Should NAR impose increased standards? Tiered Status? Higher Fees?

By
Real Estate Sales Representative with RE/MAX Realty Group

I am a professional, full-time Realtor in a market with about 10,000 members in the Washington, DC area. I guesstimate that nearly half of the membership likely have full-time jobs elsewhere but hold their active license due the overall low fees involved and ease of renewal.  The problem lies in the fact that these part-timers who may do a transaction a year fail to keep up with the changing market conditions and create potential issues for their clients and/or mine.  We have our clients sign a document that states we are not attorneys, accountants, home inspectors and the like but in our market, we write the contracts. Call me crazy but I think that contract preparation would be under the guise of practicing law. I recently encountered a seller trying to do a short sale for over a year and the "Realtor" assisting them had 1) been trying to sell it to a family member - Sorry but not allowed, 2) never entered it in the local MLS, and 3) took $3000 from the seller to pay off the second trust but the house will likely still be foreclosed lucky second just got 3K it probably would not have otherwise seen). I am growing tired of the incompetence and/or ignorance within the field and feel it's time for a change.  

Brian Buffini once proposed the idea of a required minimum of three transactions a year for NAR membership. At the Turning Point convention, this was met with applause but alas has failed to come to fruition and I never believe it will. With large real estate companies taking 50-60% of a Realtors commission, they will fight tooth and nail to prevent any restriction on their money making base. It costs them nearly nothing to maintain these agents and it's very profitable to them. If they agent screws up, the E&O will cover them.

I believe it's about time that NAR changes the perceived impression of Realtors (just below used car salesperson, I believe) and into the professional organization it should be.  I know and understand licensing requirements are determined by the states...I get that. How about if NAR created a tiered status? From part-time to full-time to degree holding?  Should Realtors have to disclose to potential clients that they are not working "full-time" on their behalf? I would further support NAR increasing dues membership to weed out the inactive Realtors but fear they would just drop from NAR and keep their license active.

Bottom line for me is that we represent our clients in the single, biggest transactions many of them will ever partake and that the NAR membership should be a professional one, not one that has minimum standards.

Comments (28)

Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

We already have some of the tiered status in place.  It is the Realtors holding designations like ABR, CRS, CRB, GRI, etc.  Most of those require additional annual dues to keep the designation.  The public doesn't seem to understand these designations and NAR has done a lousy job of promoting them.  I'm not sure I like forcing people to do a certain number of transactions to keep the membership.  I know quite a few people who busted their tail during 2007 and 2008 and couldn't get anything to close.  They shouldn't lose their membership over that. 

I do agree that there are too many part-time Realtors out there that are giving us professionals a bad name though. 

Jun 15, 2010 03:57 AM
Karen Crowson
Coldwell Banker Residential Brokerage - Rancho Bernardo, CA
Your Agent for Change

Two things I think help get the standard up - higher barriers to entry, up front.  I'd have been ok with that.  After completing the courses, I did not feel completely prepared to sell real estate.  I took 12 more weeks of supplemental training that contained much of what I now know to be what the actual practice of real estate is really like.

The other, is utiziling our local boards and available processes in place to file formal complaints (by the public or other agents) when agents are violating the code of ethics. 

Those two things would certainly help raise the professional standard.

Jun 15, 2010 04:05 AM
Eric Newman
Directors Mortgage, NMLS-3240 - Clackamas, OR
Loan Officer with 25yrs in Housing, NMLS-97776

I agree.  Working with hundreds of Realtors, I have had more struggles with part-timers, particularly with communication, or lack thereof.  It's hard to get action on a deal when you can't reach the agent who is at their "full-time" job.

Maybe this status or designation should apply to lenders and appraisers too?  

Jun 15, 2010 04:10 AM
Anonymous
diane schubach
Your short sale example didn't mention whether the agent was part time. I'm not sure what your issue is here. I am a full-time agent, but one of the best, most productive agents in my office has another full-time job. Don't you have educational requirements to renew your license in your state? And what's wrong with being a used car salesperson anyway?
Jun 15, 2010 04:15 AM
#12
Mark Ruda
Mark A Ruda - Fox River Grove, IL

I've never agreed with a transaction rule. Not only could one commercial deal every three years could result in more volume than three deals per year, it's quality, not quantity, that should count. 

Anyone who holds both broker's and appraiser's licenses, at least in IL, will tell you the amount of continuing education that's required is still lop-sided even after the beefed-up broker management requirement, More importantly, appraiser CE also is much tougher work to get through than most of your elective and non-elective broker or sales person CE.

Beefing up education requirements with meatier coursework is a better answer than volume quotas to keep a license.

 

Jun 15, 2010 04:40 AM
Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

I support making it more difficult to get a license, but as long as we are a 100% commission job, who is NAR to tell us how much we should work? I know many successful agents who cut their teeth part time while supporting their families and learning the business, I don't know if they got 3 deals the first or even second deal....and who are we to say they have to. If they do something unprofessional....then handle that within the discipline arena and with their brokers.

 

Jun 15, 2010 05:34 AM
Rick Schwartz
William Raveis Real Estate - Danbury, CT

Ditto what Karen Fiddler said

Jun 15, 2010 05:42 AM
Anonymous
Who said that? Oh.

I do find it incredibly amusing that real estate professionals are creating 90% of the negative comments about real estate professionals. If you are concerned about your public persection you might consider simply shutting up! Meanwhile, be prepared to spend you newly acquired extra time simply making sure the transaction is done properly. Don't you folks have internal local board channels to clean up your act.

Jun 15, 2010 05:48 AM
#16
Anonymous
Anonymous

And I do support much higher fees like other professionals pay (doctors, lawyers, accountants...etc...), somewhere in the thousands per year, 5k to 10k, that would keep the rif-raf out of the business and elevate the barrier to entry, thus increasing the quality of professional agents. Either you are in the business as a pro, or you are not.

That simple.

Jun 15, 2010 06:02 AM
#17
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Perhaps instead of punishing or excluding people we should promote the designations more and have the public understand the advantage of those designations.

Jun 15, 2010 07:24 AM
Win Singleton
Summit Web Design and Long & Foster Realtors - Falls Church, VA
Web Designer & Associate Broker

Craig,

You wrote - "I am growing tired of the incompetence and/or ignorance within the field and feel it's time for a change."

While I especially agree with your statement, in response I would ask, "Where is the principal or supervising broker of the office?" The ignorance or incompetence of an agent in my opinion can be laid directly at the feet of the person in charge of managing (or failing to manage) the real estate company who is allowing these individuals to "commit murder and mayhem" upon the unsuspecting public.

In an increasing era of "virtual offices", in so many instances, no one is really minding the store any more. You are at RE/MAX Realty Group. Is your principal or supervising broker aware of all of the details on each of your on-going transactions? (Years ago, the manager did or was expected to.) If so, then your office is unique these days and your broker should be applauded. But knowing the RE/MAX system, I suspect not.

Agents are demanding higher and higher splits, leaving little or no extra money for the brokerage firm to give "top flight" training to new or experienced agents. Individual states are offering on-line continuing education to fulfill license renewal requirements rather then requiring agents and brokers to physically attend the classes. Yet there is no assurance that the person taking the on-line course is even the real licensee! It could be one of their kids who is far more computer-savvy. It could be one of their friends hired to do it for them on-line. I have personally known of brokers who were able to complete 24 hours of required Continuing Education on-line in under 1 hour and 15 minutes! Did they get any education out of those on-line courses? No! They stayed on the computer just long enough to pass the on-screen test. And they could keep going back again and again guessing at the answers until they got a passing grade. How educational! ;-)

To my way of thinking, this is not about creating a tiered status. Instead, it is about how we as a profession are allowing this to take place... because no one seems to or wants to be bothered any more. "Oh, I don't want to have to drive to a Continuing Ed class!" "All of my agents work from home these days. I have no clue what they are up to. They don't tell me. And I don't really care as long as we get our monthly fee from each of them and they don't get the company into a lawsuit."

I have been a real estate broker myself for 34 years. My parents, who both got licensed in 1961 and got their broker's licenses in 1963, took great pride in running a well managed and tightly supervised real estate firm with well trained agents... until they both passed away. So as one who has been aware of almost 50 years of real estate practice, I just shake my head today at how our profession seems to be changing for the worse... not for the better.

Jun 15, 2010 08:20 AM
Danny Batsalkin
Keller Williams Realty - Beverly Hills - Beverly Hills, CA
Los Angeles Real Estate | 310.432.5706

Mike Ferry (real estate coach and trainer) proposes a minimum of 25 closed transactions annually after the 5th year of having your license.  I agree.  3 transactions per year is way too low.

Jun 15, 2010 09:32 AM
Carl Schumacher
CIDM Real Estate - Grand Rapids, MI

I once read a joke that went something like, "When a cop pulls over someone in California, they approach the car and ask to see the drivers real estate license."

In the 26 years I've been in this business I can't remember one that didn't include discussing this topic at least once or twice a year. You're right about one thing, the big brokerage companies are never going to support stricter licensing. Too much money at stake for that to happen.

One thing I learned many years ago is that, as an industry, we give sellers and buyers way too much credit for what they may know about how the real estate brokerage business works. Most of them know far less than we give them credit for. And why would they know? With the exception of investors, most people only buy or sell real estate once or twice in their lifetime. By the time they return to the market (If they do) everything is completely different than the last time they bought or sold. They don't need to keep up with all the changes that take place during their absence. We tend to assume that they know the difference between a professional full time REALTOR and a part time friend or relative. In my experience, they don't. And expecting that they will ever do due diligence on agents BEFORE they get involved with one is a fantasy.

If I had $1,000 for everytime I've heard, "Wow, wish we'd known about you before we bought/sold" I'd be writing this from a sugar white beach while sipping a cool cocktail out of pineapple with an umbrella garnish. Once the money is spent, all you can do is hope that when they enter the market again in 20 years, they think of you. How much will you have to spend on postcards and birthday cards to make that happen?

That's why much of your marketing should be trying to get referrals. Your friends and relatives just can't be relied upon to give you enough business to survive. It's a numbers game and referrals is one of the keys to prospecting in this business if you want to live.

I don't anticipate this changing much in my lifetime. BTW, I posted a response to a news story the other day and mentioned what I do for a living in the comment. One of the replies I got back started out with, "slimy real estate broker." Like water off the back of a duck son, like water off the back of a duck . . .

One more thing, a professional proof reads and spell checks their communications before hitting that submit button. Hopefully I haven't missed to many mistakes in mine. Just sayin'

Carl S

 

Jun 15, 2010 10:25 AM
Lyn Sims
Schaumburg, IL
Schaumburg Real Estate Agent Retired

I don't want any increases from the buffoons getting my dues. They are padded fat already.  I am not in favor of your tiered system, it just doesn't make sense to me. Buffini is a grandstander in this regard (I do follow him BTW) & offers no real input to the plan.  I think that YOU, personally, should begin your fight right there at home.  Start in the Washington area, forget about policing nationally.  If we all took real care & oversight with our own markets think what could be accomplished?  No one gets involved but everyone has a complaint.

Jun 15, 2010 10:38 AM
Melissa Mika
Keller Williams Realty Elite, REALTORS, Chesapeake, VA - Chesapeake, VA

I have to say that, sadly, the same thing could happen with a non-REALTOR, so NAR making any changes would not benefit the industry much.

Even with what you propose, we would still have a few unethical people who give agents a bad name, regardless of if they are full time or part time.  No designation of education status will change that either. 

I am active duty Navy and will retire in 8 years.   My intent was to get an inactive license and do part-time assistant work for any agent, even for free just to learn.   I got an active license only after I realized the benefits of it, (and I only work 3 hours a day at my navy job on shore duty) I get mentorship from seasoned agents at my office and online here, I get training through NAR and REIN and I get to watch and study the market with a little more insight than just your avg. Joe.     

I only take on clients that I feel confident I can provide the best service to.  As a KW agent, I have a mentor, and if neccessary, any other agent in the office to help me, or be there for my client in case of emergency when I cannot.  We split the commission of course, so it is just like a business partnership, and my clients are aware of this. 

I could appreciate a better education requirement to get a license, like learning more about lending, steps of transactions, and how to study the market. 

The state exam I took mainly dealt with land uses, Fair housing laws and ethics.    No way did I feel confident getting out there to assist people in the biggest transaction of their life,  which is why I am so thankful for the KW Culture! 

Jun 15, 2010 10:44 AM
Craig Rosenfeld
RE/MAX Realty Group - Gaithersburg, MD

This has been a great exchange and with some great ideas. After reading everyone's thoughts, I must agree that NAR may not be the right answer although I would continue to support increased barriers to entry and higher continuing educational requirements.

In the DC metro area, there are two big players who hold the licensing courses and as a result, take on a majority of newly licensed agents. These companies will lobby greatly at the local and state levels here to prevent any increase in licensing requirements. These two companies are also at the top of the local board associations. Seven years ago when I became licensed, we never even saw a contract through the licensing course and the instructor gave us the answers to the exam. I guess they figured that for the state exam we would be on our own. Maybe, the State should require newly licensed agents to have an experienced mentor for the first 12 months or 10 transactions or whatever number is deemed appropriate. This could help.

Unfortunately, we only police ourselves and few are willing to take the effort to report issues unless they are extreme. Lyn is right.."No one gets involved but everyone has a complaint." I don't think we can reasonably expect broker/owners to know the details of every transaction..it's impossible as they can only know what's shared. In an office of a 100+ Realtors, it's even more difficult.

@ Greg..my standards are impeccible. I would disagrree that discussions like this make us look worse. In fact, if we are trying to increase standards, it should only make us look better. Many buyers, especially first-time buyers are easier targets for many inexperienced agents. They look at us as professionals and we need to be. Who's protecting the client? Do we need to wait to it has to involve the lawyers and ethics boards? Why can't we as an organization step to the forefront to protect those we serve.

 

@ Jenna...being married to an attorney, you are in the same situation as we are in Maryland, DC and Virginia. Pre-printed forms and fill in the blank. However, there is still room for error and despite the pre-printed forms, you are still preparing a contract. In New York, it is all handled by lawyers, not Realtors in the contract preparation.

Karen and Rick- I am a 100% commission Realtor and won't operate under another option. However, I understand some of fellow Realtors don't want to have to write the check every month and that is fine. Whichever option an agent feels is best suited for them, so be it. However, 100% or not, I don't think should have any effect on the barriers to entry.

Lastly, to our friendly "Who said that? Oh." in comment 16...take stake in your own advise and consider disclosing who you may be to the community, not hide behind it. Our community, like all have a process for addressing grievances. It's far from perfect and and as Lyn addressed, lacks involvement. It seems that numerous members feel that there are issues that could be addressed and this is a great medium to discuss issues like this. By just "shutting up" as you so eliquently suggest, we can never improve.

Spell check utilized. Have a great night all and let's keep the conversation rolling!

Jun 15, 2010 02:43 PM
STAN GRAHAM
ARIZONA ELITE PROPERTIES - Gilbert, AZ

In 1 state and only 1 state - Arizona licensees are defacto attorneys, by constitutional amendment.

See Arizona State Consitiution below:

ARTICLE XXVI ..Section § 1 OF THE ARIZONA STATE CONSTITUTION (Powers of a real estate Broker or salesperson) Any person holding a valid license as a real estate Broker or a real estate salesperson regularly issued by the ADRE, when acting in such capacity as a real estate Broker or a real estate salesperson for the parties, or agent for one of the parties to a sale, exchange, or trade, or the renting and leasing of property, shall have the right to draft or fill out and complete, without charge, any and all instruments incident thereto including, but not limited to, preliminary purchase agreements, and earnest money receipts, deeds, mortgages, leases, assignments, releases, contracts for sale or realty, and bills of sale This makes the

 “defacto” defined as: de facto adj. Latin for "in fact." Often used in place of "actual" to show that the court will treat as a fact authority being exercised or an entity acting as if it had authority, even though the legal requirements have not been met.

As others have noted, many agents and brokers earn their way into the business “part-time”, but the risks involved in Arizona represent a very large risk to those not practicing everyday. Arizona licensees can do far more than fill in the blanks  And every right has a responsibility so it can get really scary here.

Jun 15, 2010 04:33 PM
Richard Bazinet /MBA, CRS, ABR
West USA Realty - Scottsdale, AZ
Phoenix Scottsdale. Sellers, Buyers & Relocations

Good post Stan. The responsibililty is real and I agree that the part-timers may be taking huge risks.

Jun 15, 2010 04:41 PM
Deborah Dade
RE eBroker, INC. - Eastvale, CA
Realtor

I am a part-time Realtor who does around  2-4 transactions a year. I am well educated and keep up on all the current changes. I belong to thelocal board, CAR,NAR and and am involved in my local community. I currently do not do alot of marketing ($$) , because most of my business comes from referrals.

But I need to say, I feel offended that people here on AR think that just because I am part-time, that I am any less qualified than a so called full-time agent.

I work FULL-TIME for my client, and that is what is important. If I wasn't doing a good job, I don't think I would be getting the referrals from past clients, and lenders I have worked with.

I look here on AR for agents to refer my clients to, and I will say that the agents from the NAME brand companies are the ones who are less likely to request or respond to my referral.

I have been commended by escrow officers, appraisers, inspectors and lenders for my knowledge and competence in handling transactions.

I pride myself in the fact that I keep up with the current changes, regulations, lending changes etc. I also learn so much here on AR.

I attend the Expo's , seminar's, classes and anything else I can, to gain more knowledge in my field.

No I do not have a fancy designation, but I KNOW I am good at my job. I can sleep at night knowing I did the best, ethical job for my client that I possibly could.

I go out weekly and preview homes, even if I do not have a current client. I need to keep up to speed on my areas.

Everyone has to start somewhere.

Enough said.

 

Referrals welcome to the Corona area

Jul 06, 2010 03:28 PM
Matthew Bartlett
Hill Top Real Estate/BRE Lic. #01353034 - Glendora, CA

Hello Craig, I certainly understand your frustration with the poor quality of certain Agents. I have had my fair share of dealings with them in my market. Though I personally do not think a tiered system is the answer. I believe it starts with each State's Legislature. The testing and State requirements should be much more challenging to the prospective Agents. Here in California it's my opinion that the test is not hard enough. Furthermore, it does not educate the prospective Agents in what to expect in actual market dealings. Example, you're never shown an actual State Contract Form when preparing for your State Exam. This is sad, but reality. When I was starting out it was my Broker & Office Manager that sat me down on a weekly basis and walked me through the contracts line by line. The State testing process should never focus entirely on generating money for the State. Sadly, this is exactly how the process is viewed. The Broker is the next step in the process that can do a better job. Each Broker must make it his/her goal to teach each Agent that joins his/her company how to be the best possible Agent he/she can be, how to create and run a business, the importance of honesty in every way possible when dealing with the public, and most importantly, always continue the educational process throughout your real estate career. Always make it your goal to learn and improve. Unfortunately, there are some Brokers that take the stance of "here is your desk and phone now go out and sell, sell, sell!" 

When I was going through the licensing process eight years ago I spoke with many Brokers before making my decision. It was important to me that I choose a Broker that would teach me how to run a real estate business. I found that Broker that I was looking for and have remained a part of the Team to this day. My Broker makes it his goal when he arrives in the ofice to help each Agent be the best he or she can be. Monday through Friday there is some type of training going on in the office. The training classes cover, marketing ideas, contracts, sales trends and much more. Each week at the Sales Meeting the team is brought up to speed on current market trends, important legal and legislative updates etc. Lastly, it's important that we as REALTORS help to educate the public about choosing the right REALTOR to help them sell and buy a home. Express to them the importance of asking the right questions when interviewing a REALTOR for the job of selling and buying a home! Thanks for the post.

Jul 24, 2010 05:26 PM