According to data from the Toronto Real Estate Board, during the last 12 months, 62 per cent of individual (active) agents sold six homes or fewer. That number has increased to 78 per cent during the past six months! Six deals a year at an average commission of $11,000 equals $66,000 in gross commission income. So 78 per cent of active agents make, after splits, fees, deduction and expenses, between $30,000 and $40,000 a year before taxes. Which is about the same pay scale as a low-paying white collar job.
Previously, 17 per cent of active agents did between 10 and 25 deals (enough to survive and stay in business). That number has now dropped to only nine per cent! So nine per cent of individual agents make enough money to stay in the business. How do the rest of them survive?
An even deeper mystery is the rapid increase in the number of transactions that big real estate teams do. A few years ago, if a team did 100 transactions, they were at the top of their field. Now we see teams easily doing 250 to 800 transactions.
There are a couple of key explanations for this dramatic shift:
- There are flat-out too many agents chasing a fixed amount of commission.
- When every agent is saying the same thing on a listing presentation (“I am a great negotiator, I have my own stager, my feature sheets are the best, my marketing is the best, I will put your property on 10 million websites and social media platforms, I will do open houses…”) the seller is faced with the only reasonable choice – and that is to pick the agent with the lowest commission. This is a double whammy for individual generalist agents. They are doing fewer transactions and making less money per transaction.
I believe there are a few real reasons for this:
- The generalist agent is perceived to have little or no value to the consumer. When you try to be everything to everybody, you end up being nothing to nobody and your perceived value drops.
- The only agents thriving right now are those who specialize in one niche market. That may be geographic, demographic or psycho-graphic (why people move, such as seniors downsizing, investors, parents with young kids, divorce, death).
- Teams have been built on a model of niche specialists within the team. Inside salespeople just convert leads, buyer agents only show property, rental agents do only rental, customer service reps only work on bringing the transaction to closing.
Don’t be left out! It is time to be one of the few.
The only way to succeed and win at this game is to bring your “factory-installed” unique abilities and natural strengths to a target market and only work with people who you really love and want to be a hero to.
This requires you to get into a niche as quickly as possible or face the prospect of doing fewer deals, for lower commissions.
The teams are winning because they hire people to do one thing only. It’s time for you to discover what that is and become a high-paid niche or celebrity niche specialist.
Remember the riches are in the niches!
I have written a new book, now available as a free download, that is a rallying call to the entire real estate industry. Agents have become a “commodity”, as there are just too many agents chasing deals. The consumer has no real ability to tell a new agent from a good or great agent.
My book will help you focus them on picking one niche market. All you have to do is bring your natural strengths and unique abilities to a target market and work with only happy clients.
Glenn McQueenie is CEO and founder of Keller Williams Referred Realty and Keller Williams Referred Urban Realty in Toronto and Keller Williams Lifestyles Realty in London, Ont. He was licensed as a full-time Realtor in 1989. Throughout his career, he has sold thousands of homes and built a business that is 98 per cent repeat and referral. He is the author of two books and coaches, teaches and mentors agents across North America. Email Glenn, or visit his website.
