By: Cynthia Ostos

Can I save money by using the listing agent when purchasing a home? - Summer 2021

Tags: real estate, cynthia, realtor

Have you ever seen a home for sale on the Internet and decided to call the listing agent directly to find out more about the property? When doing so it's important to keep in mind that the listing agent has given a promise to the seller that they will negotiate any offers received in favour of the sellers best interest. This can include things like desired closing date, terms, and highest possible sale price. So be careful not to disclose too much personal information when speaking to the seller's agent.

In Ontario the seller pays the commissions to both the listing agent and buyers agent. So hiring a Realtor to represent you when purchasing a home is essentially Free. If you choose to make an offer using the listing agent there are some things you should know.

First of all, it's important to understand that the listing agent's commission is negotiated before the house is sold. Typically in Ontario commissions range from 3.5% to 5% depending on the services being provided. From the total commission the listing brokerage will typically pay 2.5% of the commission to the co-operating brokerage (Buyers Representative). So what happens when you don’t have an
The listing broker will be paid the total commission as if you were to have had representation. Meaning you purchased a home without having representation and you are not saving any money because the seller still has to pay the full commission initially negotiated in the Listing Agreement. The only case where it would be true that the seller would pay a bit less commission to their agent would be if there was a signed “Collateral Agreement” (A Collateral Agreement outlines how much the listing agents commission would be reduced by if the home is sold by listing agent to their own buyer) so be sure to ask the listing agent if they have signed one or not.

Ultimately when the buyer and seller are clients of the same brokerage, it’s known as multiple representation or dual agency. Thankfully when multiple representation situations arise, there are disclosure requirements in Ontario. Both parties involved must consent in writing.

Ontario is proposing a ban on this as competing interests may make it challenging for registrants involved in these types of transactions to meet their obligations to their clients or to be able to advocate effectively on behalf of either party.
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