Real Estate Industry Shakeup

Also published on the Huffington Post

Buying or selling a house? Get a real estate agent! At least, that’s what 88% of buyers and sellers did in 2014, according to the National Association of Realtors (NAR.)

As technology has evolved to improve the customer experience, chatter has followed that the real estate agent is going to go the way of dinosaurs and the travel agent. That is a scary thought. Or is it?

I’m involved in some transactions now that I wish I wasn’t. Not that I don’t want to see my clients get the house they want, but working with other agents who don’t do this as their full time job, don’t play by the rules, never answer their phone or return calls or emails - it’s a hassle. There’s a lot of agent-hate on the real estate message boards - everything from our compensation to our actual value-added is under attack. It’s hard not to take some of it personally, but then I realize, “No, I know exactly the type of agent they are talking about.”

I’m not going to bother defending our compensation. Yes, we’re paid well, but the majority of us work hard, sometimes for months or years without payment and so the commissions we enjoy have to level out to something manageable to live on. Besides, commissions are negotiable. Commissions the sellers agree to pay are set by the market, not some conspiracy of agent price collusion. You want to shop around for a lower commission? Do it. That’s the free market economy at work.

The NAR put out something called a “Danger Report.” In a nutshell, they outlined the biggest issues facing the real estate industry today. The #1 threat? Masses of incompetent and part-time agents who do just a few transactions a year, who poison the entire profession with their misdoings.

I decided to contact someone at one of the State Real Estate Boards. (I won’t say which one, but guess!) I asked what the Board thought of this report and why they didn’t implement stricter standards for obtaining a license since one of the requirements is “good moral character.” I went on to explain that court records for an agent I know indicate they are nothing remotely close to “good moral character.” (Money laundering, anyone? Jail time? Defrauding INS?) I received a large helping of apathy with a side of “get lost.” I responded and said, “So unpaid parking tickets would hold up my license but jail time wouldn’t. This system is broken.” No further response from the Board on that one.

The fact that good money can be made in the industry lures the opportunists. A 60 hour class, a test and the Board’s low standard for defining good moral character and you’ve got a license and can now profit off of people making the biggest investment of their lives. Seems wrong, doesn’t it? My Brokerage is lean and mean, and we recently discussed what we want to see in someone who is a new agent coming to our company. I maintain that all you need to be a real estate agent is common sense and a genuine love of real estate. If you have those two things, I can teach you the rest.

The problem though is that many people get into real estate for the money, not the love of the business. And when you don’t love your work, you won’t be good at it. When the money drives you, you won’t make good decisions for your clients. That’s dangerous. It’s dangerous for your clients, dangerous for you and dangerous for the integrity of our industry. Every bad agent out there makes it tougher for the rest of us to prove we’re not trying to hustle you and speed off to our next closing in our Tesla.

So, all these problems, where’s the solution? I have it. It won’t be popular but it would weed everyone out who doesn’t deserve to be in the industry and it would ensure that everyone left would be better at their job even if they are already excellent at it right now. The incompetents wouldn’t survive and the people who really love it and want to do it would benefit tremendously. What is it? More education and higher dues.

This should be hard! Getting a license to assist buyers and sellers in real estate should require at least the equivalent of a semester of college level courses. The class topics could be History of Real Estate, Contracts, Customer Service, Fair Housing, all the things now crammed into 60 hours but spread into a 15 credit semester of school - at a real college, with real tuition, not a school run by someone doing it to make some extra cash. Plenty of the “schools” out there are suspect at best, and downright scary at worst. People who have lost their real estate license for doing very bad things can still somehow teach Continuing Ed and Licensing classes - how is that even allowed?

I also think that if our dues were higher it would weed a lot of the people on the fringes out. The local associations could offset it by requiring a certain level of production, then refunding part of the dues or roll it as a credit for the following year.

So, I agree. The Industry is ripe for a shakeup. Instead of the powers that be on the State Real Estate Boards and the NAR waiting to see what’s next, they should grab hold of this and fix it with some serious requirements for our profession - before we’re all out of jobs.