Who Pays Real Estate Agent Commission Fees?

If you're selling a home in the Greater Toronto Area, one of the first questions that comes up is: "Who actually pays the real estate commission?" It's a fair question — and the answer shapes how much money you walk away with at closing.

The short version: the seller pays the commission, but the money comes out of the sale price of the home. The longer version involves how commissions are split, how much they typically cost in the GTA, and how you can avoid paying them altogether.

Let's break it down.

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The Short Answer: The Seller Pays

In a traditional real estate transaction in Ontario, the seller pays both the listing agent and the buyer's agent. The commission is deducted from the proceeds of the sale at closing, before you receive your cheque.

So while it may feel like the buyer is "getting a free agent," the cost is baked into the price the buyer pays for the home — which means, in practice, the buyer is funding it through the purchase price, but the cheque is written by the seller's lawyer at closing.

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How Commission Is Actually Calculated

Real estate commission in Ontario is almost always a percentage of the final sale price, not a flat fee. In the GTA, the total commission typically lands between 4% and 5%, split roughly evenly between the listing (seller's) agent and the buyer's agent.

A worked example

Say you sell your home for $900,000 at a total commission of 5%:

• Listing agent commission: 2.5% = $22,500
• Buyer's agent commission: 2.5% = $22,500
• Total commission: $45,000

That $45,000 comes off the top of your sale proceeds, along with your lawyer's fees, any mortgage payouts, and closing adjustments. On a $900,000 sale, you're handing over roughly the equivalent of a year's salary for many households — just for the privilege of having an agent.

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Why Does the Seller Pay the Buyer's Agent?

It's a structure that dates back decades and is reinforced by the MLS system. The logic:

1. It incentivizes agents to show your home. If a buyer's agent knows they'll be paid a set commission, they're more likely to bring their clients through your door.
2. It's built into the listing agreement. When you sign with a listing agent, you agree to a total commission and how it's split with any cooperating (buyer's) agent.
3. It's paid from the sale proceeds. Since the buyer is paying the sale price, the funds are there at closing to cover both sides.

This is starting to shift. Recent rule changes in both the U.S. and Canada have begun to push toward more transparency around buyer-side commissions, but in practice the seller-paid model still dominates GTA transactions today.

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Is Commission Negotiable?

Yes. Commission is not fixed by law. It's set in the listing agreement you sign with your agent, and everything in that agreement is negotiable. Some sellers successfully negotiate:

• A lower total percentage (e.g., 3.5–4% instead of 5%)
• A sliding scale (e.g., a lower rate if the home sells above a certain price)
• A flat fee for the listing side

That said, be careful. Cutting the buyer's agent's commission below what's typical in your market can reduce showings and offers — agents may steer their clients toward homes with standard co-operating commissions. The savings on paper can cost you more in a lower sale price.

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What About HST?

Real estate commission is subject to HST (13% in Ontario) on top of the percentage. So on that $45,000 commission, add another $5,850 in tax. It's a cost many sellers forget to budget for.

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Other Costs Sellers Often Forget

Commission is the biggest, but it's not the only cost of a traditional sale:

• Staging and prep: $2,000–$8,000+
• Pre-listing repairs: $2,000–$15,000+
• Professional photography and marketing: Often covered by the agent, but not always
• Legal fees: $1,500–$2,500
• Mortgage discharge fees: A few hundred dollars
• Moving costs: $1,000–$5,000+

Add it all up and a traditional sale can cost $50,000–$70,000+ in fees and prep on a typical GTA home — before you've even moved out.

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How to Avoid Paying Real Estate Commission

If the commission math makes you wince, you have options:

1. Sell privately (FSBO)

You list the home yourself and avoid the listing-side commission. But you'll still usually need to offer a buyer's agent commission (often 2–2.5%) to attract buyers working with agents — and you take on all the marketing, showings, and negotiation yourself.

2. Use a discount or flat-fee brokerage

Some brokerages offer reduced commissions or flat-fee listings. You save on the listing side, but service and exposure can vary widely. Read the fine print on what's actually included.

3. Sell to a cash buyer like Skyway

This is the cleanest way to eliminate commission entirely. When you sell directly to Skyway:

• Zero realtor commissions — no listing agent, no buyer's agent
• No staging or prep costs — we buy as-is
• No showings — one visit, on your schedule
• No financing conditions — it's a cash offer, so the deal won't fall through
• You choose the closing date — as fast as 14 days, or on your timeline

The offer we make is the number you see. There's no 5% coming off the top at closing.

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Commission vs. Cash Offer: A Side-by-Side

On a $900,000 home, avoiding a 5% commission plus HST keeps roughly $50,000+ in your pocket. That's the difference between a stressful sale and a clean exit.

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The Bottom Line

In a traditional sale, the seller pays the real estate commission — both sides — out of the sale price. It's the single largest cost of selling a home, and it's baked into the price every buyer pays. It's negotiable, but only at the margins.

If you'd rather keep that $50,000 and skip the showings, staging, and uncertainty, a cash offer is the simplest alternative. Get a free, no-obligation offer from Skyway and see exactly what you'd walk away with — no commission, no surprises.