Breaking Down Real Estate Commissions: What 5% Really Means for Penticton Sellers

Understanding What You’re Paying For

When it comes to selling your home in Penticton, one of the most frequent questions sellers ask is, “What does that 5% commission actually cover?” It’s an understandable question after all, when you’re dealing with one of your largest assets, you want clarity on where every dollar goes.

While many people assume that real estate commissions are purely profit, the truth is more nuanced. Realtor commissions are a carefully balanced structure that covers marketing, expertise, administration, and professional risk all aimed at ensuring your property sells quickly and for top dollar.

Let’s break down exactly what that 5% (or any commission rate) truly represents for Penticton homeowners.

What Does a 5% Commission Actually Mean?

In British Columbia, commission rates are not regulated and are always negotiable. That said, many local transactions in the Okanagan region fall close to the “5% average” once you consider the common tiered structure such as 7% on the first $100,000 and 2.5% on the balance.

To make this concrete, let’s use an example:

If your home sells for $800,000, a 5% commission equals $40,000 before taxes. While that might seem substantial, here’s the reality most people don’t see — that amount is split between:

• The listing agent (your representative)

• The buyer’s agent (who brings the buyer)

• Their respective brokerages

• And numerous marketing and operational expenses

By the time the transaction closes, the agent’s net earnings reflect not just their work on that one sale, but also their marketing investments, risk exposure, and ongoing support to clients before, during, and after the transaction.

Why Realtor Fees Vary

Every realtor structures their business differently. Some focus on high-volume transactions, others on luxury marketing, and some on specialized property types such as farms, acreages, or waterfront homes.

A 5% commission might include:

• Professional photography and video production

• Virtual tours, drone footage, and 3D walk-throughs

• Social media and Google ad campaigns

• REALTOR.ca, MLS®, and global syndication

• Staging consultations or light design upgrades

• Open houses, broker tours, and private showings

Each of these services costs time and money to execute properly but they directly impact your final sale price. High-quality marketing attracts serious buyers and ensures your property stands out from the hundreds of listings across Penticton, Naramata, Summerland, and the South Okanagan.

What Happens When You Pay Less?

There’s a saying in real estate: “You get what you pay for.”

Discount commissions or flat-fee listings may seem appealing upfront, but they often come with hidden trade-offs: reduced exposure, fewer showings, limited negotiation support, and slower sales.

A strong realtor doesn’t just put your home online they position it strategically. That includes knowing how to price in different Penticton neighbourhoods, what types of buyers are currently active, and how to craft marketing that resonates with their motivations.

In other words, you’re paying for both experience and strategy.

Commission Split: Where Does the Money Go?

Let’s say your $800,000 home sells with a 5% commission. That $40,000 might break down roughly as follows:

• 50% ($20,000) to the buyer’s side (agent + brokerage)

• 50% ($20,000) to the listing side (agent + brokerage)

From the listing side’s $20,000:

• Brokerage fees, typically 10%–30%, are deducted

• Marketing costs, often $1,500–$3,000 per listing, are absorbed

• Insurance, licensing, and transaction fees are covered

• Personal taxes apply after all expenses

In the end, the agent’s take-home might be closer to $8,000–$10,000 for a transaction that may have required dozens of hours of preparation, marketing, client communication, and negotiation.

The Hidden Work Realtors Do

Behind every successful sale lies an enormous amount of unseen work from market analysis and compliance to emotional support and problem-solving.

A full-service REALTOR® in Penticton typically handles:

• Comparative Market Analyses (CMAs) to determine accurate pricing

• Professional listing photography and ad copywriting

• Scheduling and hosting of private and public showings

• Buyer qualification and screening

• Offer presentation and negotiation strategy

• Legal documentation and conveyance coordination

• Managing inspection results and conditions removal

• Coordinating closing with lawyers, lenders, and buyers

This process can stretch over weeks or months and your realtor only gets paid once the deal closes.

Why 5% Still Makes Sense

Real estate is one of the few industries where professionals are compensated only upon successful performance. That creates a built-in alignment of interests: your agent’s success depends entirely on your success.

While 5% may sound like a standard, it’s better understood as a value benchmark. When you hire a results-driven realtor, that commission funds not just marketing, but representation, strategy, and protection throughout the entire process.

In the context of a $700,000–$900,000 home — which is common in the Penticton market even a 1–2% improvement in your final sale price can more than offset the cost of hiring a top professional.

Local Insight: The Penticton Advantage

Every market behaves differently. In Penticton and the greater South Okanagan, where lifestyle, recreation, and seasonal appeal play huge roles, presentation and timing are everything.

A realtor who understands how to capture the Okanagan lifestyle highlighting lake views, vineyards, outdoor living, and community can directly increase buyer interest and perceived value. That’s why commission should never be viewed as an expense, but rather as an investment in exposure and confidence.

At My Property Central Real Estate Group, we believe that every listing deserves a personalized approach. Through eXp Realty’s global network and data-driven marketing, your home gains visibility not just across Penticton, but throughout Canada and beyond.

The Takeaway

Commission isn’t about percentage it’s about performance. A professional REALTOR® earns their fee through strategy, marketing, negotiation, and trust.

When you choose to work with a committed agent, you’re not just hiring someone to list your property you’re partnering with a professional who ensures your sale is smooth, profitable, and protected every step of the way.

Ready to Connect?

If you’re thinking about buying, selling, or joining a forward-thinking real estate team, I’d love to connect.
I’m Riccardo (Rico) Manazza, REALTOR® with eXp Realty | South Okanagan, and part of the My Property Central Real Estate Group helping clients and agents succeed across Penticton, Oliver, Osoyoos, and beyond.

💬 Reach out anytime:
📞 Call or text: 236-457-4230
📧 Email: rico@mypropertycentral.ca
🌐 Website: www.riccardomanazza.realtor
🏡 Explore more lifestyle stories: livingintheokanagan.ca
🤝 Team & listings: mypropertycentral.ca
📅 Book a meeting: Book A Call with Rico

Let’s Stay Connected

If you enjoyed this article or want to stay in touch with what’s happening in the South Okanagan real estate market, let’s connect online:

📸 Instagram: @riccardo_manazza_exp-realty
📘 Facebook: @riccardo.manazza.exp
💼 LinkedIn: Riccardo (Rico) Manazza

Follow for weekly market updates, behind-the-scenes insights, and tips from one of the Most dedicated REALTORS® in the Okanagan with eXp Realty and the My Property Central Real Estate Group.

 For immediate assistance or to schedule a showing, contact my assistant (available 24/7) at 236-500-6778.

Disclaimer

This article is for informational purposes only and should not be considered financial or legal advice. Eligibility criteria and program details are subject to change. Always consult with a qualified mortgage professional and licensed REALTOR® for the most current information