Not all plain sailing for realtors
Newcomers, especially, find it tough to make money in competitive industry
TORONTO — Dave Hamilton was looking for a get-rich-quick scheme when he got his real estate agent’s licence in 2010.
“My dad always said: ‘If you’re going to sell something, sell something expensive,’ ” the Torontonian said.
“I have a cousin who sells cars and I know what he makes per car. You can make a lot more than that per house.”
But Hamilton quickly realized that selling homes was a lot more work than he had anticipated.
After closing about half a dozen deals in his first year, Hamilton took on a part-time job at a bar, where he worked for several years before returning to the real estate industry on a full-time basis last year.
Today, Hamilton is a sales representative at the Condo Store Realty Inc. In the first months of this year, he has closed about 50 deals.
But many real estate agents are not so lucky, he said.
As Toronto house prices have risen, so has the number of people looking to make easy money by selling real estate.
There are just shy of 80,000 realtors licensed to practise in the province, according to the Real Estate Council of Ontario, up more than 26 per cent compared with five years ago, when there were nearly 63,000 agents.
In Toronto, there are 48,000 realtors who belong to the city’s real estate board — up from 34,000 in 2012, according to the Toronto Real Estate Board.
Part of the incentive is the low barrier to entry, Hamilton said. It takes just six months and costs about $2,500 to get your real estate licence, making it a tempting side hustle.
Realtors caution, however, that newcomers expecting to rake in big bucks without expending much effort are likely to be disappointed.
“It’s a very, very tough time to get into the market for a lot of realtors,” said Shawn Zigelstein, a sales representative with Royal LePage Your Community Realty.
“Yes, people are trying to capitalize. They say: ‘Oh, I’m going to go get my real estate licence, make myself a ton of money and walk away.’ But they don’t realize that 90 per cent of the business is done by 10 per cent of the agents.”
Eugene Mezini, a broker with Royal LePage Real Estate Professionals, said it is typically relationships that give established realtors an edge.
For instance, in the pre-construction condo space where Mezini has worked for seven years, developers typically have a roster of agents they enlist whenever they have properties hitting the market.
“There are a lot more agents than when I joined, but it’s not really a lot more competition from what I’ve seen,” Mezini said.
“It’s still the same people doing all the business and getting bigger and bigger. It’s not like their market share is eroding. Their market share is actually growing.”
Although a hot market can seem like a blessing for agents, who are paid a commission based on the selling price, Hamilton said in some ways it is tougher.
Representing a buyer in today’s fiercely competitive market, where bidding wars abound, requires much more work than it did previously, Hamilton said. An agent might have to prepare numerous unsuccessful offers before finally helping a client to snag a home.
In addition, the commission — typically five per cent of the selling price — is split between the buyer’s agent and the seller’s agent, and many realtors pay a portion of their commissions to their brokerages.
Zigelstein’s advice for those considering a career in the real estate industry is to go at it full-time. That’s what Zigelstein did 13 years ago, when he got his real estate licence, quit his job in the restaurant industry and went knocking on doors.
“It is very difficult to break in if you’re working a full-time job and then you say: ‘I’m going to do real estate on the side,’ ” Zigelstein said.
“Because at that point, how professional are you going to be? How knowledgeable are you going to be? Especially with market conditions that we’re seeing right now.”