It’s obvious that the real estate industry is changing. And it’s changing more rapidly than ever before. But where is it going? And where does it need to go?
Those questions are at the forefront of a lot of people’s minds – consumers, agents, brokers, regulators and even Inman.
So here’s what I envision (this is part one of a three part series)…
Barrier To Entry
The barrier to entry for agents will be dramatically increased. A full semester if not year of real estate school including real-world projects and exercises will be mandatory. Passing a hard test and doing well on the real-life projects and exercises will be mandatory in order to get a real estate license. The schools and curriculum will be developed by regulators outside of the real estate industry with some input from the real estate industry.
Note: If all or most of the input comes from the RE industry, then the same people who just want a large number of bodies to fill up their office cubicles and the organizations that are more focused on member count than member quality will just try and squash this type of change. That’s why I think that there should be heavy involvement by those outside the industry who have no affiliation, direct or indirect, with anyone/any organization within the RE industry.
Once you’ve earned your real estate license, you must work underneath a broker who closely supervises you for one year. Much like an appraiser’s apprenticeship, you can do the ministerial acts, but you are closely supervised and everything must be signed off on by your supervisor – the broker in this case.
Once you’ve completed that one year of apprenticeship, you can go out on your own. But you’re still supervised by your broker. During the next year (we’ll call it “Year 3”), you must start working on your broker’s license. By the end of Year 3, you must have completed your broker’s license training and passed the broker’s test. If you do not have your broker’s license by the end of Year 3, your license will be suspended. If your license is suspended and you don’t get your broker’s license within 12 months of your license being suspended, you have to start the entire process (school and apprenticeship) from scratch.
If you think this is too much, consider this…it takes one full year of full time school and approximately $15K to get your cosmetology license in order to merely cut hair.
Continuing Education
The current level of continuing education is a joke for a number of reasons. For one, there’s way too little of it. It’s needs to be more comprehensive and harder. Increase its scope, number of hours and how hard the test is. And make it a yearly thing. And if you don’t do it in time or pass, there’s no “grace period” – your license is suspended. If there’s a medical reason or certain hardship, that could be an exception to the rule, but “I forgot” or “my dog ate my keyboard” won’t cut it.
Secondly, it’s needs to be more relevant. There are continuing education courses here in VA that are outdated by 2, 5 even 9 years. That’s right…some of them are from 1999. (I can hear the Prince song now) That’s ridiculous. Real estate has changed dramatically in the last 6 months to a year, let alone in almost a decade. There’s nothing about short-sales, foreclosures, bank-addendum, “as is” clauses, BPOs, etc., not to mention technology including laws and ethics involved with that, anywhere in the curriculum.
The continuing education should also be created and administered by the schools responsible for the initial real estate licensure. Should NAR and/or local REALTOR associations wish to have their own continuining education in addition to the state continuing education for REALTORS only, by all means, go for it!
We’ve got to get out of this “once you’re in, you’re in” mentality and get to a “yes, you got in…but you have to earn your stay” mindset.
Oversight and Enforcement
It’s embarassing for the real estate industry how much you can get away and not lose your license. Aside from doing something so over the top and wrong that a criminal would say “OH yeah…THAT’S wrong”, all you get is a slap on the wrist and possibly have to pay a small fine, but you get to keep your license. This goes for the state real estate boards when it comes to licensing regulation and enforecement as well as REALTOR Code of Ethics enforcement.
This has to must change if we as an industry are to hold ourselves in a higher regard and be seen by others as “professionals”. With the barrier of entry being “so easy that a caveman could do it” and no CoE or state law enforcement, there’s no reason for the majority of agents and brokers to hold themselves to a higher standard. For some of us, we do hold ourselves to a higher standard because that’s where our moral compass points. But not everyone is like that and not everyone’s moral compass points north.
I suggest that if you get an ethics violation (different from an ethics complaint) or are convicted of breaking the law (Fair Housing, etc), your license be suspended for one year. If you get a second ethics violation or conviction, your license if permanently revoked. The exception to the first part (one year license suspension) is that if the violation is premeditated and so severe (similar to murder in the first degree vs. involuntary manslaughter), your license would be permanently revoked.
If NAR would to try and put themselves and REALTORS above just regular licensees, they would have even more strict CoE enforcement and even have an “Internal Affairs” division that policed its member anonymously. Why? Because I know for a fact that there are brokers that tell their agents to NOT report other agents for fear of retribution and revenge on the part of the agent that violated a CoE or broke a law and/or their broker and other agents in the local market.
I’m not saying we should all start accusing agents we don’t like of CoE violations, but I am saying that those who break the law or violate the CoE should be dealt with and reprimanded without fear of retribution on the part of the agent or broker who “blew the whistle”.
Conflict of Interest, Quality vs. Quantity
One of the problems is that there is a conflict of interest – organizations such as NAR find strength in numbers and they don’t want to admit that REALTORS ever do wrong because it may make us “look bad”. NAR needs money in the form of dues and their current business model is keep the dues at “$X” and get the most amount of members in the association as possible.
WRONG!
Here’s my suggestion…double, triple even quadruple the yearly dues. You probably gasped, but hear me out…
If you up the dues and continuing education requirements, the agents who do 2, 1 or even no deals per year who treat this as a “hobby” or “part time gig so they can sell a home to their brother or save commission when selling/buying their own” will drop off.
The producing agents that actually do real estate full time and make the money to pay for those dues will stickaround. Those agents will understand the value of continuing education and they’re the ones that treat real estate as a profession and a career. These are the agents out in the front lines every day busting their ____ and doing 90+ percent of the total volume.
Their current business model focuses on the former, not the latter. That’s insulting… NAR claims “call a REALTOR professional today”, but how can you use the word “professional” when describing someone who only sells a few homes per year or does real estate part-time?
By raising the dues, level of standards and requirements to be a REALTOR, NAR would take in the same, if not more money in dues and turn the association into what it should be – an association of REALTOR “professionals”. This will elevate the “REALTOR” status and help bring some credibility to the association, the trademark and us, the members.
(Stay tuned for Part Two)
Matt Thomson
November 20, 2008 at 4:09 pm
Interesting thoughts. I love the idea of harder standards to get your license and more relevant continuing education.
I believe that if NAR increased their dues, you wouldn’t see folks get out of the business, you’d see far more real estate agents who aren’t Realtors.
Jonathan Dalton
November 20, 2008 at 4:20 pm
I’m a bit dubious of the need to attain a brokers’ license. I’ve made the decision not to seek a brokers’ license, at least not until I’ve decided the additional business offsets the additional liability.
Danilo Bogdanovic
November 20, 2008 at 5:15 pm
Matt – Let them leave. If they’re not willing to take it seriously, then they just be licensed salespeople.
Jonathan – Having a broker’s license doesn’t necessarily mean added liability. Whether you’re an agent or an associate broker, you still have to work under a managing broker. IMHO, having a broker’s license means that you took the extra step to learn more about the real estate industry and that you want to continue learning and growing as a RE professional. I’m currently in the process of getting my broker’s license for that reason.
Missy Caulk
November 20, 2008 at 10:02 pm
I think it would helps tons to have a more standards for getting a license. It is way to easy now. I got my Brokers license in 2001, just to be able to leave if I ever felt the need too.
Derek J Wallbridge
November 20, 2008 at 11:00 pm
I was one of the first realtors in Australia to use DOS based Property Management Software back in the 80’s & the first to trial & use DOS based CRM systems and also the Web for listings etc. But I guess I’ve got a little behind Gen Y with Blogs, Facebook etc so am catching up fast! You’re right its not just the changes it’s the exponential rate of change thats fantastic. Someone told me the other day that 3 decisions he’d made in the last 10 years regarding IT changes to his business has mad more than working his b… off for 6o hours a week over that same period! Where to next?
Jim Gatos
November 21, 2008 at 5:59 am
I have to disagree with you about tripling the dues for NAR. That’s ridiculous. There are a lot of professional organizations that charge on a par with what NAR charges on a national scale and so on and so forth. For me to pay triple the dues just so we can have more lobbyists and bright ideas like Realtor.com, it just doesn’t hit right. I think MLS should be government controlled, and regulated. Or at least government supervised. How about a two year associates degree for real estate sales, in combination with a Business Degree from a 4 year accredited college? That’s for starters. Agents who have been active with x amount of sales or gross income recorded and verified can be grandfathered. Otherwise the others can take a special 1 year class. But to triple the fees for an organization that really needs to tighten up and lower it’s fees, and stop railroading it’s own members via realtor.com and so on, I’d be more for government regulation. NAR is a TRADE ORGANIZATION, NOT A GOVERNING BODY. Real estate sales should be regulated and FSBO’s should not be allowed. So many of them are overpriced and just take up space in MLS. The only ones making money are the “entry only” companies that actually take money from these poor saps to list their overpriced stuff. Sure, if I took listings all day long that will never sell I’ll charge money upfront too so I can “enter” the listing in the MLS. “Sorry your house didn’t sell, sucker!, but all you’re paying me for is for me to “type” the info into the MLS system. Nothing else..
It will be a perfect real estate world when 80% of the agents leave the business and the 20% left will be the professionals. The NAR can downsize along with us, and THEN I may be okay with paying more fees. MLS? I think I get really ticked everytime I see my listings in Frontdoor.com, Trulia, Zillow, Google, etc.. and THEY make money from advertising off our inventory. Direct money. These companies should pay US royalties for the 2 hours spent in a home measuring it, taking pictures, etc etc etc. In the very least, if the MLS companies are charging these companies for the feeds, then they should at least stop charging the very agents who are contributing this information to these companies! That’s why I think MLS should be free and possibly government regulated…
Long live Obama! LOL
Rob Hahn
November 21, 2008 at 11:00 am
My overriding question, actually, Danilo (and more so Jim Gatos) is whether government should be involved at all.
Licensing requirements typically hurt consumers, and end up causing a major mismatch in the market. Consumers aren’t willing to overpay simply because government regs artifically limit the number of providers. Instead, they resort to stuff like Craigslist and FSBO’s.
Seems to me Jim is suggesting that real estate brokerage become a more-or-less nationalized industry. The history of those suggests that the result will be a major black market in the buying and selling of homes.
-rsh
Mike Stewart, Downtown Vancouver Realtor
November 21, 2008 at 11:08 am
I think the education requirement and increased cost will be great for the public perception of our profession. So much of the bad press we get is from realtors who are not doing what they’re supposed to and that is from a lack of training or oversight. I think what you are predicting could deal with both issues. In Vancouver, realtors now have to take mandatory courses every year to maintain their licenses and this is set to accelerate. More training is always better.
Russell Shaw
November 21, 2008 at 11:23 am
If higher “standards” for having a license were an effective way to raise the status of a profession in the eyes of the public then why do lawyers have such a low status?
Jim Gatos
November 21, 2008 at 11:36 am
I’m just very happy with the way that no matter what, the real estate agents are the ones that seem to keep asked to “take the fall”…
I used to think education was the best way to control our profession but my former manager was only a high school graduate and was selling over 90 homes a year before he himself became a manager.
If government involvement will raise our taxes then no MLS shouldn’t be turned over to the gov’t.
Perhaps Danilo’s issues aren’t even issues to concern ourselves with. Russell said something very profound in that last post that made me think.
Jim Duncan
November 21, 2008 at 12:47 pm
Jim –
Will you please expand on this?
Do you mean at all?
Why/how would government be better at running an MLS?
teresa boardman
November 21, 2008 at 1:22 pm
Sorry I don’t go along with the idea of raising dues for the sake of raising dues. I would need something more in return. I also don’t agree that financial barriers are going to make thing better, instead they will make it harder for people just starting out to build a career. When I graduated from college I wasn’t charged a dime to enter the work world.
Debbie Summers
November 21, 2008 at 1:24 pm
I agree with you regarding continuing education – I think there should be increased requirements… I know a lot of agents who wait until the last minute to whack it out. Actually learning to become a better agent never enters their minds.
Jim Gatos
November 21, 2008 at 1:51 pm
@ Jim…
No matter what anyone answers, no one will have the perfect answer. Here are some of my “incomplete” ideas…
Presently, we have a lot of MLS’es and they each have their own rules. Most of them are similar and I understand there cannot be national uniformity due to regional differences but I also don’t like the sense of control lost by agents on their own listings. My listings are on Overstock.com? Who put them there? Not that I don’t mind the exposure but I just hope some day I don’t look for Austin Texas listings and wind up at a porn site viewing Benn Rosales’ inventory LOL… So I look at the MLS’s, and I say, why not have one National database that everyone can access and use, but only licensed agents can input? The Do Not Call List is free, so should “MLS”.. It should not be owned by a single entity. Maybe that’s drastic but perhaps some good could come out of this line of thinking.
As for FSBO’s, so many have different thoughts. You own your own body, but would not it be illegal to operate on yourself? I know you can represent yourself in court but a lot of judges frown upon it. See what I am going with?
It’s incomplete however.. LOL…
Danilo Bogdanovic
November 21, 2008 at 4:53 pm
Lawyers are hated because there’s always a losing side. The losing side hates their lawyer for losing the case and hates the other lawyer for winning his/her. I wouldn’t mind being hated for being the lawyer who won his case because that’s what I was paid to do and I obviously did a good job at it.
Personally, I would disband the NAR and start from scratch. My ideas about what to do assume that actually disbanding the NAR and starting from scratch is not a realistic solution (at the moment).
We must have these kinds of discussion and these are exactly the issues we should be talking about. If we bury our heads in the sand or just complain and not do anything about it, we’ll let the bafoons who got us here in the first place ruin us and our industry even more.
Barry Bevis
November 21, 2008 at 8:11 pm
I just took and passed the class and license exam to become a Florida Broker. The test- the only real hurtle to jump- is much more about memorization and test taking skills than industry knowledge.
The exam should be more comprehensive and more focused on principles and practices… not debt to income rations for the VA loan that will change tomorrow.
I am all for additional classes and a real apprenticeship…
Not enough room here to say all that is wrong with NAR….
David Sherfey
November 22, 2008 at 5:43 am
Danilo sez: “The schools and curriculum will be developed by regulators outside of the real estate industry with some input from the real estate industry”
I dunno about this. While it would be good to have people outside of the industry do this to keep things honest, I don’t think that the highest quality/value possible result would come of it. It might stifle innovation too.
You can’t regulate quality.
We need a more dynamic solution. Worldwide would be cool too.
I would think that interested professionals like the writers/readers of this blog would do a far better job of breaking down each of the activities agents/brokers do and then describe the various practices around the country/world for these activities, and then rate each one to criteria that is important to the public.
Stuff that nobody does well would be obvious, and better solutions would come from innovative agents wanting to improve their value proposition. Activities that are rated highly would float to the top and agents who want to provide the highest value to the public will start doing them.
Out of this the public could learn all the secrets of the real estate industry, and would develop knowledgeable expectations of their agent. An educated consumer is the best place from which motivation for better products and services comes from.
New agents wanting to succeed would learn from this worldwide source of “best practices” and be motivated to follow them instead of the crap they hear from less inspired sources. Their educated consumer would be expecting it.
Charlene Blevins
November 24, 2008 at 7:35 am
I totally agree with the concept of more education for agents/brokers – it’s the first thing that needs to change. NC is making the transition to an all-broker state, the additional education requirements of which have caused some of the hobbyists to seek other forms of entertainment :-). Fundamentally, I cannot for the life of me understand any “professional” not wanting to know how best to do their job. I went directly from saleperson class to broker class, and still didn’t know what I was doing in the beginning. We’re facilitating the purchase or sale of most people’s hugest lifetime asset, and 80 hours of learning the “rules” is like giving a lawyer a copy of the constitution and saying, “go for it.” I disagree, however with the notion that such education should be developed outside the industry — not possible. If you don’t work in the business, you have no concept of the issues you can face. Education like GRI should be incorporated into required courses.
The second change must be the supervisory aspect. Most Brokers In Charge supervise in lackluster ways at best, spending most of their time filling up the cubicles in the hope of improving the bottom line, a job which precludes them from doing more than one or two deals a year themselves, thereby rendering them unable to lead because they don’t know how to do the job themselves.
NAR, is both a trade organization AND a governing body — of REALTORS–not real estate professionals. They should become an organziation dedicated solely to education and policy, and spend money on those two things – responsibly.
There also needs to be some sort of regulation of those tertiary real estate websites. I got a call on one of my listings that had magically appeared on LandandFarms.com that was listed as 114 acres for $53,000. I guess so! The reality is that it was 4.5 acres, in a community of “28 lots on 114 acres” which was in the body of my listing description, but became the acreage on that website. Unacceptable! I agree that there should be some avenue of exchange/permission between listing broker and these websites — we’re providing content for their for-profit enterprise. Yes, we get exposure for our listings, but have no say-so in the manner that listing is presented. Like that erroneous info on LaF, I’m responsible.
MLS is already on the way to becoming one national entity. Anybody read the MLS 5.0 paper by Saul Klein? That’s a conversation we need to have.
Danilo Bogdanovic
November 24, 2008 at 9:56 am
David and Charlene – You both make points about the education being created within due to more knowledge of what’s needed.
I agree with that for the most part. But it’s a conflict of interest for those who run our industry to create better/harder curriculum which will weed out many of those that otherwise would have gotten their license.
The reason is because the traditional big brokerage firms are all about quantity – they want bodies to fill their office spaces and pay fees to keep the office afloat.
These same big brokerage firms and big brokers are the ones that basically run NAR and state and local R associations which are the ones that currently either solely create or help create the education courses. This can not go one.
And the discussion about the “MLS 5.0” has been going around. Check out this post https://agentgenius.com/?p=3601
Dave Henderson
February 24, 2009 at 11:17 am
I hate Realtors.
All of you are just worthless middlemen in the way giving house tours and collecting your outrageous commissions.
You are all SALES PEOPLE. You DO NOT work in the buyers “best interests” at all. Anyone who believes this for one second is a FOOL. All Realtors need to hurry up and go extinct.
I cannot stand dealing with you people. You are all ARROGANT ARROGANT ARROGANT! Lets do a quick Reality check here. Your not a doctor. Your not a lawyer. Your a damn Realtor! ANYONE can get thier RE license. You dont even need a GED. You can pump gas, dig ditches, or work at the circle K. THESE Are the kind of people flooding into your industry and then “honing thier acts”.
You all claim to offer your “services” to help buyers find there dream homes. Yet 99% of you cant even answer more detailed questions about the houses we are interested in. Uhhh Ummm hold on I have to ask the owner. So you can parrot the information from the MLS which I am already looking at. Gah! SO WHAT IS THE POINT of forcing me to deal with you people!?
A history lesson is in order here:
Once upon a time we NEEDED REALTORS. They were the only link from the sellers to the buyers and naturally it made sense for several hundreds or thousands sellers to deal with one broker in order to sell a house. Otherwise you were could put a sign in your front yard or pay for one inch classified newspaper ads.
That was then. This is now. And today everything has changed.
These days we have the Internet. And THAT is all we need.
Zillow.com. FSBO and even legal zoom.com for real estate forms and questions. With the way things have/are going, I ask every Realtor viewing this:
Why do we even need Realtors anymore?
Answer: We dont!
Danilo Bogdanovic
February 24, 2009 at 12:15 pm
Thanks for sharing Dave. I’m glad that you are self-sufficient and have learned how to do everything necessary to sell or buy a home.
P.S. Since we all know getting a real estate license is so easy and you obviously know it all already, why don’t you get a license and start getting paid to do nothing yourself?
Russell Shaw
February 24, 2009 at 12:49 pm
I think a much better question is, “Why would anyone ever need Dave Henderson”.
Bob
February 25, 2009 at 12:02 pm
Leave Dave alone. He is right – he doesn’t need an agent to sell his house.
However, if Dave thinks legalzoom is all he needs to cover his rear, he may need an attorney.
Jim Gatos
February 25, 2009 at 1:42 pm
I kinda had the impression David needs a teacher.. evidently he doesn’t know WHAT the hell he’s talking about…
Question; Why are on the average, commissions going up, and why are a discount brokers closing shop, if us Real Estate agents are supposedly going extinct?
Answer; ’cause WE’RE NOT!
LOL…
Rob Peltier
March 28, 2011 at 9:11 pm
The one thing keeping real estate agents in business; is they can gain access to the properties.
That’s it…find a way to allow secure access to a home without an agent and its game over for
the real estate agent.