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.
