Broken

Yesterday 2,400 people lost their jobs, mostly in the suburban GTA.

It wasn’t a big factory floundering  or a string of high-profile retail outlets failing. The workers weren’t in a union or organized in any fashion. No political or labour leader spoke on their behalf. Nobody, it seemed, really cared.

Why?

Because they’re realtors, and we hate them.

iPro Realty went paws up at the regulator’s insistence after an inspection found financial impropriety and ‘a significant shortfall’. “This is a serious breach of iPro’s responsibilities under the law and to its consumers and agents,” said RECO, the Ontario provincial real estate cop.

“RECO and the owners of iPro Realty Ltd. have completed an agreement to facilitate the wind-up and closure of the brokerage, to permit the conclusion of current transactions,” said the agency. And so this is the end of 17 locations, in the high-octane housing markets of Mississauga (2 locations), Toronto (3 locations), Orangeville, Georgetown, Milton, North York, Bradford, Baysville, Burlington, Woodbridge, Scarborough, Brampton, Brantford, and Pickering.

What went wrong?

The worst real estate market for sales in about twenty years. A massive number of real estate agents in one metropolitan area – an incredible 70,000 of them. Last year 67,600 properties sold in the GTA, so you can do the math. That’s an average of less than one per agent. So while the few rock stars and their marketing teams managed to do dozens of deals, a huge number of realtors sold nothing. And this year is worse.

Moreover, agents aren’t really employees. Most get no salary. No benefits. No nice pension plan. Many pay for their desks and office services. In short, they eat what they kill. And the hunting has been desperate. The brokers that run offices and exist on a slice of realtor commissions, are also in trouble. We don’t know what the iPro guys did wrong, but it’s not hard to imagine.

Yet, we hate realtors. Even when most of us do not have the backbone, risk tolerance or entrepreneurial confidence to even try living as a commissioned agent.

No wonder. In real ways, the real estate industry is at the heart of the current hot housing mess. As we know, this is a crisis of affordability, not one of supply – and politicians continue to get that wrong. However, there would be more people happy to sell their home and move on (or up) if the cost of buying and selling were not as prohibitive.

Look at the commission structure. In theory it’s elastic, but in practice the cost of selling a house in Ontario is 5% of the gross sale proceeds. This is usually split between the listing agent and the one representing their buyer. Those people, in turn, share a portion with their brokers. So on a typical detached resale that someone buys for $1.4 million, the seller is charged $70,000.

Half ($35,000) goes to the listing agent, who may have spent a bundle on marketing, photos or staging. She gives some of that to the office people. For example, a common split within ReMax is 80/20 – so the agent hands over $7,000, leaving her with $28,000, less expenses. If that’s her only sale for the year (which is the average) she is living at the poverty level, according to the Daily Bread Food Bank.

But meanwhile the seller thinks paying $70,000 to get an offer is robbery. And understanding how odious the commission level is leads vendors to up their asks. It all inflates property values while actually impoverishing most agents – and causing brokerages to fail during lean times.

But wait. It gets worse.

After paying too much for a property ($1.4 million) partially because of a baked-in real estate commission, the buyer then needs to cough up land transfer tax. There is no benefit derived from paying the LTT, and increasingly (in times of high house values) local governments have come to rely on this revenue source. Toronto alone has been taking in over $1 billion a year.

And in that city, to make matters worse, the LTT is double. Some for the province. More for the city. On that $1.4 million average, boring, needs-renovation house, the transfer tax is $48,950.

Now almost $119,000 has been added to the sell/buy cost of this property, which will get baked into its bricks and drywall. Of course there are also moving expenses, legal costs, plus an appraisal, home inspection and money to move out the racoon family.

The point being emphasized by the collapse of this iPro outfit is that the model is broken. Commissions are extreme and unjustified. The tsunami of new realtors in greedy good times means most of them starve in a drought. Real estate boards crave bigger memberships to obtain more fees. Significant costs are added to homes, helping to render them unaffordable. And the same politicians who try to sound holy and empathetic about ‘affordable’ housing are responsible for the gutting taxes that inflate prices.

Hypocrites all.

About the picture: “This is Gavel, the Sultan of NYC!” writes Ellen.  “A Malti-Poo that can lounge better than any darn cat. Thanks for the blog Garth!  Have been addicted for over 9 years now!”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2025/08/20/broken/