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How Much Do Real Estate Agents Make – Real estate agents in Canada are commission-based, meaning the amount they earn will depend on how many homes they sell or help buy. Having a commission-based salary means agents are in control of how much money they make, but it also doesn’t guarantee a base salary if they’re not making sales. Here’s how much real estate agents in Canada earn, in every province and major city.
A real estate agent’s commission-based salary is a percentage of the sale price of a home, with this commission rate differing by province. For example, commission rates in Ontario are usually 5% of the sale price of a home, while in Alberta the commission is graduated at 7% on the first $100,000 and 3% on the remaining amount. The tiered commission structure of British Columbia, Alberta and Saskatchewan results in a lower total commission for homes with a higher selling price than a flat commission percentage found in all other provinces.
How Much Do Real Estate Agents Make
The commission is first paid to the listing agent, who is the seller’s agent, who then gives a portion of the commission to the buyer’s agent. This is called a cooperation fee as the seller compensates the buyer agent for helping to sell their home by bringing a buyer to them. Each agent will then pay a share of their commission to their brokerage. The brokerage fee is usually 30% of the agent’s commission. Real estate brokers handle the general and day-to-day operations of the business, such as training agents and ensuring that transactions are completed accurately.
How Much Money Do Real Estate Agents Earn
The commission is usually split 50/50 between the listing agent and the buying agent. In Ontario, the listing agent would get 2.5% and the buying agent 2.5%.
The Canadian Real Estate Association (CREA) represents 135,000 real estate agents and brokers in Canada, and CREA predicts there will be 682,900 homes sold in Canada in 2021, with a national median price of $677,775.
A large number of provinces, ranging from Manitoba down to the Maritime provinces, have a fixed commission rate which is usually 5%. To calculate how much the average Canadian real estate agent will earn, assume that the commission is evenly split with 2.5% between the advertiser and the buying agents. With a commission of 2.5% and a national average home price of $677,775, the average commission on a home sold in Canada will be $16,944 per agent. The agent will only keep about 70% of that, for a net fee of $11,860.
There are 135,000 Canadian real estate agents and brokers and 682,900 homes sold annually. However, most real estate transactions involve two agents: one for the buyer and one for the seller. Evenly distributed, this means the average real estate agent would have just over 10 homes sold or bought per year.
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At $11,860 per home transaction and 10 transactions per year on average, this would give an annual commission salary of $118,600 per realtor. Of course, not all real estate agents will complete at least 10 transactions a year. In fact, Real Estate Magazine found that 51.3% of agents complete one or zero transactions per year, while only 10% of agents complete 10 or more transactions per year. This skews average earnings a bit, as there are many real estate agents who are only able to complete a few transactions or no transactions, while there are some top real estate agents who complete 50+ transactions a year.
The more profitable a real estate market is, the more competition it has from other real estate agents. This can be seen by the number of transactions per agent versus the average fee on a transaction. Ontario has a large number of agents relative to the number of homes sold, which means there are fewer transactions for each agent. This is offset by the higher average fee per transaction, aided by high home prices in Ontario. By comparison, real estate agents in New Brunswick and Saskatchewan may work on a large number of real estate transactions each year, but the fee for each is lower.
If you’re the average real estate agent, you won’t easily make more than $100,000 a year in Canada. According to the Government of Canada Job Bank Salary Report, real estate agents in Canada typically earn between $24,173 and $134,783, with the median income being $46,212. That’s well below the six-figure income found above, and that’s because not all real estate agents are equal in their sales performance.
In a field where your reputation and experience can help drive sales, it can be difficult for new real estate agents to acquire clients and close sales. There are also a significant number of agents who work part-time rather than full-time, or agents who sell homes as a side job while working full-time in another occupation.
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For example, you can be a part-time real estate agent who works weekends or evenings. You can work as little or as much as you like, but since your income is commission-based, you’ll at least have to put in an effort to make money. There are costs to being a real estate agent that can make it not worth becoming a real estate agent as a side job if you don’t expect your fees to cover your costs. These costs include the license registration fee, the cost of required education and training, exams, and insurance. This can cost thousands of dollars upfront. There are also costs that are recurring costs, such as renewal costs for your real estate license and real estate board membership fees for real estate agents.
The time it takes to get licensed can take up to a year, which means that becoming a licensed real estate agent isn’t something that happens overnight. For example, the Canadian Real Estate Association (CREA) has an annual membership fee of $310. Depending on your province, you’ll pay additional fees, such as if you’re a member of a provincial or municipal real estate board. In Ontario, the Ontario Real Estate Association costs $115 annually, while the Toronto Regional Real Estate Board (TRREB) has an annual fee of $859.65 for those looking to buy or sell in the Greater Toronto Area (GTA).
Other costs include the Real Estate Council of Ontario (RECO) semi-annual license renewal fee of $390 and mandatory errors and omissions insurance, consumer deposit insurance and commission protection insurance from RECO costs $475 a year.
In addition to paying thousands of dollars for tuition to meet education requirements, Ontario real estate agents will pay nearly $2,000 annually in registration and membership dues. While an agent will only need to complete one sale or transaction to recoup this annual fee, statistics show that most agents complete one or no transactions each year.
How Do Real Estate Agents Get Paid And How Much Do They Really Make?
Being a part-time real estate agent can be a surefire way to get into the industry. You can give it a try and see if real estate is right for you, but you still have another full-time job to fall back on. However, being a part-time agent has some disadvantages. You may not be able to be as responsive to your customers during the day when you’re at your full-time job, which can cause you to lose sales. You may not be able to juggle the requirements some home sellers or home buyers expect, such as timely responses and frequent showings. It can also be more difficult for part-time real estate agents to find a real estate agent willing to have you on their real estate team.
Becoming a full-time real estate agent opens up new doors and allows you to focus on your clients, but it will only make sense if you can expect to make a livable income. The tipping point is usually about six sales a year. If you’re able to make six or more transactions a year, becoming a full-time agent may be worth it.
Typically, buying agents earn more than listing agents per transaction based on how commissions are split. Many home sellers want to lower the cost of selling their home, which is why discount brokers might offer a lower commission for sellers, but this discount is taken out of the listing agent’s commission. The buyer agent will usually still be offered the full commission rate, which will help with the sale of the home. For example, if the total commission is 5%, the buyer’s agent might receive 2.5%, but the listing agent might accept a lower 1.5% commission. This can help attract sellers looking for a real estate agent who wants to save on commissions, but it doesn’t eliminate buying agents either.
However, being a buyer’s agent can require more effort than being a listing agent. When a homeowner uses a listing agent to sell theirs
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