How much do Realtors make in BC

The Competition Act of Canada and how it relates to Real Estate agent commissions

The amount Real Estate agents can earn is a difficult question to answer as there is no “standard” rate of commission.  The Federal Competition Act was legislated and put into effect as of December of 2000.  The primary function of this statute law is to allow small and mediums sized businesses an opportunity to compete with each other on an even playing field.  This means:

• A licensed Realtor can charge a:  Flat Fee of any amount, A percentage of the entire amount, or a split percentage on a portion of the sale price.  A brokerage is prohibited from demanding that a trading services representative charge a specific amount for the services performed.  For example, if a Real Estate Brokerage were to enact a policy stating commission is set at 5% of the total selling price, this would be a violation of the Competition Act.
• This can sometimes be frustrating for licensed Realtors who work with Discount Brokers who offer a flat low fee to perform trading services.  There are inherent costs to becoming licensed as a Realtor, as well as ongoing operating, marketing, and promotional costs associated with the profession.  However, the Real Estate Council of BC (RECBC) has made it clear that licensed representatives must comply with the Competition Act.
• Real Estate brokerages cannot geographically section off specific zones that the Realtor is allowed to do business in.  For example, if the brokerage were to give a Realtor the City North Zone and another Realtor the City East Zone, this would be in violation of the Competition Act of Canada.

How to calculate Realtor commissions

In this article, we will examine 3 random listings and the stated commissions on each of these listings.  We can then make our own determination as to how much a Realtor will typically earn on a single transaction.  To maintain privacy, we have removed the addresses and locations of these listings.  However, these are real-life homes that have been sold or are active on the market today.

How to calculate the Listing Realtor’s commission

The listing Realtor is responsible for setting the overall commission that is to be paid by the seller.  This will be the total amount that is then shared with the Realtor who is representing the buyers of the property.  It’s important to note that the listing Realtor has the ability to allocate more of the commission towards their end of the transaction.  Or, to split the commission 50/50 with the buyer’s agent.
 

Example #1 |  How much do Realtors make in BC:  A beautiful Townhouse listed in the FraserValley sold for $750,000 

 
In this example, we will examine a random townhouse listing located in the Fraser Valley.  For this example, the unit has sold for $750,000.  At the bottom left of this screenshot, we can see [3% 1ST $100,000 / 1.15% BAL].  So what does this mean?  Let’s do some math!
 

With a sold price of $750,000:

• 3% of the first 1,00,000 of $750,000 would be $3,000 for the buyer’s Realtor, paid by the seller
• 1.15 on the balance would be $650,000 x 0.0115  = $7,475.00
• $3,000 + 7,475 = $10,475 (commission paid to the buyer’s Realtor)

If the listing agent split the commission 50/50 with the buyers Real Estate agent, then the total commission would be payable would be around $20,950.00 CAD
 

Example #2 | How much do Realtors make in BC:  A beautiful Apartment / Condo listed in North Vancouver sold for $1,200,000

 
In this example, we will examine an Apartment / Condo listing located in North Vancouver to see how much a Realtor would make.  For this example, the unit has sold for $1,200,000.  At the bottom left of this screenshot, we can see [3.22% 1ST $100,000 / 1.15% BAL].  So what does this mean?

With a sold price of $1,200,000:

• 3.22% of the first 1,00,000 of $1,200,000 would be $3,220 for the buyers Realtor to be paid by the seller
• 1.15 on the balance would be $
• $1,100,000 x 0.0115  = $12,650.00
• $3,000 + 12,650.00 = $15,870.00 (commission paid to the buyer’s Realtor)

If the listing agent split the commission 50/50 with the buyers Real Estate agent, then the total commission would be payable would be around $31,740.00 CAD
 

Key Takeaways

In our first example, the commission payable to the buyer’s agent was $10,475.00.  In theory, if a BC Realtor were to sell a similar Townhouse each and every month then $10,475.00 x 12 = $125,700 per year.  Not bad.  And what if a Realtor were to sell a similar condo in North Vancouver as we have in the second example?  Well then that would be $15,870.00 x 12 = $190,440.00 for the year

How realistic are these examples?

When a Realtor first obtains his or her license, it can be difficult to obtain the first client.  Real Estate agents can go several months without closing their first deal.  However, there are those that apply themselves and can push their professional branding to their target market.  When this happens the potential earnings for a licensed Realtor in BC can be well over a million dollars a year.  
 

Take note of start-up costs

The process of getting licensed can be expensive, time-consuming, and difficult.  Having a good tutor study guide program can help you get past the first hurdles.  However, finding a mentor for post-licensing can be one of the best ways to solidify your career in Real Estate.  To get into the Real Estate business in BC, you will need to have at least $5,000 of starting capital.
 

Why do you want to be a Realtor?

Often times aspiring Realtors will watch a TV show where people are loving properties or listing properties for a profit.  There is much more to the job than what can be seen on popular television shows.  Most people will want to be in the business for the possibility of earning a lucrative living.  And while this is a very important aspect of the job, ask yourself the following questions:

• Do I like working with people?
• Am I good with conflict resolution under times of pressure
• If things get tight, do I have a side-job or enough saved up to weather the difficult times
• Am I comfortable posting on social media, taking pictures & marketing my brand
• Since the hours are flexible, you might be working on a job late into the night.  Is that okay with you and your lifestyle?
• Do I have a clean, trusted, and reliable mode of transportation
• Can you speak with confidence, research, and read complex strata documents, listing contracts and vendor take-back mortgages

If you have the passion to help others find their dream home, becoming a licensed Realtor might just be for you!  Remember to do your due diligence and fully examine if this career path is a right fit for you and your family.  One of the best ways to do this is by reaching out to an existing Real Estate agent.  Ask them what their experience has been like and get their feedback before committing to obtaining your Real Estate License in BC.