Today I want to talk about the biggest problem in the real estate industry: the ease of getting a license.
Today I want to address a subject that will probably get me in trouble with my peers: the biggest problem in the real estate industry.
It has been a very frustrating week for me. I have about 60 homes under contract, each in different stages of the transaction. Keeping deals going and working with so many agents, each of whom has a different level of expertise, is a tremendous undertaking. This brings me to today’s main point. So what is the biggest problem in the real estate industry? The complete lack of a barrier to entry.
You may or may not know this, but all you need to do to get your real estate license is take a 75-hour class. This can sometimes even be done online. Once you pass this class and the state exam, you have a real estate license. And the average college kid or high school graduate could probably walk in and pass the exam without even taking the class beforehand.
When you add in the fact that very few people want to be a Realtor after graduating high school, it makes the industry much more difficult. I was one of the few who, right out of high school, got my real estate license, because it was all that I ever wanted to do. However, for most, real estate is a second career that resulted from a major life change like job loss or divorce.
The average agent only negotiates seven to eight home sales a year. Yet you are putting them in charge of negotiating what is most likely the largest transaction of your life. They charge you outrageous fees for limited experience and limited marketing. Many times their approach to a home sale involves simply putting your property on the MLS, where they’ll market it using photos they took on their cell phone.
My team spends $500,000 a year on marketing. Could we save that money and just put our listings on the MLS? Yes. Would I sell as many homes for the money we do without spending that $500,000 on marketing? Absolutely not.
A secret statistic you should know is that 98% of Realtors are in and out of the business in two years. In other words, you could be working with an agent who won’t be in business in 18 months.
Having been in the industry for 25 years, I have seen many changes. If I could change one more thing, it would be to alter the barrier to entry. I would make it so that you must have two years of experience working for someone before you can think about getting your license. I would also consider requiring a college degree, since you are helping people with the largest financial transaction of their lives.
So if you are hiring an agent, ask how long they have been in business and how many sales they have. Ask them how much they spend on marketing and what their plan is for marketing your home. Vet agents before you work with them so that you know you’re partnering with someone who belongs in the industry.
If you have any questions about this or are interested in buying or selling, please feel free to reach out to me. I look forward to hearing from you soon.