Notorious R.O.B.

 

My good friend Michael McClure (@ProfessionalOne on Twitter) has been banging the “Raise The Bar” drum for quite some time now. Recently, he wrote a post accompanying a survey in which he wants to establish “the baseline for professionalism” in the real estate brokerage industry:

All that being said, let’s get to the point of THIS post: to begin to formulate some kind of consensus on what it means to be a “professional” in the real estate industry.

Should it be based on experience? Number of transactions? Number of satisfied past clients? Perceptions of the agent’s peer group? Or some combination of these or other factors?

When the public – in the form of the Harris Polls – and Realtors themselves – in the form of the aforementioned Realtor Magazine survey – agree that there is such significant room for improvement, we think practical steps should be taken to begin to move the industry in a more professional, and more uniformly professional, direction.

Of course, I heartily agree with Michael’s goals. I did have a small quibble with him about the survey itself, as many of the questions were frankly leading questions, but I suspect we’d have seen mostly the same results anyhow.

There is one result, however, from the survey that’s frankly interesting given what’s going on outside the industry. Question #5 of the Survey asks, “How important is it that a Realtor provide evidence of some level of “minimum educational experience”? 57% of respondents say “Mandatory” and another 25% say “Very Important”; 84% of those responding have said that educational experience is at least very important to be a realtor.

Why?

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I originally had a different post planned for tonight, but an online conversation with a friend, followed by an interesting set of exchanges on twitter with @onehappyguy led me to want to ask this instead.

What makes someone a good realtor?

Seems like a simple question with a simple answer, no?

But like many seemingly simple questions, this one turns out to be all kinds of complicated.

First, you get a sort of “initial response” that seems to speak to some sort of underlying assumptions about what makes a realtor good or bad.  For example, this was the answer my friend provided initially:

a good agent is also a psychologist
good list agents = good marketers, good pricers, good negotiators
good buy agents = a knack for matching the need with the home (good listener? paired with market knowledge?)
and a good negotiator, and the ability to develop a comfort level with the client…

Jessie Beaudoin of Retrove, who twitters as @onehappyguy, wrote in a Twitter exchange:

personal traits how about 1- persistent 2 -detailed 3 – outgoing. Bigger question is what’s good? I.e 15, 20, 30 sides a year etc.

Note that his initial impulse for classifying a realtor as “good” was dependent on # of transactions.

Second, you start to get all kinds of qualifying questions approaching the philosophical as people start to drill down into what’s good and (almost more importantly) what’s bad.

“How are we measuring quality?”

“What constitutes good?”

“It’s a relationship business, so it’s all about the relationship.”

And so on.

The Curious Case of Benjamin Button

Why do I care at all about this?  More importantly, why should you care at all about this?

Because in every conversation I have had about the real estate industry — including during a fun session at RE Bar Camp NYC on issues facing the industry — I have had people tell me things like:

“We need to raise the bar, and get all these crappy agents out of the industry.”

“Brokers need to enforce quality and stop hiring all these bad agents who give the rest of us a bad name.”

“NAR needs to strengthen requirements, so these terrible realtors aren’t carrying the REALTOR designation.”

“The barrier to entry needs to be much, much higher.”

And so on.

In other words, there is a very strong feeling in the real estate industry — and in particular, among realestistas — that one of the biggest problems confronting the industry is the proliferation of “bad realtors” who ruin it for everyone else.

But no one can define what makes an agent “bad”, since no one can define what makes an agent “good”.

Benjamin Button can be a realtor who knows zip about his local market, doesn’t return client phone calls promptly, doesn’t know how to price listings, doesn’t know how to stage or show a home, is terrible at transaction management, and couldn’t negotiate his way out of a paper bag.  But if he’s got strong relationships, and his clients think he’s good (since they don’t have anything to compare him to), then he’s making millions of dollars and would be considered a “good agent”, no?

What if Mr. Button is a supreme negotiator, but doesn’t know a thing about what appropriate comparables should be.  Or he’s a moron about local market data, but has a way with clients to make them feel comfortable even while making horrible, terrible decisions?

It is a curious case indeed.

Objective Standards?

In theory, designations like REALTOR, e-PRO, ACRE, CRE, GRI, and so on should be a quality filter that shows someone who holds that designation is a “good agent” in one respect or another.  As yet not a single person has said that designation = good agent, nor the converse, which is that lack of designation = bad agent.

Instead, people have said things like, “It depends on the client” thereby strongly implying that there are no objective standards at all.

But that can’t be 100% right either, because of that “initial impulse”.  When folks say, “We need to drive the bad agents out of the business”, surely they have a picture in their minds of what they mean.  And all the head-nodding agreement suggests that there is some sort of an idea as to what makes an agent good or bad.

It just hasn’t been defined.

So… many of you are realtors, many are brokers, some are association executives: What makes a realtor good?  And what makes a realtor bad?

Inquiring minds want to know.

-rsh

Interestingly enough, just after I wrote about the problem of too many real estate agents overall, I found a post by Dave Phillips over at Bloodhound Blog called “Raising the Bar or Bellying Up to It“. It’s insightful and hilarious. Recommended reading for sure.

I’m thinking, what’s all this Sam Adams reference? This is no time for mere beer. Move over, Sam, and meet my friend Jose Cuervo. As Tracy Byrd might sing:

Then after Three rounds with Jose Cuervo
I let her lead me out on the floor
And after Four rounds with Jose Cuervo
I was showing off moves never seen before

Well, round five or round six
I forgot what I came to forget
After Round seven, Or was it eight?
I bought a round for the whole dang place

Beer ain’t gonna do it when you’re looking to “beat an old memory”; and half-measures won’t cut it when you’re looking to change fundamental infrastructure of the entire industry. As Charles Woodall mentioned in the comments to my previous post, it takes 15 times the education to get a license to cut someone’s hair than it does to get a real estate license in Alabama. o.0

In any event, Dave brings up some great points and questions, ultimately concluding that this won’t be easy. The two common approaches — education and disclosure — won’t work, in his view, because governments are constantly raising the bar themselves, making the REALTOR designation sans meaningful differentiation from the vast hordes of unwashed real estate agents.

So, what is the solution? Do we think up a whole bunch of things that REALTORS® have to do or disclose that a common licensee does not? Maybe we could require REALTORS® to disclose that the neighbor will throw potatoes at you if you purchase this home? Or maybe we require REALTORS® to disclose all the future development plans within a mile of the property. (E&O Insurance companies will love that one.)

Maybe more disclosure is not a good idea. “Another Sam, please.”

Time for round one with Jose Cuervo.

If I were advising NAR, which I am not except in that “free advice is worth what you paid for it” sorta way, here’s what I might suggest: require that a REALTOR disclose everything that he would find material and pertinent if he himself were the buyer in the transaction.

In other words, the standard of behavior for the REALTOR should reflect the true meaning of the term “professional”: someone who is following a profession or a calling. This is a meaning that is continuously lost over time. There is a deep sense among the traditional professions of Divinity, Law, and Medicine that a professional works not for oneself, or even for one’s client, but for society as a whole. As a lawyer, I am an “officer of the court”. If I were practicing law, I would have responsibilities that extend beyond myself and beyond my clients to the entire judicial system, and to the polity and society as a whole. For example, no matter how much it would benefit my client, I am not to lie in a judicial proceeding or be party to a lie being told with my knowledge. The penalty for violating this is pretty severe — usually the loss of the license to practice law.

The reason why society (should) give me power and honor and prestige as a lawyer is directly related to the fact that in some real significant way, I am putting society’s interests ahead of my own. Granted, in today’s America, this sense of obligation to society as a whole has been lost in the legal profession for the most part, with idiots mouthing ‘zealous advocacy’ as the excuse for gaming the system and filing all manner of frivolous lawsuits and so on. But at the heart of the legal profession is the idea that we work for society, not for our particular client.

Same thing with a medical doctor. Even if she pays her bills with money from her own patients, she isn’t supposed to walk by an injured stranger, or turn away the sick. She owes a moral duty (if not a legal one) to society to heal the sick and help the injured. Because she puts society’s interests first, society in turn grants her status, power, and (sometimes) wealth.

If a REALTOR means anything at all, it has to mean a true professional real estate agent. That means understanding that they owe some sort of duty to society as a whole.

It does not benefit society for a REALTOR to refuse to disclose facts that he himself would find pertinent if he were the buyer of the property. That may benefit the seller, and therefore the REALTOR who is making money on commissions, but society as a whole is actually hurt by such behavior. It does not benefit society for a REALTOR to agree to represent a property at a price that he himself, in his professional expert opinion, believes to be seriously overpriced in the hopes that he can find some fool willing to overpay. When REALTORS complain that their seller clients simply are being stubborn and won’t listen to reason, I confess very little sympathy. As a professional, you are supposed to walk away and let the unscrupulous, uneducated, unprofessional merely-licensed agents deal with that trash.

So if all future development plans within a 5 mile radius of the house would be relevant to a buyer, then the REALTOR should disclose the information. If his seller client will not agree to disclose, then REALTOR should walk away and recuse himself from representing such a seller.

There is no other way. You can’t hold yourself to the highest standard of ethics and behavior while continually representing clients who are not. A client willing to cheat a buyer (morally, ethically, if not legally) to make a few bucks is not a client that the REALTOR should be representing.

How about education? We could require REALTORS® to take more education than a standard licensee. In Virginia, at the request of the REALTOR® organization, the General Assembly just increased the required hours of continuing education for all licensees to 16 hours and brokers to 24 last year. Hmm. Sounds like some more of that rising tide thing again. Man, all these Sam Adams and talk of rising tides gives me a strange urge to toss a box of tea in the harbor.

“Hey, beer me.”

Round two with Jose Cuervo.

16 hours to 24 hours of Continuing Ed? That may or may not be all that impressive, but how about NAR start with this:

To become a REALTOR, you must be a four-year college graduate, have an MBA or equivalent, and have completed a two-year program in Real Estate at a NAR-accredited institution. You must have worked for a minimum of two years as a real estate professional in a REALTOR-designated broker’s office. In addition, you must pass a NAR Professional Board Exam every two years covering topics in Real Estate Law, Finance, Property Valuation, Economics, Data Analysis, and Ethics.

That might put a bit of a crimp on that 1.3 million REALTOR number, wouldn’t it?

Sure, as David points out, if some state licensing agency makes the standard for all licenses to be the same as the above, a rising tide would lift all boat… except that a stringent requirement like this one would exponentially reduce the number of people applying for a real estate license in the first place.

When reasonable folks talk about increasing education requirements, I’m sure they don’t mean jump to extremes like this. Well, I’ve gone a few rounds with Jose Cuervo, and feel no compunction to be reasonable. Rather, let me ask, Why not? Why not lift not just the bar, but the whole damn saloon? Why not make it such that only the finest, the most dedicated, the most professional, the most ethical, and the most passionate of those who want to help people fulfill their dreams of homeownership make it through?

Yeah, I know why not: money. I’m not so naive as to believe this will be easy or even desirable to many who are already in the industry. I agree on the degree of difficulty being somewhere north of a quadruple salchow while wearing combat boots. But I merely point out that things can be done, if the will to do them exists.

And I do agree, in the last analysis, with David on a couple of concrete ideas:

Actively police REALTORS® for violations of the Code, license law, bad business practices and bad service. Bust’em and kick out the bad ones.

This is not going to be easy. Is it worth the effort? Probably. Will it get done? Probably not. Is it time for me to tell Sam goodnight? Goodnight Sam.

Enforcement is an absolute must. Lawyers are in our sorry state as a profession because State Bars have become so lax in enforcing its own laws, and judges have become part and parcel of the lawyer interest group. Self-interest and greed almost always takes over any powerful organization. But with proper enforcement, perhaps that fate was not unavoidable. Upholding the notion of the practice of law (or the practice of real estate) as a societal good, as an honor and a calling, instead of just a way to make a buck or two is critical to rediscovering the soul of what it means to be a professional.

And yes, this is not going to be easy. It probably won’t get done. It is worth the effort. And it’s round three with Jose Cuervo, and being a lightweight alcoholically speaking, it’s time for me and Jose to part ways.

Good night, Jose.

-rsh

Move, Inc. — the folks behind Realtor.com and Top Producer — held its Q4 2007 earnings conference call recently. The transcript is available on Seeking Alpha. I think it’s well worth your time to check it out in full.

Move did $286M in 2007, vs. $280M in 2006. Considering the shape that the real estate market was in during the second half of 2007, that’s quite an accomplishment. What’s more amazing is that Move grew Q4 revenues by 2.4% to $71.7M in 2007. Michael Long, Move’s CEO, boasted:

In 2007, the toughest real estate market in 50 years, we grew revenues in our core real estate businesses, Realtor.com, Top Producer, and New Homes, amid unprecedented disruption and volatility. Revenue from Realtor.com and Top Producer on a combined basis was 10% higher than 2006. For the year we also delivered the highest EBITDA margin in our history and generated positive cash flow for the third consecutive year.

They’re in great shape.

Beyond the fact that they’re making money during tough times, I found three really, really interesting things from that call.

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I know I take contrarian views to much of the received wisdom on the RE.net, but… well, I can’t help it.  Since I’m not flogging any product, or trying to get leads from this blog, or any such thing, but just write on topics that interest me, I suppose I find it more fun to disagree or to take a different angle on a story.

Which might explain why I am mystified about this story:

Does the NAR “get” blogging and other aspects of social media? I believe the answer is clearly no.

So why should the NAR hire a “Social Media Director”? (Director, Guru, Advocate, Manager – pick a title, any title.)

To help bring them into the 21^st century.
To improve their brand recognition.
To improve their brand reputation.
To accelerate their learning curve on the implementation of all aspects of social media.
To take advantage of all social media has to offer.
To engage the “RE.net” to help turn some into advocates for the NAR.
To develop and provide training and systems for the NAR membership to take advantage of social media.
To provide an active conduit between the membership and leadership.

You tell me, what else could a NAR Social Media director do? I’ve been racking my brains trying to come up with a disadvantage. No can do.

The Internet and social media can be incredibly powerful tools if they are used properly. With a good Social Media Director, the NAR could trim hundreds of labor hours from the learning curve and use the power of social media marketing and networking to reach out to not just its membership, but the general public as well.

Basically, the author (Jay T.) of NARWisdom blog, made a public appeal for a Social Media director position at NAR.  That sounds like a good idea, except… well, let me get to the exceptions in a bit.

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