There’s a prevailing misconception about the earnings of real estate agents in Toronto. They often face criticism for their commissions, but the reality is far more complex. While some agents achieve substantial success, it’s essential to understand the real estate agent's salary and what they actually take home.
Understanding Commission Breakdown
When you sell a home or condo in Toronto, the standard commission is around 5%. This amount is split equally between your agent and the buyer’s agent, meaning each gets about 2.5%. For example, on a $1,146,254 home sale (Toronto’s average as of June 2022), the agent's cut is approximately $28,656.
Hidden Costs and Agent Expenses
New agents are often shocked by the fees they must pay just to practice. There are annual fees to associations like OREA/CREA and TREB, bi-annual fees to RECO, and mandatory insurance costs. Additionally, agents must work under a brokerage, which charges various fees per transaction and monthly desk fees.
Association Fees:
- Ontario Real Estate Association (OREA)
- Canadian Real Estate Association (CREA)
- Toronto Real Estate Board (TREB)
- Real Estate Council of Ontario (RECO)
Brokerage Fees:
- Monthly desk fees
- Per transaction fees
- Commission splits
Breaking Down Commissions: The Real Take-Home Pay
Despite the $28,656 commission from our example, agents must pay significant transaction fees:
- Brokerage deal fee (5%): $1,433
- Desk fee: $875
- Broker split (40%): $11,462
Total Transaction Fees Owed: $13,770
Operational and Marketing Expenses
Agents also reinvest much of their commission to cover overhead and marketing costs:
Operational Expenses:
- Car payments, gas, insurance, parking
- Phone/internet
- Computer/office supplies
Marketing Expenses:
- Cleaning: $250-$500
- Photography: $500
- Staging: $2,000-$5,000
- Movers for staging: $500
- Marketing campaigns: $100-$1,000
Marketing is a crucial aspect of a real estate agent’s job. High-quality staging and professional photography can significantly enhance the appeal of a property, potentially leading to a quicker sale at a higher price. The investment in marketing varies with the type of property; a high-end home may require a more substantial marketing budget compared to a modest condo.
Priceless Expenses: The Time and Effort
Beyond the tangible expenses, the time and effort a real estate agent invests are substantial. Here’s a general outline of the steps that need to occur to sell your Toronto home:
- Initial Site Visit
- Current Market Analysis
- Pricing Strategy
- Listing Preparation
- Open House
- Negotiating Offers
- Listing Paperwork
Some agents do this all themselves, single-handedly. Others, like the Pierre Carapetian Group, have a team that works together to execute the listing successfully. Their process includes a team of five different people and a quality control check before your listing hits the market.
Average Real Estate Agent Salary in Toronto
To understand the average salary of a real estate agent in Toronto, let’s consider the transaction frequency. Based on a 2017 report, most agents (50.3%) do only one or fewer transactions per year:
- 34% of them did zero transactions
- 10% of them did ten or more transactions
- 2.5% of them did twenty or more transactions
- 0.3% of them did fifty or more transactions – this is where you’ll find top-performing groups like the Pierre Carapetian Group
So if you’re wondering what the average realtor salary in Toronto is, let’s base this on a realtor who has had ten transactions in a year — because we wouldn’t recommend you work with an agent who has fewer transactions than that!
Using Toronto’s average home price of $1,146,254 a real estate agent commission of 2.5% would be $28,656.
$28,656 x 10 transactions = $286,560 gross earnings
Now let’s factor in the expenses involved:
- Real Estate Fees (3%): $8,596.8
- Transaction Fees (49%): $140,414
- Operational Expenses (6%): $17,193
- Marketing Expenses (8%): $22,925*
Net Salary: $97,432
*Marketing expenses here are based on 5 transactions, supposing that 5 transactions were buyers and 5 were sellers.
Conclusion: The Real Earnings
Real estate agents in Toronto often earn only about 34% of their gross salary after expenses. This is before taxes, making the profession financially challenging. However, successful agents build a reputation through exceptional service and strategic reinvestment.
Your Agent Matters
When you work with Pierre, you’re working with an agent who falls into the top 0.3% of Toronto realtors who do fifty or more transactions per year. Pierre has earned his success in the Toronto real estate market by having his clients’ best interests at heart.
If he wouldn’t buy it, he’ll tell you. It’s through this honest approach that he’s built a loyal client base.
As an avid investor himself, he understands a good return on investment which is why he chooses to reinvest part of his salary into building his own marketing, creative, and administrative team to ensure that his clients get the highest level of service.
Beyond that, his expertise in the Toronto real estate market is proven in his custom pricing strategy and his client returns speak for themselves. When it comes to the Toronto real estate market, make sure you are working with the best.
