There may not be a better organized trade group than Realtors. The real estate world collapsed in an epic way and continues the dead cat bounce, yet the agent community has experienced no significant change.
Why has the sales community not been dismembered and regulated like others in the real estate field? Why have the requirements not been increased to obtain and maintain a license? Why is there virtually no state or federal oversight like that in other areas? Why has the process to obtain and maintain a license not substantively changed?
One might point to enormously powerful lobby, a steady stream of revenue to state and local organizations and brokerage business plans that rely on monthly agent fees as a revenue foundation.
The requirements to obtain a real estate license are laughable. To obtain a license to sell real estate in Georgia, one is required to pass a background check, sit and pass a 75-hour prelicense course, then sit a 25-hour post-license course within a year. There are no experience requirements for a salesperson’s license.
The requirements to obtain a broker/associate broker license include a background check, completing a 60-hour broker prelicense course and passing the exam, and being licensed on active status for at least three of the previous five years. A salesperson can apply after three years of active service. There are no performance requirements for a broker’s license.
Contrast that with becoming an appraiser in Georgia. A background check is required along with sitting and passing a 90-hour core course of study. At this point, one is considered a “registered appraiser.” But this does not permit unsupervised work — it merely allows the new appraiser to try to work as an apprentice for a licensed appraiser.
To become a “licensed appraiser,” one needs to sit 150 hours of core course work, pass a comprehensive exam, sit and pass an exam for a 15-hour Uniform Standards of Professional Appraisal Practice (USPAP) class, and submit an experience log showing 2,000 hours of verified field work under the direct supervision of a licensed or certified appraiser (with address, type of report, date, hours worked, each entry signed by both parties).
To become a “certified appraiser,” one needs to sit 200 hours of core course work, pass a comprehensive exam, sit the class and pass an exam for a 15-hour Uniform Standards of Professional Appraisal Practice class, hold at least an associate degree from an accredited college or university, submit a detailed log demonstrating 2,500 hours of verifiable field work (must be completed in a 24-month window with at least 25 percent being complex work with one- to four-family properties, and must include the same details as that for licensed logs).
To become a “general certified appraiser” (commercial, nonresidential, etc.), one needs to sit 300 hours of core course work, pass a comprehensive exam, sit the class and pass an exam for a 15-hour Uniform Standards of Professional Appraisal Practice class, hold at least a bachelor’s degree from an accredited college or university, submit a detailed log demonstrating 3,000 hours of verifiable field work (must be completed in a 30-month window with at least 50 percent being nonresidential, and must include the same details as that for licensed logs).
Appraisers are required to complete 14 hours of continuing education each year and updates to the Uniform Standards of Professional Appraisal Practice every second year and pass the associated exam. Agents are required to complete 24 hours of continuing education over a four-year period, with no exams required.
The appraisal industry experienced substantial changes after the savings and loan debacle back in early 1990s, when licensing requirements were instituted on a national level. The industry took the brunt of the hit during the crash. Micromanagement by Washington and the creation of the Home Valuation Code of Conduct resulted in third-party management firms, and a literal gutting of the industry as experienced appraisers left the retail side. Yet the agent community saw no changes. Absolutely nothing.
Consider basic licensing requirements for other regulated professions in Georgia:
- Cosmetologist license: 1,500 hours / 3,000 hours apprenticeship
- Esthetician license: 1,000 hours / 2,000 hours apprenticeship
- Nail technician license: 525 hours / 2,050 hours apprenticeship
- Barber license: 1,500 hours / 3,000 hours apprenticeship
Add to those additional requirements for health regulation standards, regular inspections, business licenses and continuing education.
Appraisers, barbers, nail techs, trainers, masseuses — all require a lengthy apprenticeship period. Financial planners, stock brokers, CPAs, accountants — all have much higher bars to entry, education requirements, testing, internship requirements and more. The latter group with a direct influence on the financial well-being of a client — much in the same way a real estate agent does but with diametrically opposed licensing requirements and oversight. This, despite the calamity of the real estate crash in which agents played a major role.
In Georgia, agents perform functions that are handled by attorneys in many other states. They show homes but also write offers, negotiate contracts, arrange various inspections, attend closings and act as general counsel to clients. Attorneys here represent the lender at closing, not either party; their role in a real estate transaction is to ensure proper and legal transfer of title and to ensure the mortgage is properly recorded. Unless independently contracted, lawyers offer no legal or contractual advice.
Drastic changes have been and continue to be made to every component of the real estate industry except the most important and visible part of it. The agent is the “face of real estate” and has the most impact and influence on a buyer or seller, yet nothing has been done to raise performance standards despite the scrutiny paid to every other related field.
The power of the national and regional Realtor organizations and lobby cannot be debated.
If you are just getting started in real estate, make sure to check out our real estate glossary.
Hank Miller is an associate broker and certified appraiser in Atlanta, Ga. The lead agent for HMT Atlanta, he’s known for his candid opinions and real estate expertise.