Cooperating Brokerage Commission Considerations
And a Commission Comparison Tool
By working with Point59 Realty, you are well on your way to keeping more of your home equity by avoiding unnecessary commission fees, but did you know you have full control over how you would like to market your property to REALTORS® from Co-operating Brokerages who may have a buyer for your property?
Introducing Point59 Realty’s CB Flex Rate! Typically, when you sign up to work with a traditional real estate brokerage, they build in a fixed 2 or 2.5% commission fee to offer the buyer's agent (Co-operating Brokerage or CB). With Point59 Realty, there is no requirement or set fixed amount or percentage. This is our optional “CB Flex Rate” which allows you full control over any commission you wish to pay a Co-operating Brokerage (buyer agent). Some of our sellers offer a flat fee, others offer none at all, while some offer as much as 1.5% or 2% (or more), still making their total commission only 2.09% or 2.59%, and only if the buyer is working with an agent from another brokerage! The best part of this is that when we bring you a buyer, we will never collect the full commission offered to a buyer agent, meaning you save even more!! Either way, you are still saving thousands of dollars while receiving maximum exposure and full support from us every step of the way!
Deciding what to offer a buyer agent depends on your specific situation. We hesitate to persuade one way or another, but rather explain the various options and scenarios. There are a couple of ways to consider what you offer a buyer agent, but we suggest you consider it as a marketing expense - how aggressive do you want to market to agents who have buyers? As noted, what you offer a buyer agent is 100% your decision. In most markets across Ontario, the traditional brokerages will charge you 4 or 5% leaving 2 or 2.5% for the buyer agent (and, all 4 or 5% for themselves if the buyer is not working with a REALTOR®). So the local REALTORS® are used to seeing 2-2.5% - though it is very important to note that REALTORS® have a code of ethics which we are obligated to follow (see Real Estate and Business Brokers Act, 2002 Ontario Code of Ethics: O. Reg. 580/05, s. 19.) which specifically states that REALTORS® are to promote all properties that meet their client's needs, regardless of commission. However, we understand if there is concern that if you offer less, you may have less attention from REALTORS®. While we have helped sellers offering a wide variety of commissions to Buyer Agents, if your concern is that you may have less activity from REALTORS® because you are not offering them their typical commission, then you can simply offer them the full 2 or 2.5% and know that you are still saving thousands compared to a full 4 or 5% commission. And it is very much worth repeating, this CB Flex Rate is ONLY if the buyer is working with a REALTOR®, as we will never charge the full cooperating brokerage commission even when we find you the buyer directly.
The other important thing to be aware of is that many buyers may have signed a buyer representation agreement with their REALTOR®, which states the REALTOR® will be paid 2 or 2.5%, whether it comes from the seller OR the buyer. So, in the situations where you may be offering less, the agents may notify their clients that they may need to pay the commission out of pocket. We always like to work with our clients and buyer agents at offer time to negotiate so that in the end, you get the net proceeds you need in your pocket (offer/sale price less commission). However, keep in mind, some agents may use this opportunity to talk their client out of viewing before we even have the opportunity to discuss this option if they feel they may not get their full commission (but again, see O. Reg. 580/05, s. 19).
We try not to offer a standard recommendation one way or another as it comes back to your specific situation, how quickly you need to sell vs maximizing your proceeds, or a combination of both. But of course, we are happy to discuss specific strategies based on your situation as needed!
All that said, we have had tremendous success offering a wide variety of commissions. In the end, buyers buy homes, not agents. So if the home is priced well, it will sell. We have had properties sell with multiple offers in 24 hours while offering little to no commission, while we have had other properties that take a little longer even when offering a higher commission to buyer agents. In all these cases, it comes down to price and the number of buyers looking for a property like yours. And the huge benefit of working with Point59 Realty is that the property is going to sell for the price the market is willing on paying for it (while most other sellers are paying 4 or 5% commission) so avoiding as much as 4.41% means thousands of dollars stay in your pocket. Note that we attract and work with a direct buyer on average, 30% of the time, regardless of what commission is offered to a buyer agent. And regardless of what you offer a buyer agent, our goal is to save you as much commission as possible while keeping as much of your home equity in your pocket.
As a way to help you have more confidence in maximizing your net proceeds by working with Point59 Realty and leveraging our CB Flex rate, know that we will never charge you the full commission you are offering a buyer agent. In situations where we work with the buyer and a successfully accepted offer, we will discount the commission by 50%. As an example, if you are offering 2% to a buyer agent, even when we work with the buyer, we will not collect the 2%, but rather half, so 1%, saving you thousands more in commission!
We hope this helps or at least provides a few options to consider. Please let us know if you have any further questions regarding the commission, offers, or working with buyer agents.
This chart shows you the impact on price and commission - the first column shows your net proceeds when we work with the buyer directly, the second column shows the net proceeds when a cooperating brokerage is working with a buyer. The third column shows the commission if listed with a traditional brokerage (set at 5% by default).
Commission Comparison Tool
|.||Point59 Direct Buyer||Point59+Buyer Agent||Traditional Agent|
|Sellers Agent Commission||0.59%|
|Sellers Commission Amount|
|Buyer Agent Commission (%)||0.0%||-|
|Buyer Agent Commission||-|
|Total Commission Paid incl HST|
|Amount Saved with P59|
|You would need to sell for|
|To get same proceeds as P59 + Buyer agent|