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Graduated commissions

A real way to lower the cost of buying a home

Heart-warming is the word that comes to mind. There was the Winnipeg real estate board petitioning the province recently to lower the Land Transfer Tax charged to home buyers. Noble gesture. Pure selflessness that, wanting to help get more people into a new home by lowering the cost of buying. And God bless their sentimental old hearts for thinking about us.

Of course, the agents’ plan would end up costing all of us. Any cut to provincial revenue, such as lowering of the LTT, would have to be subsidized by the rest of us. But hey, it’s the thought that counts. We wouldn’t want to offend the sensitive souls down at the board by quibbling.

So here’s a suggestion for our realtors to embrace that would save every home buyer more than a piddling reduction in the LTT. And it would give free rein to the realtors’ natural generosity. We’re surprised they haven’t thought of it already.

Why don’t they just base their commission on the same graduated scale as realtors in every other major centre in Canada? That would save thousands on the sale of every home. Commission rates are negotiable, it’s just that a lot of Winnipeggers are not aware of their options.

Here’s how it works in every other market: Realtors charge 6% or 7% on the first $100,000 of the sale price and 2.5% on the rest. As a matter of fact, agents in other cities such as Edmonton, Calgary, Toronto and Vancouver can’t believe Winnipeg realtors are still getting away with charging a flat 5%, 6% or 7% across the board.

Not using the graduated approach means Winnipeg realtors make thousands more on every

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home sale than their brethren in other cities. And given the escalation in home prices here, the past years have yielded a bountiful windfall for our boys and girls at the board.

Let’s look at the difference that makes on the commission on the sale of a $300,000 home:
City/Rate Commission GST Total
Winnipeg/6% $18,000 $900 $18,900
Edmonton/7%/2.5% $12,000 $600 $12,600
Winnipeg Agent’s Windfall: $6,300

In this example, the Edmonton agent receives $7,000 on the first $100,000 of the sale price, but only $5,000 on the rest. The Winnipeg agent collects 33% more for selling the same house.

So you can see how Winnipeg realtors could give area homebuyers a huge break in the cost of homeownership and still be no worse off than their colleagues in other cities. Now, that would be heartwarming.


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