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Has MAR forgotten who pays the bills?
Here we go again, it happened last year too. The Minnesota Association of Realtors is reminding us all that we have too many Realtors in Minnesota and is suggesting that brokers should let some agents go. Last year they urged lower producers to quit. MAR is a trade association and is supported by Minnesota Realtors who pay dues. The dues are the same for every member, regardless of sales volume.
This from Glenn Dorfman, chief operating officer and chief lobbyist for our Minnesota Realtors Association:
"Brokers must reduce the number of "unproductive agents" (x transactions per year) in order to stop the dilution of productive, professional agent's income. If this does not happen, REALTORS® should stop the blabber about "professionalism." My definition of a "professional" in real estate is someone who counsels consumers in the buying and selling of real estate and does at least 10 transactions per year. [Real estate sales is an experiential based business: the more business one does over time the more proficient, competent one is–consumers/customers make this determination based upon the depth and breath of the services provided by the REALTOR® not based upon the symbolic REALTOR® "R."]"
Let me say that I thought trade associations were supposed to work for their members, not just the wealthiest most successful members. One agent does not take money from another or dilute their income, we work hard for every dollar we earn. We all have to compete and work to earn it everyday just like everyone else on the planet. It is called competition and those who can not handle it will leave.
As independent contractors we can pretty much do what we want to as far as production levels. Real estate companies make the most profits off of the lowest producing agents, because they get a bigger cut of the commissions. They will continue to bring on new agents as long as it is profitable for them to do so. Yes real estate companies should provide more training. They don't because there is little incentive to provide training beyond how to promote the company brand and how to hold an open house which promotes the company brand, and the agent while doing almost nothing for todays tech savvy consumer and stressed home seller.
It is also possible that there are agents who make a lot of money, and do not do such a great job for the consumer. Think about it, does the general public love Realtors? Why not? Does the average consumer really know the difference between a good agent and a bad one? Most do not. Lets spend more money on consumer education and let the individual practitioners who do not like making less money figure out how to compete or go out and find another way to earn an income. In most cases ten transactions a year will not yield a decent income.
I would love it if half of the agents in the twin cities quit. That would mean more money and more business for me. It just doesn't work that way and it never will. When it gets easy everyone wants to do it, and they do. When the going gets rough they quit.
Glen, your letter is just another example of how an industry in turmoil has started eating it's young to protect old business models instead of innovating to better serve the consumer. Real estate is a self eliminating market driven profession. It works on the principals of supply and demand, as does the housing market. When agents can't make ends meet they will seek employment outside the industry and maybe they will sell a few homes too. We call our economic system capitalism and I just love the almost endless opportunities the system brings. Anyone can start their own business, how cool is that?
You don't get to decide who will stay and who will go based on earnings and years in the business. Each of us will make that decision on our own.
Related posts: The truth about real estate companies The real estate commission structure Ask your agent if they have ever sold a home
Would the person or persons who submitted this article for the "People's Choice Award" please let me know who they are?
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Thank you Teresa for the way you think and the way you speak!
I'm sure the NAR loves his comments as they visit with the Justice Dept. about anti-trust practices. Who does this guy think he is? He needs to be fired.
Oh my. Seriously? Does this guy only represent you in the union if you're a top producer? I take it there is no agency for the agents?
wow...that's a stunning statement coming from inside your own organization. What IS he thinking?? Well said, Teresa..
To be as charitable as possible, there is a crisis in the industry. It's probably getting hard to make a living as a realtor, and that has to trouble the guy.
Having said that:
While I'm sure one solution is "Why don't some of you go away?", it's rarely the most practical, ethical, or even desirable solution to any problem you can name. Many industries go through contractions, and it's not the weakest people that go away - it's the people that are bright and motivated who can do just about anything.
Plus, with the kind of dedication required to be a good realtor, you have to expect that the most focused are going to be the first to burnout. That's not good, either.
Rather than pit one part of the industry against the other, there has to be a commitment to solving the problems as a group. That would be far more productive - but a lot more work.
Erik - it is wonderful to hear the point of view of someone who is not in the industry. You bring up some great points, that I had not really considered. I guess the whole tone of Glen's message got me a little wound up. Thanks for stopping by.
Dorfman doesn't need to tell Realtors to leave the industry -- they'll go on their own, either because they're not making enough money or because they'll find easier ways to make money. What IS notable about his letter is what is left unsaid: the need for alternative pay arrangements/commission schedules for agents. Buyers and sellers both are ill-served by the current scheme, and technology will free them from it, whether Dorfman likes it or, I suspect, not.
Bubble_up - ah yes the commission structure. That is why I included a link to a post I wrote about commissions. Yes this would be a great time to look at some new business models.
Unbelievable! What about the agent who has been in the business for 20 years, closed hundreds of deals, and simply wants to throttle back while staying in the business and doing a few selective deals per year. Is this person harming the consumer because of their inexperience?
On the other hand I've been on the other side of deals from top producers who scare the heck out of me with their inattention to details.
Short sided to say the least!
Teresa,
First I would like to thank you for this post. Second I would like to state that I do not sell real estate I appraise it. I work with many real estate sales professionals and many appraisers got their start in the sales side of the real estate industry. I have learned a lot from working with sales people and have received much encouragement and support and have dedicated my business to help them and to help the real estate industry.
This is appalling to say the least and I truly find it to be disturbing.
I work very hard to do what I can to help those in sales improve themselves in anyway I can. I am not alone. I commend those who speak of professionalism and education and promote that in the industry because it only encourages us all to maintain that status and to constantly improve. I commend those who are willing to speak up for the consumer, because in one way or another we are all consumers. I commend those who see themselves as a business and a small business owner because that is what this country was made on. And I commend those like you that expose this kind of destructive behavior.
Every real estate person should see this comment… every one of them.
I think that this truly is that which is unbecoming of a realtor in some way.
Thank you again for this item of insight.
Actually while Glenn is a little harsh on his writing, and can be in person too, his point I believe wasn't clear but he and others from MNAR have expounded on this issue before... the market as a whole has become so thinly spread that it hurts both consumers and agents. From what I heard we had a 50% increase in membership during the boom times... that is just plain unsustainable. If the "new economy" is so much more efficient, why do we need record numbers of Realtors locally and nationally? I seem to remember that most other industries see employment roles drop when technology enters the business...
What do you think serves a consumer better?
A. Fewer agents that do more transactions and therefore have more daily experience and have the financial ability to negotiate their commissions because they spend most of their time working and not marketing and make more than the poverty level.
B. More agents that do less transactions, and may have other job(s), and therefore have very limited daily experience and miss things like market changes, form changes, law changes, etc. Because these agents pay so much for continuing education, commission splits, association fees, E&O insurance, and broker fees they need every single penney they get from each sale and consequently are extremely hesitant to negotiate commissions.
I believe option A is the clear winner here... while some agents are overworked or lazy & therefore horrible to work with, they don't change much in either situation.
Further, if you're an agent making just a few transactions per year and paying all the fees, splits & dues involved, you are likely working for close to minimum wage... maybe you need some encouragement to move on. The only ones that win in that scenario is the broker.
A professional in my opinion is someone who regularly conducts business and does it in a manner consistent with the best practices of the industry. Just like a pilot needs a minimum number of hours in the air to stay licensed because of safety concerns without regular practice, if you are not able to transact regularly you could be a danger to you and everyone else around you.
Could it have been said better? You bet. Is the general idea right? Definitely.
Appella - thanks. You really do support us. i see it online all the time and it is appreciated. :)
Aaron - thanks for stopping by. I agree with what you are saying. We really do have too many Realtors and not enough business for everyone. We also have some realtors who don't do much. Brokers should consider letting those go who do not serve the consumer. Unfortunatly those agents will just find another broker. I don't think there is a simple answer here. I think that our business practices and models are obsolete and that they do not serve the consumer as well as they did in the past. No argument from me on the number of agents either, we have too many.
My point in all of this is that are trade association is proposing a solution that just doesn't make sense.
I understand the argument you make but I can also see the side of the letter writer. But neither side really needs to discuss it much, IMO, because capitalism will take care of it on it's own.
As transactions get harder to obtain and even harder to close the industy will thin itself. People will go back to the 9-5s. Except for the stubborn, the well financed, or the true producers.
There will always be part-timers and underperformers. That's their business. It's not illegal. Though possibly dangerous to themselves, their broker and their clients.
As Appella noted, pilots do have to have a minimum amount of hours flown and landings made before allowing to take passengers on board. It's for everyone's protection.
I agree it does take experience to be a good agent. Chris I think you get my point. Capitalism will take care of it.
I absolutely agree with an apprenticeship set up before allowing people to become licensed.
"Think about it, does the general public love Realtors? Why not? Does the average consumer really know the difference between a good agent and a bad one? Most do not. Lets spend more money on consumer education and let the individual practitioners who do not like making less money figure out how to compete or go out and find another way to earn an income. In most cases ten transactions a year will not yield a decent income."
This is where we disagree. NAR, being the self-serving corporate monster that it is, will NEVER differentiate the bad Realtors from the good ones because they would be alienating their own members and also cutting into their own bottom line. NAR's current line is peachy for them -- Use Realtors®©™™™™ because they are professionals as opposed to just "real estate agents". That works if so many within the ranks weren't plain awful at what they do. I'll have to think on how to improve this... By the way, Greg Swann is planning an article (or series of articles) on the disintermediation of NAR... should be interesting to say the least!
Lay off independent contractors who aren't performing? How lame. Some agents take time off due to illness, the birth of a child and many other things. To "weed out" these people would be a shame. The industry takes care of itself. It is called attrition.
I've been an admirer of your blog for quite some time. Thanks to being introduced to it by Darin P. of The Gardyn. You hit on an interesting topic in this dialogue. I think, as someone who has been in active real estate sales practice for almost 18 years, we've all had that occassional "part timer" who makes a transaction frustrating or who clearly shows a lack of training in how they choose to handle their side of the transaction. We can attack the top producers as well as there are some who are completely detail lacking. My point is throughout all aspects of our business there are unprofessional agents both low producers and high producers. I believe the answer lies in training and education. I'm a HUGE proponent on increasing the hours of education needed to maintain licensing. I believe this creates an opportunity for fair and equal treatment of all agents regardless of production levels.
We kill ourselves on this aspect all the time. For example, when NAR adopted the requirement for a "business ethics" training for all REALTORS every 4 years, I was optimistic. At least we were adding to the low number of hours needed for maintaining our licensure. Then, at least here in Wisconsin, the powers that be decided we could roll that into an already required CE course and not make our REALTOR members have to take another class. GEEZ!
Just another example of how we talk a great talk but are unwilling to show the leadership to walk the walk.
Thanks for letting me vent.
Darren: I am a huge fan of your comment. :) Some of us just take a lot more training that is required because we want to learn more while others have a fit about having to take 15 CEU's a year here in MN. I have to say I was pleased earlier this month when I went to a seminar put on by MAR where they had experts go through the new 2007 forms, and explain the changes. An attorney spoke and explained how we can best protect our clients, our selves and our brokers by filling out the legal contracts the best way. Many agents would not take such a course. Our licensing course focus on passing the exam and nothing more.
Teresa- you've exposed yet another "Association of Realtors" official who has put their foot in their mouth. You know better than most that SO MANY people speak or write without thinking... and THIS is where Realtor dues go? What a shame!
"Does the average consumer really know the difference between a good agent and a bad one? Most do not. Lets spend more money on consumer education and let the individual practitioners who do not like making less money figure out how to compete or go out and find another way to earn an income."
I couldn't agree more. I don't think that most consumers know whether or not their real estate agent upholds high standards or has provided quality services to his/her clients in the past.
And selling is a competition - in real estate or in most any other sales job. Like you stated... if you can't compete find another way to pay the bills!