Between the critics who have promulgated accusations of real estate price-fixing and conspiracy, and the brokers who have long championed industry ethics and practices, there has been little room for agreement. But at least one thing appears to unite these two groups, according to RISMedia’s latest Broker Confidence Index (BCI).
The process for agents to get their real estate license is not nearly rigorous enough, according to the vast majority of brokers surveyed this month, with 84% saying that states need to implement stricter requirements and higher standards for people wanting to practice—a sentiment shared by many critics of the industry.
“(Agents) need more training in everything, including ethics, agency and what it all really means,” said one broker, who requested anonymity.
Both critics and real estate business leaders have argued that a low barrier to entry has diluted the quality of agents and contributed to larger problems. While brokers certainly will have a very different perspective on the reasons for adjusting how hard it is to get licensed, the fact that there is seemingly broad consensus on the issue makes change more likely.
Looking closer at the BCI survey, brokers appear to favor raising the bar significantly for those trying to get a real estate license. More than one-third (36%) said it should take a year or more of training to become an agent, while half (50%) still preferred the process to include additional weeks or months of education.
“The problem, in my opinion, is getting licensed teaches (agents) zero about actually selling real estate,” wrote another broker who was granted anonymity. “So a ton more training, and change what they actually learn when getting licensed.”
As far as what agents are not currently learning during the licensing process, brokers surveyed by RISMedia were divided. Just under half (45%) said agents were most in need of better education regarding contracts and mandatory forms, while 13% highlighted agency and agent obligations to clients as a need that was not being met.
A little under one in five (18%) brokers said sales skills and prospecting should be taught in licensing courses—a subject that is not traditionally the purview of state agencies.
Despite all the recent legal upheaval in the industry, only 5% of brokers thought agents needed more training on legal compliance.
Underpinning the many class-action commission lawsuits and an investigation by the Department of Justice (DOJ) is the idea that a significant proportion of agents are unqualified, unmotivated or disengaged from the task of helping people buy and sell homes—a problem explicitly acknowledged by industry luminaries, but also used by critics as ammo to push for structural change.
Whether any of this results in actual changes to the licensing process is unclear—even with broad support from brokers. But there have been at least some indications that state regulators are paying attention to the National Association of REALTORS®’ (NAR) settlement.
Every state has different requirements to become licensed, but most only mandate between 40 and 80 hours of education and training and a multiple-choice test, with some nominal fees. A few states require more—Texas, for instance, has applicants complete five courses totaling 180 “classroom hours.”
But increasing that to over a year of training and education, as a significant percentage of brokers favor, would represent a tremendous change, and would likely cause seismic shifts in how the industry functions—and who is able to practice.
Broker sentiment
Apart from looking at brokers’ opinions on agent training and licensing, RISMedia measured a significant overall drop in optimism (with the BCI dropping from eight to 6.8 in May) as the spring selling season faded, with some potentially unique factors weighing on real estate business owners despite relatively few changes in macro conditions.
“Sales (are) down year-over-year,” said Jim Fite, president and CEO of CENTURY 21 Judge Fite Company. “The uncertainty of the NAR settlement and the future of the DOJ’s involvement in the real estate business—these add up to ‘agent apathy.’”
For a deeper dive into broker sentiment, please see the BCI video breakdown at the top of this page.
It’s not too easy to get a license. It’s too easy to keep it. Online CE has diluted the learning process. It’s about nothing other than getting the credits. Period. We need classroom training and we need the states to actually enforce the laws.
The entry level isn’t the real problem. Yes, it should be a little harder, however the real issue is the system allows freshly licensed agents to pretty much opperate without real supervision. Many of the high agent count companies create this problem and of course let’s not forget the ever popular “rent-a-broker”. I won’t go into who that describes as I think almost anyone reading this knows the answer. Let’s tighten up the loose threads and help clean up the mess.
Perhaps the brokers also need more training so they properly train their agents.
Some states do not require that one have a high school education. This, at the least, should be a requirement before beginning real estate education. New, or provisional, agents/brokers should be more closely guided. This is a requirement that is too often not occurring.
It’s more than just low entry levels … Brokers / Brokerages are the real problem. Most will hire anyone that fogs a mirror, give a 100% split with little to no training, support or Broker oversight. Teams led by wanna be brokers and offices with low level “sales person managers” have watered down the business to where it is today… and that is most agents are nothing more than glorified door openers. It’s blind leading the blind.
You nailed it perfectly. Nearly everything the brokers identified in this article is fixable by them, but they don’t care. As long as they get fresh garbage agents, who they won’t train, who will agree to sign on to absurd splits, and who will sell half a dozen properties to their friend and relatives in their first year, take rental clients more experienced agent don’t want, and will be chewed up and spit out in about three years. Rinse and repeat. Brokers are happy, NAR is happy, the MLSs are happy. Meanwhile the public is screwed, and rarely knows it. The industry deserved the lawsuits, its model is seriously f*ed.
I agree with Shelley Sosnoff , Rodney Elland and Richard Mckinney
The real problem is the Brokers , I have only had one broker in 24 years that could properly instruct you in anything. I found the best advice came from seasoned veterans that had been out there actually doing the job and earning their commissions. Their advice came from experience and time in the field, and if you really talked to them, most of them were just thrown out there and learned by trial and error. Some were lucky enough like me to have a seasoned veteran take interest in them and guide them along. I think that’s the biggest problem, no guidance after licensing, more time to get a license is not going to fix that. My mentor and friend was Jerry Bartlett, I thought it only right that I give him the credit that he deserves. He loved the Real Estate Business.