Additional Property Transfer Tax on Residential Property Transfers to Foreign Entities in British Columbia, Canada…
Are Real Estate Commissions Split in Vancouver?
Updated May 8, 2019 by Mike Stewart PREC
Yes! When a Realtor is hired by a Seller to list a property for sale, the Listing Contract states that the Seller will pay this Realtor (Sellers Agent/Listing Agent) a commission should the property sell during the period in which the Listing Contract is in force.
Now, if a prospective seller was to calculate what they would have to pay in terms of commission (Want to know how much quick? Check out this Realtor Commission Calculator!), some might think it a lot of money to go to one person, but that’s not really what’s going to happening!
Real Estate Commission Splits = Buyers Agent Bait?
In Vancouver, The Sellers Realtors (Sellers Agents/Listings Agents) split around HALF of the real estate commission set out in the Listing Contract and offer it to Buyers Agents.
This is done to encourage (bait) Buyers Agents to bring their Buyers to see the property within an eye to purchase it.
The successful Buyers Agent who’s Buyer actually purchases the property receives their split or share of the commission paid by the seller when the property Completes at the Land Titles Office and ownership changes hands.
Just to reiterate – Buyers do not pay their Buyers Agents!
The Seller pays a commission to the Sellers Agent who then splits that commission with the Buyers Agent when the property sells!
Also, there is a requirement that Buyers Agents disclose in writing how much commission they earn to the Buyers they represent on these deals!
Buyers Agent Commission Impacts Marketing?
When marketing properties in Vancouver, we target both Buyers and Buyers Agents.
Buyers Agents get paid when the Buyers they represent purchase properties. Buyers Agents tend to be motivated by money.
The amount of commission offered to Buyers Agents and how that is communicated can have an impact on how quickly a property will sell.
To spur interest among Buyers Agents and get a property sold sooner, Sellers sometimes offer a commission bonus or some other extra.
When I work with sellers to sell properties, I offer Buyers Agents 3.125% on the first $100,000 and 1.1625% on the balance of the sale price. This amount comes out of the 7% on the first $100,000 and 2.5% on the balance. We find that the Buyers Agent commission above is a sufficient in the Vancouver real estate market.
Some Sellers choose to work with discount brokerages in the hopes of saving money and offer a smaller commission to Buyers Agents.
As the topic of how much Discount Brokerages offer Buyers agents is very sensitive, so I’ll let readers come to their own conclusions on which strategy for Buyers Agent commissions is best.
Isn’t There a Conflict of Interest if the Seller Pays the Buyers Agent?
No! The Agency Relationship or the fiduciary duty of the Buyers Agent is to the Buyer and only the buyer as per the Disclosure of Representation in Trading Services (DORTS).
In plain language the Buyers Agent is loyal to the Buyer and only the Buyer. The Sellers Agent is loyal to the Seller and only the seller.
The Sellers Agent offers the Buyers Agent a commission to bring their Buyers, but this does not cause the Buyers Agent to have any agency relationship to the Seller.
If you have any questions please feel free to ask! QUESTIONS ARE STRONGLY ENCOURAGED!
Looking for Info on How to Sell a Property in Vancouver?
Have a look at these great videos on Selling a Home in Vancouver!
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Check out this great video on One Pacific by Concord Pacific!