- Fee generation appears to be the only logical reason for keeping the entry and retention bar so low; clearly there is no demand for so many agents.
- The horrific public opinion of real estate agents is exacerbated by the number of agents who are unprofessional, yet nothing is done to cull them.
- Real estate is a profession, and done correctly, it takes an inordinate amount of skill and expertise. The ridiculous number of opportunities and incompetent agents undermine the credibility and work of the true pros.
When will we look in the mirror? When will the public’s opinion of us as buffoons finally spur action from within? When will we stop calling ourselves professionals and actually take steps to be professionals?
If you are not fully invested, this is not your profession — this is a hobby. And your hobby continues to smother those of us who are true professional agents.
Disruption has been a $5 word over the past several years, and nothing has disrupted the real estate world like the internet. The fastidiously well-maintained and seemingly impervious walls of secrecy have been obliterated; previously highly classified MLS information spilled into the public domain along with information including demographics, schools, tax records and pretty much whatever anyone wants.
The genie is out of the bottle, and we are all better for it. Except for one thing: this agent thing. Why are there so many, and why are so many just so — bad?
This industry has to raise the entry and retention bar; a profession does not operate in this manner.
A profession does not have an insanely high percent of members who do not earn a living in the field, nor one without any type of apprenticeship, nor one with such a large percentage of members who never complete a transaction, nor one with so many who never make it to their second anniversary, nor one that just harbors members who are incapable of successfully operating in the current environment.
If this is a profession, why don’t we act like it and demand professionalism?
What if we took a cue from the appraisal industry? What if we set minimum standards for new and existing agents? Save the comments; it’s understood that there are still subpar appraisers, but there is no argument that raising the standards improved things. Why not three agent classes that reflect education and experience? For new agents:
Registered or Trainee
- 90 hours in the classroom including case studies and contract prep
- High school grad or equivalent degree
- Criminal background check
- Learn terms, definitions, basic appraisal, basic mortgage, basic legal, write/review/explain contracts
- Must have supervisory broker signature as responsible reviewer on all transactions
- Above plus
- Minimum 30 hours accredited college credit
- Pass a comprehensive standards exam that tests real world knowledge
- Provide a detailed apprenticeship log showing a minimum of 2,000 hours of active, supervised work that is signed by the supervisor(s)
- Above plus
- Bachelor’s degree or above
- An additional 75 hours of advanced class study
- Provide a detailed apprenticeship log showing a minimum of 2,500 hours of active, supervised work that is signed by the supervisor(s) over the last 24 months
In short, this does a few things:
- Ensures a real desire to be an agent, not just possess a license to poach relatives or friends.
- Requires sweat equity on the part of the prospective agent.
- Requires the managing broker to be actively responsible for
- Requires the agent to obtain real world experience via apprenticeship type of work.
- Limits an agent’s ability to misrepresent his or her experience to the public thereby raising the credibility level to some extent.
Existing agents — the professional ones — have that real world experience, and it should be recognized. However, time in service does not mean experience and skill — closing deals and being active does.
Consider the same three-level format but leveling based on volume/gross commission income or number of transactions:
- Maybe earning less than the median household income for the state or similar criteria is the lowest tier. Maybe the “million dollar club” in overall volume — area dependent.
- Maybe GCI/sales volume in the top 25 percent of that market is the highest tier.
- Maybe everything between the two is middle tier.
- Clearly, this will be a sliding scale as this is a fluid business
- Establish an experience-for-college tradeoff. Many top agents lack a college degree but are outstanding in the field. However, college and a degree demonstrate an ability to complete a challenge, and college is viewed as important in professional arenas. Few true professions do not have a college requirement.
- To ensure rankings stay current, the rolling production average over the past two years would be reviewed on the agent’s birthday. Classifications might change based on that average.
- This boils everything down to individual agent performance and production. And it ensures that the agent is accurately portrayed in the public’s eyes.
Will it be a challenge to do something like this? Absolutely, but the upside is huge. Public opinion will improve; the industry will shake off a massive amount of parasitic agents, and the industry as a whole will become smaller and more efficient. We are a bloated babbling blob right now.
All that said, let me introduce you to the 800-pound gorilla in the room, his name is agent fee. Our industry loves him because he — particularly when a young rookie — spends (wastes) lots of money.
Broker fees, board fees, marketing, MLS, signs, websites, pretend designations, leads, coaching — it’s no secret that fees make the real estate world go ’round. It’s also common knowledge that recruiting new agents is at least as much of a priority for brokers (and many agents) as actually selling real estate.
So the confounding conundrum is clear; why would the industry try to reign in agent fee when he is its centerpiece?
The answer is simple; though the industry has been forced to talk about its clown show reputation, talk will be it. Consider the cataclysmic real estate crash and aftermath; there was one segment that rose from the rubble completely unscathed.
One group simply brushed the dust off their shoulders, rinsed the grit from that pearly white smile and told the public “it’s a great time to buy or sell real estate.”
Hank Miller has been an active certified appraiser and associate broker since 1989.