Real Estate Agents

Real Estate Agents: Definition, How It Works & Compensation

Real estate agents stand at the forefront of this market, guiding clients through the complexities of buying, selling, and leasing properties. This article explores the role of real estate agents in Ontario, detailing their functions, how the process works, and the typical compensation structure.

What are Real Estate Agents?

What are Real Estate Agents

Real estate agents are licensed professionals who help people buy, sell, or lease properties. They work as intermediaries between buyers and sellers, guiding them through the process, marketing properties, negotiating contracts, and ensuring that all legal and procedural formalities are completed accurately and on time. To become a real estate agent, an individual must complete required training and pass licensing exams, which vary by location but generally cover topics such as real estate laws, ethical standards, and property management.

Real estate agents evaluate property values, prepare and present sales and leasing offers, and provide advice on market conditions, prices, mortgages, and legal requirements in their day-to-day work. They often collaborate with other professionals in the real estate industry, such as appraisers, home inspectors, and loan officers, to manage the various aspects of property transactions. Effective real estate agents possess a deep understanding of the local property market, strong negotiation skills, and the ability to maintain detailed records of transactions and communications. Their ultimate goal is to ensure a fair and efficient transaction process while achieving the best possible outcome for their clients.

What Are Real Estate Brokers?

What are Real Estate Brokers

Real estate brokers are professionals who have achieved a higher level of licensing than real estate agents, which authorizes them to manage their real estate businesses. Brokers can perform all the duties of an agent, such as buying, selling, and leasing properties. Still, they also can hire agents to work for them.

The main difference between a broker and an agent is their education and responsibilities. To become a broker, an individual must first have experience as a real estate agent (the required duration varies by jurisdiction), complete additional education, and pass a broker’s licensing exam. This extra training focuses on business law, management, and advanced real estate practices.

Brokers can work independently or own brokerage firms overseeing other real estate agents. In such roles, they handle more administrative and managerial tasks, such as setting up escrow accounts, providing training, and ensuring that the agents under their supervision adhere to real estate laws and ethical standards. Essentially, brokers have a fiduciary duty to their clients and the agents they manage, providing guidance and support to ensure the brokerage operates efficiently and legally. This trust and responsibility underscore the importance of the broker’s role in the real estate industry.

How Do You Become a Real Estate Agent in Ontario?

Becoming Real Estate Agent

Becoming a real estate agent in Ontario involves several steps designed to equip you with the necessary knowledge and skills to operate in the real estate market successfully. Here’s how you can become a real estate agent in Ontario:

Education Requirements

In Ontario, completing the Real Estate Salesperson Program offered by Humber College is one way to meet education requirements and become a real estate professional.

Registration with Real Estate Council of Ontario (RECO)

Real estate is regulated in Ontario, so all agents and brokers must be registered with the Real Estate Council of Ontario (RECO). After completing the required education through the Ontario Real Estate Association (OREA), prospective agents must apply to RECO for registration. This process includes submitting a completed application form, passing a background check to ensure suitability for a trust-based profession, and paying the applicable registration fees. Once approved, the agent is officially licensed to practice real estate in Ontario under the supervision of a registered brokerage and must adhere to RECO’s strict regulatory standards and code of ethics to maintain their license.

Errors and Omissions Insurance

Errors and Omissions Insurance is required for real estate agents in Ontario, protecting against potential legal liabilities arising from their professional actions. This type of insurance covers the agent for mistakes or omissions that could occur during real estate transactions, such as inaccuracies in property listings, failure to disclose property defects, or mismanagement of client funds. By having Errors and Omissions Insurance, agents safeguard themselves and their brokerage against costly lawsuits and claims, ensuring financial security and maintaining their professional reputation. This insurance is mandatory before practicing and must be maintained throughout the agent’s career to ensure compliance with Real Estate Council of Ontario (RECO) regulations. More information can be found on the RECO Insurance Website.

Join a Real Estate Brokerage

Joining a real estate brokerage is a mandatory step for newly licensed agents in Ontario, as they must be affiliated with a brokerage to practice legally. A brokerage provides crucial support and resources to agents, including access to real estate listings, marketing tools, administrative support, and professional training. Additionally, the brokerage oversees the transactions conducted by its agents to ensure compliance with legal and ethical standards. For new agents, working under the umbrella of an experienced brokerage is invaluable for gaining practical experience, building a client base, and navigating complex real estate transactions with the guidance and mentorship of seasoned professionals.

Continuing Education

Continuing education is a requirement for real estate agents in Ontario, mandated by the Real Estate Council of Ontario (RECO). This ongoing education ensures that agents remain knowledgeable about the latest industry standards, legal changes, and market trends, which are crucial for providing effective service and advice to clients. Agents must complete specific courses and accumulate certain credits within each two-year registration period to maintain their license. This commitment to continuous learning helps agents stay competitive in a fast-evolving market and upholds the professionalism and integrity of the real estate industry.

Renewal of Registration

Registration renewal is a process for real estate agents in Ontario, ensuring they continue to meet the professional standards set by the Real Estate Council of Ontario (RECO). Every two years, agents must renew their registration to maintain their licensure. This process involves submitting a renewal application, paying the renewal fees, and providing proof of completed continuing education credits as RECO requires. Additionally, agents must confirm that they have upheld all regulatory requirements and ethical standards during their practice period. This biennial renewal safeguards the integrity of the real estate profession, promoting ongoing accountability and competence among practitioners.

Complete your renewal application for salesperson/broker/sole proprietor, including payment of renewal fees, via RECO MyWeb.

How Much Do Real Estate Agents Make in Ontario?

Ontario’s Real estate agents can have varying incomes, depending on various factors. These factors include market conditions, experience level, the type of properties they deal with, and the volume of their transactions. Real estate agents usually work on a commission basis, receiving a percentage of the sales price of the properties they buy or sell. The typical commission rate in Ontario is 5% of the property’s selling price, which is often shared between the buyer’s and seller’s agents.

In residential transactions, the commission is usually shared with the brokerage under which the agent operates. Newer agents typically receive a smaller percentage of the commission. In contrast, experienced agents with a solid reputation and client base may be able to negotiate higher percentages. Additionally, agents may incur expenses such as marketing costs, travel expenses, and licensing fees, which can impact their net earnings.

Economic conditions can also impact an agent’s income. In a booming real estate market, agents will likely close more transactions and earn higher commissions. In slower markets, earnings may decrease. Real estate agents often experience fluctuations in income, making this a potentially high-reward but also variable career path. Some successful, highly experienced agents in prime markets can earn six-figure incomes. In contrast, less established agents might earn significantly less, especially when starting out.

According to the ZipRecruiter salary survey, as of April 20, 2024, the average annual pay for a Real Estate Agent in Ontario is $91,128, which is approximately $43.81 an hour. This is the equivalent of $1,752/week or $7,594/month.

Compensation of Real Estate Agents in Ontario

Compensation for Residential Purchase/Sale

In Ontario, compensation for real estate agents typically comes from commissions based on the property’s sale price. The standard commission rate varies but is often around 5%, usually split between the buyer’s and seller’s agents. This commission is only paid upon the successful closing of a property sale, aligning the agent’s incentives with their clients.

In addition to sales commissions, some real estate agents may also charge for additional services, such as marketing expenses or staging costs. These fees should be clearly outlined in the listing agreement.

Compensation for Residential Rental

In Ontario, the compensation structure typically involves commission fees for real estate agents involved in residential rentals. These fees are usually negotiated between the landlord and the agent. They are expressed as a percentage of the annual rent or as a flat fee. The standard commission rate for residential rentals may vary. The commission is typically equivalent to one month’s rent, typically split between the landlord and tenant’s agents. This commission compensates the agent for several services, such as marketing the property, conducting showings, screening potential tenants, preparing lease documents, and facilitating negotiation. The payment is usually due once a tenant has signed a lease agreement and occupied the property.

The brokerage, where the real estate agent operates, may have a specific policy on commission distribution. This can influence how much of the commission the agent receives, often a percentage based on their agreement with the brokerage. Factors like the agent’s experience and contribution to the brokerage’s operations can also play a role in this distribution. 

Landlords need to note that while agents are compensated through commissions, their duty remains to ensure a fair and legally compliant transaction process, representing the best interests of all parties involved in the rental agreement. This provides the professionalism and ethical responsibility of the real estate market in Ontario.

How Many Real Estate Agents Are There in the Greater Toronto Area?

Toronto Regional Real Estate Board (TRREB) is Canada’s largest real estate board, serving almost 70,000 licensed real estate brokers and salespersons in and around the Greater Toronto Area. These numbers indicate a highly competitive market, reflecting the GTA’s dynamic and diverse real estate landscape. The actual number can fluctuate due to new agents entering the market, changes in licensing, and agents retiring or leaving the profession.

Finding a Realtor

A qualified real estate agent can make a significant difference in finding your dream home and navigating the complexities of the market. To find the right realtor:


  1. Start by conducting thorough research.
  2. Look for real estate agents specializing in the Ontario market, particularly in your desired location.
  3. Read reviews online, ask for referrals from friends or family, and use real estate association directories, which are valuable resources.

Interview Prospective Realtors

  1. Arrange interviews with several prospective realtors.
  2. During these meetings, ask about their experience, local market knowledge, and approach to helping clients find properties.
  3. Assess their communication skills and how well they understand your preferences.

Check References: Request references from the realtors you interview. Speaking with past clients can provide insight into their performance, professionalism, and client satisfaction.

Licensing and Credentials: Verify that the realtor is licensed and a member of a reputable real estate association in Ontario, such as the Ontario Real Estate Association (OREA). These credentials ensure that they adhere to industry standards and codes of ethics.

Compatibility: Choose a realtor with whom you feel comfortable and whose communication style aligns with your preferences. A strong working relationship is essential throughout the buying process.

Negotiation Skills: Assessing the realtor’s negotiation skills is critical since they communicate the offers to secure the best deal. Some qualities linked to better negotiation skills are years of experience, the number of transactions, and checking reviews through trusted sources.

Local Market Expertise: A realtor who is well-versed in the local market trends, neighbourhoods, and property values can provide invaluable guidance.

Fee Structure: Understand the realtor’s fee structure. Typically, the seller pays the realtor’s commission. However, clarifying any fees or charges you may be responsible for as a buyer is essential.

Selecting the right realtor is a decision that will significantly impact your real estate experience in Ontario. By conducting thorough research and interviewing potential candidates, you can find a realtor who aligns with your needs and goals, making your property search and purchase smoother and more successful.


Real estate agents offer services that facilitate the efficient transfer of property ownership. Their knowledge and skills ensure that buyers and sellers are well-represented during negotiations and transaction completion. Understanding real estate agents’ roles can benefit anyone interested in real estate dealings in Ontario.

How We Can Help

Insight Law Professional Corporation is a real estate law firm located in Toronto. If you need more information on real estate transactions, contact us today and learn how a real estate lawyer can help you.

The information provided above is of a general nature and should not be considered legal advice. Every transaction or circumstance is unique, and obtaining specific legal advice is necessary to address your particular requirements. Therefore, if you have any legal questions, it is recommended that you consult with a lawyer.In Ontario, one way to meet education requirements and become a real estate professional is to complete the Real Estate Salesperson Program offered by Humber College.In Ontario, one way to meet education requirements and become a real estate professional is to complete the Real Estate Salesperson Program offered by Humber College.

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