Realtor Commissions and Where they Go

The public often has the misconception that Realtor Fees are extremely high and have no idea where the funds go that they pay out as commission. The following will outline where the commission paid on the sale of your home goes. 
First off, the commission is typically split between two Brokerages (the Buyers Agent and the Sellers Agent),  then, internally between the Brokerage and the Agent involved in the transaction. This of course is depending on what sort of split there is between the Agent and the company that he or she works for, or has their licence held by as an independent contractor. After this split, Revenue Canada now gets involved. As an Agent (contractor) to the brokerage, we are responsible for all of our own taxes and deductions.
So you can see, using an example only: If you pay 7 percent on the first 100k and 3% on the balance, as a Seller, and if the split is 50% to each corporation, using an example of $300,000 as the sale price. that would be total commission, plus GST equaling $13,000. Yes, I agree that looks like a big number.
Divide the $13,000. by two Brokerages and that equals $6,500 to each Brokerage. Now if the Agent is on say a 60 / 40 split with the Broker that means that $3,900 goes to the Agent and $2,600 to the Broker. Now, out of the Agents portion of $3900 they have to pay the government for personal taxes and deductions. Out of this they also must pay for office rent, their car, maintenance, insurance, gasoline, annual licensing fees (which are large), annual training, and all their related office expenses including but not limited to: a computer, a fax machine, a photocopier, a printer (often more than one), cell phones, data plans, mobile internet sticks, pagers, laptops, software, digital cameras, virtual tours, marketing materials, MLS Fees, postage, advertising, web sites, paper, printer ink, toner cartridges, admin staff, and answering services, etc. All of this and I haven't fed my family or paid my mortgage yet.

Usually you pay no money to a Realtor up front, so the agent fields all the expenses from his/her own pocket, often over a period of months, until such time as a pay cheque arrives, often many months after the purchase or sale has closed. For example: you buy or sell a house in April with an August possession date.The agent can look forward to getting paid sometime in September, and must budget accordingly.
I hope this gives you a better understanding of where the Fees charged by Realtor's go
Chris