I never (ever!) thought I would write that headline about a NAR Economist. Witness his post today:
The number of REALTORS® grew from 750,000 at the turn of this decade to close to 1,370,000 as recently as August 2007. That is an addition of 83 percent in short seven years. From 1980 to 2000, membership figures bounced around in the narrow band of 620,000 to 820,000.
Such a rapid increase in membership is not necessarily healthy. How many of the new members have ever seen a down market aside from the last two years? How many understand the importance of repeat and referral business and not just a single transaction?
Given that about “½ million REALTORS® have less than 5 years of experience, sloppiness in some transactions no doubt exists.” A complaint I hear quite frequently from REALTORS® is about the second-rate conduct of some of their fellow new members.
Every attempt by state and local REALTOR® associations to further raise professional standards gets knocked down by government regulators as hindering competition. NAR has made efforts to strengthen professional standards and the code of ethics but has been careful, knowing that the Department of Justice and Federal Trade Commission will be breathing down our neck. (bolding mine)
Pay attention to the last point. I have heard it raised at the local and state levels in opposition to raising entry requirements. If Realtors raise dues or educational requirements, that could be seen as anti-competitive. Which is worse for the consumer (and the profession) – lots of unprepared Realtors waving their state licenses about pretending to be “professionals” or a higher barrier of entry to the profession, so that it might actually be regarded as a profession and not a hobby?
Locally, over the past twelve months, in the Charlottesville area, 374 Realtors (~25% of the total membership) have had more than five transactions. Laws, regulations and general practices are in a constant state of flux. Doing something regularly and consistently has its benefits. Why do you think one of the most common questions asked by sellers is “how many houses have you sold in the past six months?”
Technorati Tags: lawrence-yun, real-estate, realtor
Possibly the only accurate thing to have come out of NAR in years. As a broker, I find myself very frustrated with agents on a daily basis and can only imagine how the consumer feels.
But they (NAR) weren’t complaining about the dues they were collecting from the new members or from the money they make from affiliates.
There is do doubt this industry is polluted with get rich quick dreamers. They don’t take the time to educate themselves and expect to cash in the check after the co-op agent walks them through the whole transaction.
Next story will be how NAR is hurting for funds.
And truth be told they don’t actually teach you anything about selling houses in pre-licensing. They just cover real estate law and practice.
But even so… real estate bubble = real estate agent bubble.
Not much of a surprise.
Jim, the final paragraph is Lawrence Yun crying crocodile tears. From the perspective of federal and state antitrust enforcement, realtors could raise dues and educational requirements all they want, if they would just stop trying to drive low-cost alternatives to full-service realtors out of the market. The FTC and DOJ recently issued a report on the business of real estate brokers. See http://www.usdoj.gov/atr/public/reports/223094.htm Suffice to say that realtors have a rich history of anticompetitive conduct, including anti-rebate and minimum service rules, unreasonably rigorous licensing requirements for firms that advertise FSBO properties, and use of discriminatory MLS rules to disadvantage low-cost competitors. The FTC and DOJ have been doing more and more to intervene in local realty associations’ rule-making, because the rules are often anti-competition and anti-consumer. And both antitrust agencies are finding significant congressional support for their activism.
http://lawrenceyunwatch.blogspot.com
I want to jump in here and say a few not so popular things… My observation, as an instructor is that short of requiring a two year degree to be a licensee, pre-licensing requirements can be as hefty as you want to, and the students will still put their time into the class and pass the test, because they think there is a pot of gold at the other end.
The language of real estate is, of itself too complicated for many. Many of the pre-licensing students never test, as the material is too difficult. I do think that actually forcing students in chairs – in a classroom – learning from a qualified instructor for the full 60 hours is key. This time should be spent actually going over consumer interaction and training on marketing, technology and negotiations.
I really do want to disagree (respectfully) with Mr. Yun, in that my personal experience agents with less then five years and with a good business sense and intent on making a career are far more vigilant about their license and education.
My biggest issue with the more experienced brokers who are so involved in the “business” aspect of the firm, they don’t have time to invest in the day to day practice and ever changing techniques.
Experienced agents tend to think that they have heard or learned it all and have failed to realize that Real Estate Education is taking a new evolution. The business is getting more complicated, just over the past five years.
Sorry for the long comment, but I think the issue is more difficult than just requiring more education.
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