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.
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.
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)