In: Real Estate News12 Jan 2011
There are certainly some advantages and disadvantages to becoming a real estate agent. Being a real estate agent generally means that you are working for yourself (although you must belong to a brokerage), which means that you don’t really have a boss or set hours. However, the majority of real estate agents in Ontario work on 100% commission basis and they pay for all their expenses as well.
If you are considering becoming a real estate agent in Ontario here is a break down of the costs involved:
$1430 – Course fees that are paid to the Ontario Real Estate College (OREA) to complete the 3 courses required to obtain your real estate license.
$330 – Real Estate Council of Ontario (RECO) Insurance
$350 – Real Estate Council of Ontario (RECO) Registration Fee
$1,430 + $330 + $350 = $2,110
So $2,110 is the cost to get your real estate license in Ontario.
However, there other costs as well. You will need to join a real estate board and maintain your license:
$860 are the Fees for the Toronto Real Estate Board.
$430 are the CREA and OREA fees.
Sub Total # 2:
$2,110 + $860 + $430 = $3,400
So now $3,400 is the amount that you have paid to get your license and join the Toronto Real Estate Board.
However, there are more costs as well. You might want to join a large branded real estate brokerage.
Many high profile real estate brokerages actually charge their agents a desk fee that can range from anywhere to $100 per month up to $1,500 a month. We often here from agents that they pay approximately $18,000 a year in desk fees. For this example we can assume $500 a month for desk fees: $6,000 a year
Sub Total # 3:
$6,000 + $3,400 = $9,400
However, there are also more on going costs. So in addition to the $9,400 that a real estate agent has spent at the end of year one, agents also need to take ongoing courses to maintain their license.
You must complete 3 courses within your first 2 years of obtaining your license. $1,120 is the cost for these courses. Also don’t forget that the RECO Fees, TREB Fees, CREA & OREA Fees, and Brokage fees are all paid on a yearly basis. This means that most agents need to pay more than $10,000 a year just to go to work!
Now don’t forget that they also pay for their own cell phones, internet, computer, car, gas and all other daily expenses.
But most people say that agents make big bucks selling homes and they earn those big commissions, right! Well there are 90,000 agents in Canada and they sell 400,000 homes (2 sides of each sale). This is 9 “deals” per agent. If the average commission is $15,000 split between 2 agents and 2 brokerages, then we can assume that agents make about $5,000 per deal. So the average agent is making $45,000 and paying $10,000 to $20,000 in expenses. These numbers, of course, are averages and some agents make a lot of money and some agents make no money.
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