Several months ago, I conducted an unusual real estate agent interview. The request for the meeting to explore the possibility of working with my company had come in over the weekend. The prospective agent had been in the mortgage business and wanted to diversify and enhance his portfolio by becoming a Realtor.
After we settled down in the conference room, I asked him to fill in some of the details of his resume which he had forwarded via e-mail earlier. He had an impressive curriculum vitae which included work with governmental agencies, serving as a city manager & his current job as a mortgage lender. I admitted to being intrigued by his career choices and wondered aloud why he chose to enter mortgage lending & was now pursuing a real estate career.
After some hemming & hawing...he admitted to me that he was in mortgage lending by default. The broker he was working with had allowed him to come on board, although he wasn't really supposed to be doing anything which involved other people's money & he was becoming distressed by what he perceived to be inappropriate tactics at his current job.
"You see," he confessed, "I'm on probation for stealing funds from the government while I was managing a government lending program." He continued "I was wondering if I could work for you under your broker's license while I get an understanding of how the real estate industry works." I stared at him in disbelief & then asked him if he realized that being a convicted felon might impact his ability to get a real estate license in the state of Michigan? Apparently, the question had not crossed his mind.
This experience provokes many interesting questions. I was not dealing with an unintelligent individual; at least if his resume was to be believed. He had already interviewed other brokers, some of whom had offered him a job. He seemed confident that the issues he had just admitted to me were not going to preclude his entry into a career that would give him almost unlimited access to credit information & other financial data for unsuspecting consumers. Why would a convicted felon see a real estate career as a viable alternative after being convicted for fraud & financial theft? What does the general public perceive the qualifications to become a real estate agent are?
As the nation's spotlight remains on our industry, the answer to this question is becoming uncomfortably apparent. Yesterday, ABC News launched a series entitled "The Home Wreckers" in which they will be discussing the negative impact that certain types of real estate & mortgage transactions are having on communities across the nation. Charlotte, North Carolina was the location on last nights' segment about a subdivision in which 1 out of every 5 homes was in some stage of the foreclosure process. The reporter interviewed a couple who shared an increasingly familiar tale of victimization & loss. Of course the builder/developer, Realtor & loan officer were all lumped under same assumed header...Home Wrecker. A follow-up on-line by ABC network, this time set in Chicago, revealed the impact multiple foreclosures are having on the home values of entire neighborhoods.
Earlier today, another scenario juxtaposed itself,and in an unexpected way dramatized the difference in licensing requirements for various professions to serve consumers in the State of Michigan. In talking with one of my agents today, she informed me about the process that her daughter had just gone through to get a license to be a cosmetologist in the State of Michigan. Her one year
apprentice program had included: 1500 hours on the floor, practising different techniques on clients which included grading on each assignment, constant supervision while she did any transaction which involved a member of the public, 2-4 styles, cuts etc. every week, and multiple tests which she had to pass before she could take the 2 parts of the State Licensing Exam which included a Practical Exam & Theory. Whew, it makes one tired just to read this...
Contrast the following. In Michigan,an aspiring agent needs one 40 hour class & the ability to pass the real estate licensing exam within the maximum alloted time of 3 hours. Then he is free to find a wall in a broker's office of his choice on which he can hang his license before he is "let loose" on the general public. Let's look at what it would take if the requirements to handle the largest financial transaction that 97% of Americans will ever make was as stringent as the requirements to place a pair of scissors next to your head or hands!
- Instead of a 40 hour class...try 40 WEEKS of class. This would be the equivalent of time required to be allowed to sit for the licensing exam. Instead of floor time prospecting for new clients, floor time would be mandated for new agent education!
- Every new agent would submit to an apprenticeship in which they would be graded on the following basic skills: understanding the legal aspects of real estate paperwork & documentation, writing clear & concise contracts & addendums, classroom exposure to the different types of real estate services including title, mortgage, commercial, appraisal & property management, negotiation skills, prospecting, technology & on-line marketing, business administration, customer service, business communication, marketing, selling skills & time management. These are the skill set that successful professional agents excel in!
- Every phase of training would be monitored by an experienced real estate professional who would give written & verbal documentation of the potential licensees progress. A passing grade would be required in all these basic skills to be allowed to take the in-house exam
- Potential real estate agents would be required to have 2-3 client meetings a week to practise, under supervision of course, their listing or buying presentation, offer presentation & prospecting calls & contacts.
- There would be a Comprehensive Practical & State Licensing Exam. After passing the in-house exam which would require a couple of days to complete, the State Exam would consist of the examinees demonstrating their skills with a prospective client in any number of potential real estate scenarios & a written exam.
Would this make the real estate license cost prohibitive for many. Perhaps, but most budding hairstylist aren't wealthy either. Would it make it more valuable for those who undergo the discipline, training & rigour necessary to become competent...Definitely! Yes, a poorly trained stylist could do some major damage with her scissors, but consider the damage potential of a poorly trained real estate agent with an improperly handled real estate transaction. Does it make sense that my hair stylist is more adequately trained at the start of her professional career than many real estate agents are after a couple of years in the business?
© 2007 Audu Real Estate All rights reserved
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*Last note: During the commercial, I switched to Fox Broadcasting which was advertising America's latest Blockbuster TV program...."Are You Smarter than a 5th Grader" . I am left wondering...Is the training that many receive in real estate qualifying us to earn more than our barbers & hair dressers?
Copyright 2007 Audu Real Estate All Rights Reserved
Lola Audu, is the Designated Broker & Owner of Audu Real Estate. Our company specializes in helping people buy and sell homes in the greater Grand Rapids, West Michigan area. We've had the privilege of helping hundreds of clients succeed in their goals of purchasing and selling property including demonstrated success in the negotiation of Short Sale Transactions. You can contact us via e-mail @ info@auduhomes.com or by phone at 616-791-0511.
Great post. The real estate industry is in deep need of a clean-up. These financial transactions are the largest ones in most borrower's lives. It is ridiculous that it is easier to gain access to this than it is to the average american's toenails!!
Thanks for your comment Patricia. It is deeply disturbing that we continue to ignore the obvious...to be taken seriously as professionals, we must improve the training and education of our membership.
Lola,
You are right on the money with your sentiments. What is even more shocking to me than the lack of preparation for most real estate agents is the almost complete lack of regulatory oversight. Higher standards are most certainly in order.
Lola -
When I was jumping through hoops to get my license, I thought it was a terribly difficult experience -- no one should have to endure such a time
Now I look at a couple year's experience and wonder why the state of PA allows people to do such a difficult, detail-crucial job with only a couple of classes and an exam.
Let's go for the gold!
Hi Roger, Thanks for your comment. I'd have to agree with you about the conscience bit with this gentleman. I was struck by the fact that he seemed to think that this little "issue" would not preclude entry into a real estate career.
While I don't persume to know much about the standards to become a CPA, I think it would be safe to presume that if my accountant is advising me about financial issues, he is deemed to be of good moral character & not someone who has been convicted of misappropriating funds. I would hope the general public would think of Realtors in this fashion as well. We can do a lot to facilitate and enhance the public's perception by raising our standards.
I commend what you have posted about and fully support you and your thinking! You are not alone in wanting to see higher standards and education. This has been a popular subject in the blogs lately but in Michigan I think that it is in desperate need of being addressed by the State. I think that you have the right idea!
I seen the episode that you may be referring to and I could not believe what I was seeing.
Lola,
AMEN! I do agree the training standards must be improved for new hires. I also am an advocate of increased training for those who have licenses but are inactive or are used once in a blue moon. I feel these folks are just as dangerous as a new agent. I would propose increasing mandatory training classes relative to sales activity. As with most professionals the more you use your skill, the more proficient you are in your filed. If nothing else this would cull the number of novice licensee's attempting to make a few extra bucks in what they consider an easy profession.
Greg
The books issued when I took my class last year (2006 mind you) were so outdated that the Teacher repeated himself every chapter, quote "Memorize it the way the book wants you to so you can pass the test but now-a-days it's like this". So of course alot of my classmates were so boggled because they had to memorize one way but not forget the other. It's no wonder so many failed the class. I mean I'd be willing to say that the classroom (and the books provided) should be accountable to the industry. I mean if they're going to teach it to you (and charge you $ to do so), it should be CURRENT.
I would whole heartedly support a mentoring program (that actually WAS a mentoring program), because I truly believe that the lack of training is a large reason why so many new agents fail. From personal experience, a new agent is confused and unsure of what they're even doing when they first start and they really want someone to step in and point them in the right direction. Their minds are full of "Outdated" Laws.
If I could voice one opinion it would be that 80% of the class should focus 100% on:
You know - the things that can land you in a lawsuit, Kicked out of Real Estate or Put In Jail!!! They need to focus less on 1,001 definitions and make sure these new agents know the laws Inside and Out!
I know that had I not found AR I would still have 100's of questions left unanswered. (And I'm no where near finished; never will be as far as I'm concerned).
Just my Rookie Humble OP.
Renee, Thanks for your comments. It is interesting that a journeyman electrician is an apprentice for 5 years! Even the appraisers license in the state of Michigan requires a significant investment of time. It doesn't make sense that those writing the transactions, performing legal fiduciary duties on behalf of the members of the public can have less than 2 weeks invested in training and be free to represent themselves as qualified to do real estate transactions w/ very limited or no supervision.
The law in Michigan does require the broker to supervise, but as the actual nature of what the supervision entails is not clearly defined, it is not unusual for a broker to hold one meeting per quarter for all agents..new & experienced.
Lola,
About a year ago I was chatting with an agent from another brokerage. A Dept of RE attorney had just spoken at her company and told them that after taking the CA RE test applicants were waiting for very long periods of time to have their licenses actually issued - over 6 months. The reason: over 50% of the applicants who tested were found to have criminal records. The Dept of RE was buried in the paperwork.
Your article is a work of art.
Lola,
Unprecedented increase in applications here also. They had to start having the test at a massive auditorium in morning and afternoon sessions. I believe they were using the Duck Pond in Anaheim. They were buried in applications and paperwork, I am not certain if it is still as crazy. I hope not.
Can't compare a hair dresser with a real estate licensee. One is sales, yes sales. The other is mechanical and involves personal contact with customers.
Real estate brokerage is unique. I do believe that the bar for entry should be higher. But, I also believe that we focus on the negative far too much.
We manage to broker the transfer of $BILLIONS of Dollars of property each year and keep the U.S. economy fueled by the purchasing power of home owners and the value of the financial transaction.
We need to have more pride in the contribution that we, agents and brokers make and not be so preoccupied with the ones who don't meet our standards. Also, ignore the print media.
WOW! Your article is fantastic and I couldn't agree more. I am a loan officer and we have even less requirements. I wish the process was much tougher because our market is flooded with poorly trained originators that don't know an APR from a hole int he ground.
It is amazing to me that most mortgage companies don't have better training procedures if any at all. For most companies your training goes like this...
Here's your desk, there's the phone, good luck Joe, you're on your own!
My company only hires experienced loan officers so most of our guys do a great job, but I run into situations all the time where a loan officer at another company has completely messed up a deal, and the sad part is they have no idea how.
Hi Lenn, Thanks for your comment. Precisely my point...the bar should be higher. The impact of what we do has incredible implications for our nation & society. By refusing to address this issue, which most of us agree is important, we give the impression that "just anyone" can do this job as long as they have the money for a 40 hour class and can pass a test. (in Michigan) That's just not true.
Of all the individuals who started with me in my first real estate company, only 2 of us are still in the business. I chose the company I did because I was told they had the best education. At that time this consisted of a 1 week training session. (in addition to my 40 hour class) Fortunately, the broker had hired an office manager who was a former marine & put us through the "paces" as best as he could but I was determined to be very proactive about trying to learn as much as I could.
Professionals like yourself & others have much more invested than the "mandatory training" and it shows when you work with people. But all of us are marginalized when the public is exposed to agents who don't know what they are doing and are not supervised.
Thanks Penny for your comment!
Laurie, That's amazing in an odd sort of way...a packed auditorium for the real estate test!
Lola,
Excellent article. I think all new licensees should be licensed under a much more stringent set of requirements as well as some mandatory "apprentice time". And of course, an Active Rain membership-Great post : )
Hi Olan, Thanks for your comment. About 4 years ago, I decided to go through the training to become a loan officer....not because I wanted to originate loans on a full-time basis, but because I realised that it was important for me to have a more intimate understanding of the mortgage process.
The company I trained through did have some excellent training tools, but additional training was not mandatory. If I had not wanted to really be educated, I could still have done loans with very limited knowledge of what I was doing. Even after taking the training & processing some loans under close supervision, I was not comfortable holding myself out as a "loan originator".
I've handled transactions as a real estate agent in which I had to suggest to the loan officer what to do to get a deal closed! I'm thankful to have a great pool of loan originators that I refer transactions to. A good loan officer is a very valuable part of the real estate team!
Lola.... WOW.... no, make that a double wow. EXCELLENT post. You made a great point when using your daughter's friend as an analogy in regards to cosmetology. I might think 40 weeks would be awfully long, but your point is well taken. I think this should take place both in real estate and mortgages.
Overall... awesome post with some awesome points that we need to get across to those that want to be in this business and to the general public. This is more so for the consumer.... but needs to be addressed to everyone.
As PROFESSIONALS, we need to RAISE the bar & educate consumers.........
Lola,
You bring up some great and interesting points! My wife and I own and operate our real estate business in Texas. To become an agent in Texas, you must have 210 hours with real estate core hours to become an active agent and have a sponsered broker. Before the end of your first year as an agent you must have an additional 60 hours of SAE for a total of 270 classroom hours to stay current. Additionally, you are required to take an MCE Course (mandatory continuing education)every 2 years. As I understand it, California and Texas require the most but both still leave a lot to be desired. It really comes down to how good your broker is and how much does he or she thinks of their brokerage and fear lawsuits that can be devastating!
As someone has already stated,you learn what you need to know to pass the real estate exam and are equipped with just enough knowledge to make you dangerous! We have a 20 year old son that has just completed his 210 hours and we have informed him of just that. We have invited him to join our office and allow us to teach him what he will need to be equipped with to list, sell, negotiate, write contracts and above all else keep your fudiciary responsiblilities intact. All ethic's courses must be taken seriously and continue to develope your skills throughout your career. Times change and so does the rules and regulations of our business. WE MUST STAY ON TOP OF ALL EDUCATATION REQUIREMENTS AND NEVER LOSE OUR DESIRE TO KEEP LEARNING AND BEING REFRESHED.
Here's your desk, there's the phone, good luck Joe, you're on your own!
I apprciate your post, I recently graduated from a school of RE in Indiana. Although, I have 54 hours under my belt, I crave more. I plan to combine my RE with my Insurance career. I know it will be very tough to do, and very time consuming making sure all things are done correctly, however I am willing to do it. One of the problems that I am having is finding a broker that is of good reputation, that will allow me to work part time. I don't want to be shown the desk and phone, and told to do it yourself. I want a broker who will work with me, and teach me the ropes. I am completely a wreck because I have not found the perfect fit, and I am running out of options! As an indivdual with a undergraduate and graduate education, I value the learning processing and will be obtaining a degree in Personal Financial Management with an emphasis in insurance and real estate. I will have an additional 90 hours + of class time. But I also, value experience. I know I will not learn this business overnight, and want someone to teach me. But if I can't find one, I may just go get another job!
Lola, This subject is true and to the point. My daughter, Melanie who you referance in your article, is going through the process that all newbies, including myself go through, wether it be real estate or cosmetology, finding that correct working enviroment. Someone who will continue to show and teach the correct process and not feel we are just there to bring the $'s in. (Which will come with the correct knowledge and time)
We must never think we have all the answers and education needed. Just as new hair styles change, so do the economics, laws and standards of real estate and we must countinue to stay educated on them all!
Wow this was the coolest blog so far. I love it and it was very in depth. Great job
Ben
Jodi, Thanks for your comment. I would encourage you to be persistent & continue to look for a broker who is a "good fit." Training an agent today involves far more knowledge than what was available or necessary 10 years ago. Brokers are responding & recognizing that this investment will yeild long term results by ensuring that agents on board are more productive & cause fewer problems due to inapproriate actions & negotiations.
Hi Renee, Thank you for the comment. I'm so pleased & proud of Melanie. As we talked about all she had to work through to become a licensed cosmetologist, I was struck by how much more training was required for her license as opposed to the real estate license. But even after the training, as you correctly note...it's important to be in an environment that allows you to practise your profession with good supervision & on-going exposure to the changes in the marketplace.
Hi Jodi, Thanks for your comment. I would totally agree that every agent needs to be involved in the discipline of pursuing knowledge and education. Even the best training program will only take you so far. At some point, we all have to determine to do what we know we need to do to advance and develop.
However, because of the peculiar nature of the real estate transaction and the economic implications that underly the process, the State of Michigan & all other states within the United States have mandated that agents be supervised. This is to ensure that the public good & interest are served appropriately. We do not expect budding surgeons to teach themselves the latest techniques...this is also not the most appropriate method for real estate practitioners. I applaud your efforts to continue learning & encourage all my agents to do the same.
We had a husband and wife team in our office that moved down to Tennessee (their original home state) they had planned on continuing to practice real estate in their new area. I heard from my Broker that their plans changed when they discovered that they would need to have a high school diploma or a GED which excluded them. I was shocked to to hear this because I had no idea that in Michigan you don't even need to be a high school graduate to be a Realtor. I'm not saying anything against my former co-workers, they were a lovely couple, but it just seems wrong that our educational requirements are this lax.
We can't seriously expect the public to compare us to other professionals if they discover we can be educated to a tenth grade level and still be licensed to sell their homes.
Amen amen amen!! We are taking steps in South Carolina (where our requirements sound similar to your states, Lola) to require more time and more relevant training to get your license in the first place, and then some kind of apprentiship or mentoring program for the first year or so. Also, some kind of minimum transaction level to keep your license out of probation or some similar status.
Would you fly with a pilot who only landed once or twice this year? Give your taxes to an accountant that had only prepared one or two returns? Your cvil or criminal legal business to someone on their first or second case?
Thanks for your article!