Slow market forces brokerages to rethink spending, retention strategies

While the Canadian Real Estate Association predicts the national average home price will rise in 2026, the increase is minimal — a 3.2 per cent uptick from 2025 — bringing the average home price to $698,622. To stay open amid the wake of another slow year, brokerages need to ensure their financials are in tune with the real estate market.

This means taking detailed stock of all expenses and “trimming the fat” without compromising on the Realtor experience, such as staff layoffs or branch closures. To maximize brokerage profit without sacrificing customer service, here are some things to consider.

Technology and vendors

According to John O’Rourke, broker of record at Royal LePage Lakes of Muskoka, unexamined spending has the largest impact on expenses. Everything from internal accounting systems to branch-level phone providers should be inspected for redundancies.

“We recently completed an internal audit of our apps and subscriptions and found a surprising number of small, recurring charges for tools we rarely used,” O’Rourke said. “We also reviewed the number of seats in our higher-cost accounting and transaction management platforms and found we were overpaying relative to our actual needs.”

Kathleen Black, CEO of Kathleen Black International, provides coaching to both agents and brokerages to increase sales volume and profitability. She believes one of the best internal processes to improve margins is follow-up systems to ensure leads turn into transactions.

“An unoptimized follow-up system is often the single biggest margin killer,” she explains. “A brokerage can be sitting on hundreds of leads a month and converting less than one per cent. With an average commission of $15,000, poor conversion isn’t an inconvenience — it’s millions of dollars walking out the door.”

Taking stock of physical monthly overhead is equally important. Can an internal office courier deliver to three branches instead of five? Is there a paper supplier with more competitive pricing to service multiple locations? Researching alternatives and renegotiating existing contracts could save hundreds, or even thousands, annually.

Trust accounts

If they have not already, brokerages should consider switching non-interest-bearing trust accounts to interest-bearing ones to collect interest on rental and sale deposits. This is a simple way to earn passive income that could generate thousands of dollars.

While the switch is not without its teething issues during the transition — including paperwork updates and training accounting staff to process deals through new and old accounts — O’Rourke says it is worth it.

“I would recommend it,” he said. “The benefits far outweigh the required disclosures.”

Deposit providers are entitled to interest accrued on their deposit if they provide the necessary documentation. Ensure disclosures outline the minimum interest a deposit must accrue for a payout, as well as the amount the brokerage retains from that payout.

Office space

The rise of electronic signing and video conferencing has left office spaces that were once hubs of activity sitting vacant. Fewer agents coming into the office means less revenue from desk fees. Rather than closing a branch with lower activity, which could negatively affect staff and morale, brokerages should re-evaluate how that space can serve today’s Realtor.

Sylvia MacNeil, broker manager at Century 21, has transformed the office bullpen into fully equipped media centres.

“Since social media is the primary branding platform for many Realtors, offering podcast space, professional lighting, cameras and a dedicated media room has been a game-changer,” she said. “These have become a major draw.”

Brokerages that own their brick-and-mortar locations can also lease out unused offices or entire floors. For O’Rourke, reusing office space meant co-sharing with a law office in one of the company’s largest locations in 2024.

“We also share a front desk receptionist between the two companies,” he said. “This has worked out really well.”

Retention, recruiting and education

In brokerage franchises, it is not uncommon for branch managers to have annual recruitment targets. While recruiting can boost brokerage income through desk fees and commission splits, it also comes with costs.

Most brokerages offer new business cards, signage and improved splits as incentives. For newly licensed Realtors, it can also take time before they land their first closing.

“Brokerages often waste money on panic responses to a correcting market: things like extreme sign-on incentives or zero-commission offers,” says MacNeil. “We’ve all seen the fallout when a company grows too fast on unsustainable incentives without the infrastructure to support that growth — look at what happened to iPro.”

While sourcing new talent is important, retaining existing Realtors is equally critical. Black often hears complaints from realtors who feel their brokerages prioritize recruitment over retention.

Agents “gain confidence when they see strong talent joining the brokerage,” she says. “A simple shift — connecting with existing [Realtors] to discuss their future trajectory — boosts both retention and recruitment. Strengthen who you have, and you naturally attract who you want.”

Supporting agents and arming them with the information and tools they need could mean the difference between closing eight deals versus 11 in 2026. O’Rourke says strong management support, a sense of community and education are key to maintaining high retention at Royal LePage Lakes of Muskoka. High Realtor retention, he adds, creates a steady and reliable income stream to keep a brokerage afloat.

MacNeil also emphasizes the importance of training. Century 21 won seven Brandon Hall Awards in 2025 for its emphasis on education and development, including recognition for learning and development technology and sales enablement.

“Our [Realtors] are introduced to our culture through every touchpoint, and support is both emotional and deeply practical,” she said. “Our retention is exceptionally strong, and we expect to continue focusing on agent development and support.”

MacNeil believes supporting her Realtors through practical weekly training in 2026 will lead to more productive agents and healthier brokerages.

“The real return comes from one-on-one support, coaching and developing [Realtors] into confident, successful professionals,” she says. “When they grow, the brokerage grows. Profitability is simply the outcome of developing people the right way.”

For Black, the brokerages that succeed in 2026 will be those that deliver education and value, understand return on investment and replace reactivity with organized, proactive systems.

“This is not a year for shortcuts…” Black affirms. “This is a year for leaders who are willing to dismantle and rebuild with integrity.”