Real Estate Agents Make Too Much Money?

Man o' man, how frustrating is it to hear over and over again..."real estate agents make too much money".  
 
Last week during a Doug Ford campaign stop, reporters suggested that along with getting rid of the Toronto Land Transfer Tax, agents should also cut their commission to 1% right across the board to help with housing affordability.  
 
I know one percent may seem like a lot when you're selling a 2.5 million dollar home, but on the average home price of $550,000, one percent works out to $5,500.  Plus, take into account the following;
 
Your brokerage usually takes anywhere10-25% plus a transaction fee usually $700-$1000.  Now you're left with on average $3800.  Keep in mind a good agent has also spent money of brochures (design and print), for sale and open house signs (labour and print) and a virtual tour.  Now you're closer to $3200.  Most brokerages also charge a desk fee of about $100 and I would say you probably need at least 2 full tanks to help with each transaction so now we are at $3000.  We still have not factored in the costs of being a working agent; licensing fee, insurance fee, membership fee and course upgrade fee.  Lets say that works out to $200 per month?  Now you are at $2800. There's more costs involved but lets leave it there.  Even if you do two transactions per month (which by the way would be considered an incredible year) you would be making $67,200.  Not bad right?  But what if I told you the majority of agents do 6-8 transactions a year?  Different story right?  Now you're looking at less than $20,000 a year with a 1% commission.
 
There is definitely a perception out there that agents are filthy rich.  Maybe it's the nice cars they drive, or their faces plastered all over bus stops and billboards, or that most sellers still believe the agent makes the entire selling percentage, but with almost 40,000 agents in the GTA you would be surprised how many agents are really NOT rich from this profession.  Sure there are some who easily bring in six figures (and more) yearly but I guarantee those agents are working two or three times harder than the majority of people out there. If you think you can simply wake up every morning with a full inbox of people wanting you to sell their homes, you are greatly mistaken and I would encourage you to quit your job today and give real estate a go.  This business is a constant hustle.  One that is meant for agents who are resilient, passionate and thick skinned.  Facing rejection is the norm in this business as is working hours and hours with no guarantee pay. Think about it...
 
You meet a client, spend hours doing research online to find the perfect home for them,  spend the next three or four weekends visiting 10-12 homes and after a few more hours preparing the offer sheet they decide to continue to rent for another year.  The scenario is very common....and I mean VERY COMMON.  You've easily invested forty hours with this client and at least two full tanks of gas, and that may happen five or six times a year...maybe not that exact same scenario but the end result is the same; seller decides not to sell and buyer decides not to buy.  Oh well, there goes no pay for 200-300 hours of work per year.  How many times has that happened to you at your job?
 
All that said, I love real estate.  I love finding homes, negotiating for them and selling them.  I really do.  I also feel a good agent deserves to be paid well.  If you try to slash commissions to such low rates do you really think you will receive top notch service?  If you were told to cut your pay for the hard work you do would you continue to work at the same level you were once working at?
 
The idea of slashing the commission so more people can afford to buy is a very interesting argument because the other side of that argument is...how about people save a little more money before buying?  Or how about not buying above your means?
 
I strongly believe house prices have increased too much too fast that the next generation of home buyers will have a tough go at it when they are ready to enter the real estate world and that too is no good for the market and agents.  However punishing hard working people to try to help other hard working people is not the answer either.
 
Happy Monday!