More extensive barriers to entry do not automatically create better agents. As just about anyone with a real estate license will tell you, the education that you get prior to being licensed does very little to ensure your success in business, other than informing you of the legal requirements and obligations that, when followed, will allow you to keep your license. The things that make for good agents are not covered in any licensing class. They are learned after the agent begins working. They are learned through broker training classes, or through mentoring, or through the time-tested technique of trail and error. The idea that making it harder to earn a license will increase the quality of the agents is preposterous because it ignores this fact.
I like the idea of getting rid of licensing and making agents compete on the basis of reputation, but that ain’t gonna happen. Daniel has a good alternative:
If the goal of those who advocate the increasing of licensing standards is truly the reputation of the profession, then they should turn to themselves and seek out the new agents around them and act as a mentor or at least a positive example of the real estate professional. That will have a far greater impact on the profession than any increase in education requirements.
Indeed. As I argued years ago, in a different context, if you really want to “do something!” about The Homeless — take one home…
Technorati Tags: real estate, real estate marketing
Jim Gatos says:
I think in order to raise the professionalism in our profession, we should copy the entry “barriers” of other professions….
Perhaps THIS may be a better way…
1 or 2 year education process, similar to getting an “Associates” Degree…
Then, we have a 1 year or 18 month “apprenticeship” with a “brokerage” firm, where the agent has to take some training, sell some homes, etc.. There should be “minimum” standards… Maybe even as low as 5 homes in a year.. The problem you have here is that some of the best agents around have been known to sell NOTHING in their first year… How do you work around that? A two year trial?
Then, the agent gets a “license” to practice. I suggest a national license. Why keep it statewide?
Then, if they want to open an office, a full scale “degree” in real estate is needed. Bonded, etc…
Maybe I don’t know what I’m talking about LOL….
Jim
March 21, 2007 — 1:05 pm
Jim Gatos says:
Let me add another thought…
The only way you are going to have a SUCCESSFUL and “Correct” real estate agent out there is by having someone who is …
1. Self Motivating
2. Honest
3. Not motivated by Greed and Self-Interest.. Money motivation is fine, actually, it is a positive attribute.
4. Able to expand in knowledge and hopefully one who is able to be and stay organized.. and able to utilize advantages..in terms of tech and everyday practices..
Then our problems will be smaller..
March 21, 2007 — 1:15 pm
Stacey M. says:
Frequently, I come across a post that seems to perfectly describe my current mentality or the reoccurring thought of that particular day. This one hit the proverbial nail… When I first decided to become a real estate professional I “hit the ground running”. Those were the exact words of my BIC, (I try to limit myself to two clich?s a post) yet looking back I was as green as they come. While, now, slightly more seasoned, I still view every day is a huge learning experience and I stopped worrying about, potentially, making minor mistakes and concentrated on how I wanted to be perceived as a real estate professional. I am witness to a few ethical faux paus here and there solely performed in the name of greed. It may not be my place to judge, but these instances serve as a reminder of how I would like to be regarded and where I see myself as a real estate professional in the years to come. But, enough about myself. Keep up the great work Greg.
March 21, 2007 — 4:15 pm
apella says:
I support higher standards and higher education.
March 21, 2007 — 7:18 pm
James Hsu says:
Education is a good barrier, but it’s just a start. How do you teach people to start thinking about their client’s needs OVER their own. True..money is a great motivator, but the problem many consumers find is their representation is overly motivated by the compensation and makes the client feel 2nd in priority. How do we as an industry shake that perception and impression. Maybe the clients that have had great experiences with agents aren’t as vocal (online at least) than the ones that have had crappy experiences.
More education is a start, but it doesn’t solve the problem. What about increasing the cost of doing business or staying in the business? Make the renewal license $10k. In Washington State, you renew on your 2nd birthday, ..if I set aside $500 per transaction, ..I need 20 transactions in 2 years. … (make it tax deductible of course). If I can’t produce AT LEAST that in the given time, ..I should probably reconsider my career choices. If $10k is excessive, then fine, ..make it $5k. But seriously, in my state it costs $180 bucks or so.
Here’s an example of what no amount of education will change. I was working at a new construction site last year and I got a call from an agent. The FIRST question from this agent was …what’s the commission. I tell her it’s a reduced commission 3/1.5 (3% on first $100k and 1.5% on remaining). She didn’t ask another question about the development and hung up.
March 22, 2007 — 11:53 am
Jim Gatos says:
From James Hsu….
“Here’s an example of what no amount of education will change. I was working at a new construction site last year and I got a call from an agent. The FIRST question from this agent was …what’s the commission. I tell her it’s a reduced commission 3/1.5 (3% on first $100k and 1.5% on remaining). She didn’t ask another question about the development and hung up.”
James, you as a real estate agent like working for a substantially LESS paycheck?
I don’t know if I would’ve “Hung” up, but let me just say that “reduced” fees are demoralizing to me…
Reward the person who gives you the sale! Consider a hefty Buyer agent commission a part of your marketing plan! Take advantage of human nature!
March 22, 2007 — 12:19 pm
Todd Tarson says:
I think the education thing is a lot of bunk. Kids, for the most part, don’t dream of growing up to be a Realtor. In fact the real estate biz is a second or third career choice.
I didn’t finish college and don’t have a degree. I do have plenty of work experience that I have brought with me to real estate practice. A sales and customer service background in a different industry all together.
The licensing requirement is not an industry mandated deal, it’s the government that requires it (you know to protect the public — yadda, yadda). This business is actually real easy if one knows how to read and write with some comprension skills. After that it is nothing more than experience, customer service, and following the laws that pertain to RE (okay it could be more but I’m trying to be brief).
A mentoring program would be wonderful, but perhaps impossible to administer. The lazy ass brokers that are looking to make numbers off their recruits need to do more for the entry level agent. The first thing would be not to ‘hire’ the ones that don’t show the willingness to do right by the client. At the very least severing those who are not doing right. Maybe even going as far as filing a complaint against the Code against the severed agent to put a spot on their record so that future brokers would know what kind of agent they may be bringing into their firm.
Only volunteers work for free, so compensation is always a consideration no matter how fair anyone thinks they are to a client. Yes I want to do right by the clients that hire me, but in the end I do want my fee for representing them.
There is no easy solution for what we all want to improve by all that I have read over the years.
March 22, 2007 — 2:47 pm
Mike Thoman says:
I disagree – I think this perspective on the education requirement unduly minimizes the effect of such a requirement if it were to be implemented.
Before I go on, let me say that I do concur that increased education requirements (a degree) don’t equate to success on the job. I’m an engineer, with an engineering degree, and I really don’t use a lot of what I learned in school during my day job (except perhaps the problem solving thought process, and I got a lot of ‘training’ in that area from experiences other than the classroom). For certain professions, like doctors, certainly the classroom learning is essential, but let’s face it, their education reqirements are steep, and include OJT before they practice.
I think an education requirement would do one very important thing – separate the wheat from the chaff. Anyone with googly eyes on ‘easy’ commission money would look elsewhere.
Benefits:
1. Less agents overall, but more experienced agents overall, too. Less is more, especially now, right? Less agents means more transactions per agent, which not only improves the chances of being a successful agent (less turnover), but also means each of those agents gets MORE of the invaluable experential learning that Daniel advocates.
2. Improved reputation. The profession would gain credibility as a ‘real’ profession (no offense meant here).
3. Brokers would need to compete more for candidates, which means improving their offering to agents – training, specialized education, mentoring, etc. It would actually mean something for an agent to choose a broker, and vice versa.
Daniel is right in that brokers should take onus on themselves to improve agent qualifications. But it hasn’t happened so far, right? The Bloodhounds have pointed out before that there’s DISincentive to do that. More is better. More, successful or not, means more money for the broker. If agents continue to flood the marketplace, does anybody think that many brokerages WON’T continue to hire them, as long as they can make money by doing it?
Of course, I’m not sure how the education ‘requirement’ would be instated. Again, don’t look for brokers to do it, at least any time soon, except maybe in rare circumstances. The NAR is positioned to do it, but I don’t think it would happen unless they get severely bludgeoned by DOJ and lawsuits, and end up looking for ways to improve their value proposition and reputation.
If you haven’t figured it out, I absolutely agree that brokers should improve their mentoring and training if they want better agents. I just think that the education requirements and OJT approaches aren’t mutually exclusive, and probably work well done together.
Mike
March 23, 2007 — 7:45 am
Todd Tarson says:
“I think an education requirement would do one very important thing – separate the wheat from the chaff. Anyone with googly eyes on ‘easy’ commission money would look elsewhere.”
I disagree completely. I know plenty of agents with a degree that have their eyes clearly focused on commission money. It doesn’t matter.
We don’t work for free.
Brokers are the only ones that could separate the wheat from the chaff. Just because I could go out and get a license to sell real estate it doesn’t mean that a broker would HAVE to let me hang that license with his/her firm.
There are firms with solid reputations and others that don’t have the same savory business practice. The market decides that kind of stuff in the end.
I serve on the state Professional Standards Committee and sit on hearing panels where my peers have had complaints filed against them. A solid minority of all business transacted ends up with a complaint tied to it for violations of our Code of Ethics.
Customers are really the ones that need to demand better from their choice of representative… and they have such a wonderful cast to choose from. Many real estate companies are getting more and more transparent and cost effective for the consumer. The consumer just needs to ask the right questions and hear the right answers.
March 23, 2007 — 9:09 am
Mike Thoman says:
Todd,
I appreciate your contrasting opinion.
> I disagree completely. I know plenty of agents with a degree that have their eyes clearly focused on commission money. It doesn’t matter.
I’m sure most, if not all, successful agents have their “eyes clearly focused on commission money.” Why would you expect otherwise? I like my paycheck, too. That’s not really the point, though. Aren’t there just TOO MANY agents out there? Aren’t alot of the ‘too many’ looking for EASY money? After all, ANYONE can sell real estate…
> Brokers are the only ones that could separate the wheat from the chaff. Just because I could go out and get a license to sell real estate it doesn’t mean that a broker would HAVE to let me hang that license with his/her firm.
Right, but they’re not doing it, at least at a macro level. Is there a significant percentage of Realtors (big R) that don’t hang their license with a broker? Do we need 1.3 million Realtors?
Ultimately, though, I think you may have the answer:
“Customers are really the ones that need to demand better from their choice of representative… and they have such a wonderful cast to choose from. Many real estate companies are getting more and more transparent and cost effective for the consumer. The consumer just needs to ask the right questions and hear the right answers.”
If such awareness and efficiency in the market keeps the easy-money licensees out and prevents them from wasting people’s time and money, we’ll be in a pretty good place.
Thanks,
Mike
March 23, 2007 — 11:25 am
Jim Gatos says:
Mike,
“if After all, ANYONE can sell real estate…”
Then WHY is there a 13 out 14 agent “drop-out” ratio??
Why do soooo many people think it’s easy when they first think of getting into real estate, and then go around saying things like, “I’d NEVER do THAT again!”, or “No Way!”.. “Real Estate is for dogs!”
The REAL REASON IS THEY COULDN’T HACK IT! PLAIN AND SIMPLE!
You know why I’m in real estate? I don’t want to be tied to a “ball & chain”, being dependant on an employer – emplyee relationship. I want to wake up in the morning and have the security of knowing “If it’s to be, it’s up to me…” and “The Sky’s the limit!”… It’s my smarts, work ethics, and work habits that will determine how much and what I make, not my employer’s decision or control mechanisms!
In reality, even though there are a lot of problems, maybe our present system is the best, and it certainly is “The Great Equalizer” when it comes to deciding who stays, and who goes…
March 23, 2007 — 2:21 pm
Mike Thoman says:
Jim,
That specific sentence by me was very tongue in cheek. I’m sorry if it came across as offensive or demeaning. Not intended AT ALL.
I hope that if you re-read what I wrote and consider the context, that will be clear.
I’m aware of the turnover rate, and also of the demanding job a good agent has.
Mike
March 23, 2007 — 2:54 pm
Jim Gatos says:
Sorry, Mike.. After you pointed it out, I get it..
Jim
March 23, 2007 — 7:54 pm
Mike Thoman says:
No sweat.
Mike
March 30, 2007 — 11:34 am