Home Selling and the Common Law of Business Balance

The Common Law of Business Balance is a commentary on price written by John Ruskin — influential author, essayist, poet, and artist in the Victorian and Edwardian eras. His commentary on price versus value reads as follows:

John Ruskin“It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money — that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot — it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better.”

Now apply this to selling your home with a REALTOR®. If you’ve done your homework before listing your home then you will have met with more than one REALTOR® and listened to what each had to say about how they would approach selling your home in a timely fashion and how their plan would serve to get you the best price, terms, and conditions. Presumably your conversation with each REALTOR® at some point shifted to a discussion about commissions (at least it should have). As with anything in life, it is important to know what it will cost you for the services provided and exactly what those services will include — hence the use of written service agreements in real estate in Alberta (e.g. the Listing Contract).

In the Edmonton area it is common to hear the words “7 and 3” in reference to real estate commissions. What does that mean? It means it will cost you as the home seller 7% on the first $100,000 and 3% on the balance of the final sale price to have a REALTOR® sell your home for you. For example, if the final sale price of your home is $300,000 then you can expect to pay $13,000 in REALTOR® fees (plus Stephen Harper’s cut at 5% on $13,000). This amount is typically shared 50/ 50 between the listing REALTOR® (i.e. yours) and the buyer’s REALTOR®.

IMPORTANT: Commissions are not ‘standard’ and are always negotiable. While it is common to hear “7 and 3” and is typical for many sellers to pay that amount, it is ultimately up to you and your REALTOR® to determine what it will cost you to sell your home.

Real Estate Council of AlbertaRECA has some great consumer information about how fees are calculated and general information to consider when choosing your REALTOR®. You can read it here. Not sure who RECA is? You can read my post here.

The takeaway from this post? You have to decide what works for you. It is up to you to determine who offers the best balance between services provided and the fees charged for said services. Just try to remain objective and avoid making it all about the dollars and cents.

To simplify — more often than not, we as consumers “get what we pay for”. Think of it this way: do you buy the cheap paper and hope your finger doesn’t poke through it or do you go with the brand with the kittens on it, knowing it costs a bit more but delivers as advertised?



  1. […] whole tribunal reminds me of a post I wrote several years ago entitled “Home Selling and the Common Law of Business Balance”. The takeaway of that post was that it’s up to each of us as consumers to determine who, in […]