Continuing to build on yesterday’s post about what I think about various aspects of real estate.
Licensing and maintaining a license:
This is where I think the industry dug its own grave and then climbed in. The test was fairly easy (I took 45 minutes of the allowed four hours and scored in the high 90s (out of 100 (70 is non-passing; maybe I am a good test taker as people do fail to pass on the first try and go on to be very successful)) and realistically I never have to sell a single piece of property to maintain my license if I pay the fees and take online continuing education classes. By joining Prudential, I had an additional two weeks of training but that wasn’t transactional. Yes, a new broker has to work for a principle broker but that oversight runs the spectrum from minimal to spectacular.
My license is no different than someone that starts as a Realtor today. I think there should be a Provisional classification for those that are new to the industry or don’t complete a certain number of transactions in a year. The provisional agent would have increased oversight requirements during the transaction (review documents before they are signed rather than after). Six transactions would probably be appropriate (then you have to also consider whether dollar volume goes into the equation?). One argument against that is how do the new agents get new clients if they are branded as provisional? I don’t have the perfect answer (Casey Eye Institute charges less for Lasik if a student does it rather than an experienced doctor). It would help weed out those that aren’t selling homes but might hinder new blood from getting ahead. If there is X number of continuing education hours, some of that could be mitigated by closed transactions- No matter what, every Realtor would be required to complete a certain number of hours but each closed transaction would count as credit hours up to a maximum amount. Let’s say 200 hours are required, your first ten transactions are worth 10 hours each so an agent with no hours would owe 200 hours, an agent with 5 closed transactions would owe 150 hours and those with over ten transactions would owe 100.
I’m proposing barriers that make it harder to get over a bar I have already gotten over. So it will benefit me but I think it is what the industry needs to survive. I would have an increase in education hours. I think it is reasonable to expect that we’ll see fewer agents doing more transactions for less money per transaction as the industry evolves. The beginning of that evolution is thinning the herd.
I think it is reasonable to expect that we’ll see fewer agents doing more transactions for less money per transaction as the industry evolves.
I should clarify: I think the overall commission dollar per transaction will go down but some Realtors may make more if they are able to show their worth and charge rates commensurate with that (I can hear some saying that is not possible). Each agent’s worth will be determined individually, not by the current co-op model.
Appraisers have a year as an apprentice last I heard and have always found it interesting that the barriers for real estate are so low in comparison.
I was an assistant for a year before I was a Realtor and that helped me a significantly. A year under someone else would be a great entry but if it was required there would be some abused apprentices trying to get their hours.
This would drive the Principal Brokers crazy at larger offices but they should have to actually write the first four offers for a new agent and the first two listings contracts. This isn’t a barrier but it would stop some of the silly and dangerous mistakes.
At least the barriers have gotten a little harder. When I got my license I challenged the test, now they require hours in the classroom. It is a step but they need more.
thanks for blogging charles. appreciate the thoughts, though i don’t always agree. and the anti-realtor rants from some participants are fun to read.
regarding your education requirements, while i agree with the thoughts, any new standard would be sure to ‘grandfather in’ all current realtors.
how often do you go to the pmar meetings? have you ever thought about getting more involved in the pmar?
Thanks for the comments.
any new standard would be sure to ‘grandfather in’ all current realtors.
True, but an increase in continuing education would not exempt anyone and might promote the marginal from remaining in the industry.
I’m not inclined to pursue PMAR involvement at this time. If I was nominated, I would consider it. I am on the Junior Board for the Make-A-Wish Foundation of Oregon and would currently rather put my time and efforts towards that cause.
I enjoy following your Portland real estate blog. The Bend Oregon real estate market continues to be slow. It looks like a good time to buy in your area.