Updated: April 2025  |  bremo.io financial guides

Real Estate Agent Commissions in Canada 2025

Real estate commissions in Canada are undergoing significant change. Historically, sellers paid a total commission (typically 3.5% to 5%) that was split between the listing agent and the buyer's agent. That model is shifting — and both buyers and sellers need to understand the new landscape.

Traditional Commission Structure

Historically, Canadian real estate commissions worked like this:

• The seller agrees to pay a total commission (e.g., 5%) to their listing brokerage
• The listing brokerage offers a portion (e.g., 2.5%) to the cooperating brokerage that brings the buyer
• Each brokerage then splits their portion with their agent (often 50/50 to 70/30 depending on the agent's agreement)
• The buyer paid nothing directly — their agent was paid through the commission the seller offered

Typical Commission Rates in Canada (2025)

BC's Unique Tiered Structure

Greater Vancouver historically used a tiered commission structure: a higher rate on the first $100,000 of the purchase price and a lower rate on the remainder. Many BC listings still follow this pattern. Always confirm the exact commission structure when reviewing BC listings.

How Commission Changes Affect Buyers

Following changes inspired by US commission litigation and CREA policy updates, several things are shifting in Canada:

• Listings must now more clearly show what buyer-agent compensation the seller is offering
• Buyers are expected to discuss compensation with their agent before touring homes
• In some cases, if a seller is not offering buyer-agent compensation, the buyer may need to pay their agent directly
• This has created more room to negotiate — and more responsibility for buyers to understand what they are agreeing to

Can You Negotiate Commission?

Yes. Commissions are not fixed by law in Canada, and the Competition Bureau has consistently affirmed that commission rates should be negotiable. However, in practice:

• Listing agents may offer reduced rates for higher-value properties (same effort, bigger paycheque)
• Sellers in seller's markets have more leverage to negotiate lower commissions
• Discount brokerages exist in most markets and offer listing services for flat fees or reduced commissions
• FSBO (for sale by owner) is an option in Canada but carries risks around reach and legal compliance

Are Commissions Tax Deductible?

For buyers of a primary residence, agent commissions paid by the buyer are not directly deductible. However, if you sell an investment property or rental, agent commissions paid as part of the sale reduce your proceeds for capital gains calculation purposes.

Commission on New Construction

Builders in Canada typically pay selling agents a commission of 2% to 3.5% directly. Buyers' agents who help clients purchase new builds are compensated through this structure. Important: many builders have preferred agents in their sales centres who represent the builder, not you. Bringing your own independent buyer's agent to new construction purchases is strongly recommended.

What Commission Buys You (and What It Does Not)

A buyer's agent working for 2% to 2.5% commission should provide:

• Access to all MLS listings plus off-market opportunities
• Market analysis and comparable sales to inform your offer strategy
• Drafting and reviewing offers and conditions
• Negotiation on your behalf through multiple rounds if needed
• Coordination with inspectors, lawyers, and lenders
• Guidance through every step to closing

Commission does not guarantee a good outcome if the agent lacks knowledge, effort, or skill. Interview carefully before committing.

Rebate Agents

Some buyer's agents offer to rebate a portion of their commission back to the buyer at closing. These rebates are allowed in Canada (unlike some US states where they were historically prohibited). If you are working with a rebate agent, confirm the rebate amount in writing and understand any conditions attached.