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Who really pays the Buyer’s Agent when a house sells? And is the service worth the big fee?

I’ve noticed a lot of confusion around this, and rightfully so.

Hi, I’m Frank Polsinello, Owner and Broker Of Record at RE/MAX Hallmark Polsinello Group Realty.

To be frank, the way real estate commission works in Ontario is pretty strange (and confusing). But, for now, let’s dive in on who (currently) pays the Buyer’s Agent at the end of the day.

Generally, when somebody wants to sell their house, they hire a Listing Agent.

Before that happens, though, the Listing Agent negotiates a sales commission with the Seller. Usually, that commission is around 5% of the ultimate sales price (let’s say 5%).

Now here’s where things get a bit confusing… Of that 5%, a portion will be allocated to pay the Buyer’s Agent—let’s call that 2.5%.

At this point you might be thinking: “Why would the Seller pay the Buyer Agent’s commission?...

That’s a great observation! But let’s table it for now and continue on with the example.

So, the Seller is paying 5% commission when the sale is complete. 2.5% goes to their own Listing Agent and 2.5% goes to the Buyer’s Agent.

That means the Buyer doesn’t have to pay anything, right?

On the surface, that’s what it seems like, but the situation is actually more nuanced. Here’s why: Let’s assume the house sells for $1,000,000.

The Buyer is the one who’s providing that $1M… …of which 2.5%, or $25K, will get distributed to the Buyer’s Agent.

That means the Buyer Agent’s commission is baked into the sales price of the house! If the Seller didn’t have to pay the Buyer Agent’s commission then…

…the Seller would’ve accepted a lower sales price. So, ultimately, the Buyer absorbs the costs of their own agent’s fee.

This brings up a whole host of questions that make you scratch your head.

1. Why do the Seller and the Listing Agent decide how much the Buyer’s Agent should get paid?...

…Wouldn’t you expect the Buyer to work that out with their own agent?

2. Why does the Buyer’s Agent typically get offered 2.5% regardless of their expertise?... …

Don’t professionals usually get paid more or less depending on their skill level?

3. And what’s so special about paying 2.5% to the Buyer’s Agent?...

…Why isn’t 3.5% offered or maybe 1.5%? These are all fantastic questions.

Let’s just say that more and more people are asking these questions, so change is inevitable. Right now, the most relevant question is probably this one:

Since the Buyer is truly the one who absorbs the cost related to the Buyer Agent’s commission…

…how does the Buyer know if they’re actually getting their money’s worth?

In my opinion a top tier Buyer’s Agent is worth their weight in gold!

So, here’s what defines a GREAT Buyer’s Agent, in my opinion…

✅ A GREAT Buyer’s Agent is an expert on properties.

They’ve walked through thousands of houses and read through thousands of inspection reports.

They can share incredible insights about the pros and cons of different houses you’re interested in.

These insights can end up saving you tens or hundreds of thousands of dollars in the long run. If you’re planning to sell your house after a few years…

…they can tell you which projects to take on and which to forego to maximize your home’s appreciation.

✅ A GREAT Buyer’s Agent is an expert negotiator.

They’ve negotiated hundreds or thousands of sales. They’ve spent countless hours and large sums of money to hire and learn from world-renowned Negotiation Coaches.

This allows them to be an incredible advocate for you and gives you a huge leg up on the competition.

✅ A GREAT Buyer’s Agent is an expert in client care.

Buying a home can be like a whirlwind. Without somebody guiding you who knows every single step inside and out…

…the process can be a stressful nightmare.

✅ A GREAT Buyer’s Agent is an expert on the market.

They study the market like a football coach studies game tape.

They can tell you what’s overpriced, what’s underpriced, and where the opportunities for maximum value are.

✅ A GREAT Buyer’s Agent has a track record of outstanding results.

They should be able to provide a long list of recent clients they’ve helped…

…and the specific results they generated for each of those clients.

Maybe they helped their client win a bidding war, even though they didn’t have the highest offer. Maybe they helped them negotiate huge concessions from the seller.

Maybe they saved the sale from falling apart by knowing how to quickly and effectively address major issues that came up during escrow.

Now you know who truly pays the Buyer’s Agent at the end of the day…

…and how to select a Buyer’s Agent who is a worthwhile investment.

If you're thinking about buying a home this year my team and I would be happy to guide you through the process you can find me Frank Polsinello at polsinello.ca or you can call or text me at 905-830-9111.

Frank Polsinello I Principal - Broker of Record I RE/MAX Hallmark Polsinello Group Realty