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Realtor Jennifer Jones, in Barrie, Ont., on Sept. 28.Tannis Toohey for Kilcoo Camp/The Globe and Mail

The dirty secret of the real estate year is that when Canada’s market is as red hot as it has been in 2021, the agents and sales reps make a lot of money.

Nationwide the total dollar volume of residential home transactions hit $308.2-billion in August, up 77 per cent from 2020′s figure in the same period according to data provided by the Canadian Real Estate Association. The comparison to 2020 is a little misleading, given there were several months of shutdowns that stopped most real estate activity, but the industry is still on pace for a record year. And while there’s no nationwide standard commission for a home sale, it’s reasonable to presume that between 3 and 5 per cent of that dollar volume was shared with real estate agents. That means billions of dollars are flowing into realtor pockets, with business not far from double that of 2020.

The question of what to do with all that cash is not a trivial matter. All of the realtors who spoke with The Globe for this story had some of their best years ever, even if not all of them were comfortable saying what they spent it on.

“I know when people run into quick money their first impulse is finally to splurge on everything they’ve wanted to get; they immediately think of the luxuries they couldn’t afford before,” said Nasma Ali, founder of the One Group sales team with Re/Max Hallmark Realty Ltd. “Some agents think this is what it’s going to be like every year … they are the ones more likely to buy the expensive car.”

Veteran agents warn that flashing success may be tempting, but the glory can be temporary.

“It’s no secret agents make more money than ever before, and there are some really egotistical agents that don’t understand the public doesn’t want to know how much money you make,” said David Fleming, a broker of record for Bosley Toronto Realty Group Inc. who writes in TorontoRealtyBlog.com about industry foibles every week. “I look at the younger generation and some of them have a real YOLO [you only live once] mentality; they take trips to the U.S. Open or Cannes. … I’ve never done any of that. For me, personally, I do very well and I make a great living. But I’m the king of self-deprecation in my blogs. What if I was driving a gold plated Cadillac and taking photos of bills? It’s gross! A very small percentage of the population is attracted to that.”

Mr. Fleming does admit one vice: vintage hockey-card collecting.

Mike Turner, owner of Royal LePage Turner Realty in Gander, N.L., is one of Royal LePage’s top performing agents in Canada in 2021, and his approach has been to plow most of the gains back into his business.

“[2021] was our best year,” he said. “Last year the company did 168 deals, this year it’s 231 to date.” In consequence, he opened his third office, he’s gotten some new software, hired some new agents and worked 12- to 14-hour days to keep up. “We haven’t had the crazy, $100,000 more than list-price sales, but we’ve sold for list price overnight, and we had a big oversupply going into this. We got to take this for what it is; a once in a lifetime thing.”

Jennifer Jones and her sales team at Exp Realty Brokerage in Barrie, Ont., also had their best year ever, in part because even though fewer homes were sold, the prices are so much higher. With mainly digital showings and online customer generation, her 30-person sales team has managed to double their production and have expanded their reach into Ontario cottage country. Along with all that new business comes advice about what to do with it.

“For our team, we do a lot of investment seminars, because we believe in purchasing property. The question should be when you go out to list a property: ‘Is this something you should be listing or purchasing?’ ” said Ms. Jones. “It’s about how to purchase that first property; how to build more equity and move onto a second. And then buying a property, duplexing or a home improvement mortgage. It’s how to plant an orchard worth of investment properties.”

The switch to digital was uneven though, and not all agents blew through their annual sales targets by the middle of the year.

“For people attempting to rely on that ‘belly-to-belly’ business and door knocking, those realtors have struggled,” Ms. Jones said.

“It’s feast or famine,” said Andre Kutyan, a broker with Harvey Kalles Real Estate Ltd. in Toronto. “As hot as the market is there are well-known agents in areas of the city who used to do good business, but are doing nothing now. A lot of the older-school agents have not adjusted very well.”

“The push toward digital brokerage transactions was really challenging for a subset of the older population; it did accelerate retirements,” said Phil Soper, president and chief executive of Royal LePage, the country’s largest realtor network. “The real take-away from the pandemic is to look at what made you successful and hang on to some of those things: if you’re able to do virtual showings, and it took one quarter the time, that’s a massive savings in costs.”

Another big change for Ontario realtors is the ability, as of 2020, to form a personal real estate corporation (PREC), a tax vehicle that until now had been available to other professionals and realtors in other provinces.

“The decision comes down to different factors but the main driver is, ‘Does the individual need all the money they earn to live off?’ If they don’t, they can benefit from that tax deferral,” said Joseph Pagliaroli, tax partner with KPMG in Canada who has done education sessions with the Ontario Real Estate Association.

As Mr. Pagliaroli puts it, if the top income tax rate is 54 per cent for those making $220,000 and a PREC only pays 12.2 per cent in corporate tax, sheltering real estate income in a PREC can allow you to defer the tax hit on money you don’t need right now over multiple years, or even use the corporation to hold investment assets for retirement.

The only downside is you needed to plan ahead: “This is a go-forward solution. If you’ve earned the income up to now, you can’t do anything about that; it can’t be done retroactively,” he said.

Not all veteran agents struggled. Josie Stern, who runs the eponymous Stern sales team with Sutton Group-Associates Realty Inc. in midtown Toronto, has been in the game 35 years through many ups and downs. Her main advice for agents flush with success is simple: share the wealth.

“It’s time to give back. Agents with a lot of business and extra income can save for a rainy day or improve their marketing materials or technical systems. Or they sponsor community events and get your name out like that and promote yourself as someone who’s interested in giving back,” said Ms. Stern. It’s advice other agents mentioned as well; Ms. Jones’s team has sponsored women’s shelters and food banks.

But Ms. Stern, too, has seen agents, either new to the industry or without a strong network of existing clients, struggle this year, particularly with the inability to help out with things like open houses to meet new clients.

“Experienced agents are stronger than they’ve ever been before; they have the connections and experience and staff. So it’s become more than ever an industry for highly successful, busy agents,” she said.

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