Last Updated on November 10, 2021
Realtor fees, or commission, in Alberta can be a complicated subject. It is difficult to know which fees are you are responsible for, and how much they cost. These sometimes take research and negotiation to understand and agree upon.
Typically, only the seller pays realtor fees, and the commissions are split between the seller’s and buyer’s realtors. Realtor fees in Alberta vary, and can be 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 are 7% on the first $100,000.00 of 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
The commission is then split between the buyer and seller’s realtors. This helps the realtors cover marketing costs, listing costs, overhead fees, open houses, and pay for their time.
This 7/3 fee has been the standard for several years, but there is often 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 might be able to agree on a lower realtor fee.
The standard realtor fee was created before the age of the internet when 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 When Selling My Home?
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 the usual realtor fees, but it will likely create other costs for you. You will need to hire a lawyer on your own to deal with all the paperwork and bill of sale. You will also have to cater your own open houses, create your own marketing materials, and pay listing fees in many cases.
Additionally, many realtors will avoid showing your house to clients if you try to sell on your own. This is because those realtors know they will not earn a commission on your home if their clients choose to purchase it. If a realtor does not make a commission on a sale, they are essentially working for free.
There are low-fee real estate brokerages in the market, but they also encounter these 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 yourself. You also need to prepare to wait longer and spend more time selling your home.
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 are more knowledgeable about the homes for sale in your desired neighbourhoods. This being said, you can easily find online resources to find homes yourself. You will, however, have to reach out to sellers directly yourself, and some sellers will be wary of an independant party.
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 are experts in their field and can help you navigate the process.
Either way, you will usually have no fees if you are buying a resale home, so having someone to help guide you through the process will not hurt.
It can be cheaper for buyers of new construction homes to purchase without a realtor.
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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