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When the topic of Toronto real estate comes up, commission structures remain a primary financial consideration. 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, this analysis examines the mechanics of commission structures, where they’re headed, and what buyers and sellers should realistically expect.
While this article focuses specifically on Toronto, you can compare how typical real estate agent commission varies across other provinces in our Canada-wide breakdown.
Market Data Analysis: Prices vs. Inflation
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 (YTD): $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 increased at a significantly higher rate 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 for the equivalent home. While commission totals have risen, critics argue that the core scope of work has not scaled proportionally.
Yet the commission models have not adapted proportionally. Many agents still operate under the assumption that “the percentage is unchanged.” This divergence in cost vs. value has made commission negotiation a more common priority for many sellers. 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 “traditional” 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 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?
Strategies for Discussing Commission Rates
Commission negotiation is a standard business practice. Here are strategies Toronto sellers are advised to consider:
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
Market data suggests that the standard 5% model is increasingly being challenged by alternative structures. 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 — While property values—and therefore percentage-based commissions—have doubled, the Consumer Price Index (CPI) indicates that general consumer inflation has not risen at the same trajectory as home prices. 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.