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One of the sales representatives I interviewed for selling my house says she will charge a percentage of the sale price plus a non-refundable flat fee of $750 that must be paid up front. Is that allowed?
The short answer is: Yes, that is allowed.
Up until about two years ago, the rules required commissions to be either a percentage of the sales price or a flat fee, but never a combination of the two.
But in December 2013, the Government of Ontario changed the rules to give consumers and real estate brokerages more options and flexibility with how real estate fees can be structured. A brokerage can now be paid a flat fee, a percentage of the sales price, or a combination of both.
You mentioned interviewing several real estate representatives before making your decision and I commend you on that. Different representatives may bring different services and skills to the table and taking the time to ensure the person you select offers what you’re looking for is a smart idea.
An important point to remember is the listing agreement you sign, which includes the details of how much commission or fees will be paid, is actually with the brokerage and not the individual salesperson or broker.
Commission amounts, be they flat fee or percentage of sales price or both, are determined by you and the brokerage. The amounts are not set or approved by the Real Estate Council of Ontario or any other governmental or industry organization.
Part of the interview process should include a conversation about which services will be included. Since commissions and fees can vary between brokerages and for services provided, it’s important to know what you will get at a given price point.
The potential range of services the brokerage could provide is extensive. Some brokerages offer a very broad range of services and some a very limited service model, so you need to be comfortable with what is being offered and the price you will pay. It’s all about knowing which services are important to you in getting your house sold and finding them at a price you consider to be fair.
The level of service should reflect the amount being charged. And remember, you generally get what you pay for.
Beyond just basing your decision around the commission or fees that will be charged, you’ll want to get a sense of the representative’s experience. It’s a good idea to ask about which neighbourhoods or areas they typically work in, how many homes they have sold in the past few years and their approach to the selling process.
And, as with most job interviews, you’ll want to ask for references and actually contact those individuals.
It’s also important to know that some real estate professionals work in groups or teams. So if working directly with a particular individual is important to you, it’s critical to have that conversation before signing an agreement. You can ask to include in your agreement who your primary contact at the brokerage will be and who will actually be doing the work.
Selling your home is a major undertaking, so you’ll want to find the person you feel is the best match for the job, not just the person offering the lowest commission or fee.
And once you make your selection, be sure the listing agreement includes a detailed written list of which services will be provided to you. Starting with clear expectations can go a long way to ensuring a positive selling experience.
Joseph Richer is registrar of the Real Estate Council of Ontario (RECO). He oversees and enforces all rules governing real estate professionals in Ontario. Email questions to firstname.lastname@example.org . Find more tips at http://www.reco.on.ca/home-buyers-sellers/resources/ask-joe/ reco.on.caEND, follow on Twitterhttps://twitter.com/recohelps @RECOhelpsEND or on YouTube athttps://www.youtube.com/user/RECOhelps youtube.com/RECOhelpsEND.