In Toronto’s hot real estate market, everyone wants to
be an agent
The Globe and Mail
05 November 2015
Not long ago, real estate broker Jeffrey Joseph was having lunch with a
friend at an elegant downtown hotel. The server must have overhead
parts of the conversation, Mr. Joseph says, because as he was wrapping
up the bill, she sought his advice on becoming a real estate agent.
Soon after that encounter, Mr. Joseph handed his business card to a tow
truck driver who was towing one of the family cars to a garage for
repair. The driver was also planning a move into real estate.
“Real estate is on the lips of everyone more than any other subject at
every social gathering,” Mr. Joseph says, so he’s never surprised when
people raise the subject. And while he’s happy to provide some guidance
after working in the industry since 1968, he is sometimes amazed at how
many people are segueing into the business.
With the Toronto Real Estate Board predicting that the Greater Toronto
Area will tally a record 100,000 transactions this year, and with the
average deal approaching $600,000, the busiest agents are undoubtedly
able to afford to keep the shine on their luxury SUVs.
That’s one reason the number of agents has also soared to a record in
Toronto – with more than 42,000 licensed at last count, according to
In the 416, where the average detached house changes hands at above
$1-million, a 5-per-cent commission sits at $50,000.
As house prices soar, so too does the number of buyers and sellers
complaining about the cut that goes to agents. There are endless tales
of houses that sell with hordes of competing offers in a week or less.
Some agents have taken to Twitter to defend the commissions they make
and to itemize the brokerage fees and other expenses that take a big
chunk out of commissions.
John Pasalis, president of Realosophy Realty Inc., says there is
sometimes a perception among consumers that agents are making easy
“I think that’s everyone’s fantasy – I’m going to go into real estate
and double-end a sale of a million dollar house,” he says of deals
where the agent represents the buyer and the seller. Typically,
commissions are split between the two sides.
“It’s a harder life than I think most
But those transactions are very rare, he says. Instead, agents with
long-established businesses are vying for each listing. People see the
business booming, he adds, but in fact it’s more difficult these days
to make a living because the competition is so much more intense and
consumers have so many options. They’re also very knowledgeable. “It’s
brutally hard. You’re competing with four to five people. It’s a harder
life than I think most people think.”
While most agents starting out rely on their family and friends for
those first listings, that strategy doesn’t take them very far. “Most
of my friends probably know two or three other agents.”
Mr. Pasalis points out that roughly 57 per cent of TREB realtors sell
three or fewer houses a year. A sale price of $550,000 produces an
average commission for the buying and selling agents of $13,750 each.
Agents recording six sales a year might make $82,500 before expenses,
which can lower their gross income to between $60,000 and $75,000.
Mr. Pasalis says about one-third of registered agents don’t sell
anything, while those who become wealthy are usually in the top 1 or 2
Those with marquee names likely spend $10,000 a month on billboards,
along with photographers, stagers, brochures and even vases of
fresh-cut flowers. “Their overhead is big.”
Mr. Pasalis’s firm typically offers a commission of 4 per cent instead
of 5 per cent, so clients don’t haggle, he says; agents who charge 5
per cent will sometimes shave a small amount off of their rates to win
business, he adds. The agents charging full freight are often paying
for staging as part of their fee, he points out, so their expenses are
Mr. Pasalis will pay for a consultation with a stager but not all of
the expenses of sprucing a place up.
He adds that agents who stay in the business for the long haul have to
expand their networks through referrals and lengthy presentations to
potential new clients. “People underestimate the sales side of it.”
Mr. Joseph says he was selling cars on the showroom floor for his
father at the age of 17. He learned the importance of making
connections with people and staying in touch. “Some people don’t like
to make phone calls to people they don’t know. They have to get over
But Mr. Joseph says putting clients into houses and condos is a very
different process from selling cars and other merchandise. “Because
every house is one of a kind, it has to sell itself. We sell the value.”
If the house doesn’t feel right to a buyer, he says, you have to find
one that does. The expertise comes from understanding the client and
what trade-offs they might be willing to accept for the price. “They
have to want to buy it. We can’t sell it to them.”
Mr. Joseph, who specializes in neighbourhoods from Bloor Street to
Highway 401, says trying to estimate how much any agent makes from the
business is difficult because there are so many variables. Typically,
the higher the price range they work in, the fewer transactions they
Some agents post eye-popping sales tallies on their websites but often
those agents have a team of up to 10 or 15 people pooling their
listings. Those new to the business will join a team for the brand
recognition of a star agent and the veteran’s sales numbers will be
David Fleming, an agent with Bosley Real Estate Ltd., says some people
are attracted to the business because they have a genuine passion, but
others have poured in as real estate has been glorified by television.
Barriers to entry are low, he adds.
He says statistics from a data analysis company show that, of 42,825
agents, 41 per cent – or 17,536 – record zero or one transaction in a
“At the end of the day, just because you have a business card with your
name on it, doesn’t mean you’re in the business. You actually have to
Mr. Fleming says he routinely works 75 hours a week but he does
encounter part-time agents who seem to think that they can work six or
eight hours a week. In his Toronto Realty blog, he cites one example
where he submitted a low-ball offer on behalf of a buyer as a way to
launch negotiations. The seller’s agent never answered his phone before
5 p.m. so Mr. Fleming suspected he also had a day job. Still, he was
shocked when the agent agreed to the deal without pushing to see if
more money was on the table. “They’re very easy for me as an
experienced agent to take advantage of.”
While some properties sell quickly with multiple offers, many do not.
This week, he was on day seven of a negotiation in which he represents
the seller. His strategy is to stay cool and wait out the buyer’s agent.
“I know that the only way to get the best price for my seller is with
the long game. Every time they call me instead of my calling them, I
know I’ve got a little more leverage. If it takes two weeks, I’m on
board for that.”