Real estate is “cool” again. Headline after headline says the market is hot. Reality TV shows portray the profession as sexy — or sleazy, depending on which one you’re watching. New business models and websites are popping up left and right claiming they’re going to make the profession irrelevant. New licensees are flooding the market.
What makes the profession such a big target for headlines, reality TV and venture capitalists? Why do so many people want to become real estate agents now? Commission — everybody wants a piece of the pie.
Let’s start with how the real estate industry has put a target on its own back.
In my state, the barrier to entry for becoming a real estate agent is very low. Take 30 hours of classes, pass two tests, find a broker to sponsor you and boom: You’re a real estate salesperson. Pretty appealing for an individual who wants to start a new career with no ceiling.
But a shocking amount of new licensees fail and leave the business within the first two years. Others soft-fail and maintain their license, since it can be very inexpensive — you know, in case Uncle Bob wants to buy or sell a house next year. Only a small percentage will succeed. The 90/10 rule is true in this profession, and in my observation: 10% of real estate agents do 90% of the business.
In order to protect the public, a licensed broker is required to hold the license of the salesperson and supervise them for at least three years before they can become a broker themselves. During that time, the broker is ultimately responsible for the salesperson’s actions. That’s a big deal considering each salesperson could cause major financial damage to their client if they screw something up. If the broker fails to remedy the issue, they could face civil…