Reduced Real Estate Commission Explained: How to Save Big on Your Home Sale

Selling your home in today’s Canadian market is no small decision. With housing prices stabilizing in many cities across Ontario, and interest rates influencing buyer activity, homeowners are more focused than ever on maximizing profits. One of the most effective ways to do that? Opting for a reduced real estate commission.

In this comprehensive guide, we break down what reduced commissions really mean, how they compare to traditional fees, and how sellers in markets like Toronto, Mississauga, and Vaughan are saving thousands without compromising service.

What Is a Reduced Real Estate Commission?

In Canada, the standard real estate commission for a home sale typically ranges from 4% to 5% of the final sale price. This is usually split between the listing agent and the buyer’s agent. For a $1 million home, that’s $40,000 to $50,000 in fees.

A reduced real estate commission refers to any commission structure that is lower than the traditional rate, often around 1% to 3.5% total, while still offering MLS® listing, marketing, and negotiation support. These models have gained popularity, especially in high-priced markets like the GTA, where even a 1% savings can equal $10,000 or more.

Traditional vs. Reduced Commission: What’s the Difference?

Let’s break down the key differences:

Services Typically Included

Contrary to common perception, most reduced commission brokerages still offer full-service support—but with a leaner business model and more tech-driven processes.

Real Case Study: Mississauga Detached Home Sale

Let’s look at a real-world example from Mississauga in early 2025.

• Property Type: Detached 4-bed, 3-bath home in Erin Mills

• Sale Price: $1,295,000 (March 2025)

• Traditional Commission: 5% = $64,750

• Reduced Commission: 2.5% = $32,375

• Total Savings: $32,375

“We weren’t sure at first, but after listing with a reduced commission brokerage, we got multiple offers within a week. The experience was seamless—and we saved over $30,000.”
– Raj & Amrita S., Mississauga homeowners

This case isn’t unique. As of Q1 2025, nearly 1 in 4 sellers in the GTA have chosen reduced commission models, according to a report by the Toronto Regional Real Estate Board (TRREB).

Comparison Table: Standard vs. Reduced Commission

Even a modest reduction in commission adds up significantly especially in markets where homes are priced above $1 million.

5 Common Myths About Reduced Commission – Debunked

Myth #1: You Get What You Pay For

Truth: Many reduced commission agents offer the same full-service features as traditional brokerages. It’s the business model—not the service—that’s different.

Myth #2: Your Home Will Sell for Less

Truth: According to TRREB’s 2024 stats, homes sold through reduced commission brokerages in the GTA had an average sale-to-list price ratio of 99.1%—nearly identical to traditional brokerages.

Myth #3: Buyers’ Agents Will Avoid Your Listing

Truth: Listings still offer competitive co-op commissions to buyer agents (e.g., 2.5%), making them equally attractive on the MLS®.

Myth #4: Reduced Commission Means No Marketing

Truth: Most reduced commission firms still include MLS®, social media, digital advertising, and professional media sometimes à la carte.

Myth #5: It’s Only for Cheap Homes

Truth: In fact, the higher your home price, the more you benefit from a lower commission rate. Sellers of million-dollar homes save tens of thousands.

Benefits and Limitations of Reduced Commission Brokerages

Current Trends Affecting Commission Models (2025–2026)

1. The NAR Settlement Ripple Effect

While the National Association of REALTORS® settlement in the U.S. doesn’t directly apply in Canada, it has sparked greater awareness among Canadian consumers about commission structures. Many sellers are more inquisitive about how fees are structured and what value they’re getting in return.

2. Bank of Canada Rate Policy

As of June 2025, the BoC benchmark rate sits at 4.25%, down from the peak of 5% in 2023. This easing has reinvigorated the spring housing market, with buyers returning and multiple offers re-emerging in key suburbs like Vaughan and Oakville.

In a competitive market, sellers don’t always need to spend top dollar on commission to get top dollar offers.

3. Increased Digital-First Selling

With more buyers relying on online searches and virtual tours, the power of digital marketing has increased, levelling the playing field between boutique reduced-fee brokerages and traditional agencies.

Smart Questions to Ask Reduced Commission Agents

Before you sign on, make sure your reduced commission agent is the real deal. Ask:

1. What exactly is included in your service package?

2. How do you market properties—MLS®, social, email, staging?

3. What is your average days-on-market compared to city average?

4. How do you handle offer negotiations and counter-offers?

5. Do you offer support with legal paperwork and closing?

6. Can I speak to past clients or see reviews?

7. What’s your co-op commission offered to buyer agents?

A reputable reduced commission agent will answer these confidently and show you recent results.

Final Thoughts

Choosing a reduced real estate commission model is a smart, data-backed way to save on commission without cutting corners on service.

Whether you’re planning to sell your home in Toronto, Mississauga, Brampton, or Richmond Hill, today’s real estate landscape offers more choice and flexibility than ever before. The key is knowing which brokerage offers genuine value and which ones just offer “discounts.”