Hi,

Newbie question here - say I'm a realtor working for Re/Max, if I have a buyer client and he wants to see a new house (e.g. Mattamy), I take him to the builder's office and he eventually purchases a unit, will the builder typically pay the realtor/brokerage a commission? If so, what are the typical parameters around it? If not, can the realtor/brokerage technically demand commission from his client?

I could not find any info on the web specific to Ontario or even Canada on this topic.

Thanks!

The logical Person to ask would be your broker, as the “Agent” s/he would be entitled to any commission.

The question that arises is whether of not you had a binding representation agreement in place, if so, your buyer has a legal obligation to honour that agreement and make-up the difference for any short-fall in relation to the agreed commission therein.

If you failed to have a binding representation agreement in place, and no agreement in place with the builder, then your “Broker of Record” would determine what course of action the brokerage firm would take, if any.

The builder may be inclined to compensate an agent, if they thought it would lead to the further sale of their other homes.

I would advise that you talk the matter over with your broker, as they are the one who will make the final decision.

IMPORTANT NOTICE: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a Lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information.

DA - thanks for your input. I should have clarified that I am not associated with a brokerage yet as I'm still working on getting licensed.

Let's just assume the agent has a signed buyers representation agreement. I wanted to know how common (or uncommon) is it for a builder to pay a brokerage a commission?

Steely Dan

In my experience, it’s unlikely that a builder would consider paying anything to an unlicenced party. One reason being, that every buyer would then bring a friend along who would subsequently seek compensation from a builder for bringing the buyer to the builder.

But, in an instance where a builder did pay an unlicenced individual a commission in relation to a real estate transaction, this would amount to clear evidence that the individual was trading in real estate without a licence and a violation of the Real Estate and Business Brokers Act 2002

A violation of the Real Estate and Business Brokers Act 2002 could be prosecuted under the Provincial Offences Act and if found guilty, the defendant could be liable for a fine and/or up to six months imprisonment.

Needless to say, that such a conviction would have a dire effect upon anyone seeking to be licenced as a real estate practitioner.

IMPORTANT NOTICE: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a Lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information.

A bit of misunderstanding here...I wasn't referring to myself (I obviously have no intention of engaging in any real estate activities until I get licensed and hang my license with a brokerage). I was referring to licensed agents.

I was curious if these developers, specifically the large, well-known developers e.g. Mattamy, Great Gulf etc. (as opposed to custom builders) will and do pay brokerages a commission who introduce a buyer to them.

Steely Dan:
Builder’s, like everyone else do not like to spend money unless they have to, therefore if a builder is having difficulty is selling their homes or the few remaining home in a subdivision, and they have decided to pay an agent a commission, they will advise any and all agents of this fact, in order to expedite the sale of their new homes.

On the other hand, some Brokerages or the sales representative have managed to enter into a private agreement with the builder, whereby the agent will charge the builder little or no commission, providing they have the exclusive right to list and sell the current homes of all potential buyers of the builder’s new homes.

Some builder may also require the agent to maintain a presence either at their building site or at their sales office to effect sales.

[quote=Devil's Advocate][b]Steely Dan:[/b]
Builder’s, like everyone else do not like to spend money unless they have to, therefore if a builder is having difficulty is selling their homes or the few remaining home in a subdivision, and they have decided to pay an agent a commission, they will advise any and all agents of this fact, in order to expedite the sale of their new homes.

On the other hand, some Brokerages or the sales representative have managed to enter into a private agreement with the builder, whereby the agent will charge the builder little or [b]no commission[/b], providing they have the exclusive right to list and sell the current homes of all potential buyers of the builder’s new homes.

Some builder may also require the agent to maintain a presence either at their building site or at their sales office to effect sales.
[/quote]

okay, that makes sense. As I said I am still in RE school, in our current textbook there is an example there that can give the reader the impression that this happens all the time in this business.

Thanks.

Before you bring the buyers, you need to negotiate and confirm with the developer how much the commissions and if they don't, you may ask your buyers pay you something!!!

Toronto Real Estate Board has a list of builders on line; what sites, where are they building and do they or do they not co operate. Walk to the sales office and ask the sales representative or Receptionist... Do they co operate with Brokers? then register your clients accordingly.

Have had experience where,
a) the builder said wow you just [to buyers] paid an extra $2000 because I had to give something to YOUR agent
b) Builder was not co operating I needed to sign a permission form allowing the Builder to speak to my clients and NO they were not paying a referral.

Good Luck!