The real estate industry needs an overhaul … and fast

This might be an unpopular statement in the real estate industry, but it needs to be stated:

It is absurdly, incomprehensibly and disgustingly too easy to become a real estate agent in the year 2022.

Phew, OK, I said it.

Hear me out … in no way am I stating that actually being a real estate agent on the day-to-day is easy. In fact, I’d venture to say managing client expectations in this market should require a master’s in psychology, or we should be bestowed one solely on the amount of free therapy we give to dejected and frustrated buyers. 

However, the path to becoming an agent in the first place is where this industry needs an overhaul. 

It’s incredible to me and many others that in 2022 and in most states, all one has to do is just sign up for a course, pass the (objectively too easy) state licensing exam and start selling houses (and paying dues) under a local brokerage. We assist people with one of the biggest financial decisions in their lives and our education can be summarized as a couple of weeks memorizing some facts, taking a test and poof — you’re out the door and on your way. 

What this does to the industry is more or less make it a uniquely egalitarian one, where people with all varying degrees of education and experience can theoretically perform at the same level. It’s also a welcome venue for people seeking a second or third career (I admit, I’m one of those folks). That’s a lot of room for error and lack of knowledge of the actual industry.

While a training course and exam will cost several hundred dollars and a couple of weeks of your life — and association dues, marketing costs and other fees can add up in a year — it’s nowhere near the cost, time commitment or education of a college degree. You can have a midlife crisis in your current career, take a course, take the exam and be licensed within a month, compared to other professions where it often takes years to get where you want.

Some states have more demanding requirements, of course. For example, an agent needs to take 180 hours of class to become a licensed agent in Texas. But even that “difficult” course load can be completed in a matter of weeks. And, let’s not forget to mention that somewhere around 87 percent of Realtors leave within five years, at least according to the National Association of Realtors (NAR) back in 2014. 

So basically what’s happening here is instead of better policy or procedure, we’re just adding more agents to the mix, with newbies often not understanding the ins and outs of contracts, which leads to massive chaos and headaches for clients. 

Brokerages don’t have to offer new agents benefits like health insurance or even a salary. There’s no guarantee a new agent will receive further training or mentorship at that brokerage, either. So all in all, the licensing course really only teaches people what they need to know to pass the state exam, not what it takes to be truly successful as a real estate agent.

While the bar to become licensed has risen over the years, with more topics on the exam and new background requirements, this still doesn’t translate into knowing that agents will uphold a high standard of business ethics and service. 

So, what’s the real consequence of all this? 

The lack of preparation among new agents entering the field isn’t just bad for consumers; it affects our reputation as a whole. If the market is full of people who don’t know what they’re doing, there becomes an overall perception that agents don’t bring any value, which is not great for any of us.

In an inventory-chaos market like this one, most homebuyers seek out an experienced agent who can give them a fighting chance in a multiple-bid situation. Sellers, however, are another matter. Sellers, oftentimes, have the mentality that they’ll just use their friend’s son or brother’s college bud to list their house because of the whole “anybody can sell a house” reputation that this lack of education leads to.

The tragedy for the consumer and agent alike can be vast in that they’re receiving guidance from somebody who doesn’t have guidance themselves. So many brokerages out there operate on a numbers game fueled by new brokers/agents and whoever their social circles are. They’re not trying to teach you how to do the business correctly — or even ethically. Instead, they’re trying to leverage relationships.

As we head into 2022, and with prices going up, a shortage of labor and an overall shortage of materials, it’s more important than ever that our standards start to rise for the real estate industry. NAR has made some concessions, sure, but the concessions show a low bar. 

We need a shift in ethics, education and guidelines. 

A four-hour ethics class does not make ethical agents. I keep hearing from agents that they “just want to make sure we’re fair and not disclosing” but our role is to be an advocate for one party, not the whole party. I challenge NAR to adjust its classes to raise the bar.

It’s OK for real estate to be more expensive. We need better programs. We need to do more because when this market shifts, and it will shift, the burden will fall onto the group of people who hurdled the lowest professional bar possible. 

In terms of education, within BSW Real Estate we set a mandatory expectation that our agents commit to a certain number of classes and seek out a certain number of outside classes as well, with Masterminds focused on improvement rather than sales.

The goal is to have agents who learn how to sell themselves based on their knowledge and expertise … not salespeople who sell a house. There’s fair and then there’s doing your job. It should be fair, of course, but being fair is ultimately to the seller or buyer and not toward an arbitrary market.

In an industry that’s constantly shifting and always built on relationships, it’s only logical that learning from an experienced agent or mentor over time has helped many agents create successful and more lasting careers. 

Inexperienced agents focus on getting the job done at any cost, but experienced agents focus on the relationships they build and doing the job in an ethical manner. Those are things that you learn through good mentorship.

We have to be better. I implore the industry to work together to not just take a class in ethics but to be ethical. To work to be the best, not come in at the lowest point of entry with a part-time job and hopes of striking it rich while we hurt the public at large.

Bret Weinstein is the CEO and founder of BSW Real Estate in Denver. Connect with him on Facebook or Instagram.