Ask Kate: My team costs are up and revenue is down. What do I do?

Every month, Kate Teves, HR consultant, recruiter and founder of The HR Pro, answers Realtors’ questions about anything and everything related to human resources. Have a question for Kate? Send her an email.

Q: How should real estate business leaders respond to the growing gap between rising talent expectations and shrinking margins?

Kate: Good question — we’re getting this more and more. There’s a quiet standoff unfolding inside real estate businesses across Canada right now.

It doesn’t appear in listing presentations or market statistics. Instead, it plays out behind the scenes — in hiring discussions, compensation negotiations, and in the increasingly uncomfortable pause that follows when a candidate shares their salary expectations. On one side, broker-owners and team leads are navigating softer sales volume, tighter margins and steadily rising operating costs. On the other, new recruits — both agents and admin staff — are asking for more: higher splits, stronger compensation, greater flexibility and more robust support systems.

The math simply isn’t working the way it used to.

A market that has shifted, not paused

If the past few years have demonstrated anything, it’s that the real estate market does not rebound on command.

Following the record highs of 2020 through early 2022, the industry has been steadily recalibrating. Brokerage operating revenues showed signs of modest recovery in 2024, yet expenses increased at an even faster pace, placing additional strain on margins that were already thin.

At the same time, projections suggest that while stability is gradually returning, transaction volumes are likely to remain below long-term averages into 2026 — signalling something more significant than a temporary slowdown. It reflects a sustained shift in operating conditions.

This isn’t a pause. It’s a new environment, and the industry needs to evolve. Despite this, many hiring and compensation strategies still mirror a very different market — one defined by high volume, fast-moving deals and enough momentum to conceal inefficiencies that would be far more visible today.

The talent paradox

Real estate has always had a unique relationship with money. Agents are, quite understandably, highly fee-conscious. That discipline is part of what makes them effective businesspeople. At the same time, it introduces a natural tension: the same professionals who negotiate carefully around commissions and brokerage fees also expect strong support systems, responsive service and reliable infrastructure behind them.

Meanwhile, the employee side of the business — administrators, co-ordinators and marketing professionals — has been shaped by a broader labour market where wages have increased, expectations have evolved and flexibility is no longer viewed as a perk but as a baseline.

The result is a pressure point that many leaders are now feeling: expectations are rising across the board at precisely the moment when available resources are becoming more constrained. As one broker recently put it, only half in jest: “We’re trying to deliver a full-service experience on a discount margin, and everyone’s surprised it feels tight.”

The real issue isn’t hiring — it’s design

What surfaces most often in conversations with leadership teams isn’t a hiring problem in the traditional sense. It’s a structural one. Many real estate businesses are still operating with team models built for the pace and profitability of a previous market cycle. During busier periods, roles were added quickly to keep up with demand. Responsibilities were layered onto existing positions rather than fundamentally re-evaluated. Over time, teams grew — not through deliberate design, but through accumulation.

That approach works when revenue is flowing consistently. When it slows, however, the same structure that once supported growth can quickly become a financial liability.

The natural instinct during slower periods is to cut costs. Yet across-the-board reductions rarely deliver the intended results and often introduce new operational strain. A more effective response is typically less dramatic, but far more strategic: understanding exactly where value is created and protecting those areas with intention.

Where is the business leaking?

Now is the time for broker-owners to review compensation structures, ensure roles and expectations are clearly defined, and have honest conversations with team members about performance and market realities. Waiting until there’s a problem usually makes the problem more expensive.

It’s also worth examining where the business is leaking time and money. If the workload no longer supports the current salary or commission model, owners may need to adjust how support is structured, tighten accountability policies, or consider whether certain roles should be redesigned altogether. The key is to make changes early, document them clearly, and avoid assuming yesterday’s arrangement will still work in tomorrow’s market.

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