A Case for Increasing Standards to Achieve a Real Estate License in Canada
July 26, 2024
By Allwyn Dsouza, Senior Analyst, Research and Insights, REIC/ICI
By Allwyn Dsouza, Senior Analyst, Research and Insights, REIC/ICI
The real estate industry is a cornerstone of the Canadian economy, facilitating critical transactions involving substantial investments for individuals and businesses. However, the standards for obtaining a real estate salesperson license in Canada vary considerably across provinces, raising concerns about the uniformity and sufficiency of the current regulatory framework. By examining these discrepancies and considering best practices from other countries, we can identify opportunities for improvement and standardization to elevate the professional standards within the industry.
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We examined the licensing process for first-time applicants across provinces, evaluating 10 different parameters, including course duration, course fees, license fees, eligibility requirements, number of agencies involved, ease of course selection, and frequency of license renewal (see appendix for the methodology). Based on our assessment, Quebec and British Columbia have the most cumbersome processes, while Newfoundland and Labrador has the easiest.
Figure 1.0
Source: REIC Analysis
The major factors influencing this score and forming the basis for our proposition to increase standards based on a scientific approach include:
Discrepancies in Eligibility Requirements
While all provinces in Canada require a high school diploma or equivalent for licensing, there are variations in the minimum age requirement, differing between 18 and 19 years. A consistent minimum age of 18 years, aligned with high school completion, would streamline this criterion across the country.
In terms of language proficiency, a few provinces mandate English language proficiency tests. While this ensures agents possess essential communication skills, the lack of a standardized benchmark across provinces, with many provinces not requiring one, results in varying levels of agent competency. Establishing a uniform language proficiency standard, if deemed necessary, would help maintain consistent communication skills among agents.
Variation in Coursework
The pre-registration coursework requirements vary significantly, from 40 hours in some provinces to 500 hours in others. This discrepancy can be attributed to the complexity of different markets; however, there is variation within provinces as well. For example, Alberta and Quebec have multiple approved courses from different institutes, each with different coursework, duration, and fees. This variety can be confusing for candidates, who might prioritize ease of completion over quality. In addition, provinces differ in how they administer the course, with some having it self-study based, while others with a mix of online and classroom training. Moreover, some regulators have outsourced the work to partner universities and colleges while others choose to do it themselves. The inconsistency in required coursework due to multiple administering institutes underscores the potential benefits of a more standardized approach.
Furthermore, some provinces have both pre-registration and post-registration coursework requirements, while others only have pre-registration coursework.
Discrepancies in Eligibility Requirements
While all provinces in Canada require a high school diploma or equivalent for licensing, there are variations in the minimum age requirement, differing between 18 and 19 years. A consistent minimum age of 18 years, aligned with high school completion, would streamline this criterion across the country.
In terms of language proficiency, a few provinces mandate English language proficiency tests. While this ensures agents possess essential communication skills, the lack of a standardized benchmark across provinces, with many provinces not requiring one, results in varying levels of agent competency. Establishing a uniform language proficiency standard, if deemed necessary, would help maintain consistent communication skills among agents.
Variation in Coursework
The pre-registration coursework requirements vary significantly, from 40 hours in some provinces to 500 hours in others. This discrepancy can be attributed to the complexity of different markets; however, there is variation within provinces as well. For example, Alberta and Quebec have multiple approved courses from different institutes, each with different coursework, duration, and fees. This variety can be confusing for candidates, who might prioritize ease of completion over quality. In addition, provinces differ in how they administer the course, with some having it self-study based, while others with a mix of online and classroom training. Moreover, some regulators have outsourced the work to partner universities and colleges while others choose to do it themselves. The inconsistency in required coursework due to multiple administering institutes underscores the potential benefits of a more standardized approach.
Furthermore, some provinces have both pre-registration and post-registration coursework requirements, while others only have pre-registration coursework.
Figure 2.0
Source: compiled from websites of regulators, universities, and colleges wherever available and estimates made based on the number of credits/subjects covered (see Appendix for list of websites referred)
Table 1.0
Province | Number of approved institutes | Approved Institutes |
---|---|---|
Alberta | 8 | Alberta Real Estate Association (AREA), Alberta Real Estate School, Bow Valley College – new course NAIT, REDI Canada + Haskayne School of Business, RELO, Rise Real Estate Academy |
British Columbia | 1 | UBC's Sauder School of Business |
Manitoba | 1 | MREA |
New Brunswick | 1 | NBREA |
Nova Scotia | 1 | Nova Scotia Association of Realtors® (NSAR) |
Ontario | 1 | Humber College |
Quebec | 20 | Cégep Garneau, Cégep de Thetford, Séminaire de Sherbrooke, Groupe Collegia - Cégep de Matane, Cégep régional de Lanaudière, Académie de formation immobilière du Québec (AFIQ), Cégep de Saint-Jérôme, Cégep de Trois-Rivières, Académie de l'entrepreneurship, Cégep André-Laurendeau, Cégep John Abbott, Collège de l’immobilier du Québec (CIQ), Collège de Maisonneuve, Collège CEI, Collège Lasalle, Institut Teccart, Cégep Édouard-Montpetit, Champlain Regional College, Cégep de l'Outaouais, Humanis - Cégep de Chicoutimi |
Saskatchewan | 1 | UBC's Sauder School of Business |
Newfoundland and Labrador | 1 | Newfoundland and Labrador Association of REALTORS® (NLAR) |
Prince Edward Island | 1 | Holland College |
Source: REIC Analysis, compiled from websites of concerned regulatory authorities
Practical Training Requirements
Provinces like British Columbia and New Brunswick require practical training before a candidate becomes eligible for a license. Practical experience is invaluable in training new sales agents, yet it is not universally mandated across provinces. This raises the question of why some provinces do not see the necessity for such assessments.
Multiplicity of Regulatory Bodies
The variation in licensing standards is compounded by the presence of different regulatory bodies responsible for authorizing coursework, conducting exams, and awarding licenses. While some provinces have dedicated real estate bodies regulating the process, others subsume this role under finance or securities commissions. The differing perspectives of these regulatory bodies contribute to the lack of standardization.
Provinces like British Columbia and New Brunswick require practical training before a candidate becomes eligible for a license. Practical experience is invaluable in training new sales agents, yet it is not universally mandated across provinces. This raises the question of why some provinces do not see the necessity for such assessments.
Multiplicity of Regulatory Bodies
The variation in licensing standards is compounded by the presence of different regulatory bodies responsible for authorizing coursework, conducting exams, and awarding licenses. While some provinces have dedicated real estate bodies regulating the process, others subsume this role under finance or securities commissions. The differing perspectives of these regulatory bodies contribute to the lack of standardization.
Table 2.0
Province | Authority regulating the coursework | Licensing Authority |
---|---|---|
Alberta | Real Estate Council of Alberta (RECA) | Real Estate Council of Alberta (RECA) |
British Columbia | BC Financial Services Authority (BCFSA) | BC Financial Services Authority (BCFSA) |
Manitoba | Manitoba Real Estate Association (MREA) | Manitoba Securities Commission (MSC) |
New Brunswick | New Brunswick REal Estate Association (NBREA) | Financial and Consumer Services Commission |
Nova Scotia | Nova Scotia Association of Realtors® (NSAR) | Nova Scotia Real Estate Commission (NSRC) |
Ontario | Real Estate Council of Ontario (RECO) | Real Estate Council of Ontario (RECO) |
Quebec | Organisme d'autoréglementation du courtage immobilier du Québec (OACIQ) | Organisme d'autoréglementation du courtage immobilier du Québec (OACIQ) |
Saskatchewan | Saskatchewan Real Estate Commission | Saskatchewan Real Estate Commission |
Newfoundland and Labrador | Newfoundland and Labrador Association of REALTORS® (NLAR) | Newfoundland and Labrador Association of REALTORS® (NLAR) |
Prince Edward Island | Prince Edward Island Real Estate Association (PEIREA) | Prince Edward Island Real Estate Association (PEIREA) |
Cost and Time to Obtain a License
The financial burden of becoming a real estate salesperson varies widely, with pre-registration education costs ranging from $1,200 to $5,000. Additionally, the time required to obtain a license can be as short as six months or as long as two years. The significant variation in licensing fees and the duration of license validity (one to two years) further complicates the landscape. After adding ancillary costs, including insurance, board membership, criminal record check, etc., the post-education costs can go as high as $2,700. Provisions such as mandatory board membership in some provinces and non-refundable bonds ($2000 in PEI) significantly increase the upfront cost burden.
The financial burden of becoming a real estate salesperson varies widely, with pre-registration education costs ranging from $1,200 to $5,000. Additionally, the time required to obtain a license can be as short as six months or as long as two years. The significant variation in licensing fees and the duration of license validity (one to two years) further complicates the landscape. After adding ancillary costs, including insurance, board membership, criminal record check, etc., the post-education costs can go as high as $2,700. Provisions such as mandatory board membership in some provinces and non-refundable bonds ($2000 in PEI) significantly increase the upfront cost burden.
Figure 3.0
Source: REIC Analysis, compiled from websites of regulators, universities, and colleges
Figure 4.0
Source: REIC analysis, compiled from websites of regulatory authorities.
Thus, the entire process is marred by non-standard procedures across provinces, which is unlike what one would expect from a professional service and a licensed vocation. In contrast, certifications like the CPA, though regulated independently by provinces, have standardized education curricula and testing. This standardization ensures uniformity in competency levels and knowledge for any professional who clears the exam, thereby allowing clients to trust their advice. It marks a stamp of authority and pedigree.
Moreover, despite the arguments for the necessity of varied licensing requirements, interprovincial license transfer is relatively easy due to the Labour Mobility Act. Most provinces require applicants to just pass an exam post-validation of their current license. For example, in British Columbia, which has one of the most rigorous licensing processes for new applicants, if one is currently licensed or qualified to be licensed [1] in one of the 10 Canadian provinces or territories (Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Newfoundland & Labrador, Nova Scotia, Prince Edward Island, Yukon), one can apply for licensing in B.C. without writing BCFSA’s licensing examination. This ease of transfer undermines the justification for vast differences in pre-registration procedures, requirements, and costs.
Comparison with the United States
Like Canada, real estate licensing in the United States is also state-regulated, but efforts toward standardization are more pronounced. Several states include a national portion in their real estate exams, ensuring a baseline of knowledge for all agents. Moreover, many states use a standardized examination provided by testing companies such as PSI, Pearson VUE, or AMP, ensuring that the exam content and difficulty are consistent.
While there are variations in coursework and fees from state to state in the U.S., the differences are generally less pronounced than those in Canada. On average, most states require between 60 and 90 hours of pre-licensing coursework. Some outlier states, like California and Texas, require significantly more—135 hours and 180 hours, respectively—but these requirements are still considerably lower than those in some Canadian provinces. The total cost of getting licensed in the U.S., including education requirements, exam fees, criminal record checks, and licensing fees, typically does not exceed US$1000 (CAD1375).
The National Association of Realtors (NAR) and the Association of Real Estate License Law Officials (ARELLO) are working towards creating standardized content outlines for exams. These efforts promote a consistent level of competency across states, which Canada can look to as a potential model.
Recommendations for implementing best practices and raising the overall standard of the licensing process
Achieving this could be challenging due to some key hurdles like:
The current framework for obtaining a real estate license in Canada exhibits significant variation across provinces, leading to inconsistencies in the quality of education and professional standards. By subsuming best practices from across provinces, Canada can enhance its licensing process, ensuring that real estate agents are well-prepared to serve their clients effectively. Standardizing education requirements, centralizing the licensing authority, and introducing mandatory continuing education are critical steps toward achieving this goal. These measures will not only elevate professional standards but also ensure that the Canadian real estate industry continues to thrive in a competitive global market.
Moreover, despite the arguments for the necessity of varied licensing requirements, interprovincial license transfer is relatively easy due to the Labour Mobility Act. Most provinces require applicants to just pass an exam post-validation of their current license. For example, in British Columbia, which has one of the most rigorous licensing processes for new applicants, if one is currently licensed or qualified to be licensed [1] in one of the 10 Canadian provinces or territories (Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Newfoundland & Labrador, Nova Scotia, Prince Edward Island, Yukon), one can apply for licensing in B.C. without writing BCFSA’s licensing examination. This ease of transfer undermines the justification for vast differences in pre-registration procedures, requirements, and costs.
Comparison with the United States
Like Canada, real estate licensing in the United States is also state-regulated, but efforts toward standardization are more pronounced. Several states include a national portion in their real estate exams, ensuring a baseline of knowledge for all agents. Moreover, many states use a standardized examination provided by testing companies such as PSI, Pearson VUE, or AMP, ensuring that the exam content and difficulty are consistent.
While there are variations in coursework and fees from state to state in the U.S., the differences are generally less pronounced than those in Canada. On average, most states require between 60 and 90 hours of pre-licensing coursework. Some outlier states, like California and Texas, require significantly more—135 hours and 180 hours, respectively—but these requirements are still considerably lower than those in some Canadian provinces. The total cost of getting licensed in the U.S., including education requirements, exam fees, criminal record checks, and licensing fees, typically does not exceed US$1000 (CAD1375).
The National Association of Realtors (NAR) and the Association of Real Estate License Law Officials (ARELLO) are working towards creating standardized content outlines for exams. These efforts promote a consistent level of competency across states, which Canada can look to as a potential model.
Recommendations for implementing best practices and raising the overall standard of the licensing process
- Standardizing Education Requirements - Canada should standardize pre- and post-registration course duration and content across all provinces. A minimum hours requirement, combining both theoretical and practical training, would ensure a comprehensive understanding of the real estate market and elevate the baseline competency of agents entering the profession. Developing a national licensing exam covering fundamental real estate knowledge with provincial-specific sections would further ensure consistent competency levels.
- Centralizing Licensing Authority - Establishing a central licensing authority or a centralized agency for administering education and examination could streamline the process, ensuring uniform standards and facilitating easier license transfers between provinces. This authority could also oversee continuing education requirements, maintaining consistent professional standards nationwide.
- Mandatory Continuing Education - Introducing mandatory continuing education and professional development would ensure licensed agents remain current with industry practices and regulatory changes. This requirement would help maintain high professional standards and adapt to evolving market conditions.
- Uniform Fee Structure - Implementing a more uniform fee structure for licensing and renewals would address disparities and ensure fairness across provinces. This approach would make the profession more accessible and equitable, reducing financial barriers to entry.
- Specialization Courses - Offering specialized courses for residential and commercial real estate, with distinct licensing requirements, would ensure agents possess the necessary expertise for their specific markets. This specialization would enhance service quality and client satisfaction.
- Enhanced Language Proficiency Requirements - Requiring proof of English (or French) proficiency ensures that agents can effectively communicate with clients, critical for successful transactions. A standardized language proficiency benchmark across provinces would ensure consistent communication skills among agents, particularly those entering the profession without an undergraduate degree.
Achieving this could be challenging due to some key hurdles like:
- Provincial Autonomy: Provinces have historically regulated real estate licensing and may resist efforts to centralize or standardize the process due to concerns about losing control over local real estate markets.
- Variability in Provincial Laws: Real estate laws and practices vary significantly between provinces, reflecting local market conditions, legal frameworks, and consumer protection concerns, making standardization challenging.
- Industry Resistance: Some industry stakeholders may resist standardization efforts due to concerns about the costs and logistics of implementing new systems and the potential impact on existing licensing processes and educational providers.
The current framework for obtaining a real estate license in Canada exhibits significant variation across provinces, leading to inconsistencies in the quality of education and professional standards. By subsuming best practices from across provinces, Canada can enhance its licensing process, ensuring that real estate agents are well-prepared to serve their clients effectively. Standardizing education requirements, centralizing the licensing authority, and introducing mandatory continuing education are critical steps toward achieving this goal. These measures will not only elevate professional standards but also ensure that the Canadian real estate industry continues to thrive in a competitive global market.
Appendix
Methodology
To create a rating scale to rank different provinces based on the difficulty of obtaining a real estate license, we considered 10 key parameters:
Each parameter was assigned a score, with the sum of these scores providing an overall difficulty rating for each province.
1. Minimum Age
Methodology
To create a rating scale to rank different provinces based on the difficulty of obtaining a real estate license, we considered 10 key parameters:
- Minimum Age
- Education Qualification
- Pre-registration Course Duration (hours)
- Number of Course Administering Institutes
- Theoretical /Practical Requirement
- English Language Assessment Requirement
- Exam Taking and Licensing Authority
- Course Fees
- License Fees
- License Renewal Duration
Each parameter was assigned a score, with the sum of these scores providing an overall difficulty rating for each province.
1. Minimum Age
- Score 1 for 18 years
- Score 2 for 19 years
- Score 1 for High School
- Score 1 for 0-100 hours
- Score 2 for 101-200 hours
- Score 3 for 201-300 hours
- Score 4 for 301-400 hours
- Score 5 for 401-500 hours
- Score 6 for 501+ hours
- Score 1 for 1 institute
- Score 2 for 2-5 institutes
- Score 3 for 6+ institutes
- Score 1 for Theoretical only
- Score 2 for Theoretical + Practical
- Score 1 for No
- Score 2 for Yes
- Score 1 for 1 authority
- Score 2 for multiple authorities
- Score 1 for $1000 - $2000
- Score 2 for $2001 - $3000
- Score 3 for $3001 - $4000
- Score 4 for $4001 - $5000
- Score 5 for $5001+
- Score 1 for $200 - $400
- Score 2 for $401 - $600
- Score 3 for $601 - $800
- Score 4 for $801 - $1000
- Score 5 for $1001+
- Score 1 for 2 years
- Score 2 for 1 year
Summary of Scores
[1] Qualified to be Licensed: An individual who has completed the required pre-licensing education in their home jurisdiction within the last year and is currently eligible for licensing in that jurisdiction without any additional requirements.
References
- BC Financial Services Authority (BCFSA)
- Real Estate Council of Alberta (RECA)
- Saskatchewan Real Estate Commission (SREC)
- Manitoba Securities Commission
- Real Estate Council of Ontario (RECO)
- Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ)
- Nova Scotia Real Estate Commission
- Government of Prince Edward Island
- New Brunswick Real Estate Association (NBREA)
- Digital Government and Service NL
- Newfoundland and Labrador Association of REALTORS (NLAR)
- Nova Scotia Association of REALTORS® (NSAR)
- Manitoba Real Estate Association
- New Brunswick Financial and Consumer Services Commission
- Alberta Real Estate Association (AREA)
- Alberta Real Estate School
- Real Estate Learning Online
- Rise Real Estate Academy
Allwyn Dsouza is REIC’s Senior Analyst, Market Research and Insights. He can be reached at [email protected]. Media enquiries can be directed to [email protected]