The average real estate agent in Canada makes between 3% to 7% of the house price, but some negotiating tactics can be used to increase the rate. As for the total salary, a real estate agent earns about $40,000 each year on average for the seller’s or the buyer’s agent.
Other sources of income include incentives, a car or motorbike, or other benefits from their agency. Having a second job as a full-time real estate agent is also possible, although this requires time management skills.
The Real Estate Agent Paycheck
Canadian realtors get paid commission rates based on the final selling price of the home they sold it for. These rates may vary from one province to another but still fall between the 3 to 7% commission rate.
For instance, provinces such as Ontario set rates at a flat rate of 5%, while other regions such as BC or Alberta have a tiered rate, set at 7% for the first $100,000 they earn, and will then be notched down to 3% after they surpass the $100,000-in-home-sales mark.
The median real estate agent’s income is approximately $46,211 in Canada. However, some provinces may have significantly higher median income, such as Newfoundland and Labrador at over $61,000, followed by British Columbia at over $54,300.
The total commission rate and the amount will be split between the listing agent (seller’s agent) and the buying agent in each house sale.
Though buyer agents typically get a larger share due to the time and energy it takes to get the job done, the rate will usually be split evenly between the two agents. If the total commission rate earned from a house sale from Alberta is 7%, then both the buying agent and the listing agent will get 3.5% of the house price sold.
How much does a real estate agent earn in Canada?
The Canadian Real Estate Association estimates that there will be about 682,900 homes to be sold in the year, with a national mean price tag of $677,775 per home. Here is the income breakdown for the average real estate agent in Canada.
Let’s assume the average realtor gets the average flat commission rate at 5% (as most provinces in Canada do), and the split will be 50-50 between the buying and listing agent (2.5% each). That said, each agent will earn $16,944 (pre-tax).
After-tax deductions (30% from income earned), the net income per agent would be $11,860 per home sold. The total annual earnings per agent would depend on how many home transactions they can complete.
Some top agents can get up to 50 sold homes, bringing an annual net income of about $593,000; the top 10% typically sell about 10 houses, bringing an annual net income of $118,600. However, this is not the case for most real estate agents; most get as little as one home sale or none.
It is a tough market, but any real estate agent can get to the top with the right attitude and resources.
How much do typical realtors in Canada earn?
The Government of Canada’s Job Bank indicated that Canada’s typical real estate agent makes anywhere between $24,000 and $135,000, with the median income at $46,212.
According to a recent survey by the Canadian Real Estate Association (CREA), real estate agents in Ontario make the most money in Canada, followed by those in British Columbia.
Out-of-pocket expenses for realtors
Like any self-employed professional, real estate agents are responsible for their costs. Here are the most common expenses:
CREA fees
The Canadian Real Estate Association collects fees from agents and brokers to cover various costs associated with the profession. These include access to the MLS, liability insurance, and legal support.
Education and training
Realtors are required to complete continuing education courses or risk losing their licenses. This means they must pay for training, travel, and time away from work.
Local real estate board fees
If there’s a local board in your area, expect to join it and pay annual dues. This can be a significant amount of money in some areas, such as Toronto.
Marketing and ads expense
Agents often have significant marketing costs because they’re responsible for bringing in their own business. Depending on their budget and the type of clients they target, they might advertise online or in print publications or sponsor community events.
They may also host open houses and food and produce printed materials such as brochures.
Insurance premiums
Realtors in Canada typically have to buy health insurance coverage (although this can vary by province).
Taxing system
In Canada, most real estate salespersons are self-employed. This means that they can keep 100% of their sales commissions. However, realtors should also pay for their taxes and other expenses related to their business.
The general rule of thumb is that real estate agents would have to give a 30% cut from their total personal income earned (for self-employed). If they work under a real estate brokerage, the tax rate will vary from one province to another.
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