This is now the second major real estate brokerage to shut down in under a year.
RECO just took regulatory action involving four Save Max brokerages over concerns that roughly $2.7M in consumer deposits were taken from trust accounts.
And it comes on the heels of the iPro scandal, where nearly $10 million in consumer deposits and realtor commissions were misappropriated.
At some point, we have to stop treating these as isolated incidents.
Because the uncomfortable reality is that we are probably going to see more of this.
To understand why, it helps to understand how most real estate brokerages actually make money.
Most brokerages earn revenue by charging their agents a monthly desk fee, plus an additional fee on every transaction. Sometimes it’s a flat amount, sometimes it’s a percentage split.
But the key point is this: brokerages are far more sensitive to falling transaction volume than they are to falling home prices.
The GTA typically sees around 95,000 home sales a year. We hit a peak of 127,000 in 2021.
Then everything changed.
In 2023 and 2024, sales dropped to about 70,000. In 2025, they fell again to roughly 62,000.
These past three years have been the lowest sales volumes in over two decades.
A 30-40% decline in transaction revenue is hard for any brokerage to absorb. But being down that much for three straight years is simply not manageable for a lot of firms.
And this is where things get ugly.
A brokerage does not usually take millions of dollars out of a trust account in one shot.
More often, these businesses were bleeding cash for years. They were trying to buy time. It might start with taking $100,000. Then it becomes $500,000. Then $1 million. And it just keeps growing.
Money gets juggled. Books get stretched. The business keeps running, until eventually it collapses.
To be clear, I don’t know the financial details of these specific companies. But I do know how these situations tend to unfold.
And I also know something else that most consumers don’t realize.
Brokerages are not audited very often.
I opened my brokerage in 2009, and I’ve been audited by RECO twice.
Twice, in more than 15 years.
That means a brokerage could be taking money from trust accounts for years before anyone catches it.
On top of that, most real estate brokerages are not high-margin businesses.
Over the past couple of decades, many have been lowering the fees they charge agents just to stay competitive.
But at the same time, a lot of brokerages still carry the same fixed costs. Physical office space, staff, and the overhead required to keep everything running.
Those costs don’t shrink when the market turns.
So when transaction volumes collapse, the pressure builds quickly.
So the bigger issue here is not just one company, or even two.
It’s a system with weak oversight, infrequent audits, and financial incentives that push struggling firms into dangerous territory.
The hard truth is that there are probably other brokerages out there right now that are bleeding cash, quietly dipping into consumer deposits, and simply haven’t been caught yet.
And that’s exactly why these stories matter.
John Pasalis is President of Realosophy Realty. A specialist in real estate data analysis, John’s research focuses on unlocking micro trends in the Greater Toronto Area real estate market. His research has been utilized by the Bank of Canada, the Canadian Mortgage and Housing Corporation (CMHC) and the International Monetary Fund (IMF).
Have questions about your own moves in the Toronto area as a buyer, seller, investor or renter? Book a no-obligation consult with John and his team at a Realosophy here: https://www.movesmartly.com/meetjohn
February 4, 2026
Market |