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TL;DR: Don't feel like reading? Listen to our 2-Minute Audio Insight on Toronto Real Estate Commissions.
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When the topic of Toronto real estate comes up, few line items spark as much debate as commissions. In a city where the average home often crosses the million-dollar threshold, the percentage fee attached to a transaction can translate into tens of thousands of dollars. With new legislation in Ontario — the Trust in Real Estate Services Act (TRESA) — shaping consumer rights and agent obligations, it’s worth unpacking how commissions actually work, where they’re headed, and what buyers and sellers should realistically expect.
Property Prices vs Inflation: What the Numbers Reveal
Over the past decade, property prices in Ontario and especially in the Greater Toronto Area have risen dramatically. Some areas in Ontario have seen more than 100% growth in the home price index over ten years.
Meanwhile, inflation in Canada has averaged much more modest increases. For example, in 2024, the Consumer Price Index rose about 2.4 %.
Toronto Average Home Price & Year-over-Year Change (2012–2025)
Blue = actual average price. Green = constant-growth path using CAGR from 2012. Red dashed = YoY % change.
Show data table
| Year | Average Price ($) | YoY % Change |
|---|---|---|
| 2012 | 499,413 | — |
| 2013 | 525,681 | 5.26% |
| 2014 | 569,402 | 8.32% |
| 2015 | 623,529 | 9.51% |
| 2016 | 731,927 | 17.38% |
| 2017 | 823,422 | 12.50% |
| 2018 | 784,118 | -4.77% |
| 2019 | 812,996 | 3.68% |
| 2020 | 926,340 | 13.94% |
| 2021 | 1,098,087 | 18.54% |
| 2022 | 1,193,771 | 8.71% |
| 2023 | 1,131,277 | -5.24% |
| 2024 | 1,120,266 | -0.97% |
| 2025 | 1,080,118 | -3.58% |
Key Insight: How Prices Have Shifted
2012 Average Price: $499,413
2022 Peak: $1,193,771 (+139.0%)
2023 Average Price: $1,131,277 (+126.5%)
2024 Average Price: $1,120,266 (+124.3%)
2025 Average Price: $1,080,118 (+116.3%)
In just over a decade, Toronto home values more than doubled, then eased from the 2022 peak (2025 is about 9.5% below the 2022 high). Commission percentages stayed broadly the same, so the dollar amounts paid in commission rose substantially alongside overall price levels—making fee structure and negotiation more important than ever.
To place that in context:
- When a home’s market value doubles over ten years, it has grown at an average compound rate of approximately 6–8 % per year (depending on the base).
- Yet in that same period, inflation rarely exceeded 3 % annually for sustained stretches.
- Thus, the real price of real estate (adjusted for inflation) has appreciated substantially, meaning much of the gain is pure property-market growth, not general cost escalation.
Because commissions as a percentage of sale price scale in lockstep with nominal price increases, the dollar amounts paid in fees have ballooned considerably faster than most other services or costs. In simpler terms, you might pay two or three times as much commission today than you would a decade ago on the same equivalent home, even though the work to list, market, and sell hasn’t necessarily become two or three times harder.
Yet the commission models have not adapted proportionally. Many agents still operate under the assumption that “the percentage is unchanged.” That disconnect is one reason why negotiation is not just advisable — it’s essential. Sellers and buyers need to recognize that the fee structure must evolve if it is to remain defensible in a market where nominal prices have far outpaced inflation.
The Traditional Framework
For years, the “standard” assumed commission rate has been 5%.
Which means on a $1 million sale, that’s $50,000 in fees, divided evenly between two brokerages. On a $1.5 million sale, it climbs to $75,000. In raw numbers, the magnitude is clear — which is why commissions attract scrutiny.
What consumers sometimes overlook is that commissions are contractual. Each agreement is negotiated between the seller and their listing brokerage, subject to disclosure requirements under TRESA. Buyer-side compensation is also negotiable, though many sellers continue to offer 2.5% to attract cooperating agents.
What the Commission Covers
Commission isn’t just a percentage; it’s a service package. Full-service brokerages typically include:
- Staging, photography, and videography
- Marketing campaigns (digital, print, open houses)
- Negotiation expertise and offer management
- Guidance on disclosures and compliance
Discounted or flat-fee models may pare this down to MLS® exposure and basic representation. The value equation depends less on the percentage itself and more on the outcome: did the strategy deliver a stronger final price, smoother transaction, or added buyer incentives?
How to Negotiate Without Feeling Awkward
Negotiating commission doesn’t have to feel slimy. Here are strategies Toronto sellers swear by:
Buyer vs. Seller: Who Ultimately Pays?
While commissions come from the seller’s proceeds, buyers indirectly bear the weight. Commissions are baked into listing prices, meaning both sides have a stake in how compensation is structured. This is why buyer rebates and flexible arrangements are becoming more visible — they respond to affordability pressures in an already strained market.
Legal & Ethical Guardrails
For all the debate, there are rules in place:
Knowing these safeguards can give you more confidence walking into negotiations.
The Future of Commissions
The days of assuming 5 % are fading. In Toronto, commissions have shifted from being a quiet line item to a central point of debate. Some defend the traditional full-service model, saying it reflects marketing strength, negotiation expertise, and accountability that good representation provides. Others point to flat-fee or reduced-percentage structures as proof that consumers now have meaningful alternatives.
What many don’t realize is that property prices have risen far faster than general inflation. Because commission amounts are set as a percentage of sale price, the fees have ballooned even more — without necessarily offering commensurate increases in effort or risk. That imbalance makes negotiation not just wise, but imperative.
For some households, paying 5 % feels like an investment when it secures a stronger final price or smoother experience. For others, a leaner 3.5 % or flat-fee arrangement delivers adequate service at a lower cost.
The important thing is not to accept assumptions. Interview more than one professional. Compare what each includes. Ask direct questions about value. In a city where every percentage point can mean tens of thousands of dollars, the commission structure you choose is not just about math. It is about control over one of the most significant financial decisions of your life.