A commercial real estate agents is responsible for organising the sale, rental, or purchase of houses, buildings, land, or offices on behalf of their customers.
However, this description barely scratches the surface of the tasks real estate agents perform on a daily basis. It also fails to distinguish between residential and commercial real estate and how the responsibilities change.
In Canada, commercial real estate agents fees is based on commission, which means their pay is determined by the number of properties they deal with or assist in purchasing. A commission-based compensation allows agents to determine how much they earn, but it does not guarantee a basic wage if they do not generate sales. It typically varies by province and city.
Difference Between Commercial and Residential Real Estate?
Real estate is divided into two types : commercial and residential. And the disparity between the two is merely the kind of property in which an agent specialises.
Commercial real estate agents are experts in purchasing and selling commercial/business properties. Residential real estate agents are experts in buying and selling residential/housing properties.
There are six noteworthy differences between residential and commercial real estate :
-
- Salary Range : Commercial real estate agents earn more yearly revenue than residential agents. It is due to higher commissions and the fact that the residential real estate market is more vulnerable to changes.
- Hours : Commercial agents often work “normal” 9 am to 5 pm, 40-hour work weeks. Residential agents are more likely to continue working even after their working hours.
- Real Estate Terms : Commercial agents often work for brokerage firms as they require a lot of maths and analysis. They must be familiar with business terms like Net Operating Income, Profit and Loss, Tax Strategy, Return on Investment, Cap Rate, Internal Rate of Return, etc.
- Volume : Residential properties outnumber commercial ones by a wide margin. As a result, there are considerably fewer commercial real estate deals.
- Purchase Length : A residential property transaction is reasonably straightforward. A standard deal takes 30-45 days to complete. A commercial deal might take up to a year, although it is hardly completed in less than 60 days.
- Commissions : Commercial property sells for more than a regular house, so commissions on a commercial property transaction are frequently higher than commissions on residential property transaction.
Salary of a Commercial Real Estate Agent in Canada
According to the CREA (Canadian Real Estate Association), which represents 135,000 real estate agents in Canada, 682,900 properties will be sold in Canada in the latter half of 2022, with a nationwide average property price of CAD 703,775.
Many jurisdictions, from British Columbia to the Maritime Provinces, have a maximum commission rate of 5%. To figure out how much the typical Canadian commercial real estate agent will make, we’ll assume that the commission is shared equally between the listing and buyer agents, with a 2.5% split to each. The average commission for a property sold in Canada will be CAD 16,944 per agent, based on a 2.5% fee and a national average price of CAD 703,775. The agent will retain around 70% of this for a net commission of CAD 211,133. The commission is split equally amongst them, implying that the regular real estate agent will sell or buy a little over 10 residences yearly.
How Much Does The Average Agent Earn?
An average real estate agent in Canada will struggle to earn more than CAD 100,000 a year. Real estate agents in Canada typically make between CAD 24,173 and CAD 134,783, with an average pay of CAD 46,212, according to the Government of Canada’s Job Bank wage report. That’s much less than the six-figure salary mentioned above, and it’s because not all real estate agents do equally well in terms of sales success.
Is it True That Buyer Agents Earn More Than Listing Agents?
Buyer agents earn more than listing agents in each transaction due to how commissions are distributed. Many homeowners desire to reduce the cost of selling their house, which is why discount brokers may offer a cheaper fee to sellers; however, this reduction is deducted from the listing agent’s commission. The buyer agent is frequently given their total commission rate, which aids in selling the house. If the total commission is 5%, the buyer’s agent may take 2.5%, while the selling agent may accept a reduced fee of 1.5%. It can help attract sellers searching for a real estate agent who wants to save money on agent fees, but it does not eliminate the need for buyer agents.
On the other hand, being a buyer’s agent may need more work than being a listing agent. When a homeowner hires a listing agent to sell their home, the listing agent gets paid when the house sells. Because of the current state of the property market, houses for sale in Canada are swift and reasonably easy.
In contrast, a buyer’s agent will work with purchasers searching for a property for an extended period without assurance that they would purchase a home.
Responsibilities of a Real Estate Agent
A commercial real estate agent not only handles or assists their consumers with purchasing and rental property in Canada generally, rather they have various responsibilities for several other tasks, including the following:
-
- Investigate local listings (current, pending, or sold) on the internet or in directories such as Activity Reports
- Keep up with industry news, trends, and policies
- Complete the necessary paperwork and submit the agreements to the proper state authorities.
- Schedule meetings with your customers
- Create a marketing plan to attract more customers
- Return client calls and emails
- Organise open houses and showings
- Create leads for your real estate company
- Photograph attributes for use in marketing brochures and flyers
- Make connections with other real estate experts
- Investigate the current market to determine a reasonable asking price
- Renew your licence
- Attend a continuing education class
Bottom Line
The majority of buyers and sellers use real estate agents. Agents are compensated with a percentage of the sale price, known as a commission. Though the dealer is usually on the arc for the commission, the cost is usually considered in the property’s listing price. The buyer ultimately pays the required amount of real estate fees to them.
You May Also Read :
| real estate investment ROI | What Is ROI in Commercial Real Estate |
| Real Estate Agents | Guide to Real Estate Agents Can Be More Profitable |
| Real Estate Investor Salary | All About Real Estate Investor Salary |
| Pros and Cons of Real Estate Agents | Pros & Cons of Working With Real Estate Agents |
Frequently Asked Question (FAQs)
Depending on the kind of property, the typical real estate agent commission is between 3% and 7%.
Real estate commissions range from 3% to 7% of the selling price, although there is no defined amount with the CAD 500,000 cost.
The agent commissions are usually paid by the owner of the property. It works similarly for a sales property.
It varies from realtor to realtor, but you will typically have to pay half the charge upfront and the rest when you buy the home.
Agents with real-estate expertise may provide a lot of information and experience. Your realtor may then give precise details on properties in and near your preferred neighbourhood. These details can include whether a rental is in a family-friendly community, what facilities are close, and an entire history of previous concerns with the home, whether a building has a history of mould, insects, or other maintenance difficulties. Working with a qualified real estate expert also offers you insurance that may safeguard your rental deposit. What is the realtor's fees?
What do real estate agents charge?
Who pays the realtor fees for rental properties?
When does a home buyer pay a realtor, after or before purchasing a home?
What is the primary advantage of using a real estate agent while renting a home?
