Real Estate’s Revolving Door

             

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When I first came into the real estate industry in the nineties there were a couple thousand real estate agents licensed in the Salt Lake City area. Four years ago there were about four thousand. Today there are over eight thousand. That’s 100 percent growth in four years! In Utah there are now over 25,000!

          

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The general perception is that Realtors drive their big fancy cars around all day looking at beautiful homes and make hundreds of thousands of dollars a year working part time hours with no education.

Truth is about 90% of people who get into real estate fail. They’re so focused on what the job entails that they really never understand what the work is all about. And it all begins with licensing.

The state makes a lot of money collecting licensing fees from all these people who are so willing to pay for the chance to make it rich selling dream homes every Saturday at the open house. But this lack of education, commitment and understanding is the principle reason for the overall failure of these licensees and their ill-fated clients.

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In Utah it takes about two weeks of schooling to get through all the classes required to get your license. Two Weeks! And when you do earn your license what do you know about selling real estate? Nothing.

Many new licensees don’t even own their own homes and have never bought or sold real estate before. Often the client knows more about the real estate transaction than than the Realtor does. And these are the people the state deems “experts”. They have spent two weeks learning a few hundred completely useless terms, how to calculate the cap-rate of a four-plex and they skim over the legally binding purchase contract and they are then sent out to represent people in the largest financial transaction of their lives. Yeah- that makes perfect sense.

And every time some Yahoo gets a license and screws up a deal or two before going back to their “real” jobs they ruin the industry a little bit. Give a few more people reason to not want to have “professional” representation next time they need to buy or sell real estate. Sometimes they cost people tens or even hundreds of thousands of dollars and assist in causing families myriad problems and heartache.

         

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The licensing process should be a two year process of instruction, education and, most importantly- internship. Students should attend courses (not classes) on agency, including its application and meaning. They should be taught actual case law examples of fraud and they should be shown what representation and fiduciary really mean. And they should spend a year as an intern for working Realtors where they can learn the work that is supposed to go into each transaction. Let them see the prospecting and how most agents go months without making any money. Show them the endless phone calls and marketing expenses that sometimes end with no reward.

Give them the real part of real estate.

Students could take courses on inspections and the different testing that occurs, title insurance and the title plant operations, home warranties, escrow process, zoning and state regulations, negotiations, and every student could be required to get licensed in appraising and lending.

By having this kind of education in the business every licensee would have real value to offer their clients and the clients would be much better represented and taken care of. Fewer people would get into the business and fewer people would fail. Everyone would win- especially the consumer.

It takes two years to get a license to cut hair but it only takes 90 hours in Utah to list million dollar homes and advise people where they should relocate their families.

Is that right?

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18 thoughts on “Real Estate’s Revolving Door

  1. Greg

    You make some good points, but so does Mike Elliott. I think we need a little of both.

    The “Governator” here in Calif. signed legislation that will bring to an end CA’s “conditional license. That’s a start.

    Good mentoring and training at the office is a must. It’s one of the things we love about Keller Williams – their commitment to training.

    BTW – You and your blog are getting mentioned regularly at the blogging classes Pat Kitano and I are holding out here in the Bay Area.

  2. Mike,

    “no schooling can prepare a licensee for the realities of our profession. No test can accurately judge a licensee’s ability or worthiness”

    That’s exactly the point of my post.

    Learning about the actual ethics involved during course study over time and gaining a commitment to those ethics would go much further than a few hours of learning how many people sit on the board of directors and passing a test.

    Interning for a year with good Realtors who are in the field and practicing the business would have a profound impact on the type of people coming out of the real estate licensing program. This is where new licensees could learn about ethics and agency and gain a real insight into the real challenges families go through when relocating their families.

    I have seen a lot of very good people, with great ethic and integrity, fail in the business because they did not understand the sales side of it.

    I have also hired and trained hundreds of new licensees over my career as a broker and part of the education needed today comes from people who “create blogs and spout off about things they THINK they know”.

    Odd that you would attack me for offering my opinion about how if licensing courses were more involved the consumer and the agents would be better off.

    You work for a real estate licensing school or something?

  3. Mary and Mike,

    The state licenses people, brokers don’t.

    You both seem to be completely adverse to new licensees getting any additional training or mentoring during the licensing process and prefer to let everyone get a license as easily as possible and then let the brokers all worry about the flood of people getting into the business.

    That’s what is happening now so you must think that everything is fine just the way it is.

    I don’t agree.

    I think two years for a license to cut hair and two weeks for a license to handle the largest financial transaction of most people’s lives is simply not right.

  4. BUT IT WAS OK FOR YOU. Now its not ok for others. the training is not up to the state…they will screw it up, since the state does not sell real estate.

  5. Pingback: Where Realtors Really Make Their Money « BlueRoof.com Blog

  6. Pingback: BlueRoof.com Blog How Real Estate Licensing Should Be «

  7. Pingback: Realtors are Just too Damn Old « BlueRoof- Real Estate Blog- Salt Lake City Real Estate

  8. In the financial industry, if a salesman sells you a pension or savings plan, he is required to write down a full fact find to demonstrate that he has been diligent in considering all of your financial circumstances. I think a similar ‘Fact find’ system would work well with the real estate industry.

  9. Hello,

    I am a licensed real estate broker here in Indiana since 1997, I have to agree, that cosmetologist spend more time in school than a real estate licensee. My sister cuts hair and makes more than most real estate agents. I have written our senators here in Indiana for many years, regarding adding background checks and fingerprinting for licensees and applicants, additional hours of pre-licensing. Nobody will do anything about this. Many people enter the business thinking they will be making an income, some have spent hundreds of dollars in fees and dues without even seeing a dime from the business. We are not doing our seasoned and knowledgeable agents a service, nor are we helping the sellers and buyers. I strongly think that a minimum 2 years of college (associates) degree should be a pre-requisite. and if you think real estate is easy and just showing properties, think again, you have to know how to negotiate, market properties and get the property from sale to close. That takes knowledge. Sellers do not pay for us to come in and just collect a check.

  10. As a realtor myself, I am surprised that those 90 hours were spent on topics that did not help me make a liing at all. I finally learned to sell myself and it has really given me an edge over other agents who just show homes. I highly recommend a new video ebook you can get at http://www.sellingislikesex.com It talks about how to sell like we fall in love and is very good for realtors.

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