It Matters Who You Work With
key points
There is little debate that the real estate industry is saddled with a large number of marginal real estate agents that are part-time, untrained, unethical and/or incompetent
This reality has been exacerbated by the Pandemic Housing Boom, which has seen the number of licensed agents reach new all time highs, many of whom have seen little training or oversight in the last 3 years
Buyers and Sellers would be wise to ensure they are hiring an agent that is competent, well-trained and ethical because the truth is, while there are millions of agents out there, not all of them have the same level of experience or track record of success. And not every agent will hand you the same level of value or secure the same amount of money for your home sale.
The Pandemic Housing Boom created a feeding frenzy amongst buyers and sellers alike, but they were not the only ones who jumped in on the action. In the past two years, the number of licensed real estate agents has ballooned to all time highs. Figures from the December 2022 National Association of REALTORS® Membership Report shows that there were 1,580,971 REALTORS® at the end of 2022. And keep in mind, there are a great many more folks out there that have a real estate license, who are not NAR® members. The lure of real estate can be hard to ignore, and when the pandemic hit in 2020 and sent prices sky high, many people could no longer resist the urge to jump in to real estate in the hopes of cashing in on those record commission checks. In fact, according to Google search trends, the top job-related search between January 2021 and January 2022 was “how to become a real estate agent.”
These days, it feels like you can’t throw a dart without hitting someone who has a real estate license. The reality is, getting a real estate license is a laughably easy thing to do. At least twice a month, I get a call from someone who wants to talk to me about becoming a real estate agent. I’m always happy to chat with folks about the idea, but I never lie to them about what to expect. At least three-quarters of the people I talk to come to me with the belief that every real estate agent makes at least $120,000 a year and works 4 hours a week. The conversations I have with these folks tend to be less than satisfying for them. Of the rest, there are usually one or two people a year that begin the conversation with the understanding that - just like any job - many will try, but few will succeed. The problem is, most people thinking about becoming a real estate agent don’t have a conversation with someone who will be honest with them and as such, many folks skip into this business expecting a feather bed and find something much worse instead.
There are many reasons why so many people who shouldn’t be real estate agents become one anyway, but for the average consumer looking to buy or sell a home, it’s important that they understand that unless they’ve done some digging to find out whether the agent they’re working with is competent, there’s a pretty good chance they’re hiring one that’s not. The truth is, while there may be literally millions of real estate agents roaming the country, there are very few competent ones. This phenomena is not a new one, but the pandemic has made the problem worse. This dilemma is one that the real estate industry and our trade groups have been discussing for years. Regrettably, little progress seems to have been made on the issue, a fact that poses serious problems for consumers who end up hiring agents who lack the skills necessary to properly guide clients through the real estate transaction, or worse, who are dishonest and unethical.
The D.A.N.G.E.R. Report
In 2015, the NAR® Strategic Thinking Advisory Committee commissioned Stefan Swanepoel to research and compile what would become known as the D.A.N.G.E.R. Report. It’s probably safe to say that this well-intentioned endeavor to identify the current and future threats facing the industry did not yield the expected or desired outcomes, as the NAR® has since shut down the page where the report can be read. Fear not however, as I have managed to scavenge a copy for you, which you can download using the link below:
Download the: NAR® D.A.N.G.E.R. Report
The 164-page report details the 50 threats, risks and challenges the real estate industry is facing today and will face in the near future. Interestingly, many of the 50 items take the industry to task for low-quality agents, poor leadership, cumbersome governance structures, industry infighting and shortsightedness, particularly when it comes to the potential effects of advancing technology.
I could go on for days about the contents of this report, especially when you consider how little progress has been made in addressing a great majority of the concerns identified within it. But I will spare you my rantings and highlight the one portion that pertains specifically to the topic at hand, which is identified as DANGER A1.
Everything that follows is a direct quote from the D.A.N.G.E.R. Report, pp. 20-21
“The real estate industry is saddled with a large number of part-time, untrained, unethical, and/or incompetent agents. This knowledg gap threatens the credibility of the industry.”
“The knowledge and competency gap from the most to the least is very large, due to the low barriers to entry, low continuing education requirements, and the lure of quickly making big dollars.”
“Most professions (doctors, lawyers, accountants, and engineers) require thousands of hours of study, beginning with a bachelor’s degree. Even becoming an earth driller requires an average of 704 hours of instruction, and becoming a cosmetologist requires an average of a 372 hours. But to become a licensed real estate agent requires an average of only 70 hours with the lowest state requirement being 13 hours.”
“The delta between great real estate service and poor real estate service has simply become too large, due to the unacceptably low entry requirements to become a real estate agent.”
“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.”
164 pages later, the reader is left with little in terms of how these 50 items ought to be addressed so that, at the very least, consumers can be protected from their potential impacts. Alas, the report offers nothing here, leaving it for the industry to decide how best to tackle them. Regrettably, it’s easy to understand why so little progress has been made on issues such as these when you consider what impact raising the bar for real estate agents would have on the financial outlook of the numerous trade organizations, regulatory agencies, licensing authorities and brokerages that all derive an overwhelming majority of their income from dues and licensing fees. The sad truth is, there are a lot of people who get rich off agents even if the agents never make any money being one.
who you work with matters
Given that this is how our own industry views the issues, you can begin to understand why I spend so much of my time talking about the importance of hiring a good agent. The truth is, while there are millions of agents out there, not all of them have the same level of experience or track record of success. And not every agent will hand you the same level of value or secure the same amount of money for your home sale. But as we enter the new year and with it, a shifting market, it becomes more important than ever before to put serious effort into your search for an agent.
That’s because prior to 2020, consumers only had to contend with large numbers of part-time, untrained, unethical and/or incompetent agents. In 2023 consumers now have to contend with a new arrival: quarantine agents. Now before you yell at me, understand that I know a lot of incredible agents who were licensed after 2020, so don’t discount someone on that fact alone. Rather, a quarantine agent is an agent who would normally fall into one or more of the usual unappealing categories discussed already, but who also carries the added distinction of being someone who has received a great majority of their educational background via Zoom, with little actual oversight of their day-to-day activity. Regular coaching and mentorship sessions, which were already a rarity for all but the few agents working under highly respectable brokerages before 2020, have almost certainly been nonexistent for quarantine agents. What’s more, many of these agents probably enjoyed incomes which vastly exceeded their skillset in 2020 and 2021 because, let’s face it, everybody made money selling real estate then. Unfortunately for them, 2022 was probably a pretty rough year for most quarantine agents, because 2022 was a pretty tough year for the great agents too. In 2023, the quarantine agents are now competing with all the other part-time, untrained, unethical and/or incompetent agents who also made very little money in 2022 compared to the previous two years. They are scared, starving, listless and would do just about anything to get you to hire them. Worse still, there’s a real possibility that a real conflict of interest is going to arise when they are faced with a situation that requires them to put a your best interests ahead of their paycheck.
It’s probably safe to assume that you can’t think of any situation where you would willingly hire someone that would put their interests above my own, but this is exactly what buyers and sellers do every time they work with an agent without making sure they’ve properly vetted them. If nothing else, when you’re buying or selling a home, your agent’s skills and expertise can dramatically impact your sale. As a whole, high-performing real estate agents will secure significantly higher sales prices and faster sales for you than the average agent. Consider too, that it’s not unheard of for Buyers or Sellers to find themself in hot water legally after following the advice of a bad agent.
So how do you make sure you hire a great agent? It’s actually a pretty easy thing to do, and it’s something that I genuinely feel is so important for everyone to do that I’ve created two guides to help you do it. There’s one for Buyer Agents and one for Listing Agents. You can download them absolutely free using the links below:
Buyer Agent Interview Guide
Listing Agent Interview Guide
I truly hope that you will use these resources but if nothing else, this one hard and fast rule is a great starting point:
You should only hire an agent that works full time as a real estate agent (that is, their primary source of income is helping people buy and sell homes) and lives close enough to the area you are going to be buying or selling a home that you’d call them if you had a flat tire.
Of course, there will be exceptions to this rule from time-to-time, but for the vast majority of Buyers and Sellers, following this one rule alone is half the battle. Please try harder than this, but if this is all you can muster, it’s better than nothing I suppose.
final thoughts
If you subscribe to my newsletter or follow me on social media, you’ve probably noticed that I talk about a lot of things that you don’t see other agents talking about. This is one of those topics, but I talk about them because they’re important. To that end, if you’re an agent and you feel like any of the concerns I highlighted above might apply to you, either fix it or find a new job. I’d be thrilled to hear you want to fix it, and I’ll do anything I can to help you along the way, because we are an industry that serves those that deserve so much more than some of us are giving them. But if you can’t or won’t fix it, please just go.
If you’re a Buyer or Seller, I’d be thrilled to be the agent you choose to work with, but more than that, I’d be even happier to know that you chose an agent that was competent, well-trained, and highly ethical. Trust me when I tell you that almost everyday I see what can happen when someone chooses the incompetent, untrained, and/or unethical agent, and it’s never something I enjoy watching. It’s why I’ve always said, Your home is not a commission check. Your home is one of the largest financial investments that you will ever make and you owe it to yourself to hire an agent that will treat it that way. Whether that’s me or someone else is totally irrelevant as far as I’m concerned.
Lastly, know that if there’s ever anything that I can be of assistance with, I am here to help. My willingness to be a resource for you will never be predicated on whether you are a client or not. I’m never more than a call, text or email away! Until then, stay warm and be good.
Cheers,
Jamison