Do You Pay a Real Estate Agent if You Are the Buyer?

Buying a house comes with a long list of fees and expenses, many of which go far beyond the price itself. This is why it’s smart to ask how much your purchase will cost in total before you even begin placing your offers.

Moving costs, property taxes, lawyer fees, and mortgage insurance can all add up. If you’re not careful, you could exceed your budget without even realizing it. In this post, we’ll answer the question “Do you pay a real estate agent if you are the buyer?”, how much you will need to buy a house in Etobicoke, and more.

Curious about the market or what the buying process will be like? Book a meeting with us today, and we will walk you through the steps.

What Percentage Do Realtors® Take?

Real estate commissions when selling a house can be as much as 5% of the final price. The listing agent takes approximately 2.5%, with the other half going to the buyer’s agent.

Though there has been some talk about revamping how Realtor® fees in Ontario work, to address the common question “Do you pay commission when buying a house?”, the seller still covers commissions for the most part.

Do you plan to sell your house before or shortly after buying a new one? The posts below can help you streamline the entire process:

When and How Do Real Estate Agents Get Paid?

How much does a Realtor® cost when all is said and done? The exact dollar amount depends on the value of the transaction. The more important question is what a true expert brings to the table.

A knowledgeable and experienced real estate agent can make your move far more seamless and successful, whether buying or selling. As a buyer, this representation is invaluable to help you uncover the best possible listings for your needs while zeroing in on the right neighbourhood. Even more importantly, a good Realtor® will negotiate the lowest price and terms that work in your favour regardless of the type of market.

Technically speaking, this valuable service comes at no cost whatsoever to the buyer. First off, an agent only gets paid once a transaction is closed and ownership officially changes hands. Secondly, remember who pays the real estate agent; it’s the seller’s responsibility in most cases.

You might argue that buyers pay Realtor® fees indirectly, at least partially since the seller will price the home to account for the commission. Still, this is one less out-of-pocket expense to worry about.

Are you wondering where your next house should be? You might find your ideal location in Our Top Etobicoke Neighbourhoods.

The Total Cost of Buying a House

A buyer rarely, if ever, needs to pay commission when buying a house. So let’s turn our attention to the costs you can expect. Total closing costs involve a long list of incidentals, from mortgage insurance, title insurance, and legal expenses to property tax adjustments and utility setup fees. The buyer may also be responsible for home inspection and appraisal costs, depending on the terms in the Agreement of Purchase and Sale.

Land transfer taxes are often the most prohibitive cost by far when buying a house. In Toronto (which includes Etobicoke), you also need to prepare for a double expense since both the province and the municipality want a percentage.

It’s also important to remember that mortgage insurance is your only closing cost that you can include in your mortgage and spread out over your amortization period. You must be able to cover everything else up front in cash, including your land transfer taxes.

A Hypothetical Home Buying Case Study

It’s great to know what to expect in theory. However, the experience is entirely different once you get out there and actually start placing offers. The example below can give you a clearer picture of what your home buying journey will look like and how much it will cost in total.

Imagine you’ve found a house you love at a price of $1 million on the dot – just to keep our calculations simple. (You can also play around with different numbers with our closing cost calculator.)

With Canada’s newest guidelines in mind, you have saved up a down payment of $75,000 ($25,000 on the first $500,000 plus $50,000 on the remainder). At least $50,000 of this should be readily available so you can make a deposit within 24 hours of a seller accepting your offer.

5% is standard for a deposit, but a higher amount can make your offer more compelling. You’ll pay the remainder of your down payment upon your closing date when ownership officially changes hands.

Note: If you manage to increase your down payment to 20% ($200,000), you will save money each month because you will no longer require mortgage insurance. Your monthly mortgage payment will also decrease the more you pay out of your own funds.

Looking for more advice before starting your house hunt? Start with the valuable tips and resources below:

What Happens on Closing Day?

As your closing day approaches, you’ll want to arrange a final walkthrough before taking possession. Your lender may also require an appraisal before finalizing your loan, which can range based on the price and structure of the home. This is usually the buyer’s responsibility, although some lenders may waive the cost for some mortgage products. It’s always worth it to ask!

During this time, you’ll also need to arrange for a lawyer to run a title search and arrange for title insurance. If you need a recommendation for a good real estate lawyer, your real estate agent can likely refer you.

Before you can officially take possession of your new home, you will also need to cover your land transfer taxes. (On a $1 million home, you’d pay $16,475 each for a total of $32,950. )

It’s easy to see why the land transfer taxes present a challenge for anyone searching for a new house. First time buyers are particularly affected, but fortunately, there is some good news. The City of Toronto offers a new buyer rebate up to $4,475, and Ontario allows up to a $4,000 savings for a total reduction of $8,475.

Every resource counts when it’s time to buy a new house in the GTA. With careful planning and expert guidance, you could have your offer accepted before you know it!

Do you want a customized plan for your next move? Our Etobicoke real estate agents will be here every step of the way. Reach out today at 647-282-7653 or email contact@sileckythompson.com with any questions or to get started.