When I got my real estate license, my co-blogger and friend Mike told me that I would probably be able to pass the test without taking any classes. I had been an investor in real estate for a long time, and I decided to get my license because my flips had gone from 55k homes to 155k homes, and I didn’t want to give away an extra 6% on every deal (3% in, 3% out). So I went to the Arizona School of Real Estate and Business, and for about $1,000, took 120 hours of classes (all in a row, two week crash program because I thrive on immersion), and took the test a week later, with a 95%+ score.
So could I have passed without the classes? Probably not, because there was some stuff I didn’t know (mostly that doesn’t matter in regular real estate, such as how the Baseline and Meridian survey system works, how many people are on the real estate board, what the commissioner’s powers are, etc.) although there was some stuff I didn’t know that is important (how to fill out a HUD form, how agency law applies in real estate, stuff like that).
Generally the classes were really interesting to me, and I had a blast taking them, looking forward to being down there every day. The classes were broken into a math section and a non-math section, because there is lots of math they think you need to know to be a real estate licensee. Since I have a math degree, the classes that most people find daunting, were really boring.
The other fun thing about the classes is that it appeared that lots of the students thought it was really a fashion show… but I digress.
After going through all the classes and before you take the state exam, you have to pass the school exam; I studied for the weekend (last class was on Friday) and took the school test Monday. Then it was off to the test center to take the state test.
After all was said and done, I felt pretty much ready to practice real estate as a profession. Wow, was I wrong. I had no business trying to help people sell real estate at that point. Sure, it was legal, and I had all the knowledge, right? Not exactly…
In a similar experience, I went through the (very brief) classes for, and took the state test, to be a financial advisor. I passed all the tests, and then ultimately decided not to get the license. Again, I had no business being a financial advisor at the time, even though it would be legal.
These are two professions in which the public entrusts some of the biggest, most important, most life-altering decisions to a state licensed person.
What about when you go to get your hair cut, or your nails done? How much education is required for that? And experience? This was shocking to me:
COSMETOLOGIST LICENSE: 1600 Hours
BARBER LICENSE: 1500 Hours (Call Board of Barbering)
ESTHETICIAN LICENSE: 600 Hours
NAIL TECHNICIAN LICENSE: 600 Hours
ELECTROLOGIST LICENSE: 500 Hours (Call Board of Radiology ARRA)
COSMETOLOGY INSTRUCTOR LICENSE: Cosmetology License for 1 Year + 650 Hours
ESTHETICIAN INSTRUCTOR LICENSE: Esthetician License for 1 Year + 500 Hours
NAIL TECHNOLOGY INSTRUCTOR LICENSE: Nail Technician License for 1 Year + 350 Hours
MASSAGE THERAPIST LICENSE: 700 Hours
Real estate license: 120 hours
Is it any wonder that real estate agents often have poor reputations, one up (maybe) from used car salesmen? For sure there are some great options (but not requirements) to be a much better real estate agent, such as the GRI designation and lots of others. What about brokers, as opposed to “regular” agents? Pretty much you go through the exact same set of classes over again, another 120 hours, and take pretty much the same test again. Not much difference, except you have to take a brief “broker management” class that has a few more of the legal record keeping and agent legal procedures information tidbits in it. But as for getting more information… no.
After an agent has closed 50 or 100 deals, they are usually ready to perform transactions. So how does an agent get to 50 deals? The best way is for them to have a mentor, someone who guides them through the first bunch of transactions. There will be lots of initial handholding, but after 10-15 transactions, this is minimal and there are just occasional questions. Still, unusual situations still arise. I closed a large number of transactions in the first half of the year, and there were a few surprises. I closed one just this week in which I got a surprise. This after several hundred deals… we are all still students, still learning.
The first thing that needs to happen to our industry is a dramatic increase in the requirements to get a license. This will weed out all the weekend warrior agents, and that alone will do wonders. The agents who have held a license for 10 years and have done 20 transactions are not generally busy enough to really understand the market and the business; for them to represent clients is a disservice, in my opinion.
The second thing is a required mentorship. Many brokerages are starting to require it, but there are just as many that will sign you up if you have a license and a pulse, and let you go about your business. This is because the prevalent broker models in Arizona are more about renting office space for a monthly fee than promoting agent quality.
And before a licensee heads out on their own, they need a certain number of transactions under their belt, and they need to be signed off by a mentor.
The laws regarding real estate licenses are strict; they have a moral turpitude clause in them, among other things. The department can revoke a license if they feel that a licensee is acting with poor moral character! I think this is rarely done, but there it is. Perhaps we need similar requirements for public figures such as movie stars and sports figures. More about that in another post.