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n Canada, the home seller typically pays a commission to real estate agents on both sides of the transaction. However, some agents are now offering cashback rebates to home buyers as a way to attract clients and stay competitive in the market. This rebate works as a discount on the total purchase price.
Mehrdad Khayeri, who bought his dream house in the Greater Toronto Area earlier this year, negotiated a cashback agreement with his agent that earned him nearly $35,000 back. His agent still earned 2.5% commission on the sale price but gave about three-quarters of the fee to Khayeri.
The amount of the rebate depends on the percentage agreed upon and the final purchase price. In cities like Vancouver and Toronto, where homes sell for over $1 million, a cashback agreement can result in significant savings. Some agents are now giving as much as 50% of their commission to clients, which can be used to offset costs such as land transfer taxes or renovations.
Real estate agent Alex Kvitnitsky finds that offering cashback rebates brings in more business and helps him stand out from competitors. He notes that homebuyers are becoming increasingly savvy and want to be involved in the process, doing their own research and looking for properties online.
Tom Davidoff, an associate professor at the University of British Columbia, describes cashback rebates as consumer-friendly and a good thing if negotiated by buyers. Most real estate agents in Canada can offer cash back, but some argue that smaller fees could lead to worse service.
As Canadian home prices continue to rise, more buyers are pushing back on commissions and seeking out agents who offer cashback rebates. For those looking to use an agent with this type of arrangement, Davidoff advises doing due diligence and researching the agent's experience and reputation.
Some real estate agents are now offering flat fees or reduced commission rates in exchange for a hands-off approach, where clients do most of the work themselves. This can be beneficial for buyers who want more control over the process but may not be suitable for everyone.
