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REALTOR Standards...we need a plan

It has always amazed me, how the real estate industry lacks standards. Most folks go to real estate school thinking they will come out educated. Instead they come out knowing how to pass a test...

"When in doubt choose 'c', that's what I remember. I, like everyone else sat in class bored to tears while the instructor rambled on with his own version of ancient war stories. Occasionally, he would drop us a hint as to how to answer the test question.

In real estate school I never did learn anything about how to make this business work. Upon receiving a license, I was basically "on my own."

Twenty some years later, nothing has changed. In fact, things are worse. Instead of having a broker to look after you, the brokers are now looking after mobs of 100's of people in the BIG companies. The broker in change really isn't. How can one oversee hundreds of licensees if they can't even remember their names!

What has changed in our industry is the competition. Everyone wants a piece of the action. Brokers continue to cut their fees because they can't defend their services. Instead they practice pro-bono real estate, until they go broke and get a real job.

NAR, the National Association of Realtors does a commendable job in campaigning to keep banks and the like out of our business. What they aren't doing right is making our business "special". Instead they continue to push to let our numbers swell to the point beyond reason. Having a "Realtor in every house" in not good for our industry! We need to look to setting standards, reasonable standards that people need to aspire too. Not drop into.

Standards should be associated with education. Serious education, that aids REALTORS to succeed in business. If we work on improving the attrition rate, rather than the sign up rate, we as an industry would have more respect. We need to get past the "revolving door model."

Being a REALTOR should be a destination career. Kids in school should want to aspire to a worthwhile, lifelong, rewarding career.

Are you a REALTOR? Speak up...what kind of industry standards would you feel improve your business and stature in society?

Posted by Kristal Kraft ~Denver Real Estate~303-589-2022 on 09/14/2006 11:43 PM

Comments (33)

realtor standards, real estate standards, featured, kristal kraft realtor

Originally posted at: Denver Real Estate & Relocation: REALTOR Standards...we need a plan

33 Comments on REALTOR Standards...we need a plan

SEP

2006

Bravo, Kristal- I agree completely...

SEP

2006

Here's one of the first few blogs I ever posted on AR. I think it speaks to the same issues....

My decision to enter the Real Estate profession was influenced by a number of things. I had been fortunate to have had a diverse mix of career experiences (by choice). The traits I that I enjoyed most among my favourite roles included flexibility, project management, independence, human dynamics and interaction. Real estate offers all of these things.

Having always been around and involved in the industry personally, I had often considered pursuing the formal licensing process but had never made the committment. Sadly (or happily in my case) what changed all that was the rather poor experiences I had with several realtor I had dealt with in personal transactions. Let's face it just how all doctors are not all created equally...the same can be said of Realtors.

During the licensing process, it became clear to me why my experience was probably not an anamoly.

Before I continue, I want to make it perfectly clear that this is based purely on my own experience and therefore reflects the standards within my localality. When I compare the process to my other formal training and education, I am sorry to report that it falls well short comparatively. Considering the nature of the profession is based on providing fiduciary duties, I believe the governing bodies fell well short in providing the necessary rigorous framework for licensing standards.

The entrance requirements in respect of background education are non-existant. A high school education is not formally required. Clearly this the first gaping hole in the standard.

The pre-registration courses are rather limited in scope. There are only 3 courses required and the testing standards are poor with all testing done on an open-book basis. Once you achieve a pass on each and you meet some minimal background requirements and are "hired" by a broker, you are off to the races. If someone is so inclined, he/she can easily complete these courses in less than six months, with much of that time alotted for marking/result dissemination in between courses. Even more troubling and what I think is so blatantly obvious is the lack of any "articling" requirement for new candidates. I strongly believe it would be in everyone's bests interests (ie. the public, the brokerage, and the individual candidate) for a mandatory period of articling prior to allowing anyone to trade in real estate.

It's time we raise the bar.

I think the main reason we are lacking standards is the way we are being taught. We are taught that we need to change with the times in some aspects and settle for less than what we are worth, and on the other hand we are being taught to be just like the veterans and try and act like them. Most think of this as a job rather than a career. I personally believe that you have to build a reputation for yourself rather than rely on someone elses. Some just sit back and ride the shirt tails of the big names and hope that they will get enough leads to make it. ( On a Wal-Mart salary) I will quit rambling. Still pissed about the lender thing earlier. Oh yeah, by the way, weren't we supposed to mark "B" to get passing grade?

My hat is off to you. I love everything you have said and have been saying it for years. Here in South Florida we have more agents that have never read a contract it amazes me. I have always persued knowledge in this industry. Through seminars, designations and more. The average agent does not take the time to read the contract they use

Kristal,

As a home stager I did not know there were no real standards for Realtors. I thought that was why you all went to school and why the NAR was formed.

This sheds a lot of light on what is happening in the Staging side of this industry. Open your doors to train and push as many bodies out REGARDLESS of talent or skill. Certifiy/Accredit with some mumbo jumbo acrynm so they think they are something now and release them out into the real world.

Spot a theme?

Yes! Bodies=dues. Dues=revenue. Revenue=paychecks for staff.

Does it equal longevity for the industry? NO, we keep trolling through the bodies. Untrained bodies, that unfortunately never had a chance.

Excellent post, Kristal! I have never understood why it's such a great thing that NAR boasts of more than a million members, other than to keep generating revenue.

Apparently a hot topic.

http://activerain.com/blogsview/Too-many-newbies-Realtors-?8058

Like I said in my blog; here's what's going to change.

Not much.

Too much money, too much "we've always done it that way", too much "don't care".

In Tennessee several years ago we tried to do with away with "grandfathering" and make all licensees subject to continuing education requirement.

The biggest opposition was from some of our legislators who had held a real esate license for year & years and 'graying' Realtors who had been in business 40 years or longer and needed the education most.

We finally got a high school diploma added to requirments to apply for a license.

Not our finest hour.

Our associations, including NAR, need to stop thinking about numbers and dues and enforce current rules, have mandatory post-licensing training at the local level.

The real estate business

Too easy to get into.

Too easy to get out of.

It needs to be a bigger comittment, but as these markets toughen up, I would expect agents to start "dropping like flies"

We definitely need to either have it more expensive to get in, more difficult or require more education. We aren't even required to do any sort of apprenticeship - like appraisers - at all. It's just like, take your course, take your test & GO. This isn't just a newbie issue though - there are many agents who have been licensed for years who have no clue what they are doing. Heck, one of my current clients is a licensed Realtor (inactive) for the past 20 years. He has never done anything with his license but guess what? He has one & pays his dues - NAR likes that - money for them. The current buyer's market is weeding out a lot of agents here locally. That's a start.

How difficult is it to get into Harvard to earn an MBA?....How many taleneted people apply?

How difficult is it to get into Stanford Med School to earn a Doctorate? How many talented people apply?

How difficult is it to become pass the LSAT and earn your Law Degree and be called to the Bar? How many talented people apply?

How difficult is it to become a Realtor? How many talented people DONT apply?

When NAR figures and other Real Estate bodies figure out the point of this message, maybe they'll start to understand.

Krystal,

I must admit it is the first profession I've been in that doesn't require a college degree. It doesn't even require a high school diploma in my state. Although many real estate professionals are highly educated there is no standard requirement.

When I first decided to go into real estate, I thought having to get a license from the state meant something, that it set us apart from sales people in other industries that are not licensed. However, in other industries the companies have the standards in hiring. I guess when you don't pay anyone anything you have nothing to lose by hiring warm bodies to fill seats.

One difficulty with standards is the problem-solving, negotiation, and people skills that make a good agent are subjective and hard to measure with simple test scores.

That said, a list of necessary core skills/knowledge for agents might look like this:

Good understanding of contract law.

Good understanding of legal risk management.

Simple, summary-type knowledge of construction and architechure.

Excellent communication skills - both verbal and written.

Here's one of those subjective ones: Good directional sense. Agent needs to be able to read a map!

Great post! Once again you have great insight!

Great point, unfortunately the appeal of fast and easy money has propelled real estate into the realm of the paid advertising on TV.

I have taken both the real estate license exam and the loan officer's exam in Ohio and passed both with little effort and did very well.

I hope that the industry will correct itself when the picking get slimmer and the wannabes and pretenders will take their graceful exit. Until then, it's our task to weather the storm and stick to the fundamentals and ethics until the industry purges itself.

Good luck and much success to all of you!

George

I just got done doing my back flip and cartwheel over this one! BTW... that hurt!

In all seriousness, this is a fantastic post. I believe that once the requirements are raised, we will all start to see the respect we deserve. Let's face it, many people out there are not fans of our profession.

I was having dinner with a very good friend last night who's cousin just got into the business about a year ago. He hasn't been able to perform because the market is so difficult in Michigan. So after 12 months of trying he's going back to sell cars (I know, that's very cliche). He plans to jump back into selling homes once the market rebounds.

Now, I'm not hear to debate the whole "2nd job" thing. I think that every person has to do what's right for them. However, I think that it's a really BAD idea to have 2 jobs when one is a Realtor. It makes the job of a Realtor look like a cake job. Something you can just pop in and out of. That's so not the case.

Those of us who are serious about this profession work very hard all the time. Not just when we have a customer.

Let's raise the standards folks... we'll all benefit from it!

Two different issues as I see it:

1) There ought to be tougher standards to become a licensee. Last night I was sitting at a poker table next to someone going to real estate school mostly for his own benefit "but maybe I'll put together some deals." Oh, yeah. Piece of cake, babe.

2) The part that won't change: all you need to do to become a Realtor is pay the dues. In some places it's optional. Here in the Phoenix area, if you want MLS access, you MUST be a Realtor because the boards own the MLS. There's nothing prestigious about a mandatory membership.

Having said that, I believe Darwinian theory and current market conditions will solve much of the problem. SUPRA subleases space in our office and it's amazing how many keys we have seen turned in over the last year.

I couldn't agree more but would offer the same advice for my end of the real estate industry (mortgage brokers). It's amazing how little traing & knowledge are held by some in this industry. Try a little exercise, pick a random mortgage company out of the phone book and call them posing as a 'rate shopper.' You'd be amazed how quickly they offer their rates without even a hint of trying to probe and educate a prospective client. This is just one example though. As big of a deal as the housing industry is, education is crucial.

Not to be off topic here, but I just had to congratulate you for the"Duplex." First time I've seen an addict get two gold stars side by side on the dashboard. Gives me something new to aspire to. Crap!

Should we add Duplex to LW's growing dictionary of AR phrases?

Nice job KK!

And now, something substantive in response to your post.

I am fine with low barriers to entry into real estate. I'll let anyone have their chance at building their future. But education requirements, broker supervision requirements and minimum transaction requirements should be beefed up in order to renew a license. I treat this as a profession, and want to deal with others who do as well.

This is a great post. I think it is why 80% of licensees aren't doing anything... It always amazed me that everything you study for to pass the exam is almost never used in the day to day grind.

The same problem we have in this field with education is the same problem many other fields which is that the education in many many cases is not practical education. Meaning, knowledge on how to do the job.

I'm amazed when I place an ad to hire agents at how many agents call me up wanting training because they don't know how to fill out a contract or don't know how to find a property for a client. Stuff that frankly I think takes just a bit of common sense, yet you'd think that after they took the required "Contracts" course that they'd at least know how to do that!

I actually think the State of TX is doing a good job of Education Requirements, I just think the education is linear and needs to be more lateral. When I hire new agents, I just take them through a whole scenario of dealing with the clients from advertising to getting the lead to handling the lead to helping the client to filling out the contracts to dealing with other agents to preparing for closing and after.

Actually the whole reason I started my company instead of just working for myself was because I had so many friends that were broker shopping because they were trying to find one that could train them to be successful.

ONE FINAL NOTE: A bigger reason, to me, that most agents don't do anything is because their lazy. Sorry to be so bold.

Great post & question. I think people come into this business uninformed and not aware of how challenging the long haul really is. They see us getting big checks for what they perceive as very little work and figure they want some of that too. Many people like the idea of being their own boss. Unfortunately, most really can't do it, even with proper training. Those of you who have been around awhile have seen many, many transitions in and out of the business. The stick-to-it-everyday-work-ethic is lacking for 90% of the people who come into Real Estate.

Making the test harder isn't going to solve anything, because the real test comes when you have run through your family, friends and former co-workers and, now, you have to really perform and work like a salesperson. Most can't or won't. That's why this cycle will continue, with perhaps an increase to 95% getting out before the start of year five in real estate.

Hi Kristal, great post and topic. Let's put the RE licensing requirements into perspective.

When I got my first job as a waiter I had to train for 30 days. Starting at washing dishes to making salads to working in the prep room to following another waiter for a week. During this time I was expected to learn how every menu item was made including the ingredients and had to learn to speak with knowledge on the wine list. Then I had to take a written test. 300 questions and very difficult. Not multiple choice.

I had to take a 2 week class room course and pass a background check and written test to qualify to get a license to drive a taxi cab.

It took me 2 weeks 8 hours a day in a class room environment and 3 weeks of following a seasoned salesperson before I was allowed to go on my own selling vacumm cleaners!

I took a crah course of 7 days and passed a 100 question State exam to get my RE license. No training, no shadowing a seasoned professional. For an additional fee and a 3 hour orientation I became a Realtor. I am now "qualified" to assist anybody in the buying or selling of their most expensive asset.

Now if you really want to jump through hoops to get a State license. Try getting a license to cut hair!!! Weeks and weeks of intense training.

It's a joke!!!!!!!!

The bottom line is there should be a school that actually teaches you about the business. How to manage a business, how to get listings, how to sell houses!!!, how everything Real Estate. You get out of your licensing school with the latest laws of the state and little else. There is no prerequisite of managing a business. Its not just the ethical standards, but the day to day business sense one needs. I think all new Realtors would love a course that actually instructs them in what to do! And it should be mandatory! All other industries have not only their license or requirements, but they need to ascertain a certain level to be "qualified". On the flip side, why did all of you Active Rainer Real Estate Agents go into this Business? My next Blog

I agree with you Kristal and wrote a longer reply as a separate rant.

There's a very low entrance cost to getting a real estate license. I think this low entrance bar does not push higher standards.

Linda

SEP

2006

A year or so ago, I recall reading that the AVERAGE gross commissions for Ohio real estate agents was around $36-37K. The AVERAGE agent worked around 35 hours. Those agents grossing over $100K generally worked 70-80 hrs per week.

This bears out Kristal's point in that there are too many part-time, casual agents. When the public sees these agents having so much 'free time', it lowers the public's impression of us who view the job as a career.

We agree--there are too many part-time, casual agents because the market has been so lucrative in the past few years. We are in the process of dealing with an agent (who has another full time job). Does not have a home fax machine or answer her calls in a timely manner. It has been an extremely frustrating experience.

Jay and Linnea Hanley

I'lm sure that what I have to say, will more than likely cause realtors to cringe. I feel that we did it to ourselves. We became greedy by telling others to join real estate and become our Buyer agents so that we or rather they could make a percentage of the sale. Realtors have hords of folks working for them so that they develop their own little business within the company. This word spread and more and more people joined to make the "big bucks." I know this is simplistic but I really feel that this was a deteriment to our industry.

I was very lucky to have had a Broker who spent the time educating his staff before and after getting their licenses. Each Wednesday and Saturday he offered classes. He also took a good percentage of the sale from his associates but we learned a lot which as we all know taking real estate classes and a test do not provide.

Once I felt sure of myself, I left and went to work for another Broker where I could keep more of my sales. But at the same time, the firm I hang my hat with, provides continuing education as well as support when needed.

I realize there are firms that do not offer support to the realtors and I would suggest that they leave those Brokerages and find one that does. If enough realtors did so, then we would have more realtors out there that hopefully would be getting the support and education that they need.

I agree that we need to make it more difficult to get a license in the first place. I often wonder how in the world a fellow realtor who does not have a handle on the English language ever passed the test in the first place. That has puzzled me for quite sometime. If someone has the answer to that one, I'd love to hear it.

Brokers need to be accountable for the realtors working under their license with continued education and monitoring and it is my opinion that it should be taken seriously and followed with fines if not provided. Perhaps, this will eliminate those who just want to make a buck with little or no effort.

Just my 2 cents...

JAN

2007

Thanks Kristal for this remider about who we are as professionals and what we are supposed to do! I am including your post in my article about 2007 Predictions & the Impact of Education entitled "Snapshots for the Year!

Lola Audu, CRS GRI

Audu Real Estate. www.auduhomes.com

JAN

2007

thanks Lola, I 'll have to go check out your article!

MAY

What a great post! The problems go very deep, I'm afraid. I think we need a revolution in the whole "political" structure of real estate organizations/associations. NAR, our local state organizations, and the MLS all have BIG stakes in keeping the status quo. And as long as we put up with the hoops they make us jump through for little to no return, it will stay that way. We need a nationally organized effort to create change....a daunting thought!

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