Are new licensees ready for prime-time — and how can we get them there?

Basic training is just that — basic. When you get a real estate license, it means (or should mean) that you have a solid, basic knowledge of how to conduct a real estate transaction. It’s the equivalent of knowing how to steer, accelerate, and break — it doesn’t mean that you’re ready to take on the Washington Beltway at rush hour[*].

So while new licensees may not be ready to practice real estate on their own, they should be ready to be ready. The foundation should be built; experience will take care of the rest.

That’s the theory. Does it work that way? It’s a question we posed: In 2009, we formed a workgroup to look at the issue of licensee competency. And early this year we polled nearly 4,000 Virginia brokers about what they thought of the quantity and quality of real estate education in the state.

We brought it all together at our GetActive legislative conference, with an open panel and town hall discussion. The questions before the panel and the audience: Do Virginia Realtors get enough training — and the right kind of training — before being licensed? And if not, what’s to be done?

Easy does it

“Could someone walk out of exam and help someone with the biggest investment of their lives?” asked Paul DiCicco, executive vice president of McEnearney Associates, rhetorically. (He’s since joined Keller Williams as regional director.) No, obviously. “They could be showing homes and writing contracts without knowing what they were doing.”

His issue is that real estate education is less about how to do real estate than about how to pass the course. Students learn how to get a good grade, he said, but “There was no way someone could come out of these classes and be able to sell a home.”

Greg Davis, a recently licensed real estate agent with Long & Foster in Richmond, agreed. While he said that the 60-hour prelicensing requirement is enough to pass the exam, “When I walked out of there, did I want to list somebody’s house? Did I want to help somebody buy a house? No.”

The issue, he pointed out, is that it’s not always clear to the newly licensed that they aren’t quite ready yet. A licensee’s got to know his limitations.

“I can see why some new licensees would want to rush out,” Davis said. “They think they need to start making money.” And while that kind of enthusiasm might be praiseworthy in a general sense, without some experience under their belts, new Realtors can be prone to making mistakes that can cost clients money, and do permanent damage to their reputations — not to mention the profession as a whole.

“The licensees are going to have to take some responsibility themselves,” he said. They’ll have to realize what they’re lacking. (Davis has an advantage in that regard — his wife Pam has been a Realtor for seven years.)

Members of the audience were quick to agree: Getting a real estate license is easy … too easy, for some. As one audience member groused, why are we giving somebody a license right after the finish a class? After all, student drivers first need a permit.

But what does that mean, ‘too easy to get a license’?

For at least some people, the ease of getting a real estate license equates to lack of respect for the industry. If it takes more training to become a barber, how can we expect consumers to accept Realtors as the professionals they are? (For a comparison of various professions’ licensing requirements, see the chart below.)

Licensee competency is about more than general professionalism. What we wanted to know was what specific training issues rear their heads when a newly-minted real estate agent hits the streets.

Missing pieces

So what’s wrong with new licensees? What kinds of training are they missing? Ask 10 people and you might get 10 different answers… or you might not.

Contracts (and the understanding thereof) was a common issue.

“[New] agents are coming into the office and they’ve never seen a contract,” said Ben Mills, an associate broker with William E. Wood in Virginia Beach. He’s not entirely surprised — the “Principles of Real Estate” course doesn’t talk about completing contracts, he said. Result: “Nine times out of 10 I ask ‘What does the contract say?’ and they don’t know.”

Others in the audience agreed. “Understanding the contract is the biggest issue I run into, and not with just new agents,” said one. “It’s the biggest investment in your clients life, and its got to be taken more seriously.”

Kit Hale — audience member, general manager of MKB in Roanoke, and 2006 VAR president — said the issue isn’t even about the nitty-gritty. “[It’s about] understanding a contract,” he said, “not the contract.” An example: an agent asking him to review a contract that included the line “subject to short sale.” That begs the question: What about the short sale?

DiCicco had a different issue: “Folks are coming out [of real estate school] with no idea how to negotiate.” Schools may teach the nuts and bolts of a transaction, but not the people angle — and real estate is all about people.

Of course, there wasn’t agreement on everything. Some audience members thought there wasn’t enough training in at least the basics of specialties such as property management. Others, though, complained about spending time learning things they’ll never use — appraisals and financing were two examples.

“It’s good to be smart,” said one, “but we don’t need to be experts.”

Whatever the specifics that are missing, the consensus seemed clear: It’s time to look at licensure requirements. The better the quality of real estate-school graduates and new licensees, the better it is for everyone. Problem: It’s not entirely clear what’s missing.

The number one violation found by the Virginia Real Estate Board, said Christine Martine, executive director at the Department of Professional and Occupational Regulation, is “unworthiness and incompetence.” Although the board is working to narrow that definition, it’s clear that too many agents are not quite ready for prime time. Sure, there are always some people who intentionally do the wrong thing, but in the vast majority of cases it’s a case of simple sloppiness, or just not understanding the rules well enough. (Incorrect handling of earnest money deposits is a common problem.)

So what’s to be done?

Ideas

Boland’s workgroup generated with plenty of ideas. Some have already been put into action: broker self-audits, short sales being incorporated into the licensure curriculum, rules for unlicensed assistants, and carryover CE credits.

One idea that piqued interest was simply increasing the required pre-licensing hours from 60 to 120. Not only would that (in theory) better prepare agents, it could help improve Realtors’ image overall as well-trained professionals.

There was one significant problem with that: The workgroup quickly realized that it wasn’t the amount of time students spend doing coursework, but the material they were learning (and the quality of the courses and instructors).

“If you could quadruple the number of hours, it wouldn’t make a difference,” Boland said. “[Students] learn more working in an office than they can from books and classes.” Quality, in other words, needs to trump quantity; a stronger and more flexible pre-license curriculum — on that teaches to today’s markets — is more important than arbitrary increases in hours.

So, once again, what’s to be done?

More classes on standard forms, was one suggestion. Requiring an apprenticeship or at least hands-on experience. (The idea that no one should be allowed to list or show houses without first visiting and evaluating properties was met with enthusiasm.)

How about changing the curriculum to match the need? As Charlee Gowin, a Realtor with Prudential Towne Realty in Virginia Beach put it, “We know what we want them to know.”

Maybe clarifying the role of post-licensure education as focusing on the practical side of the business?

Or what about one of the simplest ideas: Require more and better broker supervision, especially of new agents.

VAR legal counsel Blake Hegeman understood that sentiment completely. “It’s clear from the many [Legal] Hotline calls I get that broker supervision is a key issue,” he said. “I think the broker is the key to this.”

That’s the way John Ince of Nest Realty in Charlottesville was also thinking. His suggestion: “Why not require a broker sign-off on all contracts for a probationary period?” Many in the audience agreed, and some suggested going a step further: Brokers should be doing that already, and for all licensees.

More broker supervision garnered plenty of head-nodding and general assent, but there’s also the inverse — converse? — approach: Make Virginia an all-broker state, like North Carolina. There, every sales agent is responsible for his or her own contracts to a much greater extent than in Virginia and indeed in most states. There is less buck-passing and more individual responsibility… and more pressure, especially on new licensees.

The idea of requiring a more-thorough education for real estate licensees was appealing to Boland’s workgroup — N.C. requires 75 hours of training for “provisional” status, and an additional 90 hours within three years for a full license — not to mention the benefits of that extra responsibility put on agents. (For more on what nearby states require for licensing, see the box below.)

But what works in a lab doesn’t always fly out in the wild. So it was with the all-broker-state idea. “There was a lot of excitement about that,” Boland said, “until we ran it by some folks.”

Problem and solutions, dancing in the dark

There is general agreement that new licensees could be better trained. There is slightly less agreement on exactly what that better training would be: ethics? contracts? negotiating? And there’s always the question of the overall goal: Is it to keep as many Realtors out of trouble as possible? Is it to enhance the profession’s image? Is it to reduce some of the weight on brokers’ shoulders?

And there are solutions: More required hours, updated curricula, closer supervision, and so on. Each has champions and detractors, of course.

The trick is finding where the two sets mesh, and mesh in a way that accomplishes the goal(s), addresses the current training shortcomings, and is palatable to a majority (preferably a large majority) of members. No easy feat.

But if the first step to solving a problem is admitting there is one, we’re at least on our way.

 

[*] Or any time, really

* * *

Virginia and its neighbors — real estate licensure requirements

	HS diploma or equivalent required?	Classroom hours required for real estate license*	Additional requirements for broker’s license*
Virginia	NO	60	180 hours of coursework
Kentucky	YES	96	Two years as salesperson for at least 20 hours per week; 336 hours of additional coursework; 48 hours in brokerage management coursework
Maryland	NO	60**	Three years as salesperson; three-hour ethics course for brokers
North Carolina	NO	N/A***	75 hours of coursework for “provisional” status; additional 90 hours within three years for full status
Tennessee	NO	60	120 additional hours of coursework, including 30 hours of “office/broker management” classes; 120 more hours within three years of passing broker exam
Washington, D.C.	NO	60	Two consecutive years as salesperson; 135 additional hours of coursework
West Virginia	YES	90	Two years active experience as salesperson; 90 additional hours of coursework
* Some states will count experience and/or general college credit toward these requirements ** Includes three hours of ethics training *** NC considers all licensees to be brokers

Virginia licensure education requirements

	Classroom training required to sit for licensing exam
Real estate salesperson	60 hours
Auctioneer	80 hours
Barber	1500 hours
Contractor	240 hours and four years practical experience
Esthetician (cosmetologist)	600 hours
Nail technician	150 hours
Real estate appraiser	650 hours
Real estate inspector	35 hours, plus 50 certified inspections*
Surveyor	Graduate of 4-year course
Wax technician	115 hours
	* Other combinations of classroom training and certified inspections are allowed.