Realtors not getting rich
Resales Top 100 Billion Dollars
Garry Marr, Financial Post
The value of existing-home sales cracked $100-billion last year for the first time, but realtors maintain they are not getting rich in a real estate market that continues to set records.
The real estate community says housing statistics have to be taken in the context of an industry that has seen its commissions squeezed at the same time as the pool of real estate agents continues to grow — leaving them with a smaller slice of a growing pie.
“There’s another crop of real estate agents in the industry each year,” said Phil Soper, chief executive of Brookfield Real Estate Services Fund. “There’s nothing like adding a few thousand agents to cut the return you’ll get.”
The Canadian Real Estate Association said yesterday there was $118.3-billion in sales in Canada’s top 25 markets in 2007, a 19.6% jump from a year earlier. Given the average commission is about 5% or less, that leaves about $5.915-billion in commissions to be split among the country’s approximate 96,000 agents, or about $61,600 per agent.
Mr. Soper said the number of agents is not growing as fast as the market, adding that much of the increased profit is ending up in the pockets of the star agents. He said the typical realtor in Toronto at a high-profile firm might have annual gross earnings of $140,000 but keeps only about 60% of that once expenses are calculated.
Statistics from the Canadian Real Estate Association show 1% of its members had annual income of $600,000 in 2006. About one-third of the industry made $75,000 to $150,000, and that does not include expenses.
“A lot of people come into the real estate industry thinking it’s an easy way to earn a living. In fact, it favours the hard-working and the organized,” Mr. Soper said.
“There is a lot of turnover at the low end or entry-level part of the industry,” Mr. Soper said.
Like the real estate market, the industry has grown. As of Sept. 30, the association had 95,995 members, up from 88,131 a year earlier.
Don Lawby, chief executive of Century 21 Canada, said commissions range between 4.7% and 5%, varying across the country. A decade ago, he said, they were in the 6% to 7% range.
“There is pressure on commissions. It’s not: ‘Prices are up and everybody is making more money,’ ” Mr. Lawby said.
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