Ask what the standard real estate commission is in Alberta and you will get a number. Ask where that number comes from and the answer gets vague, because there is no rule behind it. The Real Estate Act Rules, which govern every licensed brokerage in this province, do not set a commission rate. They never mention one.
That is worth establishing properly rather than asserting, because it is the single thing most people get wrong about commission here.
There is no standard rate, and this is checkable
The Real Estate Act Rules run to roughly 187,000 characters. We searched the complete text for every phrasing a prescribed rate could take: "7%", "3%", "5%", "commission rate", "rate of commission", "schedule of fees", "schedule of commission" and "tariff". Every one of those searches returns nothing.
The Rules have a great deal to say about commission. They govern how it is agreed, how it must be documented, who may pay it, who may receive it, how it is handled when two brokerages share it and what happens to it in a trust account. What they never do is say what it should be.
So when someone tells you a rate is "standard", they are describing what is common, not what is required. Those are different claims, and only one of them is binding on you.
You will see one structure quoted more than any other in this market: 7 per cent on the first $100,000 of the sale price, then 3 per cent on the balance. It is a real convention and you will meet it. It is not a rule, no body endorses it, and we are not going to tell you how common it is, because we have no source that would support a number.
What the Rules do require
The terms go in writing, before anything else
Rule 43(2)(b)(viii) requires the written service agreement to set out "the amount or method of calculating the remuneration or alternate compensation to be paid and the circumstances on which it will be payable".
Two useful things follow from that wording. "Method of calculating" is explicitly allowed, which means a flat fee, a tiered structure and a straight percentage all sit equally within the Rules. Nothing pushes a brokerage toward a percentage except habit.
The second half matters more and gets read less. "The circumstances on which it will be payable" means the question of when commission becomes owed is itself a negotiated term. Whether it is payable on an unconditional offer, on possession, or if you withdraw the property, is written into your agreement rather than fixed by law. If you read one clause closely, read that one.
Rule 43(2)(c) requires any amendment or addition to be in writing and signed by the relevant parties. Rule 43(3) requires the brokerage to give you a copy of the agreement, and of any amendment, immediately on signature. A commission term agreed verbally after the fact is not how this is supposed to work.
You are contracting with a brokerage, not with a person
Rule 54(1)(b) and (c) prohibit an individual associate from paying or accepting commission, referral fees or other remuneration except through the brokerage they are registered with. Rule 50(c) sets the same boundary from the other side: a brokerage may pay commission only to its own registered licensees, to another licensed brokerage including one outside Alberta, or to a qualified auctioneer.
This is why the brokerage name has to appear on everything, which Rule 49(b) requires. The agent you meet is the person you will work with. The brokerage is who you are contracting with, and who is accountable.
Rebates and cashback are permitted, with conditions
Alberta allows a brokerage to give money back. Rule 54(1)(d) permits incentives provided that the incentive is "provided by and on behalf of the brokerage" the licensee is registered with, so an individual agent cannot run their own side offer.
Rule 54(1)(e) adds the condition that makes these offers safe to accept. An inducement requires that, at the time it is made, the licensee delivers a signed written statement "clearly setting out all the details of the inducement", signed by the licensee and by any other person involved.
If an offer of money back is real, it comes with paperwork at the time it is offered. If it arrives as a verbal promise to sort something out at closing, that is not what the Rules contemplate.
Referral fees are money you are not seeing in the commission line
Rule 45(1) requires that when a licensee refers you to another licensee or any service provider, and knows they may be entitled to a referral fee, remuneration or benefit for doing so, they must disclose in writing both that they passed on your details and that they may be paid for it. Rule 45(2) requires them to keep a copy.
This belongs in a conversation about commission even though it is not part of the commission. When you are referred to a lender, an inspector or a lawyer, your agent may be paid for that referral, and the Rules give you a written right to know. Most pages about commission do not mention it at all.
Your deposit and their commission are separate money
Rule 96 prohibits a brokerage from paying its own office expenses, or commission owed to its own brokers and associates, out of an account holding money in trust. Trust money is not a place a brokerage can draw its pay from.
Where two brokerages share a commission, Rule 97(3)(b) requires the other brokerage's share to be paid immediately from trust directly to that brokerage's own account. Rule 97(4) covers the case where a shared commission is not paid in full when due: the brokerages may split what was actually received as they agree, and failing agreement, the brokerage holding the money must immediately pay it into a lawyer's trust account until the matter is resolved.
What the commission actually buys
The Rules answer this too, and the answer is more concrete than the usual list of adjectives.
Rule 57 sets out what a brokerage in a sole agency relationship owes a seller: fiduciary duties of loyalty, confidentiality and full disclosure of conflicts of interest; to present all offers and counter-offers in a timely way even when the property is already under contract; to disclose material latent defects known to them; to keep the seller informed; and to advise the seller to get expert advice on matters of importance.
Rule 58 does the same for a buyer, and three of its obligations are worth knowing because buyers rarely realise they are owed them:
- Rule 58(h): to seek out and advise the buyer of available properties in the market area that may meet their requirements, including those listed with other brokerages and other available properties known to the licensee.
- Rule 58(n): to disclose to the buyer the existence and terms of any competing offers known to the licensee on a property the buyer is interested in.
- Rule 58(i): to take reasonable steps to discover relevant facts about any property the buyer is considering making an offer on.
Rule 58.1 confirms that a designated agent owes the same obligations as a licensee in a sole agency relationship, so the designated agency model most Alberta brokerages use does not reduce what you are owed.
Those are the duties attached to the fee. If you are comparing brokerages on price alone, this is the other half of the comparison, and it is the same for all of them.
Questions worth asking before you sign
- What is the amount, or the method of calculating it, and when does it become payable? Both belong in the agreement under Rule 43(2)(b)(viii).
- What happens if I withdraw the property, or if it does not sell within the term?
- How is the commission split with a buyer's brokerage, and what is offered to them?
- What is the term of the agreement, and how is it terminated?
- Will you be referring me to a lender, inspector or lawyer, and will you be paid for that referral?
- Is any incentive or rebate on offer, and can I have the written statement Rule 54(1)(e) requires?
Where we stand
Chabi is a licensed real estate brokerage, so this is our own fee we are writing about. We think the honest version is more useful than a pitch, so here is our position in one paragraph and then we will leave it.
We charge less than the convention quoted above, and we put the terms in writing up front as Rule 43 requires and any rebate in writing as Rule 54(1)(e) requires. We would rather you compared us against the duties in Rules 57 and 58 than against a number alone, because every brokerage owes those duties to its clients and the fee is the part that varies.
A note on the numbers you will see elsewhere
Commission is a taxable service, so GST applies on top of it. Confirm the amount in your agreement rather than relying on a calculator.
We have not published an average or typical commission for Calgary or for Alberta. We looked for a credible primary source for one and did not find it, and a number without a source is how the "standard rate" idea got started.
This article summarises the Real Estate Act Rules as they stood on the date below. It is general information, not legal advice, and it is not tax advice. For your own transaction, read your service agreement and get advice from a lawyer where the terms matter.