It’s starting to sound like a broken record. How many people have said that we need to promote “professionalism” in real estate? I’m perhaps a little guilty of it too, in fact it’s one of the reasons why I write this blog. I figure that if I write about mistakes some agents make, other agents might learn about the right way to work. I blog my meeting topics out and encourage other managers to engage their agents the way I hope I engage with mine. Trust me, it hasn’t come easily but blogging has definitely helped me be a better manager and Realtor. But (and there’s always a “but”) I propose that we stop talking about professionalism in real estate and start thinking about real estate as a profession. When we choose to believe that this is an skilled, caring, ethical and honest way to make a living, professionalism just kinda comes along for the ride. It’s a small tweek in thinking but a powerful one.
I think most would agree that we are fighting a losing battle trying to teach professionalism in an industry that has low barriers to entry. Sure, RECO, our governing body, has increased minimum education requirements for people wanting to take the courses, but more could be done. Last year RECO replaced the continuing education credit system with a 6 hour online update course along with two elective online courses. I get their logic. In fact I would be the first to agree that the 24 credit education system had its flaws. Do we need to study Feng Shui and different roof styles? Will that make us better Realtors? Does this help in consumer protection? Because, make no mistake, that’s what RECO is all about…looking after the consumer. A RECO-administered update at least keeps the content relevant and consistent and online learning is the way of the future. I’m just not convinced this was the right answer. It is, after all, a system that could be corrupted and abused.
Currently The Ontario Real Estate Association or OREA is the entity that delivers the real estate education program in Ontario on behalf of RECO. That course content, which took years to develop and fine tune, is owned by RECO as a result of a previous transfer from OREA. I believe that at some point RECO has designs on administering the courses directly. Some agents might think that might be a good thing as much of OREA’s income is generated by education. No more OREA would save us in dues, but I’m worried about what could happen next. RECO was established under the Real Estate and Business Brokers Act to, first and foremost, protect the public, but their acts of simplifying the process could have the opposite effect. In a time when the real estate transaction is getting more complicated, does it really make sense to make the courses easier and faster? It’s no surprise the Toronto Real Estate Board has nearly 40,000 members.
I’m concerned for our industry and while I don’t want to sound the alarm bells I believe it is important for real estate boards across Ontario to stop talking about professionalism and start promoting real estate as a profession. If doctors, lawyers, plumbers and mechanics take years to get their ticket, why aren’t we? Third party educators of additional accreditations like the ABR, SRS, SRES, ePRO have helped but I would also ask why prospective agents aren’t given standard aptitude tests before beginning the programs?
Here’s the other problem…when you talk to good, successful agents they say, either charge Realtors $5,000 a year to keep their memberships or have a minimum sales standard. In theory, that’s not a bad idea but real estate boards across the country, survive on membership. Think of it as belonging to a gym. The more members you have the cheaper the dues. As far as a minimum number of transactions…well I’m sure the Ministry of Labour would have something to say about that.
Thinking about real estate as a profession starts with a solid educational base. Let’s start by turning the licensing program into a three year curriculum where students need to get passing grades to move ahead. Let’s encourage designations, and solid in-class learning. Least we forget that this is an industry full of entrepreneurs. Brokers should be encouraged to provide more training and serious career counseling.
As a two-time past education committee member I believe OREA is the best organization to deliver a college level real estate program. As for me, I hope to continue to promote education, OREA and the real estate profession through my blog and in my role as director at the Toronto Real Estate Board.
If someone gave you $100k tax-free, what would you do? Go on a trip around the world? Buy a new car? Maybe quit your job and go back to school? Now let me ask you; what would you do if you lost $100k because your agent screwed up? If you are like most people you would probably start by screaming and pulling out your hair. Of course, I am talking about bully offers. This is the second time I have written about it. You can check out another article hear, http://bit.ly/yadRHu but this post talks about what happens when bully offers go bad.
Here is the story. The names have been changed to protect the guilty and I modified the price. Agent Liz lists a stunning home in downtown Toronto for $1.2m and decides, with the seller, to hold back offers. On the first day of the listing Agent Bob shows the house to his client who is absolutely in love with the home. Bob’s client lost out the night before on a $1.3m house that needed several hundred thousand dollars in renovation so when he saw Agent Liz’s house he figured he could go as high as 1.6m. He tells Agent Bob that he wants to bid high on the house and that he has been approved by his bank. Agent Bob calls Agent Liz and tells her that he will be coming to the table on offer night and asks that he be kept in the loop should anything develop before offer night. Agent Liz agrees. The next day, the house is reported sold by Agent Jay in a bully offer for $1.5m. Agent Bob is furious. He calls Agent Liz who tells him that there were too many people to call and the bully offer had a very tight irrevocable time.
Okay, now the house is sold firm, but sadly the damage is done. If she is smart, Agent Liz will do anything in her power to keep the news of the other offer quiet, but, if it got out what recourse would the seller have? Naturally he might launch a lawsuit against the agent and complain to The Real Estate Council of Ontario and in a worst case scenario, Agent Liz might be responsible for the difference between Agent Bob’s offer and the accepted price. Most likely however, she would be fined for not contacting any of the agents that had shown the property. In this case, there are two things to consider; first, the seller accepted the bully offer of his own free will. Second, it would be very difficult to prove that Agent Bob’s client would have actually bought Agent Liz’s listing for what he said he would pay. Remember, there is nothing as constant as change, and who is to say that on offer night, Agent Bob’s client simply changed his mind.
So, how do agents, on both sides, protect themselves? First of all, any listing agent should recognize that if you are going to be entertaining a bully offer you are under a greater responsibility to ensure you give everyone an opportunity to play the game. Missing one or two phone calls can cost you your commission. In a discussion about this event, one of the agents in my office said that she keeps an email log of every agent who has shown her listing so that if a bully offer appears she can send out a quick group email. In response to Agent Liz’s comment about the tight irrevocable time, she should have told Agent Jay that she needed more time to reach the seller and discuss their options. While Agent Jay might be a little irked at the delay it is important to recognize that he isn’t going away. His clients want the house. Agent Liz lost control of the situation. How could Agent Bob better protected himself? One simple move, have his client sign an offer right away and get it registered with the Agent Liz’s office. I have always been a proponent of registering quickly. Not only does it guarantee a seat at the negotiation table, it can scare away those buyers who don’t want to be in a bidding war.
The current market in Toronto is hyper competitive these days. With anywhere from 5 to 15 buyers for every listing, it is understandable that bully offers have found their way onto the real estate landscape. Knowing your role, on both sides, will minimize your risk to you and your client. As usual, I look forward to your views, comments and concerns. This post may not represent the views of Bosley Real Estate.