Disclosure of Remuneration: What is that?
How a Realtor gets paid and by whom is always source of interest in Vancouver.
In British Columbia, Buyers Agents (ie Real Estate Agents who are representing a Buyer) must disclose in writing to the Buyer they are working with, how much they are being paid and by whom when they are preparing an offer or Contract of Purchase and Sale for a Buyer.
Buyers Agents are required to have a Buyer read over and initial a Real Estate Council of British Columbia provided Disclosure of Remuneration form. This is part of the duty of Full Disclosure that all Real Estate Agents in British Columbia have with their clients as part of the Agency Relationship. I have embedded two versions of the documents below for reference.
Who Pays the Buyers Agent?
9 times out 10, a BUYER DOES NOT PAY THEIR BUYERS AGENT! The Sellers Agent (or Listing Agent) will split the commission offered by the Seller with the Buyers Agent. The commission offered by the Seller is nearly always split 50/50 between the Buyers Agent and the Sellers Agent with a few percentage more going to the Sellers Agent to cover their costs of listing and marketing the property.
Interested in finding out how much Mike Stewart Vancouver Realtor charges sellers? Check out this video on Mike’s Vancouver Real Estate Commissions for Sellers!
When does the Buyers Agent Get Paid?
The Buyers Agent gets paid on the Completion Date, which is when the title to the property the buyer wrote an offer or Contract of Purchase and Sale on transfers ownership at the Land Titles Office. This is after the Buyers offer or Contract of Purchase and Sale has been accepted by the Seller, the buyer is 100% satisfied with the property and has removed all subject conditions and the buyers and sellers lawyers have had sufficient time to prepare the transfer documentation.
How Much does the Buyers Agent get Paid?
This amount varies because in Canada there is no set amount for Real Estate commissions according to the Federal Governments Competition Act. The Buyer always has a right to know how much their Real Estate Agent is getting paid (So ask if you want to know!) because they will initial the Remuneration Disclosure document.
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Vancouver Real Estate Remuneration Disclosure by Mike Stewart Vancouver Realtor
Disclosure of Remuneration for British Columbia Realtors by Mike Stewart Vancouver Real Estate Agent
I STRONGLY ENCOURAGE COMMENTS AND QUESTIONS!
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I heard that realtors commisions were going to be lowered. Is that true and is
it in effect yet?
Hi Marj,
Good to hear from you and thank you very much for taking the time to comment!
Are you referring to the Federal Competition Bureau’s Dispute with the Canadian Real Estate Association (CREA)?
In terms of how much commission, based on the Competition Act, we Realtors cannot say there is a set commission rate (Its been like this for years). The Competition Act requires us to do this because they want ensure that commission is negotiable (Its also been like this for years) and the ensure the perception there is no set commission rate.
Commission is agreed between a Realtor and their clients. There is no set rate that can be reduced.
As I understand it, the Competition Board ruling will change the rules of access to the MLS and a Realtor will not be required for the whole process of the sale.
This may have an impact on commission by giving sellers more choice, but there has always been a lot of options sellers looking for discount Realtors.
I don’t see these changes having that big of an impact at all.
What are your thoughts?
This is a lot clearer to me now. Thanks Mike
Good to hear Marj!
Let me know if you need anything!
Thanks,
Mike
Wait a second Mike.
Two things.
First:
Commission isn’t paid to the Seller’s Agent, it’s paid to the Brokerage. Disclosure of Remuneration is what the Listing Brokerage pays to the Selling Brokerage. The Brokerage takes their pre-arranged fees and charges and, in turn passes on the remainder to the Agent.
Second:
As you pointed out, commissions are not ‘set’ they are negotiated. The Buyer’s Agent may very well be responsible for their side of the commission.
It is not at all set i stone that the Buyer’s Agent (or Brokerage) is paid by the Seller’s Agent (or Brokerage).
Buyer’s should be aware that some properties listed through Real Estate Agents do not have a ‘cooperating commission’ negotiated into the price.
Hi Corton,
Good to hear from you and thank you for taking the time to comment!
Thanks for clarifying those points.
You’re absolutely right.
Realtors can NEVER take a commission from a client under ANY circumstances. If you’re working with a Realtor in BC, their Brokerages have to pay out or receive any and all commissions.
Again, you’re right. There are lots of different commission structures and Sellers Brokerage, doesn’t always pay the Buyers Agents commission.
That said, in the course of doing business, I realized very quickly that most people have no idea how Realtors are paid. Furthermore, barely any clients knew their Buyers Real Estate Agent had a duty to disclose their commissions to the Buyers they are working with.
This post was written to explain how commission is paid 99% of the time in the Vancouver real estate market where I work.
When I was planning the post I did think of the what you mentioned, but felt it was beyond the scope of the post.
That said, please do check back because you’ve given me food for thought on future posts on different commission structures and fee agreements. Thanks again!
Damn, your nice.
I try!
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Dear Mike,
You say:
“9 times out 10, a BUYER DOES NOT PAY THEIR BUYERS AGENT!”
I’m now facing a buyer’s agent who insists that I pay him a fee for the service, while he’ll forward on to me his share of commission if any.
Does that sound reasonable? Should one accept that? I’ll appreciate a quick response.
(I live in another province, not in BC.)
Thanks a lot,
Kisik
Hi Kisik,
Good to hear from you and thank you for taking the time to comment.
Here in the Vancouver market, what I mentioned is still the situation.
“9 times out 10, a BUYER DOES NOT PAY THEIR BUYERS AGENT!”
I have never heard of the arrangement you mentioned.
If I understand correctly, the person you want to hire is asking for an upfront payment from you in exchange for a share of the commission he may (or may not!) earn if he helps you purchase a property?
Is this correct?
If so, it doesn’t sound like a good deal for you.
What happens if the Realtor doesn’t do a good job or doesn’t do anything at all?
What Province are you in? Is this common in that Province?
I suggest you get a second opinion from another Realtor in your area (Get a local expert) and if you like I can find someone in your area to answer your questions.
Looking forward to hearing more on this.
Hi Mike,
Thank you very much for your quick and helpful response.
Yes, that’s exactly the case, though I think the fee will not be payable upfront, but after the sales deal. He said though that even if we don’t end up buying anything, he’ll still be claiming the fee for the service.
He says he is not interested in any commission money coming from the seller, because he wants to represent the buyer and the buyer alone (in case he’ll get commission money he promises to forward it on to us; and I suppose he’ll be obligated to disclose to us in advance what this commission money will be for any given house we’ll be interested in).
It does strike me as an unusual arrangement. I’m in Nova Scotia. I would very much appreciate a reference to a local expert, if you know one here. You can send it directly to my email.
Thank you in advance. All the best!
Kisik
Hi Kisik,
Good to hear from you and thank you for sharing your experience with me!
I am not familiar with the rules regarding this sort of thing in Nova Scotia, but it doesn’t sound like a good deal to me.
I’ll email you to discuss further.
Enjoy your day!
Thank you, appreciate your help!
Kisik
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If I haggle my agent down to a lower commision than average will buyers agents try to avoid my property because they would make less money off it?
Hi Mike,
Good to hear from you and thank you for commenting!
This is a difficult and dangerous question for a Realtor to answer given the recent situation with the Federal Competition authorities.
I can speak from my own experience and these are my thoughts.
OK, so you’re able to significantly haggle down the commissions charged by the Realtor you’re hiring to help you market and most importantly give you advice on negotiating an offer on your home.
Would you want to have this person, who is unable to negotiate their own full paycheque, representing and advising you in the negotiation on the sale of your home?
Buyers Agent commission rates are part of the marketing program for your property.
In Vancouver, Realtors are required to show all properties irrespective of commission and I abide by this rule.
I cannot speak for my colleagues, but my question is why there are rules that require Realtors to show properties with a lower commission?
I feel for my listings offering a good Buyers Agent commission is the best way to get my listings sold.
What are your thoughts?
Hi Mike – I appreciate the opportunity to ask a question without reference to a specific property. If an agent is respresenting a buyer for my property and wants to represent me as the seller, is it reasonable to ask for a discount on his commission from me as a seller as no advertising, open house, etc. expenses on his part would be involved. My property would sell in the $3-4m range. Thanks.
Hi Ross,
Good to hear from you and thank you very much for asking and for commenting!
One thing to note is that commission is always negotiable no matter how much service is offered.
If the Realtor (Buyers Agent) you mentioned has a buyer interested in your house and you don’t have your property listed on MLS, it’s the Buyers Agents job to negotiate a commission from either the buyer or you the seller.
The Buyers Agent has to either get you to agree to pay a commission at an amount that works for you or if you refuse to pay a commission, the Buyers Agent will have to get their buyer to pay the Buyers Agent a commission.
A good Realtor, as a professional negotiator, should be able to negotiate a decent commission on a deal like this. You as the Seller will need to work to pay a commission that works for your needs and gets the deal done, if that is a goal.
Please let me know if there is anything I can do to help you with this.
Looking forward to hearing from you!