Archive for May, 2009
Reforming Pre-Licensing Requirements for Real Estate Agents
May 27th, 2009 categories: Military Installations, Relocating
In this second of a four part series on Improving the Practice of Real Estate in the Commonwealth of Virginia, we’ll begin the look at reformation, appropriately, at the beginning. In other words, where Realtors receive their pre-licensing training or instruction, the traditional classroom coursework that must be completed prior to testing by the state for a Realtor’s license.
Current Requirements
As stipulated by the Virginia Real Estate Board (VREB), and set forth in the Virginia Code, § 54.1-2105, pre-licensing education requirements for those seeking a real estate license are:
1. Every applicant for an initial license as a real estate salesperson shall have:
a. At a minimum, a high school diploma or its equivalent; and
b. Completed a course in the principles of real estate that carried an academic credit of at least four semester hours, but not less than 60 hours of classroom, correspondence, or other distance learning instruction, offered by an accredited university, college, community college, high school offering adult distributive education courses, or other school or educational institution offering an equivalent course.
In other words, to legally practice real estate in the Commonwealth of Virginia you need:
- 60 hours of classroom instruction (you actually don’t have to be IN the classroom – online courses meet the requirement)
- Passing a written examination.
- Oh, I almost forgot, you also need a high school education, or its equivalent.
So, having passed the state test, without having handled a contract, toured a home, negotiated a contract term or clause, or spoken to a client, a brand new licensee can “practice” real estate. Is that adequate preparation to carry out a responsibility involving hundreds of thousands of dollars? Is there another profession whose qualifications are as minimal?
Can you imagine a surgeon performing surgery without having gone through the steps a few times, not to mention hundreds of times, prior to going solo? What about obtaining a driver’s license? How many practices has the student driver had before they are operationally ready? Before they are licensed?
One might argue that those are poor comparisons since a lack of adequate training or preparation in those professions might lead to death, whereas nothing that extreme might occur as a result of an error in a real estate transaction. And, they have a point. It may not result in a death, but incompetence and real estate “malpractice” could certainly costs tens of thousands, if not hundreds of thousands of dollars.
If you’re not satisfied with the comparison with a surgeon or a driver of a vehicle, what about teachers? Are they licensed to teach without student teaching many, many times while being supervised. What about an accountant? An architect? A bank teller? In each case, minimal hands on “real life”, supervised training is required prior to the ”students” being given the OK or being certified to operate on their own. Likewise, should this be required in our training?
In our profession of real estate, one may ask if this should be a pre-licensing criteria, or is it more suitably done after licensing, but as a first step of a mentoring program Realtors participate in once licensed and prior to operating on their own under the Broker of their choosing. Hmmm…that’s something to consider. For now, let’s begin by looking at improving pre-licensing training with a requirement of 60 college credit hours.
Learning is a never ending process. While there are many constants in a real estate transaction, there are some variables that may change depending upon the client, brokerage firm, financing involved, and other related factors. It’s important too remember that a standard curriculum can’t cover all the possible contingencies or circumstances a practitioner might face, however, it certainly should include many.
Current pre-licensing coursework provides students with little practical instruction of how to do their job. Its intent seems to be one of preparing students to pass a written test of concepts instead of preparing them to practice real estate. But, in examining how Realtors are trained prior to being certified or licensed to practice, maybe we’re not asking the right questions. Maybe we the should be asking, “What should pre-licensing instruction be designed to do?” What outcome are we looking for? Shouldn’t it be designed to prepare a candidate to do their job? If not, why not? For the sake of this series of articles, let’s assume that’s the objective. We want to prepare Realtors to do their job properly, plain and simple. In other words, to carry out their job related tasks in a “professional” manner.
Proposed Requirements
- A first step in better preparing our prospective real estate agents for their job begins with dramatically increasing their pre-licensing requirements. This can be accomplished through augmentation of the depth and breath of the classroom curriculum. While there is no substitution for experience, the increased use of case studies, and a more detailed examination of contracts and real estate practices, to include real estate finance among other topics, will provide candidates with a better base of practical problems and solutions to learn from.
- To adequately prepare Realtor candidates, the pre-licensing curriculum should be expanded from the current 60 classroom hours to 60 college credit hours. Not only would these college credit hours substantially increase students exposure to real estate material, but, doing so would also provide them with college level credit. In accordance with state guidelines, the specific content of the real estate courses “shall be in real estate brokerage, real estate finance, real estate appraisal, real estate law, and such related subjects as are approved by the Board.” Incorporated in this coursework should be 10 hours of “hands on” practice. This practice includes interaction with clients, both buyers and sellers, writing contracts, negotiating terms, and experiencing the entirety of a real estate transaction from beginning to post closing follow up.
While current pre-licensing training material provides students with a familiarity of real estate procedures (concepts can be identified if seen on a test), it does little to prepare these aspiring agents for practical problems they’ll face in a typical transaction. Increasing classroom time, improving the course material, and providing “hands on” practical experience with real estate trasactions, are three steps that need to be taken in order to improve the pre-licensing requirements for those training to be real estate agents.
Improving pre-licensing requirements for real estate agents is an initial step in attempting to improve our profession. By providing new agents an improved foundation to build on, they’ll be better prepared for actual real estate practice and carrying out their job. But, while they can now legally practice, how capable are they? Probably capable enough to be dangerous, but not capable enough to be on their own. And, that’s where the second step of the improvement process comes in, the use of a Mentoring program.
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A Modest Proposal (On Improving the Practice of Real Estate)
May 18th, 2009 categories: Military Installations, Relocating
Previously, I focused on the #1 complaint voiced by Realtors about their profession of Real Estate, that being, other Realtors. After discussing the most prevalent complaints voiced by them, the article concluded by asking, “How do we improve the way we do business”? Since licensing requirements and/or standards vary by state, I’ll focus, specifically, on improving the standards of practice in Virginia.
If agents aren’t performing up to the standards our profession requires, how do we ensure they do? Is it a matter of better preparation? Better oversight? And, more importantly, how do we fundamentally change the way we do business? If the current standards used to conduct business aren’t getting the job done, if it isn’t compelling the type of professional behavior we want from our practitioners, what changes are needed?
Believe it or not, the National Association of Realtors(NAR) established professional standards for real estate practice nearly 100 years ago, outlined in their Realtor Code of Ethics. But, the Code is not law. For Realtors, the Code defines duties and obligations required in the public interest, which are beyond the capacity and power of the law to mandate, and supplements the law by requiring a higher sensitivity to the duties and obligations which it imposes. The Code’s “bottom line” rests upon putting the client’s interest first in the transaction.
While the Code of Ethics provides an excellent set of rules or guidelines, what are they worth if they aren’t followed, or Code violations not reported? Or, in some cases, for various reasons, not punished?
While few doubt the Code’s intent, many of my peers have voiced concerns over how well or closely those in our profession practice the Code. And, remember, adhering to to the Code is not optional. But, the Code is supposed to be a starting point. And, if the Code is a simply a beginning, what other preparation or training is needed to develop the standards we need to more effectively professionalize our business. Let me propose three steps:
1. Dramatically increase required Pre-licensing course work, to 60 college semester credit hours of only real estate coursework.
2. Mandatory, Standardized Mentoring Program for New Agents.
3. More Effective Use of Grievance and Professional Standards Processes.
Each of these recommendations will be examined in articles to follow. While these proposals aren’t new, the need for each hasn’t disappeared. Instead, according to anecdotal data, they’re needed now, more than ever.
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We’ve Seen The Enemy
May 13th, 2009 categories: Military Installations, Real Estate News, Relocating
One of the benefits of being a teacher or instructor is the interaction with peers. The opportunity for feedback is almost limitless. Discussions with students are almost always entertaining, and hopefully instructive. And the “instructive” aspect goes both ways. As many teachers will tell you, we, more often than not, learn more from the students than they do from us.
This column has been in the works for weeks. Well, at least I’ve mentally started it on various occasions. But, as life tends to do, other, more pressing tasks have, in the meantime, overtaken my schedule. But, yesterday, after coming across an article on the Real Estate blog, Agent Genius, written by our local Association’s Education Director, Matthew Rathbun, I was reminded of my article-to-be . Our director’s article echo’s the many complaints I’ve heard from students since stepping into the classroom as an instructor a little over a year ago. Their biggest complaint isn’t about the real estate process, or the contracts that they have to use, or the mortgage industry, or even the erratic appraisal business. Their biggest complaint is about other agents. And, it isn’t even close!
Complaints about agents aren’t something new. We’ve heard it for years from home buyers, home sellers, and yes, other agents. But, it reminds me of the outrage and uproar about members of Congress. How they are all crooked and self serving. Well, all of them except my Congressman or Representative.
What are the complaints about Realtors? They run the entire gamut, from lack of communication to various forms of “unprofessional” behavior. These include, in no particular order:
- Lack of communication – Difficult to get ahold of, not updating clients or other agents on the status of a property, not returning phone calls or e-mails, etc (you get the picture)
- Unaware of what real estate contract verbiage says or means – Unable or unwilling to explain what contract documents say to their clients, negotiating contracts based upon false assumptions or a misunderstanding of what the contract says (Do you know what broom swept or clean means?….and that’s the easy part)
- Not showing up – have you ever heard the term, “required formation”?
- Not being on time – agents are notorious for being late (and, yes, so are clients)
- Others….
Every profession has its share of complaints about the way business is conducted. But, normally, the majority of the criticism comes from consumers, or from the “cheap seats” (those critical of the business but not involved in it). But, our profession, the real estate industry, probably hears more criticism from its’ members than it does from outside sources. Are we just a profession of whiners or is the criticism justified? More importantly, if the critics are even close to the mark, how do we improve the way conduct business?
We’ll get into that on Page 2.
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When Anywhere Just Won’t Do
May 6th, 2009 categories: Entertainment, Relocating
Do you ever find it difficult to find a good place to unwind? Especially, after a long day at the office? Or at home? More and more folks, having seen the eye catching facade, are stopping into to The Fredericksburg Pub.
Opened at the first of the year, the Pub has gotten rave reviews. One of its first published reviews was noted in the Fredericksburg blog, InTheBurg:
“Today Gail took me out to “The Fredericksburg Pub” for lunch. She had the pub burger, I had the bronzed fish sandwich. Both came with fries. I also added a Boddingtons (on tap) to the meal. This place is going to give other area restaurants a run for their money for the following reasons
a) Good pub fare
b) Fast service, I mean fast for everything, from getting our order, to bringing our drinks, to having the food in front of us.
c) Nice sized proportions and good prices
d) A Variety of flat screens showing football (American football) and football (soccer)
e) THEY ARE SMOKE FREE
f) Attractive and unique uniforms”
Having enjoyed the Pub a time or two already, I’d have to echo the reviewer’s comments. While the novelty of the design and woodwork might impress you during your initial visit, the quality of food and service will beg you to return.
For those interest in a pint or two, you’ve found the mother lode. There are more beer types, bottled and on tap, than one can imagine. Whether it’s a dark brown Irish ale, a Double Chocolat Stout, or a plain old domestic brew, there’s plenty to choose from.
The menu’s wide array of choices not only features unique dishes like the Cotswold Chicken Sandwich and Guiness Brownie Sunday, the normal British fare of Shepherd’s Pie or Bangers & Mash, but also many other favorites to pick from.
The Fredericksburg Pub isn’t your normal night out. The character of the place is one you’ll remember. The ceiling is a bit higher than your traditional British Pub, but just about everything else you’ll find will leave you coming back for more.
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Fredericksburg’s Tax Man
May 4th, 2009 categories: Real Estate News
Balancing a budget is one task that most public officials seldom look forward to. It requires making choices. Often, tough choices.
As reported in the weekend’s Free Lance Star, Fredericksburg’s recent budget proposal by the City Council indicates the real estate tax rate for the city will increase from 56 cents to 70.5 cents per $100 of value next year. If the proposal is successful, that would mean the tax on property valued at $100,000 would be $705 dollars instead of the previous rate’s tax yield of $560. While that appears to be a sharp increase in what property owners will pay in real estate taxes, that’s not the entire story.
Real estate tax rates normally fluctuate depending upon the variance or change in the assessed value of real estate in the county/city. What is assessed value? Simply put, it is a dollar value assigned to a property for the specific purpose of assessing or calculating taxes. In Fredericksburg’s case, there was an overall decrease of 24 percent of single family residential property values. To compensate for the decrease in real estate property values and, as a result, lost revenue, the tax rate had to be increased to gain needed revenue to meet budget expenditures. In addition to meeting the budget costs, the City Council decided to ”plus up” the tax rate to bring in additional revenues as well. That to the tune of $1.6 million.
That additional money may be where the Council runs into a bit of trouble. Many citizens understand the balancing act between assessed value and the real estate tax rate. However, the tax rate increase to generate new revenue seldom passes without opposition. Fortunately, citizens can voice their concerns, pro or con, at a public hearing, scheduled at City Hall, on June 9, at 7:30 PM. For those who enjoy a bit of back and forth with elected officials, you might want to mark your calendar.
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