Real Industry Needs Reform

Buying & Selling Real Estate
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Real Industry Needs Reform

Jim Kent
Austin, TX · Member since 2016 · 148 posts · 30 votes

I think most people that have given it much thought and aren't agents/brokers themselves realize that the real estate industry is in serious need of reform.  Should someone without a college degree be making more money than a lawyer for doing half as much work?  Should the system fundamentally put the interests of the real estate agent in direct conflict with those of his clients?  Should real estate agents be able to buy up all the best deals for themselves and their friends/family before their clients ever know the deals existed?

Again, unless you are benefitting from this system, it is pretty clear that it is not working for the public.  I propose the following reforms.  Please comment and offer additional suggestions.  Maybe we can start a reform movement right here and right now, and this legislation can someday become a reality.

1. Eliminate the broker-agent apprenticeship system.  Make the requirements to become an agent more stringent, but don't force them to be in thrall to a broker.

2. Make the MLS public, just like travel agents had to deal with Travelocity, etc. If agents are truly offering a valuable service and not just holding the MLS hostage, this should not affect them.

3. Require agents to charge by the hour.  No more commissions based on sales price, which not only results in agents being paid out of all proportion to the service being provided, but also creates serious conflict of interest issues.

4. Make it unlawful for real estate agents to purchase or own investment property.  Make it unlawful for real estate agents to purchase investment property for anyone with which they have a personal relationship.

5. Require real estate agents to hire another agent when they purchase property.  And make it unlawful for that agent to have any personal relationship to the purchaser.

6. Require the real estate industry to provide to the public the same sales contract and leasing templates they provide to real estate agents.  And make it unlawful for real estate agents to discriminate against self-represented buyers or sellers in any way.

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Wes Blackwell
Real Estate Agent · Phoenix, AZ · Member since 2016 · 738 posts · 1k+ votes
9y

@Jim Kent4. Make it unlawful for real estate agents to purchase or own investment property. Make it unlawful for real estate agents to purchase investment property for anyone with which they have a personal relationship."

I'm really starting to reconsider all the time I spent on this post and wonder if you're just trolling everyone. It's starting to look like you had a really bad experience with an agent, or someone bought a property you were interested in... is that what happened?

"5. Require real estate agents to hire another agent when they purchase property. And make it unlawful for that agent to have any personal relationship to the purchaser."

Completely unnecessary and totally redundant and inefficient. And people like to work with those they know, like and trust. Would you rather hire your family member to sell your home or some stranger? C'mon man!

"6. Require the real estate industry to provide to the public the same sales contract and leasing templates they provide to real estate agents. And make it unlawful for real estate agents to discriminate against self-represented buyers or sellers in any way."

LOL! So all the dues paid to employ our MASSIVE team of attorneys to write (and re-write and re-write and re-write) those contracts so they should just be given to you for free? That's ridiculous! Man I regret even writing all this now lol.

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  • Ryan MurdockPro Member
    Rental Property Investor · Austin, TX · Member since 2016 · 1k+ posts · 1k+ votes
    9y

    I was with you until 4 thru 6. 

    Acting in the capacity of a real estate agent I have helped a number of investors purchase properties using my wealth of knowledge gained from my own personal experiences as an investor and property owner. Who was hurting by doing that?

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    first off half of what you state is already industry standards. The other half is just plain silly.  Rental property purchases are a minor part of the industry.  Majority is finding homes for folks to live in.   

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    and if you can't beat em join em

    1 in 10 in ca are licensed lol.  Sounds like a bunch of sour grapes. With no foundation in fact or reality.   

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  • Ryan MurdockPro Member
    Rental Property Investor · Austin, TX · Member since 2016 · 1k+ posts · 1k+ votes
    9y

    @Jim Kent a 55 hour class is all that separates you from these gold paved streets. Go get your license.

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  • Alvin MercerPro Member
    Marietta, GA · Member since 2016 · 26 posts · 12 votes
    9y

    Most Realtors aren't making a fraction of what a lawyer makes.  Those that are have definitely worked to get to that position.  Not sure what insider info you speak of as it relates to Realtors.  Just about anyone can get all of the info a Realtor has.  I did it for several years as an investor before I was licensed.

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  • Ryan MurdockPro Member
    Rental Property Investor · Austin, TX · Member since 2016 · 1k+ posts · 1k+ votes
    9y

    @Jim Kent 

    I agree the system is dated and will need to evolve rapidly or perish but not because of illegal or immoral dealings.

    Here on planet earth Real Estate Commission rules to not give one the advantage of insider trading or bank robbery. Not sure what it's like elsewhere.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    Jim. Sorry to inform you but I do zero commission work.   I have the licenses in 3 states for investor credibility. And to have access to MLB on my own.  Like most good investors once they figure it out do.  Your so far off base of what you think realtors make

    No question great ones make great money my wife sold 14 million last year do the math and only one was a rental property and we brokered that off market to a fellow bp member from sf   10 to 20% of agents make 75% of a companies gross revenue.   Just like those that wholesale I would say 10% do well other go broke trying

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  • Brandon L.
    Real Estate Agent · Falls Church · Member since 2012 · 2k+ posts · 1k+ votes
    9y

    @Jim Kent this is why I pay dues to the NAR lol, just in case any politicians get ridiculous ideas like this :)

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    Jim still waiting for at least one post to support your position .. so lets bump thread up and see if you can get at least one person to agree with you  LOL... 

    even if what you suggested could be implimented you could never monitor it.. there would be all sorts of back room deals.

    and this is just capitalism.

    would you not like to be offered Google on the opening sale of the stock.. ( I did not get a chance to buy it) only the players did ... so how do you reform that industry.

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    9y

    @Jim Kent Do I have a license, yes.  Have I made more money from doing my own investing and flipping, yes.  Actually I no longer work as an agent for others, I'm back to contracting and just picked up an 8 month $2M contracting contract, so not interested in "protecting" my livelihood.  Obviously you have an issue with agents, but your suggestions about being on their own, making it unlawful for them to buy properties for themselves/friends, pay an hourly wage (a pittance I'm sure) and so on is just silly, not well thought out and you would end with group of totally uneducated, unmotivated slackers.  Feel free to avoid all agents and do it all on your own.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    Jim its not private.. in our market there is the public side of the MLS anyone can look at it. the only info you do not have is info regarding the seller IE their name phone numbers etc.. and agents private remarks which are usually there to help other agents show the property.. IE showing instructions like watch the dog.. keep the cats in.... My clients are gone 8 to 5 ( don't want crooks knowing this info so house gets broken into) theres more to it that you simply don't understand.

    way back in the day I actually fought the San Jose MLS in San Jose Ca.. I was my own broker at 20 and I wanted the MLS but I worked for myself and did not want to join the BOR that was a requirement.

    Well someone before me had taken that on and won... and I threatened the same action and they allowed me to join without joining Nar or the local BOR ... although in oregon we one of my 3 brokers licenses reside to have MLS the entire office must be a member of PMAR .. which I don't like but hey its 500 a year and if you cant afford that then you should not be in the RE business in the first place

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  • Dean I.
    Tucson, AZ · Member since 2016 · 120 posts · 127 votes
    9y

    Disclaimer: I have my real estate license, but I am not an active real estate agent and I never have been.

    First I want to share something I once read or heard (I honestly can't remember which or from where). Everyone has one competitive advantage over everyone else. This could be education, experience, connections, money or in this case a real estate license. This also means that more than likely, you have a competitive advantage over your competitors too. The problem is, most people just don't realize it or they don't use it to their advantage. Instead, it is a lot easier to complain about everyone else's advantages instead of developing your own.

    1. I am not exactly sure what you are referring to, but I do agree that agents and brokers should be held to a higher degree of accountability. In fact, in NC agents are now required to be brokers so that they are personally liable for any mistakes they make. 

    2. I'm not sure that I understand your logic here. It is not like the MLS is a monopoly, in fact, by definition it is the opposite of a monopoly. With that being said, good agents do a lot more than print a list from the MLS. I am sorry if you had a bad experience with agents in the past (I know I have), but the fact is there a lot of bad agents and very few good ones, which leads us to our next point.

    3. I mostly have to disagree here. Would you rather pay 3 agents by the hour, just to find out they are terrible and unable to deliver or would you rather pay commission to the one agent who actually delivered. Commission forces people have to perform and do a good job. Those who do not, don't get paid and don't make it in this industry, which is a good thing. That being said, you are right, there can be a conflict of interest if the agent is only pushing certain properties that make them the most money. However, if you are a real estate investor, then this should not affect you since you should be doing your own homework and running your own numbers.

    4. I'm sorry, but I'm just going to say it . . . this is just plain stupid. 

    5. I am not sure how any of this makes sense. As long as the agent discloses that he or she is a real estate agent or broker, why would they need to hire another broker to do their job? Also, why should it be unlawful for a agent to purchase a property from a family member or friend? Do you think they are some how conspiring and hiding the fact that they are a real estate agent. Doesn't sound like they have much of a relationship if they don't at least know what the agent does for a living.

    6. I don't know where the law falls on this one, but I can tell you this. In order to create those documents, you have to hire lawyers to draw up the documents and constantly update them as new laws are put into place or as new disclaimers need to be written. The last time I checked, a lawyer costs money and lots of it. If you think that you should be given something that someone else paid for, for free, then well that's a topic for another thread. Not sure exactly what you mean by the last sentence since there is no real context. 

    Anyways, if you can't beat them, join them. Stop complaining about their advantages and start creating or finding your own. Nothing you mentioned here points to gross misconduct and misuse of a real estate license. 

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y
    Originally posted by @Jim Kent:

    Since you believe in capitalism so much, let's have a two year study where we have actual competition in the system (oh no, not that!).  For two years we have half the realtors playing by your rules and half the realtors playing by my rules.  Let's thoroughly educate the public on the rules each side is playing by.  And let's see who the public chooses as their realtors.  See, I understand the system is working great for YOU.  But my concern is the public.  You (the general you meaning your industry) would never allow the public to have this option, and you know it.

     the general public knows bubkiss about real estate  they may transact one to 3 times in their entire life.

    and if you really knew anything about the industry you would go ballistic if you knew how Commerical brokers operated.

    They first and foremost never share if they don't have too.. they get a listing they show it only to their clients first..  then their office second and if it still does not sell they put it on loop net. 

    Many times on larger deals there is no commission for the buyers side buyer has to have their client pay them.. 

    And again they hardly if ever put anything on MLS it all goes loop net or coast star which you as the public have a right to subscribe too for a fee or see the free side as well.

    its sounds like to me you just want a hand out and are not willing to put in the time education and effort it takes to get the best deals.

    and the best deals many times are gotten by the wholesalers in certain markets.. and I don't see you ragging on them.. when they tell a little old lady their 150k house is only worth 50k and do a equity strip deal... whats your thought on that ????

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  • Ryan MurdockPro Member
    Rental Property Investor · Austin, TX · Member since 2016 · 1k+ posts · 1k+ votes
    9y

    @Jim Kent I still fail to see how what you are advocating against is really hurting anyone. Who are the victims when an agent owns property, purchases property without 3rd party representation, or deals directly with a friend or relative? 

    Can you provide an example of how you were swindled by one of these devious agents and how your proposed "improvements" to the system would have helped to avoid that? 

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  • Jeff Keller
    Palo Alto, CA · Member since 2017 · 226 posts · 95 votes
    9y

    The advantage that a real estate agent has is that they spend all of their time working to buy & sell. More time leads to more knowledge.

    The local MLS in Silicon Valley is widely visible to the public.

    An agent isn't an apprentice to a broker. They generally do different work. A broker makes certain the agents under him are following regulations and laws. Agents are buying & selling property.

    It isn't hard to get either a sales agent license or a broker license. The hard part is earning enough money to stay in the field until you become really proficient. Locally 75% of all agents who actually sell or buy a house only complete 5 sales in a year. They aren't getting rich.

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  • Ryan MurdockPro Member
    Rental Property Investor · Austin, TX · Member since 2016 · 1k+ posts · 1k+ votes
    9y

    "Ridiculous system with five year enslavement"

    Apparently we've fallen out of a real estate forum and into a sci-fi movie. No clue where this info is coming from now.

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  • James Barnhart
    Rental Property Investor · Ocala, FL · Member since 2016 · 226 posts · 140 votes
    9y

    I am not a real estate agent, but I took the course just to learn all that I could.  

    I too fail to see much merit of what Jim Kent is proposing. If you take away the opportunity to make good money, who would want to ever be a RE agent?  I definitely believe in capitalism.  That's why the USA is the best country in the world.  We don't need more government to get in people's way.  Let's leave people alone.

    We see the world as it is, adjust to it's ways and work with the systems in place.  Many of us in BP have done that and done well.  We don't get upset because other people are making money, too.  I don't see what the problem is.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    jim  its 2 years as agent in 90% of states a few have 3 years there is no 5 year requirement'

    Many brokerages have extensive training .. think Keller Williams C 21 etc. 

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  • Dean I.
    Tucson, AZ · Member since 2016 · 120 posts · 127 votes
    9y

    @Jim Kent Are you a socialist? Serious question.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    @Dean I.  there is NO regulation in china anyone can sell real estate buy real estate take a fee ext ext no license required.

    Just like in TEXAS no contractor licenses required and boy are that are over run with crooked contractors

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  • Curt Riffel
    Accountant · Dallas, TX · Member since 2016 · 161 posts · 75 votes
    9y

    Jim I am not close to being a professional of real estate by any means, but I agree with you on some of your points of contention. The MLS change would be the best in my opinion. Seeing what a house is listed for, when it was put up for sale, having access to comps, and mainly being able to use it to list a property for sale would be tremendous.

    In a hot market, the main reason I see using a realtor is solely to gain access to the MLS. If there was a flat commission structure I would support the idea more. I've always thought it ludicrous to pay 6% of the sales price to RE agents when selling a home. I'd be much more inclined, if possible, to pay a nominal fee (say $200) to list the house on MLS and then pay the buyer represented agent a flat commission of $1500 for 'finding' a buyer. But if purchases had access to view the MLS as well, like via a monthly subscription ($50 a month), then you could likely lower the $1500 commission and have just the lawyers and loan agents draw up the paperwork.

    Personally I don't have any known issues with agents purchasing good deals for themselves or owning rental property. I imagine if I had enough capital I could pay someone to monitor the market and find good deals. I also don't understand enough about the Broker/Agent relationship to comment. I understand that agents pay a portion of their proceeds to the broker they work under. 

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  • Wes Blackwell
    Real Estate Agent · Phoenix, AZ · Member since 2016 · 738 posts · 1k+ votes
    9y

    @Jim Kent4. Make it unlawful for real estate agents to purchase or own investment property. Make it unlawful for real estate agents to purchase investment property for anyone with which they have a personal relationship."

    I'm really starting to reconsider all the time I spent on this post and wonder if you're just trolling everyone. It's starting to look like you had a really bad experience with an agent, or someone bought a property you were interested in... is that what happened?

    "5. Require real estate agents to hire another agent when they purchase property. And make it unlawful for that agent to have any personal relationship to the purchaser."

    Completely unnecessary and totally redundant and inefficient. And people like to work with those they know, like and trust. Would you rather hire your family member to sell your home or some stranger? C'mon man!

    "6. Require the real estate industry to provide to the public the same sales contract and leasing templates they provide to real estate agents. And make it unlawful for real estate agents to discriminate against self-represented buyers or sellers in any way."

    LOL! So all the dues paid to employ our MASSIVE team of attorneys to write (and re-write and re-write and re-write) those contracts so they should just be given to you for free? That's ridiculous! Man I regret even writing all this now lol.

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  • Wes Blackwell
    Real Estate Agent · Phoenix, AZ · Member since 2016 · 738 posts · 1k+ votes
    9y

    @Jim Kent

    You seem to have a serious misconception about what you think you "have" to do and all of the other options available, in real estate and in participating in these forums.

    You made a lengthy initial post, and then when someone makes a lengthy one in return addressing every single issue you brought up, you mock them.

    That shows me you're just trolling and have no interest in having a serious conversation about the issues you brought up.

    Good day sir.

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  • Chad Clanton
    Contractor · San Antonio, TX · Member since 2013 · 647 posts · 205 votes
    9y

    @Jay Hinrichs, you're incorrect, there are at least 3 or 4 contractor licenses required in Texas for certain trades (tongue in cheek). Seriously though, a bit too much deregulation in my personal opinion, but I could beat that horse all day and I'm pretty sure we're on the same page there. And yes @Jim Kent, there are quite a few reforms I could think of that would be great. Unfortunately, enforcement of current standards is the biggest one. Remove commissions and you have zero motivated realtors who actually care to learn their jobs (in my opinion, anyhow). Get rid of agents owning or brokering investment properties for friends or family and I'm pretty sure you'd only have three or four people in the state who own real estate. Also, the MLS feeds to public sites such as Realtor, Redfin, etc, it just doesn't include all the data and not necessarily in realtime, but plenty to get a start on. Low inventory will always create the same problems with acquiring property. As to the broker, I'm a fan of there being a broker because when the agent goofs up, the broker can a) backstop and b) is on the hook. There are plenty of shady dealings in real estate, but the vast majority of them are conducted by shady people, not specifically because of shady laws or regulations. Do I like the way everything is set up? Absolutely not, but if you look beyond real estate, you'll see that it's just as prevalent in other industries, just with a different flavor. Some places are tougher on it, some less. Enforce standards, no need to arbitrarily create more rules and regs.

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  • Mike ReynoldsPro Member
    construction · Nacogdoches, TX · Member since 2011 · 2k+ posts · 1k+ votes
    9y
    Originally posted by @Jim Kent:

    @Jim Kent

    Here are some answers to your questions and responses to your comments:

    "the real estate industry is in serious need of reform"

    Agreed. The National Association of Realtors should up the score required to pass the license test to 90-95% from the current 70%. It's an industry of C students for sure. But if they did that, agents like me who could pass the test would make an absolute killing due to less competition, and the NAR and MLS would make waaaaaay less money because they'd have way less members paying their regular dues. 

    So basically, while it would be great for agents that provide their clients with extreme value and treat the career like profession, it ain't gonna happen because it's bad for the governing associations.

    "Should someone without a college degree be making more money than a lawyer for doing half as much work?"

    Bahahahah... I'm on my 3rd straight 14+ hour day and regularly go to bed with 10-20 unread emails every night simply because I can't keep up. And you really shouldn't think we are all millionaires... the median salary of real estate agents is only $39,822. This is an industry where 20% of the people make 80% of the money, and you better believe they're working their butts off to do it.

    "Should the system fundamentally put the interests of the real estate agent in direct conflict with those of his clients?"

    How is this the case? If I sell your home for more money, I get paid more. You win, I win. If I help you find a great deal on a house, you'll tell your friends about me and then I'll get more business. I don't see how our interests are at odds with our clients. Please explain.

    "Should real estate agents be able to buy up all the best deals for themselves and their friends/family before their clients ever know the deals existed?"

    This assumes agents have the money to buy all those amazing deals, and as I showed you the average salary is hardly enough to pay for your own house let alone snatch up all the amazing deals. Sure, some agents know about deals before they hit the market, but that's because they did the marketing necessary to promote themselves and be in a position to have sellers contact them to sell their property.

    "1. Eliminate the broker-agent apprenticeship system. Make the requirements to become an agent more stringent, but don't force them to be in thrall to a broker."

    There are plenty of brokerages that offer this business model, my brokerage (Homesmart) being one of them. When I joined I didn't apprentice under anyone, and only pay a small transaction fee per deal no matter my commission. If you go to a place like Coldwell Banker or Keller Williams it's a different story, but the choice is completely up to the agent. And there are practically UNLIMITED options.

    "2. Make the MLS public, just like travel agents had to deal with Travelocity, etc. If agents are truly offering a valuable service and not just holding the MLS hostage, this should not affect them."

    LOL! They did! It's called Realtor.com, Zillow.com, Trulia.com, Redfin.com, etc. etc. etc. Realtor.com updates live from our local MLS every 15 minutes, and my MLS has a site where you can search all the local listings straight through the MLS.

    "3. Require agents to charge by the hour. No more commissions based on sales price, which not only results in agents being paid out of all proportion to the service being provided, but also creates serious conflict of interest issues."

    Here's a conflict of interest for you... If I'm paid by the hour, I have the incentive to drag out the transaction as long as possible and subject you to a bunch of unnecessary steps, delays, etc. just so I can get paid more. Whereas how it currently is I have the incentive to process the transaction as quickly and efficiently as possible to provide the highest level of service possible.

    Furthermore, how does this give the agent any incentive to sell your home for a higher price? What the hell do I care? I just want this transaction to take as long as possible so I can get paid for more hours.

    "4. Make it unlawful for real estate agents to purchase or own investment property. Make it unlawful for real estate agents to purchase investment property for anyone with which they have a personal relationship."

    I'm really starting to reconsider all the time I spent on this post and wonder if you're just trolling everyone. It's starting to look like you had a really bad experience with an agent, or someone bought a property you were interested in... is that what happened?

    "5. Require real estate agents to hire another agent when they purchase property. And make it unlawful for that agent to have any personal relationship to the purchaser."

    Completely unnecessary and totally redundant and inefficient. And people like to work with those they know, like and trust. Would you rather hire your family member to sell your home or some stranger? C'mon man!

    "6. Require the real estate industry to provide to the public the same sales contract and leasing templates they provide to real estate agents. And make it unlawful for real estate agents to discriminate against self-represented buyers or sellers in any way."

    LOL! So all the dues paid to employ our MASSIVE team of attorneys to write (and re-write and re-write and re-write) those contracts so they should just be given to you for free? That's ridiculous! Man I regret even writing all this now lol.

     Trust me, you don't regret it as much as those of us that had to read it.

    I disagree. As someone who is not a realtor and sitting on the sidelines I thought it was informative. He addressed his opinion to every one of yours. I was expecting a better rebuttal from you then that. 

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