Key takeaways
- Commission is negotiated; a quoted percentage is not a legal tariff.
- Fees can be a percentage, a fixed amount or another permitted combination agreed in writing.
- Buyers should check their own fee obligation rather than assume the service is free to them.
- HST and other selling costs must be included when estimating net proceeds.
Is there a standard commission rate in Ontario?
No fixed rate is approved by RECO, a government authority, a real estate association or a real estate board. You and the brokerage agree on the services and remuneration. The payment can be a fixed amount, a percentage of the sale price or a permitted combination. [1]
Compare the service package as well as the headline rate. Photography, staging, advertising, showings and other work may be included, excluded or separately charged. A lower advertised rate does not tell you the full cost if another fee applies in common circumstances.
Ask for the calculation in dollars using a realistic sale price. That makes it easier to compare proposals and spot whether a quoted listing fee is only one part of the total amount.
How is payment shared between the brokerages?
A seller’s agreement should explain the amount payable to the seller’s brokerage and any amount the seller agrees to contribute toward the buyer’s brokerage fees. A buyer’s agreement should explain the buyer’s fee and how it changes if the seller contributes toward it. [1]
The arrangements can vary. There is no universal requirement that the seller fund a particular percentage for the buyer’s side. The contracts should also address how fees change in situations such as multiple representation.
Ask who invoices, who receives payment and which amounts your lawyer will be directed to pay from sale proceeds. Do not rely solely on an informal explanation that the agents “split it.”
Can a buyer be required to pay a commission shortfall?
Yes, depending on the buyer-representation agreement and any other binding arrangements. If the agreed fee exceeds the seller-funded amount, the buyer may be responsible for the difference. If the seller offers nothing, the buyer may have a larger direct payment obligation. [1, 2]
For example, suppose a buyer has agreed to a $15,000 brokerage fee and an applicable seller contribution is $12,000. If the agreement makes the buyer responsible for the balance, that leaves a $3,000 shortfall before applicable tax. The actual result depends on the wording; this example is not a standard fee.
Discuss that possibility before making an offer. A buyer who budgets only for the down payment and legal expenses may otherwise discover a financing gap late in the transaction.
Is HST added to the commission?
Taxable brokerage services in Ontario generally attract 13% HST. The tax is on the service fee; it should not be confused with HST on the sale of a newly built home. Check whether a fee quote includes or excludes tax. [3]
As a simple illustration, an agreed 4% commission on an $800,000 sale would be $32,000. HST at 13% of that fee would be $4,160, making the total $36,160. The 4% is an example only, not a recommended or legally prescribed rate.
Subtract the actual commission and HST, mortgage payout, legal expenses and other authorized charges when estimating your sale proceeds. The gross sale price is not the amount available for your next purchase. [4]
When does the obligation to pay arise?
The contract determines when remuneration is earned and payable. Commission is commonly settled on completion through the brokerage’s deposit accounting or a direction to the lawyer, but do not assume it can only become owing after a successful closing. [1, 2]
A failed closing, a seller’s refusal to complete or a transaction made after an agreement expires can raise separate fee claims. The answer depends on the commission clause, the facts and applicable law.
Before signing a cancellation or extension, ask your lawyer whether existing remuneration rights are preserved, released or changed. Ending a purchase agreement does not automatically settle every brokerage contract.
What is a holdover clause?
A holdover clause can preserve a brokerage’s entitlement to payment for specified transactions entered into after the representation agreement expires. It has a stated period and conditions; it does not mean every later transaction necessarily attracts a second commission. [1]
Keep a copy of the agreement and any list of properties or people relevant to the clause. If you change brokerages or buy a home introduced by a previous representative, tell the new representative and your lawyer so potential overlapping obligations can be checked.
The safest time to clarify these terms is before you sign the original agreement, while you can negotiate the scope and duration.
About the author — Gathyayini Manoharan
Gathyayini Manoharan is a lawyer licensed by the Law Society of Ontario (LSO #75591T, licensed since 2018) and a Practice Lead at iClosed. Her practice is Ontario residential real estate, and she works on purchase, sale and refinance files from retainer through to reporting. Her Law Society record can be verified at https://lsodirectory.lso.ca/en-US/licensee-detail/?lawsocietynumber=75591T. This article is general information about Ontario law and practice, not legal advice. It does not create a lawyer-client relationship. For advice on your own transaction, speak with a licensed Ontario real estate lawyer.
Sources
- RECO — Signing a contract with a real estate brokerage. — https://www.reco.on.ca/consumers/things-you-need-to-know/signing-a-contract-with-a-real-estate-brokerage/
- RECO — Bulletin 2.3 Representation agreements. — https://www.reco.on.ca/agents-and-brokerages/reco-bulletins/reco-bulletin-2-3-representation-agreements/
- CRA — GST/HST rates and place-of-supply rules. — https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/charge-collect-which-rate.html
- Financial Consumer Agency of Canada — Selling a home. — https://www.canada.ca/en/financial-consumer-agency/services/selling-home.html
This article provides general information about Ontario law and closing practice as of October 26, 2026. It is not legal or tax advice and does not create a lawyer-client relationship. Your agreement of purchase and sale, your lender’s instructions and your own circumstances control what applies to you. Rates, thresholds and rules change — confirm current figures before relying on them.