Realtor fees in Alberta can be a complicated subject. Knowing what your realtor fees are in Alberta, and figuring out who is paying realtor fees, is something that can require a lot of research and negotiation. Typically, only the seller of a home pays realtor fees, and the realtor fees in Alberta are split between the two realtors representing the selling and buying parties. Realtor fees in Alberta vary, and are always dependent on negotiations between the seller of a house and the realtor representing the seller’s home.
How Much Do Traditional Realtor Fees Cost?
Traditionally, realtor fees have been 7% on the first $100,000 on a house, and 3% on the remainder of the price of the house.
7% on first $100k, 3% on the rest (typically includes taxes) =
$400,000 + 5% GST = $420,000.
7% on $100,000 = 7,000
3% on $320,000 = 9,600
Total realtor fees = $16,600
These fees are then split between the buyer and seller’s realtors. This 7/3 fee has been the standard for several years, but there is always room for negotiation in realtor fees. Realtor fees are typically based on how much of the work you would like them to perform. If you will be the one answering phone calls and arranging showings, researching communities and homes, and simply asking your realtor to speak with other realtors and negotiate asking prices, you will likely be able to agree on a lower realtor fee. The standard realtor fee was created before the age of the internet, where your realtor was the only connection you had to knowing what houses were for sale and what neighbourhoods were like. Now that a large amount of research can be done via Google, you can negotiate a lower realtor fee. The more work you’re willing to perform yourself, the lower the realtor fee, typically.
Can I Avoid Realtor Fees?
The short answer is, yes. When selling your home, you can avoid realtor fees simply by putting your home for sale by owner. This can save you all the realtor costs; however, you will likely need to hire a lawyer instead, to deal with all the paperwork and bill of sale. Although you can save money on realtor fees if you put your home up for sale without a realtor, the one risk is that your home will take longer to sell, as realtors will likely avoid showing your house to clients, unless they are specifically asked. This is because those realtors know they will not earn a commission on your home if their clients choose to purchase it.
Other real estate agencies are known to advertise a lower cost to realtor fees, but they also confront similar problems. Realtors who know a home has a lower commission may avoid showing clients those houses. Negotiating a realtor fee requires understanding that the lower the fee, the less other realtors will be interested in showing their clients your home.
If time isn’t as much of an issue, or you’re willing to do a lot of self promotion, putting your home for sale by owner is a potential way to save on realtor fees. You just need to ensure you’re prepared to do the work of answering phone calls and inquiries, showing your house, having open houses, and dealing with all offers and negotiations yourself.
Do I Need A Realtor to Buy a Home?
Buying a home does not always require a realtor. If you’re looking at resale homes, realtors often have a better knowledge of the homes for sale in neighbourhoods you like; however, with the internet you can easily do some research and find homes yourself, and you will have to reach out to sellers yourself. If you’re already using a realtor to sell your home, you may as well ask them to help you negotiate the buying process as well, since those fees are already being paid. Realtors know real estate, and as such can help you navigate the process. If you’re not selling your home, a realtor may require a fee, and as such you can choose to avoid that fee by buying a home without a realtor.
Read our guide here on Why You Don’t Need a Realtor to Buy a New Home.
Realtor fees can be a difficult process to navigate, so before choosing a realtor, ask yourself how much work you’re willing to do to sell your home, and make those expectations known to your realtor. When all the expectations are out in the open, you can negotiate a fair fee for the amount of work expected of your realtor.
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