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!
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.
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.
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?