There’s a lot of TV shows that make a career in real estate look like a get rich fast scheme. It can be a very exciting career with earning potential that can reach six or even seven figures with a little luck and a lot of get up and go. However, it’s important to remember there’s a lot involved in the breakdown of the money earned, not to mention that your salary will come from the commission. Here we take a look at what real estate agents actually earn to help you get a better idea of what your income will look like.
THE AVERAGE INCOME
First, let’s take a look at what is reported to be the average salary. We looked at Indeed.ca as our resource because they update their average salaries on a regular basis. As of October 2019, the average annual salary for a Canadian real estate agent was reported at $106,239. That is a pretty respectable salary compared to the average income for Canadians which sits at about $70,860. However, there is a lot more to consider so let’s dig a little deeper.
AVERAGE HOME PRICE AND COMMISSION
The average price for a home in the GTA in September 2019 was $843,115. So, this is a good number to use when calculating how much an agent would make on commission. The seller’s agent usually gets 2.5% of the selling price. That means the average commission earned for a home in Toronto would work out to $21,077.88. That is impressive.
HOW MUCH DOES THE AGENT GET?
Although this is a neat little sum, real estate agents must work for a broker in Ontario. This is because the broker has to manage many of the legal aspects of a transaction including maintaining the trust accounts for Buyer deposits. They also provide all kinds of important administrative services for agents and their clients such as reception, setting up appointments, assisting with marketing and more. Because of this, agents have to pay out some of their commission to cover these services.
Now that these fees are taken care of, now what? Where do you get your clients? What happens when clients start asking you questions you may not have the answers to? Who will help you post your first listing? Who will help you with your first offer? Who can provide high quality, professional marketing, and advertising?
In the GTA, you can join OnlyWith.ca. Our team does not have desk fees but rather a fair commission split we give our realtors. The only upfront cost is a DocuSign Account, which is mandatory to join the team. Onlywith.ca is part of Right at Home Realty Inc., a brokerage that offers a very competitive commission structure.
The amount paid out varies from brokerage to brokerage. Some brokers might request a flat rate per transaction, while others might request a percentage of the commission. This can be as high as 30% or more. It appears the average amount paid to a broker is about 15 to 20%. Some brokers also charge what is called a “desk fee.” This is required every month whether a house is sold or not.
In the case above, using the lower end at 15%, an agent would owe the broker about $3,161 per sale.
CALCULATING OTHER EXPENSES
There are other expenses a real estate agent is faced with that comes out of their income. Of course, this includes taxes which would average 25 to 30% of their earnings. All Canadians pay taxes, so this is not a special situation. However, this does take another chunk out of their commission.
Common expenses a real estate agent has to consider would include:
Realtor fees and insurance
Transportation-related expenses such as a presentable vehicle to take clients around, insurance, gas, parking, etc.
Data and internet
Home office supplies and equipment including a computer and probably a laptop or tablet
Marketing for each property
Listing preparation costs
All of these things add up.
AVERAGE HOMES SOLD
If you’re wondering how many homes you can hope to sell, this is a very uncertain number. Even the Toronto Real Estate Board doesn’t share those numbers. However, Real Estate Magazine (REM) tries to assist with the reality of sales for an agent.
First, they reported that 34.6% of Toronto realtors didn’t make a single sale and 51.3% made a single sale based on 2017 numbers. So, if you were one of the people that made a single sale your salary in 2017 would have been about $17,000. However, although there are a little over 50,000 agents in Toronto, this doesn’t mean all of these realtors are active.
A 2017 BREAKDOWN
Looking at REM’s numbers, they describe the salary based on four house sales in 2017 would look something like this:
The average earned by four houses sold in 2017 would equal $2,985,716
The average commission was 2.5% which equals $74,642.90
Based on the average 20% broker payment the agent receives $59,714.32
Less professional fees to professional associations the number is $55,714.32
Continuing education deductions bring the number down to $54,214.32
Average expenses reduce the number to $44,214.32 (gross so taxes are still owed)
That’s still a respectable salary considering it was work for selling just four houses, but it’s not quite as much as one might hope to make. So, what are the average number of sales per agent looking like?
AVERAGE NUMBER OF SALES PER AGENT
According to REM, 30.3% of Toronto agents sold four or more homes in 2017 so you can definitely get your numbers up there. However, they also report only 10% sold 10 or more and of course that number drops the higher the number of sales gets.
THE SECRET TO SUCCESS
The secret to success is to hit the ground running. Finding the right brokerage and/or team to work for will increase your income and help fuel your sales. For example, at OnlyWith.ca we offer the following to our real estate agents:
No upfront costs or fees ( you will need your own DocuSign account)
100% commission is yours for all your existing client's earnings
Exceptional leads in your area
Start closing 10 deals monthly
No hidden fees or catches
With the right support and limited fees, you’re already ahead of the game. All it takes is your own enthusiasm and drive to succeed. You can outdo the averages and start carving out your own path to big earnings.
If you’re interested in joining the Only With team, we’d love to hear from you. No experience is necessary (experience is welcomed) as we provide the necessary training and support, and learnings around negotiation and sales skills. You need basic TORONTO MLS Skills and have a DocuSign account. You must have all your schooling done and be energetic and ambitious with a positive attitude. Click here to apply today.