Breaking Down Income – How Much Does a Real Estate Agent Make in Ontario?

The likelihood is that a real estate agent assisting you in the buying or selling process if you’re in the market for a property. They thrive on the commissions you pay to them, which brings us to question how much does a real estate agent make in Ontario per sale? This guide will shed light on the earning methodologies of the agents. 

Real Estate Agents Earning on Commission Based Model

In Ontario, real estate agents make money on commission basis, meaning that the number of houses they assist buy or sell determines how much money they make. Agents who are paid on a commission basis have autonomy over their earnings, but in the event that they don’t close any deals, they won’t receive a base pay. The percentage of the sale price of a property that goes towards agent’s commission is what determines the commission rate for each province so will determine how much does a real estate agent make in Ontario per sale. 

For instance, commission rates in Alberta are tiered, with 7% on the first $100,000 and 3% on the remaining amount, whereas in Ontario they are typically set at 5% of the selling price of a Toronto pre construction condo. 

In contrast to the flat fee % found in all other provinces, residences with a greater selling price in British Columbia, Alberta, and Saskatchewan have a lower total commission due to their tiered commission structure.

How Does the Commission Based Model Work?

The listing agent, who represents the seller, receives the commission first. The buyer’s agent then receives a portion of the commission from the listing agent. Since the seller is paying the buyer agent for introducing them to a buyer and assisting in the sale of their home, this is known as a “cooperative commission”. After that, each agent will provide their brokerage a portion of their commission. Typically, the brokerage receives 30% of the agent’s compensation. 

Real estate brokerages handle the day-to-day management of the business, including agent training and correct transaction completion.

Real Estate Agent Making Money Per Sale

Typically, the buying agent and the listing agent split the commission 50/50. In Ontario, the real estate  agent will make about 2.5 percent on  per sale. 

What is the Commission Paid to Real Estate Agents for Pre Construction Condos?

Pre-construction rates normally fall between three and four percent. For pre construction condos, several agencies provide cashback incentives.

The Commission Rate is Determined By Whom?

The commission rate is not formally governed by any rules or regulations. The kind, rate, and fee of each agent’s commission can be customized. The commission will differ from agent to agent, but it will generally approximate the average commission in the region. Commissions on real estate are negotiable. The contract you sign when hiring an agent will contain information concerning your agent’s commission.

Does the Real Estate Agent Make Money as of Salary?

In Ontario, it’s unlikely for an ordinary agent to make more than $100,000 annually. The Job Bank wage data published by the Government of Canada states that real estate agents in Ontario typically make between $24,173 and $134,783, with a median income of $46,212. That pays a lot less than the six-figure salary mentioned above, and the reason for that is that different agents perform better in sales than others.

How Much a Real Estate Agent is Likely to Make in Ontario?

Through 37 local real estate boards, including the Toronto Regional Real Estate Board, the Mississauga Real Estate Board, the Ottawa Real Estate Board, and the REALTORS Association of Hamilton-Burlington, the Ontario Real Estate Association (OREA) represents 79,000 real estate brokers and real estate agents (salespeople). 

There were 26,191 sales of homes in Ontario in June 2021, with an average price of $857,754. In contrast, 152,840 sales were made in the first half of 2021, or 25,473 sales per month. Real estate agents would have made about 50,000 more transaction opportunities each month as a result.

In Ontario, where there are 79,000 registered realtors, each realtor completes roughly 0.66 deals each month. This equates to approximately 8 deals annually, which is significantly more than the typical Toronto real estate agent’s less than 7 transactions annually.

A 2.5% commission with an average sold price of $857,754 would come to $21,443, or $15,010, after being divided with their brokerage at a 30% brokerage fee. If eight purchases were made annually, the average would be $120,080. 

An Ontario real estate agent will make  around $120,080 a year if they sell the typical number of properties in Ontario at the typical price of a pre constructed condo in Ontario. With the exception of Windsor-Sarnia, the Northeast (Sudbury, Timmins, and North Bay), and the Northwest (Thunder Bay), the Government of Canada assesses job prospects for real estate brokers as favorable throughout the majority of Ontario. The employment outlook in these areas is deemed to be reasonable.

For Real Estate Agents – How Does the Tax Apply?

We have decoded, how much does a real estate agent make in Ontario. Income tax is due on commission income for agents. Whether an agent works for a real estate company or independently, their tax situation varies. In Canada, about 30% of agents work by themselves. Commissions from real estate agents are subject to personal income taxation rather than corporate income taxation. While real estate salespeople cannot incorporate in some areas, like Ontario, they can still tangentially reduce their taxes by using techniques like setting up a management business to channel their revenue through.

Want to know more about such details of the Real Estate Agency? Or interested in becoming a full time/part real estate agent. Speak to us for better insights!

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