Hey Curtis, What's Up With Commissions?
It’s important that sellers not only know how much commissions are but also understand how they work. I’m going to explain both.
The first thing to know is that Saskatchewan has no set commission rate. REALTORS® are free to charge whatever they like. This comes as a surprise to many people.
Secondly, buyers don’t pay commissions—only sellers do.
Most home sales (90% plus) involve two Realtors, one working for the seller and one for the buyer. The Realtor working for the buyer gets a portion of the total commission offered on a home by the seller.
My Rate
I charge 4% of the total purchase price.
Now Let’s Split
So, here’s the important part.
As a seller, you offer a portion of the 4% total commission to the buyer’s Realtor.
It’s usually a 50/50 split (not a statistic, but what I typically see), meaning you would offer a commission of 2% to anyone that can bring a buyer and write an offer on your place.
The amount of commission you offer to the buyer's Realtor matters more than you'd think.
Here's Why
There are around 400 (yikes!) Realtors in Regina, and we're all working with buyers hoping to get a sale. It’s the only way we get paid, we have no steady income. No sale means no money.
To make sure these Realtors (the ones with the buyers) notice your home, you offer them a portion of your commission. It’s like saying, “Hey, bring your buyer over here and write an offer on my home. If you do, I’ll pay you some money.”
Now Consider This
Let’s say you walked into work tomorrow morning and saw three doors.
Door One Says $100
Door Two Says $200
Door Three Says $300
Boss says pick a door and get to work. Your pay for the day is written on the doors. You’ll do the same job behind each door, same amount of hours, same workload.
Which door do you choose every morning? It’s obvious.
Commissions work that way (sort of). Realtors know how much they will get paid before they even show a home. The buyers have no idea and don’t
care.
Why Should You Care?
If the commission you offer to the buyer’s Realtor is lousy compared to similar homes for sale in your area, you won’t generate any excitement from Realtors.
Remember, Realtors have all the buyers. You're trying to find a buyer.
Let's say there are three homes for sale on your street, and the others are offering 2% to the buyer’s Realtor. You negotiated a lower commission and are offering 1%. At that pay rate, you can be sure Realtors aren’t going to push their clients in your direction.
Now, Realtors can’t make someone buy one home over another, but buyers are always looking for advice. “Which one do you think is a better house?”, “What did you
think of that last house?”
What would you like them to say? Good things about your house, of course!
You’re not going to get Realtors working hard for you if you offer a poor commission. You’ve put yourself at a disadvantage compared to your competition. Your competition is other homes in your area in the same price range.
Back to My Rate
Again, I charge a total of 4%, with 2% going to my services and 2% to the Realtor that brings the buyer. This is a competitive buyer’s side commission and won’t put you at a disadvantage. Unscientifically, most commissions offered to the buyer’s side in Regina are 2%. However, in a tighter market, we often see sellers offering 2.5% or even 3% to the Realtor that can bring them an offer.
Now you understand commissions. To be successful at this, you need to know how to play the game.
Respectfully, Curtis
PS: Everything I do is meant to help you understand how it all goes down. Selling or buying a home follows a predictable script. Read the script in advance, and you’ll know what to do right now and what to do next.
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