Limbo, Licensing Law, and a Long Rant.

The responsibility for raising the bar in real estate does not fall solely on NAR.

Fair warning. I feel very strongly about this topic, thus the following post reflects my own personal thoughts and feelings on the subject.


In my Monday afternoon poke through the real estate groups on Facebook, I came across Brad Inman’s post in the Inman Coast to Coast group regarding the low levels of professional requirements to become a real estate agent.

we need to raise the bar in real estate

“Imagine the pole in a limbo dance being placed six feet high, so anyone can dance under it.  That is the state of real estate licensing laws.”

Amen! I couldn’t agree more!  As expected, most of the comments on the thread laid the blame at licensing law.   The laws vary by state, but in most cases, it’s easier to become a real estate agent than a barber.  I love a great haircut and don’t want an under qualified person doing mine, but real estate agents are handling the largest transaction of most people’s lives and the requirements to enter the business don’t match the requirements of the job.

NAR and the state associations nationwide DO need to do better in setting the most basic professional standards.

The fact that licensing requirements are too lax is not a secret in our business.  Nearly every experienced agent or broker will agree, and yet nothing changes.  The DANGER Report published in 2015 by the National Association of Realtors and written by Stephan Swanepoel, CEO of T3 Group, it’s put this way. “There are too many real estate agents that are simply not qualified to the level they should be. Furthermore, there are no meaningful educational initiatives on the table to raise the national bar for real estate agents across the board. And while this lack of agent knowledge is a significant danger in itself, when combined with a lack of basic competency it could be destructive and harmful to both the industry and the consumer.”

“…while this lack of agent knowledge is a significant danger in itself, when combined with a lack of basic competency it could be destructive and harmful to both the industry and the consumer.”

There is a lot more to the story here, though.  The issue is not just that the requirements to get or maintain a real estate license are not tough enough, and the buck does not stop with our governing bodies.  As convenient as it is to point the finger at the powers that be, we in the industry bear a large portion of the responsibility.

The sales force and customer service side of any company is the walking, talking, and (if they’re not qualified) potentially very damaging representation of our brand.  They are the face of the company. They are the first and, in many cases, the only person that our clients interact with.  In any other business, no company in their right mind would hire an unqualified sales person to represent them in their marketplace.  Back in my life in the corporate world, I had a special place for resumes from people like that.  It was called a “trash can”.  We called references, we did background checks, and we had multiple interviews before we trusted a sales person enough to hire them.

The real estate world, though, is very different.  In general, the company doesn’t screen the agents and then choose the best candidates (well, most don’t).  The agents screen the companies because, in most cases, any brokerage in town will hire any licensed agent who walks in the door.  Considering that as I stated above, we as an industry are well aware that because licensing requirements are too lax, being a legal agent does not equate to being a qualified one, so why would a brokerage do this?

In my opinion, it comes down to what is, unfortunately, a very common brokerage income model today;  brokerages built around a fee structure of low commission splits to the office and a larger fee structure.  Agents are attracted by a higher percentage of the commissions and pay a monthly fee to work there, fees to use the copy machine, fees to have a phone, and so on.  (I’ll save my thoughts on how damaging this can be long term for the agent’s business for a later post) Because the brokerage does not earn the bulk of its income from commissions it also does not rely on home sales to survive.  It relies on lots and lots of agents. If an agent has a license, has a butt capable of warming a chair and is willing to pay for the right to warm it, that agent will likely get hired because the more butts in chairs with wallets to pad said butts, the more those wallets also paid the brokerage balance sheet.  Whether or not the agent attached to the butt is actually qualified often does not impact the decision to bring them on board.

Additionally, our state and local associations are funded by membership fees, so it seems to me that they may be more interested in adding headcount than improving standards as well.

The reverse of the “more butts the better” approach is the brokerage where the company is paid when the client gets served; where the majority of the company income is from revenue earned from commissions.  The company gets paid when the agent gets paid, which is when the listing gets sold or the buyer closes on their new home.  It’s not “the more butts the better”, it is pay for performance.  This is how we operate at BloomTree. We don’t get paid until the customer is taken care of and the home is sold, so our growth does not come necessarily from more agents, but from bringing in better agents who sell more homes and by developing the agents we have to help them to grow, all of whom help to maintain our reputation in our market to allow us to earn more trust, and therefore, more business.

Real estate is a service industry.  We are here to serve our clients. 

Real estate is a service industry.  We are here to serve our clients.    We help them through a very challenging process, and as I said earlier, one of the largest financial transactions they will ever face. As a company, BloomTree’s most valuable assets are our clients, our agents, our employees, and our brand.  Every one of us here at BloomTree has worked extremely hard to build trust within our local community; each of us on the leadership team, our staff, and every one of our agents.  Our brand isn’t what we say it is; it’s what everyone that we serve says it is.   The only way that BloomTree can succeed as a company, and be able to continue to produce the incredible growth that we’ve shown over the last year and a half is to make sure that we hire, train, and support excellent agents who are solely focused on serving the consumer.  It’s baked into everything that we do, it’s one of the ways we ensure outstanding client service, and it’s also how we protect our brand.

Yes, I just said “hiring and training”. It does not stop at just finding the right agents. Our most valuable assets are our clients, our agents, our brand, and our employees, so education and professional development of our agents protect three of the four.     Although we do have the youngest average age of any company in our market because we tend to attract millennial agents, we face the same challenges here locally as the industry at large. Real estate agents are not, in most cases, in their first career.   Most people transition into real estate from another career, and in many cases, they have not had the benefit of a business management or sales background.  That does not mean that they are bad agents, not by any means. Some of our newer agents are also some of our highest producing.  There are transferable skill sets in many other professions, but people who are new to the business need solid mentoring, even the most experienced agents need ongoing education to stay ahead of business trends, and I’ll argue that both need a lot more than that.

I have yet to see any real estate company say that they don’t offer “training”.  Most do.  Well, kind of, sort of, but not really.  Ok, a few do.  Of the few that do, many of those charged for it through their “the more butts the better” income model.  I don’t mean being able to watch a video about a topic that they find more current information on by searching YouTube.  I mean actual education.

The vast majority of the so-called training I’ve seen offered at the company level are either basic topics like how to use Facebook or Periscope for real estate, or outdated sales methodologies like cold calling scripts, manipulative hard closes, “give me a lead and I’ll leave you alone”, and such. “Business planning” in the average real estate office does not usually involve anything that would be considered an actual business plan in any other industry.   This includes some companies out there who tout very loudly in their marketing that they are all about training.   I have seen some fantastic training being offered, but it most cases it’s been provided by companies whose business is to sell products, coaching, or services to real estate agents and ironically not by the brokerage or company whose livelihood and reputation depend on their success.  

What we can control, however, is who we hire and how we help each of them to grow professionally, and we can ensure that our own agents are well trained and that as a result that our clients get the best service we can provide.

Real estate agents are nearly all independent contractors, which means they are not only selling homes and caring for clients are also running a business, and as I said before, representing our brand. Running a business requires education in a lot more than Facebook or cold calling scripts, and managing large transactions and carrying the weight of fiduciary responsibility to clients requires more than just basic CE keeping an agent legal.  To serve clients at the level at we believe clients have the right to expect, as well as to succeed over the long term, a good agent needs to understand business practices, financial management, strategy and tactics, business integrity, planning, promotion, marketing, branding, customer service, and more.   Because they are our company in the eyes of the consumer and because we rely on the collective success of each of our agents to pay the bills,  BloomTree has a vested interest in ensuring that each of them is the absolute best that they can be, and, therefore we provide as much of this training to them as we are able.  And we don’t charge them for it (remember…the better they are, the more we earn).

At BloomTree we cannot control what the National Association of Realtors may or may not decide to do in regards to raising the bar, nor can we influence what the state requires for those who want to get a real estate license.  We can’t change what continuing education is required by the national and state associations either.  What we can control, however, is who we hire and how we help each of them to grow professionally, and we can ensure that our own agents are well trained and that as a result that our clients get the best service we can provide.

We can’t wait until the license laws change, but we can take steps to improve the real estate industry from within.

(Disclaimer:  I’m following up with another reminder.  This post reflects my own opinions on this subject and does not necessarily represent those of others within the company. Similarly, typos and grammar goofs are my own)