How Cashback Rebates on Real Estate Commissions Can Help Homebuyers Save Thousands

When Greater Toronto Area homebuyer Mehrdad Khayeri purchased his dream home this year, he gained an extra bonus — nearly $35,000 in cashback. By negotiating a cashback agreement with his real estate agent, Khayeri was able to secure a major rebate on commission fees.

Khayeri and his wife put in significant effort by using online tools like House Sigma and MLS to find listings, reducing the agent’s role. Although the agent earned a 2.5% commission on the sale, they returned about three-quarters of that fee to Khayeri. As housing prices soar, this type of cashback arrangement is growing in popularity among buyers who seek to reduce high commission costs.

Changing Real Estate Roles

In Canada, sellers generally pay the commission for both the buying and selling agents. Some agents, however, are now offering cashback rebates to buyers, effectively discounting the total purchase price.

For instance, agents in high-priced markets like Vancouver and Toronto, where average home prices exceed $1 million, are seeing cashback agreements become valuable savings tools. Alex Kvitnitsky of brokerage firm Justo gives clients up to 50% of his commission back, which can be used for land transfer taxes, legal fees, or renovations.

With more homebuyers doing their own research, real estate agents are adjusting fees to accommodate this trend. Kvitnitsky noted, “Buyers today are very savvy, wanting to be part of the process.”

Evolving Commission Practices

Real estate commission rates vary widely across Canada, but negotiating commissions is becoming more common as buyers recognize that industry standards are flexible. Tom Davidoff, a real estate strategy professor at the University of British Columbia, calls cashback rebates consumer-friendly and encourages homebuyers to negotiate fees.

Though some agents argue that lower commissions could impact service quality, Davidoff believes such resistance may stem from self-preservation. He emphasizes that experienced agents can still add significant value but recommends homebuyers thoroughly vet agents offering rebates. “Check their transaction history,” he advised, adding that experience is essential.

Innovative Commission Models

In the Greater Toronto Area, real estate agent Mike Zhou launched Robin Hood Properties with a flat-fee model. Charging $5,000 plus per-showing and per-offer fees, Zhou gives the remaining commission back to the buyer. Zhou’s hands-off approach appeals to tech-savvy clients who can manage property searches themselves.

This model may not be ideal for everyone, but it highlights how commission structures are evolving to meet buyers’ needs.

Ensuring Transparency and Savings

For homebuyers interested in cashback agents, mortgage agent Jenny Korotkyi suggests getting agreements in writing to avoid misunderstandings. Korotkyi, who saved $20,000 on a recent home purchase, notes that even smaller rebates, like $6,000 on a condo, can make a difference.

As Khayeri remarked, “This is the biggest purchase you’ll make, so being informed and saving on commission is beneficial.”

For more homebuyers, cashback rebates are a practical way to reduce real estate costs while navigating today’s competitive market.