In a recent tweet storm, Brad Inman took to Twitter to vent about licensing requirements, incompetent agents, and what it will take to fix the problem. While he recommended implementing more stringent licensing requirements, penalties and watchdogs, is there a more effective solution?
What can the real estate industry do to raise the quality of the agents in the business? Everyone complains about the problem, but the issue refuses to go away. Potential solutions include raising the education requirements, requiring new agents to work with a mentor, and shifting from a desk-count mentality to focus on quality rather than quantity.
All of these fixes are like putting a bandage on a blister. The bandage addresses the symptom, but it doesn’t fix the root cause of how the shoe fits.
The root cause: a shortcut mindset?
In 2012, the Texas Association of Realtors surveyed 284 broker-owners/managers who identified what they saw as the correlates of new agent success and failure. Broker after broker commented that those who fail were agents who “shortcut training and do the minimum amount to get by rather than constantly learning.”
The same study also showed that new agents who earned their Graduate, Realtor Institute (GRI) designation and actively sought out regular education had significantly higher success rates.
The same holds true for experienced agents. I can’t tell you how many times I have spoken at a large brokerage event and the CEO complained: “I can’t believe it — all my top producers were in the first three rows. The agents who really needed to be here didn’t even bother to show up.”
Shortcutters: where there is a will, there is a way
A number of years ago, there was a continuing education (CE) provider whose nickname was “Pinky.” He would certify agents for their 45 hours of required CE for just a check and a few hours of their time. When the Department of Real Estate cracked down on Pinky, many of those agents faced losing their licenses.
Recently, the Texas Real Estate Commission (TREC) proposed a new rule that has many of the Texas real estate schools and education providers up in arms:
“Correspondence courses will not be allowed as a delivery method for TREC real estate prelicensure courses after Dec. 31, 2015, due to lack of any meaningful standards or oversight of courses delivered by this method.”
The loophole in the current law allows for “correspondence courses” when they are sponsored by a community college. A number of the private schools have affiliated with community colleges, but have failed to adequately enforce the monitoring and the hours required.
Shortcutting and disciplinary action go hand in hand
I recently researched the Texas data as to who was receiving disciplinary action, as well as how they handled their prelicensing or license renewal training. Of the 100-plus files I examined, here is just a sample of what I found:
- “Completed required 210 hours in nine days.” (23.3 hours per day to meet CE time requirement)
- “Completed 150 hours in less than eight days.” (19.75 hours per day to meet CE time requirement)
- “Records show completion of all courses on one day.”
These files point to a direct link between disciplinary action and those who shortcut their educational requirements. It’s also the same behavior that the Texas brokers cited as a primary source of transaction-related problems and poor customer service.
Complicating matters even further, when brokers do make a wrong hire, they may not be able to terminate that agent. Melissa Zavala, a San Diego broker-owner, made the following observation in an article for Realuoso:
“If the brokerage cannot require agents attend training, how can they protect their licenses from loose cannons or rogue agents? Believe it or not, brokerages may not be able to terminate independent contractors, as the 20-factor IRS test states that, ‘the right to discharge a worker is a factor indicating that the worker is an employee.’”
A new twist on whom to recruit
Based upon the facts above, brokers need to actively screen for the agent’s attitude towards education. Did the agent take the time to attend the full amount of hours required to obtain their license or did they opt for a couple of weekend seminars? For experienced agents, does the agent actively seek out education opportunities or do they do the bare minimum just to get by?
But there is another factor that goes hand in hand with an education mindset that may be even more important in predicting business longevity and service. That factor is, “Does the agent actively participate in giving back or serving their community?” In fact, this appears to be an emerging core value for many Gen Y-run brokerages.
One of the best examples is Venice, California-based Pardee Properties. This team-based brokerage has 12 brokers and 23 support people. Since Tami Pardee launched her business 10 years ago, her team has contributed over $550,000 to local charities and nonprofits. Pardee references her brokerage as her “business family.” They work and play together. Pardee was also the top-producing agent in Los Angeles for 2013, according to Terradatum Inc.’s BrokerMetrics.
Brad Inman’s solution is to “toughen rules, [have] tougher penalties, [get] consumer watchdogs in regulatory roles, [and] change the broker biz model and leadership from NAR.”
I believe a better solution is to take a hard look at the core values of the people who enter the business. Brokers should search for lifelong learners and for those who care about serving others. When agents have an education mindset coupled with truly caring about doing the best possible job for their clients and community, “penalties, watchdogs, and disciplinary action” are seldom needed.
Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, author and trainer with over 1,000 published articles and two best-selling real estate books. Discover why leading Realtor associations and companies have chosen Bernice’s new and experienced real estate sales training for their agents at www.RealEstateCoach.com/AgentTraining and www.RealEstateCoach.com/newagent.