Thursday, 29 May 2014
Are There Too Many Real Estate Agents?
The number are astonishing. For the Toronto Real Estate Board, there are nearly 40,000 real estate agents int this city this year. To put that into perspective. That is 1 real estate agent for every 140 Torontonians, twice as many as ten years ago. Four thousand more than last year. If you are looking for a way to not feeling special in this city, become a real estate agent.
So, the question has to be: Why are there so many?
The number one reason: There is a public perception out there that selling real estate is easy money. If you have a winning personality and half a brain, you can be rich and self-employed. There is a belief that any one can do it. But the same stats that show us just how many real estate agents there are here in the city also tell us that a great proportion of the Toronto real estate agents are not making this easy money. I'm sure some may be surprised to find out that almost 27% of all agents in Toronto have not done a single sale last year. To put that into perspective, they are paying their yearly dues, thousands of dollars, to the Canadian Real Estate Board, the Real Estate Council of Ontario, the Ontario Real Estate Board and the Toronto Real Estate Board, and not making a dime. In fact, two thirds of all agents in Toronto have done less than three deals in a year. Of course, people at the top do much better than this, but still the median salary for a real estate agent right now in Toronto is less than miminum wage.
The other shocking statistic: 71% of all real estate agents on the Toronto Real Estate Board are part time. That means that most real estate agents have another job beit a fireman, a part-time teacher or they just don't clock in enough deals to be considered full time.
If you are someone who wants to buy or sell a house or condo, you should find these stats concerning, to say the least. If you are dealing with a salesperson that has less than three transactions a year, then you are dealing with someone who has cultivated little expertise. Now, I know we have all been there. We've all had to start somewhere. And I personally think it's important to support new real estate salespersons as they learn, but it's another thing to have most agents in this city with such limited experience. And I see this on a daily basis. Salespersons who do not know how to write up a deal, who don't understand the conditions I have included. Real estate salespersons who price something incorrectly or market something poorly.
The inexperienced work force does not only come from those salespersons who think they can make easy money and have it as a part-time career. The Ontario Real Estate Council, who provides the educational framework to become a real estate salesperson, also makes it very easy to obtain this real estate salesperson designation. Tougher than the old days, but still fairly easy. The more real estate salespersons there are, the more money OREA makes from providing the educational courses.
Even though it's not a bad idea at all, I don't want to be that guy who says it should be tougher to become a real estate salesperson by increasing the standards of education. A lot of what I learned, I learned from buying and selling property. And if most agents are not turning over more than three transactions a year then I would think the learning curve doesn't curve very much. There is simply not enough opportunity to learn for many.
So, what does this mean for those of us who are not real estate salespersons? For the consumer, make sure you do your homework on your salesperson. Ideally, you would seek out someone who has some skills and some experience, works well with your personality, and who is, most importantly, full time in their career. If you want to give your cousin or best friend a chance who has just become a real estate agent, maybe have him or her work with someone more experienced on the transaction. As for part-time agents, I don't know if they can be as effective as a full time one. Would you prefer a part-time doctor over a full-time one? I think with any profession, whether you're a brain surgeon or a tambourine player, full time will make you better at your job.