According to the DANGER report, recently released by the National Association of REALTORSÂŽ (NAR), buying and selling agents list âmarginalâ players as the greatest professional danger they face. âThe real estate industry,â the report says, âis saddled with a large number of part-time, untrained, unethical, and/or incompetent agents. This knowledge gap threatens the credibility of the industry.â
What are âmarginal agents,â and what can a real estate brokerage, or an individual agent, do to reduce their numbers or minimize the damage they do? In general, educators and real estate agents agree that constant improvementâof your own tools, knowledge, and skill setâis more helpful than trying to expose the bad apples.
Stephen Antoni, incoming chair of Realtor Party Member Involvement Committee of NAR and broker associate of Mott Chace (Newport, R.I.) estimates that as many as 90 percent of agents in the U.S. could be classified as âmarginal.â Of the NARâs million-plus agents, he asserts, more than half probably havenât executed a transaction in a year. Consequently, he says, real estate agents suffer from the same sort of stereotype that dogged car salesmen years ago.
âBut look what that stereotype did to the automotive industry,â he says. âIt pushed the industry to get rid of that unprofessional approach, to put no-haggle prices on the cars, with proper disclosures. If you go to a doctor, youâre expecting a doctor. If you go to a Realtor, you should expect a licensed, trained Realtor. Unfortunately, in some states itâs a matter of a couple dozen hours of pre-licensing class. Our model is diluted as soon as Uncle Joe comes along to sell Aunt Gladysâ house, claiming to be a licensed regulated Realtor.â
Mistakes, Shortcomings Are Pervasive
Michalene Lanzito-Melges, of Michalene Melges Properties in Lake Geneva, Wisc. lists the biggest faults of poor-quality agents as follows:
- Throwing off the marketâs inventory and confusing buyers by listing a property at whatever price the seller demands;
- Listing a property without a pre-inspection, hoping that the official inspection wonât uncover anything;
- Not doing their homework. Lis pendens, federal tax liens, and judgments are all on the County website.
Melges says the minimal standards a selling agent should live up to, to be considered reputable, include showing up with a plan; setting the sellerâs expectations; showing the owner their odds of selling so theyâre able to make a clear decision whether to list or not; and explaining the current market as it pertains to that property and the competition. A buyerâs agent needs to have a thorough understanding of what the buyer is looking for, so that every tour is relevant; anticipate every question about a property and have an answer for it; and bring an offer.
âWhen the client has made a decision to purchase,â she says, âwrite the offer. Thatâs what youâre there for. Do your own homework: never go on a listing appointment unless you know the propertyâs background. Interview the prospective client: Let them believe theyâre interviewing you.
âIf youâre a selling agent, always do a pre-inspection on the listings you take, so you can spot problems and have them taken care of prior to the buyer writing the offer.â
Jack Cotton, residential real estate broker at Sothebyâs International Realty in Osterville, Mass., says low barriers to entry bring a lot of incompetent or uneducated brokers into the business. However, he remarks that standards seem to be getting higher.
âWhen people ask, âWhoâs your biggest competitor?â I say itâs the 20 people who each sell one home out of their kitchen,â he says. âBut the requisite level of competence is rising. Buyers are much more sophisticated today, and want answers to questions about permits that were issued on a home 20 years ago, for example. A part-time or marginal agent doesnât have the information, doesnât know where to get it, and makes more work for other parties to the sale.â
Another grave danger, Cotton says, is the agent whoâs too focused on the commission.
âThis past weekend,â he recalls, âwe set an appointment to show a $1.6 million house to an interested buyer. In the course of making the appointment with the listing agent, my agent asked a lot of questions to gather information that the buyer wanted. The level and depth of the questions must have made the potential buyerâs interest evident to the listing agent. After our agent and his client had driven three hours to view the property, the listing agent informed everyone that there was an accepted offer, and that this showing would now just be for backup.
âIn other words, that agent used our buyer to get another buyer to âstep up to the plate.â Our buyer was naturally annoyed, and the homeowner mightâve been better served if heâd waited to accept an offer till the second buyer had seen the property. However, the full commission on a lower price was more attractive than a co-broke on a higher price. Like many agents, he forgot whom he works for.â
Set, Maintain High Standards
Mike Duran, CEO of McKissock, insists that your worth as an agent depends much less on the hours spent on the job, than on the standards you set for yourself. Some part-time agents dabble in the field; others are fierce professionals and competitors, every bit as dedicated as those who work the business full-time.
âYour education must be ongoing,â he insists. âThe highest-performing agents look beyond state-mandated continuing education requirements to build their skills. They continually monitor trends, think of skills theyâll need to work with those trends, and seek out supplemental classes, learning materials, and networking/mentoring to fill the gaps. At McKissock, weâre responding with learning products that meet our customersâ full range of skill development needs.â
Nationwide, residential real estate brokers agree that educational opportunities are greater than ever. Private-sector educators like McKissock are constantly adding to their offerings, and many state certifying organizations have upped their game as well. Jane McCune, broker and co-owner of Blank & McCune (Iowa City, Iowa) says standards of professional education have risen dramatically since she joined the industry in 1975.
âThe state requires that we take continuing education every three years,â she says, âand it used to be a waste of time: You just sat in those classrooms because you had to. Now, you can actually learn something. You can get useful information about professional ethics, banking law, and lots of other subjects. The teachers are experts who travel statewide or nationally: Theyâre not just locals. Marginal agents arenât much of a problem in this market because of our high level of education.â
Education, Knowledge Make Difference
Realtors generally agree that an agentâs standing in the industry is largely a matter of differentiation and competitive positioning. Education and knowledgeâof your local market, of transaction structures, and of tools to streamline the process for your clientâare the key differentiators in a market thatâs fast becoming less parochial, more global.
âItâs extremely difficult for any agent to be an expert in everything,â Duran admits. âMcKissock recently started to assemble âthe world of real estateâ to guide our overall education curriculum while also giving professionals a chance to focus. Â Weâve identified more than 100 areas of specialization that arenât geographically specific, where professionals can focus on building deeper knowledge to improve competitive differentiation.â
Duran advises agents to be prepared to answer the tough questions. Most buyers and sellers wonât dig deeply when interviewing an agent, but they shouldâand some will. Agents should be able to answer theoretical, situational questions in detail, and relate their answers to experiences the client may have had. They should discuss the local market accurately and articulately. They should be able to talk about the advanced training they have, their certifications, and their recent transactions. They should have a solid list of references.
âWe see a huge gap between client expectations for marketing their homes and actual delivery by the listing agent,â Duran continues. âHome marketing is one of the most important services a real estate agent can deliver, and sellers lose confidence early in the relationship if the marketing isn’t first-rateâespecially if the digital components havenât been well thought through.â
The NAR, Stephen Antoni remarks, has now instituted core standards that every state board must comply with, for educating members, community outreach, and advocacy. Continuing education is also required. But, he insists, thatâs still not enough.
âThe hours of education required to renew your license donât always consist of material thatâll make you a better agent,â he says. âYou can sometimes slide by, in that renewal process, by taking online classes on things like environmental issues. If there were a testing component, maybe that would help: if there were a 10- to 15-minute quiz at the end to make sure you got it.â
âThe current curriculum is fine,â Jack Cotton agrees. âIt just needs more frequency.â
Another issue, says Antoni, is that itâs considered unethical to warn someone off of an agent you consider incompetent, ill-trained, or dishonest. The professional code dictates, âIf you have nothing good to say, say nothing.â
âSpend more time promoting yourself as a professional,â he urges. âThatâs the best way to make yourself useful to the community. Make it about the consumer and how you can help them sell or buy their house.â
The most serious knowledge gaps in the real estate profession, Antoni says, vary from region to region. But one of the most universal is the failure to understand how to price a property.
âDo you list at the price the seller wants you to list it at?â he asks. âHow is that helpful to the client, or to other Realtors? Itâs my job to show the client what the market is showing me, and say, âMy best educated guess is your house is worth X Iâm not talking about giving it away, but pricing it realistically so that itâll sell. Do you want to sell or stay? If youâre not willing to sell it for that price, then itâs okay for you to stay here.â
âIf youâre carrying inventory and sending multiple market updates to the owner, the market has proven the product is overpriced,â Lanzito-Melges adds. âFace it: Youâre not producing and the product is dragging the rest of the market down. After about the third incremental price adjustment, you wonât be the clientâs advocate or ally: Youâll be their scapegoat!â
Beware Accidental Ethics Breaches
What are the most serious ethical gaps in the real estate profession, and how can they best be addressed? Antoni says that whatever they are, education is the best way to address them. In practice, he adds, the failure to disclose known issues with a property is the most pervasive ethical breach.
âIf youâre my client and Iâm selling your house, and weâve agreed that what weâve talked about is confidential, and you tell me that a year ago the government buried 150 gallons of green smoking stuff in your back yard, thatâs where the confidentiality goes away: I have to disclose that,â he says. âThe uneducated agent might not realize that the brokerage is responsible, if it isnât disclosed.â
The profession recognized that a part-time or seasonal agent might be every bit as reputable as a full-time agent, Antoni says. Unfortunately, many buyers or sellers assume that the agent with the biggest billboard is the best in the area.
âA referral from a trusted friend is the best way to find out whoâs best,â he concludes. âWe ask people to look for the REALTORÂŽ designation, but thatâs not always enough: You have to get counsel from your trusted advisers.â
A recent Inman survey seems to confirm that agents are concerned about the publicâs perception of their value. Itâs broadly believed that even experienced agents tend to be behind the times in adopting new technologies or systems that could provide more information and make transactions run more smoothly. Indeed, many agents agree that that criticism is justified. Thereâs considerable concern that agents will become irrelevant as consumers find homes and process loans without an agentâs help. The next step, some industry insiders expect, will be title searches, inspections, and even closings all arranged via the consumerâs desktop computer.
The best way to address these issues, Duran concludes, is ongoing real estate learning.
âAs for addressing ethical gaps,â he says, âthe most common and effective formula seems to be clear rules; regular education using real case studies that clearly illustrate the consequences; and regular prosecution of egregious offenders.â
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