Are Real Estate Agents Rich in Alberta, Canada?

Ever wondered if your friendly neighborhood real estate agent is secretly swimming in cash like Barbara CorcoranHINT: It's not quite that simple! In this post, we’re diving into the financial realities of being a real estate agent in Alberta, Canada. Are they truly raking in the big bucks, or is it all just a façade? Let’s find out!

The Alberta Real Estate Landscape

First, here is a quick overview of the Alberta real estate market. Alberta's housing market is known for being unpredictable. When the market is hot, some agents might feel like they’re on top of the world. However, depending on your clientelle a hot market actually may lead to more work for less as it can be very challenging to find homes that meet your clients' needs (but you still shop with them everyday!)

When things cool down, it can be a struggle to stay afloat. I remember vividly in 2019 I felt like the grim reaper of real estate. I went on hundreds of listing presentations for people who did not have enough equity to sell.  I would deliver the devasting news and then we would all cry together.

It's a rollercoaster ride, and not the fun kind with cotton candy! (To be honest, I hate rollercoasters.)

How Do Real Estate Agents Make Money?

Real estate agents in Alberta primarily earn through commissions. This means they get a percentage of the sale price when they successfully complete a transaction. The more they sell, the more they make. Simple, right? But not easy. 

Commission rates vary and are completely negotiable.  In Alberta we see multiple structures from 1%, 2%, 3.5% on the first $100,000 and 1.5% on the balance, flat fees or even sometimes one penny (do those even exist anymore?) Depending on the price of the home some of these commissions may sound like a lot however agents do not keep their entire commission (some less than others). Real estate agents in Alberta are required to hold their licenses at a brokerage.  Their commission will be split with their brokerage, possibly other agents involved in the sale (referral fees are typically 25%) and then there are a multitude of expenses required to keep their doors open (no pun intended).

Average Income of Real Estate Agents in Alberta, Canada

Let’s talk numbers. In Edmonton (and surrounding areas) the average amount of transaction a real estate agent completes per annum ranges but typically lands between 5-10. I ran some very rough numbers for the last 12 months (May 2023 - May 2024) and it looks like the average is about 6 transactions. The average commission is around $7000. This would mean that the average real estate agent is making an income of around $47,000 per annum. Now, like all stats these are scewed. There are many individuals that hold licenses but do not transact.  

Depending on the year and number of total transactions the average income for a real estate agent in Alberta can range from $50,000 to $150,000 per year. That’s quite a range, right? It all depends on experience, market conditions, and sheer grit.  Remember these amounts are gross, take out brokerage fees, agent referrals and expenses will leave behind a much smaller income. Compared to other provinces, Alberta's agents do well, but they’re not exactly lining up for private jets.

Factors Influencing Income

Several factors influence an agent's income:

  • Experience and Reputation: Seasoned agents with a solid reputation tend to complete more transactions.  They have 'word of mouth' referral business and typically either move to lower cost brokerages or negotiate they brokerage split to something much more palatable. 
  • Market Conditions: A booming market can mean more sales opportunities, sometimes fewer expenses and less time spent with each client. 
  • Location: Urban areas typically offer more lucrative opportunities than rural regions. Sometimes simply due to density.
  • Networking and Client Relationships: Knowing the right people and maintaining good client relationships can lead to more referrals and sales.  Establishing yourself as a community resourse typically has the best ROI.

Think of it this way: It's less about selling million-dollar mansions and more about surviving on coffee and charm. Especially in Edmonton, where the luxury market is very small... Focus and building community and providing legendary service in order to maintain clientelle for years to come. 

A Never Ending List of Expenses

Being a real estate agent in Alberta isn't just about earning commissions; there are also significant expenses involved. Business costs can eat into those seemingly hefty commissions very quickly. Here are some of the common expenses:

  • Brokerages and Team Fees: Depending on what brokerage you choose fees can range and so can value. Some agents may choose to be on a team and then have team fees on top of their brokerage fees. Many of these fees will include training, lead generation, marketing expenses, admin, office space and other items depending on the brokerage or team. Sometimes these are flat fees and sometimes they are percentages (or a mixture of both.) It is extremely important to do your research.
  • Marketing: Online ads, social media, websites, business cards, signage, flyers, open houses, bus benches, print ads and professional photography and video (the list goes on...)
  • Office Space: Whether at home, rented space or at your brokerage (desk fees can really be challenging for agents who are not transacting.)
  • Transportation: Driving around to view properties and run errands. Our cars are like mobile offices. 
  • Licensing, Insurance and Continuing Education: Keeping up with certifications and training. Annual licensing dues (here in Edmonton you pay fees for RAE, AREA, CREA and REIX.) Considering the nature of our careers having an additional errors and ommissions insurance is mandatory for most brokerages and teams. 
  • Internal Systems: CRMs, Apps for design, editing, Gsuite, cyber secruity, admin support (if you can afford it) etc.

The Reality of Being a Real Estate Agent

The life of a real estate agent is far from glamorous. It involves long hours, fluctuating workloads, sacrafice, and emotional highs and lows. Real estate agents deal with high levels of stress, unpredictability, and rejection regularly.  There is very little feedback and you must be deepingly motivated to learn through self evaluation. A career in real estate can be incredibly rewarding but not always financially lucrative and never easy.

So, are Alberta's real estate agents secretly rolling in dough? For the majority, it’s a decent living but for many it is extremely challenging to maintain the large outputs and minimal income (not to mention the sacrafice, stress and work-load). The key to success in this industry is hard work, determination, a great support system, humility, perseverance, and a bit of luck. The reality is far more complex and challenging than it appears on the surface.

Thinking of diving into the real estate world? Or just curious about more industry insights? Reach out to our team anytime to chat. 

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