Where Does the 5% Real Estate Commission Really Go?
Paying 5% real estate commission in Ottawa. Where does it go?
When selling a home, many homeowners automatically assume that paying a traditional 5% real estate commission is simply the cost of doing business. But have you ever wondered where that money actually goes?
The reality is that a significant portion of the commission paid to a traditional brokerage never goes toward marketing your home, attracting buyers, or negotiating your sale. Instead, much of it is absorbed by brokerage fees, franchise royalties, office overhead, management costs, and agent commission splits.
At Equity One Real Estate Inc., Brokerage, we operate differently. By eliminating unnecessary overhead and leveraging technology, we provide full-service real estate representation while charging just 1% on the listing side, helping Ottawa homeowners save thousands of dollars.
Breaking Down a Traditional 5% Commission
Let's use a $750,000 home sale as an example.
A traditional 5% commission equals:
$750,000 × 5% = $37,500
Typically, this commission is divided as follows:
2.5% to the buyer's brokerage
2.5% to the listing brokerage
The listing side commission would be:
$18,750
Many sellers assume this entire amount goes directly to the agent working on their behalf. In reality, that's rarely the case.
Where the Listing Commission Often Goes
Many traditional brokerages require agents to split their commission with the brokerage owner. Depending on the company and agent's agreement, the brokerage may retain anywhere from 20% to 50% (or more) of the commission.
The brokerage then uses those funds to cover expenses such as:
Franchise fees
Office leases
Administrative staff
Manager salaries
Corporate marketing fees
Technology subscriptions
Training programs
National advertising
Desk fees and office overhead
The seller ultimately pays for all of these costs through higher commission rates.
What Happens at Equity One?
At Equity One Real Estate Inc., Brokerage, we've built our business model differently.
Rather than operating expensive offices, paying franchise fees, and maintaining layers of management, we focus on efficiency and technology.
Our typical commission structure is:
2% offered to the buyer's agent
1% listing commission
Total commission:
3% instead of 5%
Using the same $750,000 home sale:
Traditional 5% Brokerage:
Total Commission: $37,500
Equity One:
Total Commission: $22,500
Seller Savings: $15,000
That's money that stays in your pocket rather than being used to support brokerage overhead.
Lower Commission Doesn't Mean Less Service
One of the biggest misconceptions in real estate is that lower commission means fewer services. At Equity One, our sellers receive the same professional services they would expect from a traditional full-service brokerage, including:
Professional photography
3D Matterport tours
Drone photography and video
MLS® exposure
REALTOR.ca marketing
Showing coordination
Market analysis and pricing strategy
Contract negotiation
Transaction management
Social media marketing
Professional signage and lockboxes
The difference is that we have structured our business to be more efficient, allowing us to charge less while still delivering exceptional service.
Why We Can Charge Less
Many large brokerages are built around a business model that hasn't changed much in decades.
At Equity One:
We don't pay franchise royalties.
We don't operate expensive retail offices.
We use technology and automation wherever possible.
We keep our marketing production in-house.
We focus on results rather than overhead.
And most importantly, our business model isn’t built around agent recruitment and retention.
As a result, we don't need to charge sellers an extra 2% simply to support a large corporate structure.
Buyer Agents Still Get Paid
A common concern among sellers is whether offering a lower total commission will discourage buyer agents.
The answer is no.
Buyer agents generally focus on the commission offered to them, not the amount the listing brokerage earns. At Equity One, we typically offer a competitive 2% commission to buyer agents while reducing only our portion of the fee. This allows sellers to save money without sacrificing exposure to the market.
The Bottom Line
If you're selling a $750,000 home, choosing a traditional 5% brokerage could cost you $37,500 in commission. With Equity One's full-service 1% listing commission model, that same sale may cost only $22,500. That's a savings of approximately $15,000 while still receiving professional marketing, expert negotiation, and full-service representation.
The question isn't whether your home deserves professional representation—it absolutely does. The question is whether you should be paying for expensive brokerage overhead when you don't have to.
Thinking About Selling?
Before committing to a traditional 5% commission, find out how much you could save with Equity One Real Estate.
Lower Commission. Full Service. More Money in Your Pocket.