Why Your Realtor Costs So Much

People think Realtors are ballers.  They drive nice cars, wear nice jewellery and are selling million dollar houses, right?  We’re not as wealthy as you think.  The average Realtor in Canada does 5 – 6 deals per year and their average income is around $30,000 – $40,000.  After reading “Why Your Dentist Costs So Much”, I felt like I should write a similar article on Realtors.

Brokerage/Board Fees:  Realtors need to be attached to a Reing al Estate Brokerage to be a Realtor.  Real Estate Brokerages are running a business and they get their revenue through their Realtors.  Some have monthly “desk” fees which is just the fee of being part of their brokerage.  Some have commission splits.  Some have one or the other and some have a combination of both.  Most of the popular brokerages have a commission split with their Realtors.  If the commission is $5000, Realtors don’t pocket $5000.  The splits can range from 50/50 – 100/0.  Realtors also belong to a real estate board and so they have to pay membership dues just like dentists, nurses and doctors are members of their national associations and have to pay member dues.

Car Fees:  I don’t know any Realtor who takes the bus for work.  It’s not surprising to see Realtors putting 30,000+ kms/yr in their car.  Hence, they use a lot of gas and car maintenance happens more frequently than not.  Although it’s not mandatory to drive an expensive European car as a Realtor, it’s got to be a decent, well maintained, presentable car, so no beaters.  Many Realtors lease or finance their cars because part of it can be written off as business expense.  So vehicle fees add up.

Marketing Fees;  It’s not free to put your listing MLS.  Not only that, but many Realtors use print media advertising or advertise on local newspapers to get their listing sold and those fees stack up really fast.  Additional mandatory marketing fees include business cards, open house signs, for sale signs, website hosting, website design, logo design, videography and photography of your listings, open house brochures, etc…

Overhead/Admin Fees:  There are the basic administrative tools that most Realtors use:  high speed internet, laptop, tablet, expensive smartphone + smartphone plan w lots of unlimited minutes/data and printer/scanner.  Also, if Realtors are really successful, they tend to have team members assisting them, so Realtors have to pay them a wage, whether it be a salary or commission split, or a combination of both.

At the end of the day, you get what you pay for.  Buying or selling a home is probably the largest financial transaction you’ll ever have to make.  Do your homework and interview Realtors and choose accordingly.  I’ll write next time about how I would choose a Realtor.

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