A sold sign in front of homes in the Riverside South neighbourhood of Ottawa on Aug. 30, 2024. (Patrick Doyle/The Canadian Press)
Earlier this year, Mehrdad Khayeri purchased his dream home in the Greater Toronto Area, and with it, a pleasant surprise: nearly $35,000 in cashback. This was part of a deal he negotiated with his real estate agent, who returned a portion of the commission after the sale.
Khayeri and his wife took an active role in finding the properties they were interested in, utilizing online tools like House Sigma and MLS. "The agents are actually doing maybe less work now with all these resources available," he explained. His agent still earned a standard 2.5% commission, but three-quarters of that fee was returned to Khayeri as part of the cashback agreement. This trend is becoming more common as buyers seek ways to offset the high costs of purchasing a home, especially as housing prices have risen significantly in recent years.
Mehrdad Khayeri scored thousands of dollars back from his home purchase after he negotiated a cashback agreement with his real estate agent. (Oliver Walters/CBC News)
In Canada, it’s typical for the seller to cover the commission fees for both the buyer’s and seller’s agents. However, some agents are now offering cashback rebates to homebuyers as an incentive, which effectively reduces the overall cost of buying a home. In cities like Toronto and Vancouver, where average home prices exceed $1 million, these rebates can amount to significant savings.
Alex Kvitnitsky, a real estate agent with the firm Justo, offers up to 50% of his commission to clients. He believes the rebate helps clients with additional costs like land transfer tax, legal fees, or renovations. Kvitnitsky’s approach has proved effective, attracting a wide range of clients from first-time buyers to seasoned investors. He attributes this success to the fact that buyers are increasingly taking an active role in their home search, conducting their own research, and often coming to him with specific properties in mind.
As the real estate industry continues to evolve, so too do commission structures. While commission rates vary across the country, they are not set in stone, and many buyers are now questioning the need for traditional, higher commission fees. Tom Davidoff, a real estate expert at the University of British Columbia, describes cashback rebates as beneficial for consumers, noting that the rising commission fees are often not justified by the level of service provided. However, he also cautions that while cashback deals can be advantageous, buyers should still carefully evaluate an agent’s experience and reputation before committing.
For those considering a cashback agreement, due diligence is key. "I'd want to check how many transactions they have taken care of in the past year. If they have a lot of experience, I don't think there's anything wrong with it," Davidoff advised.
The trend is also gaining traction among agents offering alternative models. Mike Zhou, a 26-year-old agent in the GTA, runs his own brokerage, Robin Hood Properties, and offers a flat fee structure along with cashback to clients. His approach, which is more hands-off and tech-oriented, is popular among buyers who prefer to manage their own search. However, he acknowledges that this style may not suit everyone, especially those who need more guidance through the process.
Jenny Korotkyi, a mortgage agent in Barrie, Ontario, has used agents who offer cashback rebates with great success, saving tens of thousands of dollars on her property purchases. She recommends that clients get any cashback agreement in writing to ensure transparency.
Khayeri, who saved a substantial amount through his cashback arrangement, echoed that he had no regrets about the deal, confident that the process worked in his favor. As real estate practices continue to shift, it seems that cashback rebates are becoming an attractive option for savvy homebuyers looking to save on their biggest purchase.
