Several years ago (I think it was around 2014) the National Association of Realtors commissioned Stefan Swanepoel, a real estate industry consultant, to conduct a study of the chief threats facing the real estate industry. He and his colleagues surveyed close to 8000 real estate agents, interviewed 74 senior industry executives, and studied over 6000 pages of existing material to come up with the DANGER report. DANGER stands for Definitive Analysis of the Negative Game Changers Emerging in Real Estate in case you were wondering. Clever, right?
I’ve been hanging onto this topic for a couple of years now. No particular reason. Just haven’t gotten around to writing about it before but it’s a rich source of insights about the real estate industry. The author listed out 50 dangers threatening the industry, grouped into the 5 entities threatened:
- Agents
- Brokerages
- The NAR
- MLS
- State and local associations
There is no way to do justice to all the topics covered in a single blog post so I’ll periodically focus on a particular subject from the report. The first one that caught my attention was this insight:
Masses Of Marginal Agents Destroy Reputation
As the author goes on to say:
The real estate industry is saddled with a large number of part-time, untrained, unethical, and/or incompetent agents. This knowledge gap threatens the credibility of the industry…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.
I couldn’t have said it better myself. Of course this is true! The author then goes on to make another comparison that I have often noted myself, contrasting the state mandated educational requirements for being a realtor with the requirements for being a cosmetologist. In Illinois you need 1500 hours of education to become a barber (one branch of cosmetology) – over a period not less than 9 months but not more than 3 years. But to be a realtor…are you ready for this? You only need 90 hours of education and there doesn’t appear to be any time limits on it. In other words anyone and their uncle can be a real estate agent, which is part of the reason why there are so many real estate agents running around.
And Illinois/ the realtor lobby just made it easier to maintain a real estate license by changing the continuing education test taking process. You can now pass the classes by merely scoring 60% or better on each of the true/ false online quizzes BUT you can take the quizzes an infinite number of times. So you could, theoretically, just go online and start taking quizzes and, if you don’t score 60% or better, you just write down the correct answers and immediately retake the test.
This may also explain why there are so many really bad agents out there. Based upon the agents I’ve seen in action here is how I imagine the distribution of realtors looks:
What I’m suggesting here is that 80% of real estate agents just aren’t very good and there isn’t much difference between the top 20% simply because there is only so much to know. Real estate is not like brain surgery.
The sad thing is that that bottom 80% still gets business. A lot of consumers don’t know how to weed out the weak players and there isn’t really good public information available to do this – other than client reviews. And instead of looking at client reviews they focus on overly simplistic heuristics like “they do a lot of sales in my building” or “I see their signs everywhere”. And on the flip side many consumers agonize over deciding among that top 20% when in fact it almost doesn’t matter.
My advice for the consumer is pretty much the same as it was in my very first blog post on how to choose a realtor. Read reviews and force the agent to list out in detail exactly what they are going to do for you. Don’t let them get away with vague platitudes. Make them get concrete. And cost matters because you don’t necessarily get what you pay for.
#RealEstate #Realtors #RealEstateAgents
Gary Lucido is the President of Lucid Realty, the Chicago area’s full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market, get an insider’s view of the seamy underbelly of the real estate industry, or you just think he’s the next Kurt Vonnegut you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.