Real estate brokers are indispensable experts when it comes to the purchase or sale of a house. But their expertise also comes with a price tag that can be quite controversial. In fact, the perception of a real estate broker's salary is often very much inaccurate.
Real estate brokers earn huge salaries… They are overpaid... They have luxury houses and cars... The commission requested is far too high... These are just a few of the false beliefs that need to be debunked!
To do this, let's explore the issue of real estate brokers' salaries in more detail. What is their commission rate? How much do they earn annually? What expenses must be deducted from their income? Read on to find the answers to all this and more.
How much is a real estate broker's commission?
First of all, let's start by saying that the real estate broker's commission is not set by law. Instead, compensation is based on free competition amongst industry experts, who can set the commission rate that suits them.
In Quebec, a real estate broker generally receives a commission of between 4% and 7% of the sale price of the property. The average rate is 5%. This can give way to large salary variations, as shown in the following table:
| 4% | 5% | 6% | 7% | |
|---|---|---|---|---|
|
$200,000 |
$8,000 |
$10,000 |
$12,000 |
$14,000 |
|
$300,000 |
$12,000 |
$15,000 |
$18,000 |
$21,000 |
|
$400,000 |
$16,000 |
$20,000 |
$24,000 |
$28,000 |
|
$500,000 |
$20,000 |
$25,000 |
$30,000 |
$35,000 |
To stand out from the competition, some real estate brokers offer rates as low as 2% or 3%. However, you should not expect the same services that you would receive if you'd paid a little more.
Fees to be deducted from the commission
Does this commission seem high to you? You're not alone in thinking this. Many people decide to sell their house without the help of a real estate broker specifically to avoid paying the commission amount.
But it is important to know that the amount received does not go directly into the pockets of the broker; quite the contrary! In addition to paying the broker themselves for their time and services, the commission is also used to cover many other costs, such as:
- The fee due to the firm for which he/she works, if any;
- Sales taxes on commission (GST/QST);
- Licensing, administrative fees and fees payable to the OACIQ;
- The rent of their office;
- Advertising costs;
- Photo-taking;
- Insurance premium;
- Etc.
And these fees are not just for the most seasoned experts. Those who are new to the industry and often have lower salaries must also cover these costs, which can easily run between $8,000 and $10,000. Just for the issuance of the license to practice, the expert will have to pay up to $2,500.
Who pays the real estate broker's commission?
During a real estate transaction, it is the seller who pays the real estate broker's commission. In fact, if both the buyer and the seller work with a broker, the commission will have to be split 50/50 between the experts. The real estate broker therefore does not receive the entire commission amount!
How much does a real estate broker earn per year?
This is not an easy question to answer. There are several factors that can affect a real estate broker's salary. These include commission rate, experience, network of contacts, hours spent working, and more. Nevertheless, let's try to pinpoint an answer.
According to the Job Bank of the Government of Canada, the annual salaries of real estate brokers in Quebec are as follows:
- Low: $38.46/hour
- Median: $57.69/hour
- High: $86.03/hour
These data were collected in December 2024.
On an annual basis, estimated at 40 hours per week, this would be approximately equivalent to:
- Low: $80,000/year
- Median: $120,000/year
- High: $179,000/year
According to other data, this time analyzed by Indeed, real estate brokers would earn an average of $117,000/year in the province in 2024. Those working in the Montreal and Laval regions would, however, have higher salaries.
A lower hourly wage than you might expect
In addition to the many fees that must be deducted from the commission amount, it should also be noted that a real estate broker generally works much more than 40 hours a week. They can be on the clock 50 to 60 hours a week, or even more, especially during their busiest periods. They invest a lot of time into their work for each of their clients, whether it's during the day, evening or even on weekends.
In short, brokers work hard for their money! Especially since their salary is never guaranteed. They must constantly look for new clients in order to earn a living. Thus, their hourly and annual income depends directly on their productivity and performance.
High earnings: the 80/20 rule
But what about the belief that real estate brokers make a very good living? This is indeed the case for some of them, but not for the majority.
In fact, the 80/20 rule holds particularly true for real estate brokerage. In other words, 80% of revenue is earned by 20% of brokers. So, while some individuals earn much more than the figures cited in this article, it is certainly not the norm.
As a result, it is difficult to establish an average salary for real estate broker fees.
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