Critics say mega-brokerages like iPro Realty helped increase the number of licensed realtors in Ontario threefold in recent years.Evan Buhler/The Canadian Press
As the Real Estate Council of Ontario (RECO) faces increasing scrutiny for its handling of the iPro Realty Ltd. scandal, industry experts claim one shared trait between the RECO’s governing model and the business model of the disgraced brokerage is an obsession with increasing the number of realtors in the province.
“I see daily how our industry has become addicted to ‘bums in seats’ – boards reliant on dues, brokerages warehousing agents and an erosion of professionalism,” said Todd Shyiak, executive vice-president of Century 21 Canada Limited Partnership. “There are more realtors in the GTA per capita than double the rest of the country. Many are part-timers who are taxi drivers and bartenders but they don’t want to say that: they are a realtor, but really they have another job.”
Mr. Shyiak is most critical of so-called “body shops” that use a low-fee business model, such as iPro. Before it was shut down, iPro was one of the largest brokerages in Canada, with 2,400 agents. It was shuttered after it was discovered that $10.5-million was missing from its trust accounts. But he’s equally frustrated at RECO for what he says are practices that encourage the creation of mega brokerages and have tripled the number of realtors in Ontario.
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“When RECO was established in 1997, the handling of real estate licences was being done by government. Part of the mentality was that they were downsizing: They wanted to tighten things up. And one of the things they wanted was to eliminate warehousing,” said Alan Silverstein, a real estate lawyer and former bencher for the Law Society of Ontario who was on RECO’s initial governing board from 1997 to 2003.
According to Mr. Silverstein, before the legislation that introduced RECO, it was relatively inexpensive for realtors to hold onto their licence even if they weren’t using it. With the establishment of a mandatory insurance program, annual membership fees and the establishment of a code of ethics that could result in disciplinary fines, Mr. Silverstein said RECO eliminated close to 15 per cent of the almost 30,000 licensed realtors in the province at that time.
In its early days, RECO’s new fees may have had an attritional effect, but that was short-lived, even though the annual costs to maintain a real estate licence are now into the thousands of dollars in most parts of Ontario. According to some, “warehousing” realtors who rarely transact sales in “body shops” is now a core business model of not just some low-fee brokerages but of RECO itself, which collects a $350 licence renewal fee every two years and an annual $500 insurance fee from the more than 110,000 realtors in the province. Fees from registered realtors make up the vast majority of RECO’s annual funding. In its 2025 budget, more than $21.6-million of its total revenue of $26.3-million was from fees.
The share of non-transacting realtors warehoused at low-fee operations does appear higher than those at traditional brokerages, according to data from the real estate analytics company REDATUM (R E Stats Inc.). In the past 12 months, out of the approximately 2,400 realtors iPro had working for it, only 1,116 individual agents (or 46 per cent) listed and sold at least one home. There were 3,447 homes sold for a total dollar volume of $3.2-billion.
As a comparison, a large brokerage based on a more traditional model, Royal LePage Signature Realty, recorded that 1,005 of its 1,577 employees (or 63 per cent) over the same period made at least one listing and sale. The roughly 4,970 transactions had a dollar value of about $5-billion.
As of now the province’s largest brokerage is Right at Home Realty with 6,245 realtors, but in the last 12 months it saw only 2,668 of its employees (42 per cent) list and sell a home. They collectively sold 8,127 homes worth about $7.5-billion.
At iPro and other companies like it, realtors pay relatively low annual fees to be a member of the brokerage and pay a flat fee per transaction, often less than $500. Using the REDATUM numbers, the Right at Home transactions might have earned the low-fee brokerage $4-million over the last year, and at iPro, where an even lower fee was charged, it might see only $1-million to $2-million in transaction fees. The numbers are a little more difficult to estimate at Royal Lepage Signature because commission percentages can change, but if Royal LePage took 20 per cent of an average 2 per cent commission on the $5-billion in deals it did in the same period, the traditional model would collect as much $20-million.
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When versions of the body-shop criticism circulated in a real estate newsletter in the early days of the iPro scandal, it drew a sharp response from Right at Home’s broker of record Julie Kee, who fired off an open letter to critics: “Misappropriating trust funds is not a ‘discount model’ problem – it’s an ethics and integrity problem. To conflate the two risks unfairly painting every brokerage that operates on a leaner fee structure with the same brush,” she wrote.
But very large brokerages are a fact of life in Ontario now: according to REDATUM’s numbers, the top 60 brokerages in the province all feature hundreds if not thousands of agents under a single broker of record, responsible for the vast majority of the billions in real estate transacted every year in the province.
But as Mr. Shyiak warns, with transaction volumes falling, those brokerages that are closer to the financial edge might be the most susceptible to ethical shenanigans. “Brokers are under financial pressure like they’ve never been before. … That does play a role in this,” he said.