Is a Career in Real Estate Realistic?
By Joe Issid
Monster Contributing Writer
Being a successful realtor does not necessarily mean that you need to plaster your face across city buses or park benches. Nor does it mean that you have to be a grizzled chain-smoker from a David Mamet screenplay. Furthermore, it is certainly not a last resort career because you have exhausted all other options that don’t involve back-breaking labour. While we all may have certain misapprehensions about what being a realtor entails, it is undoubtedly a viable profession with a great deal to offer a very large cross-section of Canadians. But, like any career path, it shouldn’t be regarded lightly and anyone looking to possibly make the transition into this field needs to be aware of some of the potential pros and cons. Here are a few:
As someone who has been self-employed for large periods throughout my career, I can safely say that I regard this as an enormous benefit. However, many people are not built for the potential volatility and sheer unpredictability of going it alone. With no guaranteed income or benefits packages (realtors operate exclusively on a commission basis), being out on your own can be a daunting prospect. However, the flexibility and autonomy that comes with the turf can be very strong motivators. There is tremendous room to be enterprising and entrepreneurial as a realtor and there is a great deal of up-side for those who fully invest in themselves.
“The long-term rise in residential real estate prices, particularly in Canada's large cities, has benefited real estate agents and brokers,” according to Statistics Canada. Real estate professionals saw a 2.5% increase in weekly earnings from January 2014 to January 2015. But what does this mean in real terms? The average weekly income rose to $938 in 2015, which represents an average annual salary of roughly $50,000. However, real estate can often be a feast or famine proposition. Your average realtor will earn said $50,000 through a very small volume of transactions, which can be very luring to outside observers. However, it is no small feat to sell a property. Often, realtors can go months (even years) between sales, so earning potential is often tied to a very small series of events.
Low commitment and barrier to entry
Becoming a licensed realtor varies from province to province. However, the universal similarity is that there is a very low barrier to entry. Typically, only a basic level of formal education is required and a written realtor’s exam is needed to become a licensed broker. Additionally, there is also a very low level of commitment required to remain a realtor. In some cases, people get their realtor’s license as a back-up to their existing careers. Personally, I have several friends who are licensed realtors but who work in completely unrelated fields. Should the opportunity to assist in a sale arise, they are more than happy to earn a commission on the side.
As of March 2015, the Canadian Real Estate Association represents more than 109,000 realtors working within Canada. According to the Financial Post, this means that there is one realtor for every 245 Canadians over the age of 19. And nowhere is this more evident than in Toronto: the Toronto Real Estate Board represent 39,000 brokers, one for every 140 people that live in the GTA. But why such large numbers? According to Service Canada, this is due to a number of factors: “These changes stem from the situation in the housing resale market, the adaptation of income to market fluctuations and the extent that electronic communication tools are used.” With the prevalence of web sites such as Realtor.ca and Centris.ca, being a realtor certainly requires a lot less leg work than in previous years. Combined with a low barrier to entry and low commitment to remain licensed, it is clear why more and more people are heading in this direction.
According to the Canadian Real Estate Association, “the Canadian housing remains balanced…the national sales-to-new listings ratio was 52.2 per cent in February. With sales up and new listings down, this marked an increase from 50.4 per cent in January. A sales-to-new listings ratio between 40 and 60 per cent is generally consistent with balanced housing market conditions.” Additionally, with interest rates remaining low, the capacity for borrowing in the country remains high, providing favorable conditions for those willing to make the investment. According to Service Canada, “Undoubtedly, the economy has an impact on the housing resale market, but, more specifically, fluctuations depend on interest rates, demographics, employment increase and the vacancy rate of rental housing units.”
Naturally, those with sales and/or marketing backgrounds tend to fare well in the real estate world. However, there are immeasurable attributes that make a good realtor and several factors that can dictate the relative success or failure of those willing to take the plunge. While it is undoubtedly a very competitive field, the barriers to entry remain low and the medium-term outlook for the industry remain positive.