- "Raise the bar" is more bullhorn than boots.
- Incremental change is insufficient.
- International regulation should focus our industry on prompt action.
I’ve been trying to write this for some time, but it’s difficult to put a positive spin on it. I’ve put it back on the shelf a half dozen times, but after having a chat with Brad Inman in Seattle this week, I thought: “This is Inman. Just let it rip.”
So, here goes:
The real estate industry has a perpetual ritual. It’s titled “raise the bar.” After a decade of observing it, I wonder whether it’s a choreographed song and dance rather than a call to action.
The lyrics come from rote memory: “More education! More training! Higher barriers! It’s too easy to sell real estate!”
Self-flagellation follows: “There are too many bad agents. It’s our fault. It’s our brokers’, our licensing boards’, our associations’ fault. Mea culpa, mea culpa, mea maxima culpa.”
Feeling relieved to have aired our indignation, we return to the status quo until next year’s performance.
Paved with good intentions
To be fair, expressing our desire to better our industry is valuable. There are many people who have devoted their efforts to improve our practitioners.
That the progress is so slow is perplexing, though. With countless voices proclaiming to be the prophets of professionalism, there are far too few putting those words into action.
“Somebody should do something.” This is our usual unenforceable delegation. The National Association of Realtors, brokers, the state licensing board — someone else should raise the bar and shrink the pool of ill-equipped agents.
I’ve had the privilege of sitting through the conference calls and meetings with committees, task forces and licensing boards that intend to raise real estate standards. There’s a revolving door of well-intentioned people who express their viewpoints but won’t endure the process.
There’s little continuity. Little moves forward. The stalwarts become jaded and begin to give up (mea culpa). The bar remains the same. More untrained agents get licenses, write contracts and balloon the already overcrowded rolls of consumer complaints-in-waiting.
More agents, not fewer?
A counter-narrative to the overpopulation of agents has popped up recently. It strikes me as bizarre, and it goes something like this:
There’s a problem with the aging population of agents. The boomers will retire, and we won’t have enough knowledgeable practitioners available. The public will be underserved. Unfit entities will fill the void.
The real estate market must be booming if this is our current concern. There are roughly 1.5 million agents today. There are 5 million homes sold annually.
Retiring agents will train their successors. Larger, more efficient teams will take up the slack for those that don’t. If we cut the agent population in half, we’d still have plenty of manpower to handle consumer demand.
The demographic trends are an interesting study. The aging population won’t create a shortage of competent agents, though. Let’s put that distraction to bed.
NAR membership: Crutch or benefit?
There’s also been talk of NAR’s compulsory membership being an impediment to its members. Its revenue would suffer if it supports barriers to membership that reduce headcount.
It could, however, gain a more selective group of members as its distinguished Realtor representatives, according to a thought-provoking piece by Russ Cofano. If NAR didn’t compel membership, maybe only the best and brightest would rise to the top, uniquely identified as Realtors for all consumers to see.
That’s an engaging topic for the trade association. It won’t change the landscape of the overall sales force, though. We will only improve the industry’s reputation by creating standards that ensure all salespeople, Realtor or not, have the proper training and experience to do business with the public. If that means fewer members and fewer licensees, so be it.
Winter is coming
If we needed a wake-up call, the winds of change are storming in from the North. British Columbia, Canada, is attempting to put its real estate industry into a regulatory stranglehold. Canadian real estate has been dancing on the bar as long as we have. The Crown is tired of waiting for it to get down.
Rob Hahn put together a thorough breakdown of the potential changes. The regulations potentially placed upon B.C. real estate practitioners and the powers stripped from their associations would be sweeping.
Whether those winds spread to the U.S. is still in question. That we should be prepared for the possibility is not.
The essence of the government’s argument is that the real estate industry was allowed to self-regulate. It was given time to work out issues. It failed to act.
Our regulatory environment is significantly different, but we’d be foolish to ignore the implications.
Raise the bar: Brass tacks edition
We have reasons to improve. We have the motivation to improve. So, what would it take to discourage the hobbyist agent from dabbling in real estate?
Incremental changes won’t work; 200 hours of annual education isn’t enough. We all know about those online education schools (wink, wink). Licensing fees of $1,000 aren’t enough; $5,000 Realtor dues might not even be enough. Agents can make five-figure commissions on a single transaction. Two to three sales a year is a significant second income for many.
Higher education requirements and fees are popular suggestions, but they miss the point. Only training and on-the-job experience teach an agent how to run a business and act like a professional.
A required apprenticeship would be a beneficial barrier and a boon to the real estate sales profession. It’s not a new idea, but it’s one that is usually passed over for easier so-called fixes. That’s probably because this kind of radical change would require immense, broad support.
Before licensees ever work solo with a client, they should work as an apprentice to an experienced agent for a significant length of time.
This isn’t a manager signing off on contracts. It’s a mentor required to train an apprentice in the full world of real estate. That’s more than paperwork. It’s interacting with clients and customers, marketing, business building, conflict resolution, etc.
Of course, this won’t affect the legions of hobbyists who already have licenses. When you’re in a flooding boat, though, your best bet is to plug the leak before bailing water.
Boots on the ground
Are we dancing or are we lifting? Our actions will make the answer clear. If you feel the need to talk about raising the bar, take the next step.
Engage your local Realtor association, your MLS board, your brokers and your managers. Prepare for a long haul. It’s not glamorous, but it’s necessary.
The irony doesn’t escape me — I’ve been dancing while you’ve been reading.
So I’ll shake off the cynicism and get back to work. I hope to see you there.