We’ve touched on this, but now the NAR-commissioned report is going mainstream – here is a link:
Consider these broadsides to get the flavor of the report:
>> “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.” Ouch!
>> Low entry requirements for agents are a key problem. While other professionals often must undergo extensive education and training for thousands of hours or multiple years, realty agents need only complete 70 hours on average to qualify for licenses to sell homes, with the lowest state requirement for licensing at just 13 hours. Cosmetologists, by contrast, average 372 hours of training, according to the report.
>> Professional, hard-working agents across the country “increasingly understand that the ‘not-so-good’ agents are bringing the entire industry down.” Yet there “are no meaningful educational initiatives on the table to raise the national bar … .”
>> The commissions that realty brokers and agents charge are under attack and highly vulnerable to reductions because of pressure from cost-sensitive consumers. While typical commission rates in this country are around 6 percent, fees in other developed countries are significantly lower. In the United Kingdom, they average 1 to 2 percent; in Australia, 2 to 3 percent; Belgium, 3 percent; Germany, 3 to 6 percent.
>> In response to consumer demand for lower fees, “a growing new generation of brokers and agents [is] exploring … new business models and pricing models that will most likely become commonplace in the next 5 to 10 years.” The reference here is to technology-driven discount brokers who are making inroads in many markets. Baby boomers looking to downsize and millennials seeking first homes are especially interested in shaving fees to save money.
>> Realty brokerages face their own challenges, such as compliance with aggressively enforced federal regulatory policies. Among the most prominent, according to the report: The Consumer Financial Protection Bureau’s anti-kickback and referral-fee rules governing brokers’ financial arrangements with title companies, lenders and others. Though “most brokerage companies are either ignorant of the fact or believe they are in compliance,” says the report, “most are likely in violation already.”
The real estate machine thrives on new, inexperienced, and lazy agents. They need them and their lousy commission splits – and dues – to survive. Why then, is N.A.R. releasing this report, especially when there won’t be any meaningful response?
Is it to ensure that agents know they should be polishing up their resumes as we wait for Zillow to clean our clock? Seems like it!