FEWER REAL ESTATE LICENSEES. GOOD OR BAD?
November 5th, 2008 by admin
THE REAL ESTATE MARKET IS THINNING OUR RANKS, GOOD OR BAD NEWS??
* * * * HARD CORE REAL ESTATE TALK * * * *
HOW MANY REAL ESTATE LICENSEES CAN THE COUNTRY ABSORB?
ActiveRain member Paul Henderson reflects with sadness the numbers of Realtors leaving the business and the loss of brokerage offices. Perhaps there is a different view. . . .
HAVE WE SACRIFICED QUALITY FOR QUANTITY? I believe that our ranks have needed thinning for far too long. Low entrance requirements encouraged part time, untrained, unskilled and often down right risky agents. With the numbers of offices that offer minimum supervision, inexperienced agents are not receiving the training to even begin their real estate practice. I, for one, am very glad to see a retraction.
60 HOURS IN A CLASSROOM AND A MULTIPLE CHOICE EXAMINATION AND YOU HAVE A LICENSE TO PRACTICE REAL ESTATE SALES. Getting a real estate license is just too easy. Brokerages recruit new agents if they can find the office because, with a 50/50 split, if these new licensees bring in 1-2 sales of friends and relatives, it was profitable for the broker. These unskilled agents may be dangerous for the consumer, but they are extremely profitable for the brokerage. The primary function of many brokers or office managers is not, as is often thought, agent supervision or office management. A manager’s primary job description is, for many companies, recruiting new agents. Many large offices offer real estate classes which serve as a primary recruiting tool.
NEW AGENT TRAINING. We have brokers offering new agent training for a fee, one of which I’m aware in my area is $600. Is agent training a responsibility of the broker as is suggested by the license law of many states? Or, agent training a profit center?
The end result of a reduction in the sheer numbers of licensees and Realtors may result in a much needed rise in the average REALTOR’S annual income:
- While Realtors who have spent two or less years in the business had a median income of $10,500 in 2007, those with three to five years of experience . . . . . . Inman News, May 2008.
BETTER NEW AGENT TRAINING IS NEEDED. Recognizing the need for better new agent training, many states are now requiring significant Post Licensing Training which is mandatory for new agents. This is encouraging. However, before that new agent has even completed the required new agent training, they are able to represent buyers and sellers.
WHERE IS THE SUPERVISION? Agents often ask questions of their peers through such forums as ActiveRain. We know from reading ActiveRain posts that many agents are not skilled in the most fundamental skills required to represent the consumer in a professional manner.
Experienced agents and brokers may write about financing types, property valuation, contingencies, settlement procedures, real estate and mortgage regulations, etc,. Inexperienced and unskilled agents ask “how to” questions. The risk is that the answers they receive will not be accurate or reflect the license law of their particular state. It is their broker to whom their “how to” questions should be directed. Unfortunately, many brokers and managers are preoccupied with office routines and recruiting new agents. The name of the game for growing brokerage companies is market share of agents and listing inventories.
Much of the “training” received by new agents has little to do with contract management skills or license law. Most office meetings are sales training session, sharing listing information, broker products, etc. Sales training is paramount for brokers because new agents learn early on that the most important part of their job is getting listings through contacts with friends, relatives, neighbors, spheres of influence, farms, etc. for property listings.
WHY ARE UNTRAINED AGENTS RISKY? Below is a listing of the categories of consumer complaints to the Maryland Real Estate Commission. None of the categories of complaints are related to business development. Of course, many abuses of the Realtor Code of Ethics would be filed with the Real Estate Associations of Realtors or Real Estate Boards of Realtors and not the Commissions or Boards regulating licensees. But, it’s interesting to review the causes of complaints to the licensing authorities. While there may be agents that violate license law through habit, negligence or expediency, I believe that most violations below result from lack of experience and/or training.
TOP REASONS FOR CONSUMER COMPLAINTS:
Failure to disclose material facts
This could be to buyer or seller. For a listing agent it could be failure to disclose flooding.
For a buyer’s agent it could be failure to disclose financial condition, insufficient funds for escrow.
Giving advice to buyer or seller that would result in future problems.
This includes telling buyers that home inspections are a waste of money.
Failing to keep copies of contracts and provide copies to buyers and sellers.
Buyers and sellers are entitled to have a copy of any document that they sign WHEN they sign.
Asking buyer or seller to sign blank forms.
Asking sellers to sign blank listing forms or buyers to sign blank contracts or addenda.
Failing to provide Disclosure/Disclaimer Forms
Failure to have seller complete the forms and/or failure to provide to buyer before the contract is
complete represents an incomplete contract.
Not depositing escrow funds within 7 days of ratification of contract.
Brokers control escrow accounts and money is deposited immediately following contract acceptance.
Failing to disclosure Deed Restrictions or Covenants by Distribution of HOA or Condo Documents
Buyers have a period of time to review and rescind a contract when documents are received.
Changing the terms of buyer financing from conventional to FHA without agreement of seller.
This changes the net to the seller. Buyers making application with new lender and not pursuing loan
accepted by seller when contract accepted.
Failure of agents to use the full name of their broker in advertising.
The consumer must be able to contact the broker through the agents advertising.
Agents failing to disclose known flooding in listing.
If the agent knows, they must disclose, even if the seller doesn’t want to.
Source: List obtained from course material at a Continuing Education class in April, 2007.
WE DON’T NEED 1,200,000 REALTORS. WE NEED SKILLED AND EXPERIENCED AGENTS.
This entry was posted on Wednesday, November 5th, 2008 at 5:55 am and is filed under OPINION. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.
