I just finished reading the D.A.N.G.E.R. report. The report was commissioned by the National Association of Realtors (NAR) and researched and authored by the Swanepoel T3 Group. D.A.N.G.E.R. stands for Definitive Analysis of Negative Game Changers Emerging in Real Estate. The goal of the report is to assess the challenges, opportunities and threats that face the real estate industry in the coming years. It is a comprehensive look at the past, the current environment and what lies ahead for a complex and diverse group of entrepreneurs: Real Estate Agents. The report also addresses threats facing real estate brokers, NAR, state and local associations and MLS. The report was compiled using interviews with top industry experts inside the real estate world and outside of it. It is a frank, well-organized and detailed report and I would urge all Realtors to read it. Get your copy here.
The authors created an index called a PTI measuring the Probability (P) of the danger to happen, the likely timing (T) of the danger and finally the impact (I) of each danger. Care to guess the number one danger threatening the real estate agents with a high score of 100%?
“Masses of Marginal Agents Destroy Reputation”
“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.”
Amen. This is a battle that all full-time professional real estate agents and Realtors wage every day when the agent representing the other party in a transaction is either MIA at their day job, oblivious to the state rules and regulations governing real estate transactions or unable to successfully utilize the technology involved in the day-today business. Unfortunately, fogging a mirror is the only requirement for hire at many real estate companies. Low entry requirements (average 70 hours of education required before real estate exam and licensure; cosmetologists have to complete 372 hours), the potential to make decent money with no prior experience and minimal continuing education requirements make this the industry of low hanging fruit.
Franchises routinely haunt Practice & Principle classes to recruit as many new agents as they can, for them it’s simply a numbers game: If 20 new agents occupy a desk, pay fees and sell 1 house a year, that’s 20 sales. The agent training for the most part consists of a few webinars produced by the mother ship on sales techniques and “floor time” where they answer the phone during a set time frame with their fingers crossed that a transaction will somehow waft their way (such transaction may be subject to a 35% referral fee for “leads” that they receive via the mothership’s lead generating internet vacuum).
At Home Selling Team we don’t hire everyone that comes in the door with a license or pending license. We interview the prospective hire. We want to know what their long-term and short-term plan is. We want to know if they’ll have family support (this is not an easy transition for many). We try to determine what they can bring to the table as well as take away from it. Are you willing to obtain professional designations in addition to your continued education requirements? Are you willing and able to participate in our monthly meetings and brainstorming sessions? Do you have character references? Someone who lacks integrity and trustworthiness and who engages in unethical or unfair dealings reflects badly on all of us. And as part of a team you must play well with others.
We have actually declined to hire agents on several occasions after interviewing them, feeling that they may not be a good fit for our team or not aspiring to be the type of professional that we want to work with i.e., “I just wanted to get my real estate license so I can do flips.”
Typically, once we inform a prospective agent that they must disclose to the public that they are a licensed real estate agent with a financial interest in the property, their interest wanes. Not to say all of our hires have been perfect or without regret. Sometimes things don’t work out as planned on either side for many reasons.
One thing I would love to see is younger agents and many more of them. This is also addressed in the DANGER report under “Insufficient New Blood. “Youth is a Gift the industry has yet to receive.” This issue received a score of 56% in the danger index. According to NAR the under 40 group has declined from 20% in 2003 to just 12% in 2014 while the over 60 group has risen from 24% to 40% in 2014. And the median age of a Realtor was 56 in 2014 as compared to 51 in 2003. Ouch.
The real estate industry needs younger minds and younger leaders now to bring a fresh perspective to many of the threats we are facing now and in the future. According to the author of the DANGER study, NAR is the logical choice for the promotion of real estate as a career choice among younger people. I hope that in their quest for young movers and shakers, NAR also considers the prospect of changing its focus from membership totals to the professionalism and quality of their members. It doesn’t seem they can do both successfully. In the wise words of Will Robinson: Danger! Real Estate Professionals! A troubled future ahead without significant changes.