Originally posted on September 22, 2006, “It is Past Time to Raise the Bar!” has nothing to do with bars — my current place to hang out while we do a little vacationing in Rocky Point, Mexico.
It’s a discussion of how easy it is (too easy, IMHO) to get a real estate sales license (ditto for a real estate brokers license — at least in Arizona and I suspect elsewhere).
There are a few who are calling for having no licensing — which to me seems a bit silly. While I am not a big fan of government involvement in business, and the last thing we generally need is more regulation, to just up and dissolve licensing regulations seems a bit extreme. While in theory it sounds plausible, I’m not convinced that the market will weed out ineffective real estate agents (it’s certainly not doing that now) and I think licensing, or more specifically a good “Apprentice Program” might instill a little consumer confidence in this business.
The original post:
It is Past Time to Raise the Bar!
It is far too easy to get a real estate license. There, I’ve said it (again). It’s probably going to irritate a lot of people but that’s just too bad. It’s ridculously easy to get a real estate sales license. All you need to do (in AZ) is sit through 90 hours of classroom “education”, be 18 years old, have a relatively clean criminal record and pass the licensing exam. That’s it. Need any high school? Nope. Any apprenticeship? Zip. Any formal training? Zero.
90 hours in the classroom, which you could complete in as little as 9 days if you were some sort of masochist. The school is horrifically boring and the chairs are painfully hard (the better to keep you awake). Put your butt in the seat for 90 hours, pass an exam, supply your fingerprints and drivers license. Fill out a form, write a few checks and POOF, you can call yourself a real estate professional!
Training? Nah… You can legally list or sell a home the day you get your license. “What about those 90 classroom hours?” you may be asking. “Don’t you get training there?”
The answer is a resounding NO. What real estate school teaches you is how to pass the state licensing exam. They don’t teach you how to sell real estate, how to deal with clients, other agents, title companies, loan officers, inspectors, whiny kids, buyers, sellers, or brokers. Oh you may occasionally get a war story about real estate from the instructor–I learned more REAL real estate talking to my instructors during break that I did in the classroom. The schools churn out future professionals by the score every single day. And they do a damn fine job preparing you for the state exam. They do nothing to prepare you for selling real estate.
Hopefully the new agent aligns himself with the kind of broker that will take them under their wing and truly help them. Sounds simple, but finding a broker that does that these days isn’t easy. Too many brokerages just bring in agents by the truckload. Some have HUNDREDS of agents working for them. It’s just a numbers game to them. The more agents they have, the more desk fees they collect. If they run a commission split office, they figure if they hire a few hundred agents then dumb luck means some of them will turn out to be successful. Those that quit (and 80% do in the first year) are simply replaced by new sheep.
Let’s step back a second and compare the requirements for getting a real estate sales license to a few other licenses/certifications:
- COSMOTOLOGIST (hair stylist): 1600 hours education, 2 years High School education, at least 23 years of age
- AESTHETICIAN (skin care specialist): 600 hours education, 2 years High School education, at least 23 years of age
- NAIL TECHNOLOGIST: 600 hours education, 2 years High School education, at least 23 years of age
- MASSAGE THERAPIST: 500 hours education, High School Graduate/GED required
- RESIDENTIAL REAL ESTATE APPRAISER: 90 hours education, 2000 hours apprenticeship completed within 18 months
- HOME INSPECTOR: 80 hours education, complete 30 inspections as apprentice
- MEDICAL TRANSCRIPTIONIST: 240 hours training typical. Associates degree preferred. No required certification
- REAL ESTATE SALES LICENSE: 90 hours education, 18 years of age.
It takes 17.7 times as many classroom hours to get a barber’s license as it does a real estate sales license. Want to pluck eyebrows? Expect to spend almost 7 times longer in a classroom. Oh, and be sure you have two years of high school. You don’t need ANY high school education to sell real estate.
The public perception of real estate agents is not good — just Google “Realtors Suck” and read some of the 3,660 results if you don’t believe me. It’s not pretty.
The low barrier to entry is a big part of the problem. I assure you there is someone out there at the very moment you are reading this that decided 3 or 4 weeks ago to become a “real estate professional”. This person is no professional. The barely qualify as a trainee. Yet they are going to go out there and mangle some transaction, cause undue stress and pain for the hapless buyer or seller that’s using them (more than likely that will be a relative, friend, and/or their best friend’s sister’s husband’s cousin.)
Hapless buyer/seller has bad experience. So maybe they blog about it. Maybe they express their opinion on MySpace. heck, maybe they even set up an entire website that explains why their Realtor sucks so bad. And all this “publicity” spins on as the image of real estate agents slips lower and lower until we’re rubbing noses with attorneys and car salesmen.
What to do? Simple answer, complex solution. The answer is raise the bar to entry. There should be more classroom hours. REAL classroom hours, not just “instructors” saying, “Ahem, you may want to remember this in a couple of weeks…” If you can train someone to fly a jet fighter, or cut a tumor out of someone’s brain, you can train someone to sell real estate. Don’t train them just to pass a test. How about having at least MINIMAL previous education requirements? It’s hard to get ANY job without a high school diploma. Make that a minimum (it is in some states). Why not a true apprenticeship program? Make it a requirement that new licensees work a minimum number of hours or transactions with an experienced agent or broker. Yes, the “we’ve always done it this way” attitude of compensation may have to be revised. Or would it? Not many new agents start out of the box with too many sales. Most go months before their first transaction. If they WORKED in those months, REALLY worked, then they could probably complete an apprenticeship in that time period.
The real problem might be making experienced agents mentor/train new agents. So make is a requirement for license renewal hours. We already have to take a certain number of hours in specific topics in order to renew a license every two years. Just add mentoring junior agents to the required continuing education hours. Better yet, make it a requirement for brokers to mentor agents in order to renew their license. Then maybe brokers would be inclined to take on bright, hard working agents.
Now there’s a concept.
Other blogs on low barriers to entry in real estate: Matrix, Portland Real Estate, Paul Caloca, Kristal Kraft and DailyPundit. Jim Duncan has an entire blog category devoted to public perception.
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I'm Jay Thompson, and I have a little blogging problem... Welcome to The Phoenix Real Estate Guy, or "TPREG" as I fondly refer to it.
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