Mark McLean, our office manager at Bosley Queen West and author of “Realty Lab,” has answered all out outstanding questions about who-is-selling-what as it pertains to Toronto real estate.
His latest blog post about the top one-percent of Toronto Realtors also includes information on who is not selling anything…
Agent Statistics: The Top 1% of Toronto Real Estate Board
By: Mark McLean
Realty Lab
“Statistics are like bikinis. What they reveal is suggestive, but what they conceal is vital” American Professor Aaron Levenstien.
Months ago, at one of my Monday morning meetings, I wanted to drive home a point about the top 1% of agents (by ends) currently in The Toronto Real Estate Board. I took out my trusty tape measure that used to accompany me on every appointment and told everyone to imagine that each centimetre represented 10 agents in TREB. I fixed one end to the edge of our front desk and asked the agents to shout stop when they figured I had reached the number of centimetres that represented the top 1%. Off I walked.
I got about 3 metres before I heard the first ‘stop’. Guess what? That 3 metre distance, representing over 3,000 agents, was ten times higher than the actual number. Strange but true. The top 1% of TREB, in terms of number of ends, is represented by fewer than 360 agents. Wow! This was fascinating to me so I worked with our General Manager, Ann Bosley, to break down the numbers even further. What came to light was a very interesting story. Check out this first graph;
This first graph is very interesting. In a very unscientific manner, I determined that agents become full-time when they sell over 6 properties in a year. It is fascinating to see that this graph represents a full 71.2% of the nearly 34,000 agents who fit into the category of “Part-timers”. Even more amazing was that a whopping 6,136 agents, a full 18.6% of the Toronto Real Estate Board did not sell a property last year.
Note how the percentage of agents in each category diminishes as the number of deals an agent does increases. TREB membership has grown by over 1/3 in the last ten years and it seems clear to me that this segment of the membership will be particularly vulnerable to a downturn in our economy and if we were faced with as deep a recession as we saw in 1989, we could lose a significant number of agents.
This next graph deals with full-time agents. What’s particularly interesting about this graph is the number of deals the top 1% do per year. At the very top of TREB are the group I have categorized as the “Super Ultra Agents”. This elite group consisting of only 7 agents represent a mere .02% of TREB. They almost exclusively work as team leaders and they sell over 200 units per year.
The next group, the “Ultra Agents”, consists of just 39 agents or .12% of the total TREB membership. They also work as team leaders and sell between 100 and 200 properties a year.
The next category is reserved for the “Super Agents” who sell between 50 and 100 properties per year. While there are nearly 150 agents in this category they represent only .45% of the membership.
Finally, rounding up the top 1% are the 164 agents that are selling between 40 and 50 deals a year.
The middle group, particularly the agents that are selling 7 to 12 units per year represent the most significant category. They are the biggest group of full-time agents, nearly 5300 agents or 16% of TREB membership. They are working hard enough to get nearly a sale a month, but with an average sale of $500k, this group is making a yearly income of between $87,000 and $150,000 before office split and expenses.
Several months ago I produced an interesting Infographic on the Canadian Realtor, check it out here;http://bit.ly/w9UfpV . The research clearly illustrated that not only is the Toronto Real Estate Board the biggest board in Canada, it is over three times the size of the next biggest board, Vancouver. So why did we spend so much time doing the math? Simple, having an insight into the demographics of our board helps us to be better managers.
These graphs are an amazing visual explanation on agent performance. I can see what the agents in our company are doing compared to the industry as a whole and I can work with agents to help them jump to the next category. What is clear is that at the very least, agents should be striving to hit the 7-12 transaction target as quickly as possible and as a dedicated manager it is my job to get them there.
A few notes on the information gathered here. The statistics on agent performance are collected by a third-party, independently audited company called IMS Incorporated. When you see an agent claiming to be in the top 1%, it is almost always supported by IMS numbers.
For the purposes of this post, the numbers provided only deal with units sold, not dollar volume, over the last calendar year. There is a small margin of error in some of my math. Don’t forget that there are a number of new agents that are working full-time but have yet to record a transaction. Also, the numbers do not report new construction sales.
Fascinating stuff!
But which of the following do you find more amazing:
1) 18.6% of all licensed Realtors in Toronto did NOT sell a single property in 2011.
2) 71.6% of Toronto Realtors sold six or fewer properties in 2011.
Almost one Realtor in five doesn’t do a single deal, and sadly, not all of these Realtors are retired and just too lazy to let go of their real estate licence! Consider that you have to be proactive to keep your licence. You have to pay thousands of dollars in dues to TREB, OREA, and CREA, pay insurance, and take part in “continuing education” by obtaining 24 hours worth of credits every two years. It’s not like your licence simply stays with you forever until you somehow “terminate” it.
So I think it goes without saying that these Realtors who didn’t do a single deal in 2011 had planned on doing a transaction (or two…) or were actively working but didn’t have any luck.
Thanks to Mark and Ann Bosley for accumulating these statistics.
You can read more of Mark McLean’s writings on his blog – www.realtylabratory.com
JC
at 7:57 am
I think those results are skewed somewhat by salespeople who work for builders, who have to be licensed, who are working full-time selling new construction for the builder, but those figures aren’t reported to TREB.
Or agents who work almost exclusively in leasing. Are those transactions not counted because a “sale” wasn’t involved?
Christopher
at 12:24 pm
Even if the numbers are skewed because of licensed new home salespeople this it still shows an overwhelming trend towards part-time agents. New homes builders are rampant int he major cities, but the majority are still small builders who contract agents to sign them up for maximum exposure, so it can’t really be that big of a skew. Can it????
Joe Q.
at 9:24 am
This is fantastically detailed data, but very troubling as well — it’s like the irrational ‘herd mentality’ has spilled over from the investment side to the agent side.
Ralph Cramdown
at 11:19 am
Fascinating post, David.
It’s interesting to think about those agents who do few deals. I suppose you’d have to ‘end’ a median property for yourself, family or a friend about every 3-4 years to break even on your fees. Maybe we should wonder what fraction of the agents who did one deal this year will do 0 next year, or vice versa, and be just fine with that.
And of course, another good fraction of the 0-1 gang are new agents (maybe haven’t even been in the business a year? Are these numbers only of agents who had their license for a full year?). Do top teams rely on a continual supply of these muppets to staff their open houses?
It’s also important to note that those fees aren’t set in a vacuum. TREB, OREA and CREA (and by extension, their producing agents) all benefit from the annual dues and course fees of that 35% of agents who do 1 or no deals, and raising fees to force them out might reduce revenue. It is a self-regulated profession, after all, so the education and dues are entirely up to the voting members.
Pen
at 1:16 pm
89,347 properties were sold through TREB in 2011 or less than 6 ends available for each of the 32,000 or so members in 2011 to sell. Reduce the listing side by the mere postings for private sellers and the number declines further. This is the most important variable never mentioned with such statistics.
Every Realtor ought to be very adept at math. It’s scary when they aren’t and there are far too many ways many Realtors demonstrate they aren’t. Consider:
There are approximately 34,000 Realtor members of TREB and pretty much every Realtor knows this. 1% of that number can only be 340. That the shouting to signal the tape reached 1% began at the 3,000 mark is shocking.
Skewing the stats for team leaders (quasi-brokerage within a brokerage) are team members who source and sell listings in the name of the team leader – whom the client sometimes never meets.
Likewise are those who choose to be non-producers such as many brokers of record; broker owners; managers; licensed assistants; property managers. Add to this the majority of off TREB commercial Realtor deals; Realtors registered solely for managing their investments; the semi & retired but still registered members and the newly minted registrants who start at the bottom. Then there are the members in small communities or remote areas who would have few listings available to sell.
The most telling fallacy is that every agent can ‘hit the 7-12 transactions.’
Ralph Cramdown
at 6:27 pm
The most telling fallacy is that every agent can ‘hit the 7-12 transactions.’
I’d guess that agents at Bosley and other brokerages without desk fees are given a certain number of years to hit that mark and, if they don’t, they’re gone. “Third prize is you’re fired.”
David Fleming
at 8:57 pm
@ Ralph
Second prize is a set of steak knives…
Mahsa
at 12:33 am
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Nate
at 1:44 pm
At the risk of getting flamed, I’d like to comment that I thought it was interesting that the default premise of this article is that someone is a ‘top agent’ by using the metric, volume of sales.
It says that ‘top agents’ are … good at generating sales. It doesn’t tell me anything about, say, what percentage of customers for those agents are satisfied with their service. What if you have an agent who is just hyper-efficient at generating sales? (Obviously there is some correlation; agents who provide good service will tend to have more customers.)
Maybe an analogy to a different industry would help me articulate this more clearly. For financial advisors, you might have an agent who manages the portfolios of hundreds and hundreds of customers and consequently, from the firm’s perspective, that’s a ‘top performer’ who generates lots of fees. But is that guy going to give better service compared to, say, an agent who handles fewer customers but provides much more hands-on, personalized service?
What I mean is, what about deal size? Is an agent who sells 10, ‘$5 million’ houses better, or worse than an agent who sells 100 ‘$500k’ properties? In both cases $50m worth of transactions have occurred. Who is the ‘top agent’?
Should the metric be value per transaction? Customer satisfaction rating? % of repeat business?
[I don’t know, I’m an ignorant layperson and I don’t know about how performance is measured /compensation works in real estate firms]
Focusing purely on # of transactions seems to be evident of a certain world view.
JC
at 4:44 pm
I wholeheartedly agree Nate. I despise the “I’m number 1” advertising slogan that you often see being used. I like to think of my client as being #1. I also know of clients that have used “top producers” and weren’t very happy because they were treated like a number without any level of personalized service. I would rather have 1 really happy client than 10 who were unenthusiastically satisfied, or unhappy.
Unfortunately, in Real Estate sales, performance only seems to be measured in $ sold/bought transactions. People scramble to get the Presidents Gold/Platinum/whatever. Me? I could care less.
I recently switched financial advisors (to get to your example). During the 2008/2009 rout, I heard “nada” from my guy. Meanwhile, I discovered afterwards that much of my RRSP had exposure to Europe and that was one of the reasons it had fallen 24%. I took every cent and started with a new guy, who called me more in one week than I’d heard from the former guy in over a year. FWIW, the former advisor never even bothered to call to find out why I was moving a sizable amount of money from his company.
Anthony
at 10:28 pm
Nate, I couldn’t agree with you more.
There are agents who do volume. They have slick marketing and attract a lot of new business. They are good at “selling” and closing deals. Then BANG deals together and the only way to do lots of deals is to spend less time per transaction. It’s the only way to be #1. It’s all about the numbers.
So ask yourself if you are the buyer or seller. Is your best interest really represented truthfully by someone who does 200 deals a year or someone that can manage 40 deals a year but does a much better job because he/she has more time for each client.
Aside from the time factor, there is also a difference between the “service” and the “trustworthy” of the agent. I know a lot of good service agents/teams. They are promptly at returning calls, they are always punctual, they sound as sweet as grandma’s apple pie, but does that mean they are trustworthy?
There are agents who point out things that are deal breakers. Because they want their clients to know what they’re getting into. Those are the good agents.
So being number #1 by ranking doesn’t mean much other then how much volume someone did and that has very little to do with the quality of the advice you’re getting.
And the stats are very skewed because it doesn’t take into account pre-construction sales. Many agents do mainly pre-cons and that would push a number of 1% agents off the list.
Cheers
Andrew Tamburello
at 10:08 am
Nate,
Your comment is very good and accurate. The benefit of a realtor in my mind is value added services and negotiating. I am all for full service real estate and a personalized touch, but one can never lose sight of the fact that a financial transaction is occuring and that is usually where the “friendly” agent loses out.
I like to look at the average sale/list price ratio for both buying and selling ends. How much % does your realtor get on average per listing and how much do they % do they save with buying? you can be the nicest person in the world, but you are playing in a game with sharks and plenty of money can fall through the cracks if your agent does not know how to effectively negotiate.
This number can be skewed with underpriced homes but I have come to realize the only way to offer full service is by having an administrative assistant and a small team of 1-2 realtors who share the same work ethic as you and can fill the holes if you need to be somewhere else. Great post!
Christopher
at 12:17 pm
I totally agree with Nate, our industry is wholly gauged by the number of deals we do and the amount of money we “earn”.
It would be nice to see the industry gauged by the quality of work we do and not the quantity, but unfortunately how do we possibly do that? agent reviews, client dollars saved, peer reviews?
The sad truth is, there is no good way to do it that doesn’t end up getting skewed in the long run. Models like Redfin seem to have a pretty good grasp, but in the end, who knows.
Vilija
at 6:05 pm
Congrats on your T-star coverage! 🙂
Chuck
at 9:07 pm
Goooo team 50-100! 🙂
real estate London
at 3:44 pm
I fixed one end to the edge of our front desk and asked the agents to shout stop when they figured I had reached the number of centimetres that represented the top 1%. Off I walked
Phalakone Mysay
at 10:31 am
Woww this post is amazing!
I’m surprised to see that number 71% of the real estate agents are part time.
Do you have a list of great real estate agents to recommend? I actually looking for a potential investment.
Great blog by the way.
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at 12:39 am
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Leon Sebek
at 9:46 pm
As a seller, I am frustrated by the number of agents who purport to be in the “top x% in Canada”. Any agent can move properties if they can convince their client to lower their price far enough. The metric I would really be interested in is what % of an agent’s sales are within a given % of the ORIGINAL asking price. Is there anywhere that this type of data might be available?
Fred Helps
at 10:41 am
Just a correction — ORIGINAL asking price doesn’t mean squat either. Some agents (and brokerages, in fact) have a pricing policy to underprice every listing out of the gate, to generate multiple offers and sell quickly. This works sometimes, but more often leaves money on the table that should have ended up in the sellers pocket. So % of original asking price doesn’t mean a THING either.
Example: A property is worth around $490k. I spruce it up, list it for $499, and sell it for $495k. Another brokerage might list it for $480k, generate a bidding war, and sell it for 490k, “10k above asking!” .. their stats are better, but I got more for my client. How do you measure that? You can’t – so it all comes down to reviews and customer satisfaction.
Numbers can be spun to mean anything. It’s something I hate about my industry, because even the number-savvy get fooled by some of these stats unfortunately.
Bruce
at 4:52 pm
thank you, Fred. Very well articulated – I’m on a mission to help the public understand this and eradicate all of the performance claim nonsense and erroneous use of statistics to assess the skill of an agent.
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at 9:39 pm
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Name
at 11:07 am
I think that the number of deals done is so misleading. Comparing teams to indiviual agents is also misleading the public. The public wants information to asses quality not quantity.
You should look at the number of sales divided by the number of agents on the team, AND the dollar value of sales is just as important if not more that the number of sales. Quantity is no indicator of quality. I have managed the sales process of 1700 home in the GTA for over the past 15 years so am well qualified to share an opinion.
The agent who sell 12 homes for an average of $2,5 million represents $30,000,000 in tranaction value and should be able to deliver a much better quality of service than a sales team that sells 150 homes. House selling is a personal service where quality overrules everything else.
William Tore
at 12:13 pm
Please respond if you have experience in drafting Bill of sales and purchase agreements.
Yours Sincerely
William Tore
mr.williamtore@gmail.com
Ali
at 10:47 am
Hi
This is a very intersting article… Are these statistics available to public – I would like to be able to choose an agent based on the homes they sold or bought ….
M.Irfan Nazir
at 3:33 am
I’m looking for person who’s professional and the way he or her deal with their clients so understandably and their prefer client’s choice on the top.
Thankyou!
Best Regards,
M.Irfan And komal
The Real Estate Profession
at 3:17 pm
This sector of the economy is quite interesting. Many people get attracted to the real estate profession by the allure of making a lot of money. After they do what they need to do to enter the profession many quickly realize that it is not what they expected. They find that the expenses are much greater than they expected and most new agents find out that it is hard work getting listings and making sales. Most agents that start do not last long when they do not sell homes.
Cody http://greaterpropertygroup.com
at 9:20 pm
Could I utilize some of this information on our Toronto real estate IDX site? http://greaterpropertygroup.com
Jen
at 6:36 pm
Michael antczak Remax is my agent and he is amazing!!!!!
waqasalirealtor
at 3:34 pm
Out of 50k agents only 7k are busy! rest of part timers Reco should strict the rules of being park the licence…..waqasalirealtor
Wendy fuller
at 5:13 pm
Do you have stats for recent years please
REPYYC
at 1:10 am
Wondering if you’d be up for guest blogging on http://repyyc.com when it launches?
Soni Chachad
at 10:15 pm
Time to do this graph again and see what 10 years have bought along
Chip Barkel
at 1:46 pm
Why do agents always talk number of deals, when volume is what counts. I could sell 20 houses at $400,000 or 10 at $10 million. Which is more desirable?
Post dollar volume not number of sales.