You’re considering a career in real estate. For many people like yourself, this has proven to be a very rewarding choice. And it could be for you, too.
Salespeople in Ontario must be employed by a registered real estate brokerage. Compensation plans and the level of support provided to new salespeople will vary from brokerage to brokerage.
Find out what will work best for your situation by seeking out real estate brokerages and registrants and using their knowledge and advice to help you make good choices. Do your homework and select the brokerage that will do the most to support your career goals.
Look at the big picture
As a real estate professional, you may earn a six-digit income... or you may work for months or years with limited financial success. In either case, one financial fact is certain: it will take some time, maybe a long time, before you receive your first commission.
Regardless of the brokerage that employs you, compensation is usually based on a commission structure – and commission plans can vary, depending on the number of properties sold or leased. Your earnings can also be affected by area, property type, local market conditions, and specific brokerage policies.
The income received from a particular transaction is typically subject to the number of brokerages and salespeople involved in the transaction. For example, if a salesperson lists and sells a property, the commission is paid to the brokerage and then splits the amount with the salesperson. Some brokerages pay an extremely high percentage of the total commission to the salesperson; however, that salesperson typically must pay monthly fees to the brokerage regardless of whether commissions are earned.
Get the help you need
Even though compensation plans may be broadly the same across the industry, they do differ – and so do brokerage management styles. It’s a good idea to survey a number of brokerages to find the one that best suits and supports your career goals.
Predicting your income can also be difficult. Real estate earnings are typically related to personal sales ability and people skills. You’ll probably need several years of experience before you can accurately predict your income levels. But for starters, it’s a good idea to seek out the advice and counsel of experienced real estate professionals.
Assess your personal finances
It may take quite a while to receive your first commission. The time lag may be three/four months or more (longer for commercial properties) before you get paid. First, a property is listed, and goes through the process of being shown to interested buyers.Then, an agreement is drafted, fulfilling any conditions and notifications. Finally, a closing date is set – typically 30 to 60 days later. Your commission is paid on closing.
Any business venture takes a while to get off the ground. The same will likely be true of your real estate career. As a consequence, it’s only prudent that you have sufficient capital available to be financially independent for at least six months. The best advice: your personal goals may take a while to reach and you can’t predict the future with total accuracy, so be financially prepared before you embark on your career.
Set a budget
Set a realistic budget to get you through your educational and early career-building process. Base it on these typical areas of expense.
There are course costs, of course – but they are just part of the total investment required for salesperson registration in Ontario. Remember that you will not be able to earn any commission until you are registered with the Real Estate Council of Ontario. Time delays must be considered. Once you complete the Pre-registration courses and obtain salesperson registration, several months may pass before commissions are earned and several more before they are actually received. In addition, you must pay RECO a two-year salesperson registration fee along with the mandatory insurance program premium. If you do not remit the required fees, there is no monetary penalty – you just won’t get registered.
Approximately 85 per cent of registrants in Ontario are members of local real estate boards. Real estate board dues vary throughout the province. Salespeople may also be responsible for other board services fees. Contact the local board for more information. Click here to view Ontario Real Estate Boards.
In addition, brokerages may hold salespeople accountable for advertising and/or other costs associated with the real estate profession, such as telephone calls, paging services, administration fees relating to listings and transactions, and photocopy/fax services. So here is another reminder to investigate the costs and services you will encounter at different real estate brokerages.
There are other expenses to consider as well, including vehicle operation and maintenance, personal attire, computer equipment, and electronic communication devices.
Make sound financial decisions and invest in yourself
Every profession has initial and ongoing fees – real estate is no exception. Budget wisely and carefully as you start your career and at every step along the way. Invest a portion of every dollar you earn in ongoing professional requirements, continuing education, and other career enhancements.