By Jon Gorey
For better or worse, it’s not very difficult to get into real estate. In most states, you can just sign up for a course, pass the state licensing exam and start selling houses (and paying dues) under a local brokerage.
That makes the industry a uniquely egalitarian one, where a high school dropout can find as much success as an Ivy League MBA. It’s also a welcome venue for people seeking a second or third career — only 5% of active Realtors started out in real estate, according to the National Association of Realtors 2020 Member Profile.
Also in this issue:
But that ease of entry also guarantees a steady inflow of newcomers who, without additional training and mentorship, may be ill-equipped to succeed and often flounder — sometimes at the expense of their clients. “It’s one of the greatest things about real estate and one of the worst things about real estate all in one,” says Kevin Fruh, owner and broker at Fruh Realty in Newburyport, Massachusetts.
Ease of entry
The relatively cheap, quick and easy process of getting up and running in real estate makes it unique from many other industries in three key ways, says Sonia Gilbukh, assistant professor of real estate at the City University of New York.
While a training course and exam will cost several hundred dollars and a couple of weeks of your life — and association dues, marketing costs and other fees can quickly top $1,000 a year — it’s nowhere near the cost or time commitment of a four-year college degree. “So the education is relatively cheap,” Gilbukh says. “It’s also fast. You can take a course, take the exam and be licensed within a month, compared to other professions where it can take years to apprentice.”
Indeed, while it takes 40 hours of coursework to obtain a real estate license in Massachusetts, for example, becoming a licensed hairstylist requires 1,000 hours of schooling over six months. While you’d want anyone wielding sharp scissors next to your face to be thoroughly vetted, most consumers would probably not be comforted to know that the stylist performing their $50 haircut may have completed more training than the real estate agent negotiating their $500,000 home purchase.
Some states have more demanding requirements, of course. It takes 180 hours of class time to become a licensed sales agent in Texas, for example. But even that rigorous course load can be completed in a matter of weeks. (Texas, surprisingly, has more Realtors per capita than Massachusetts: about one in every 216 versus one in 268.)
Finally, since most agents work as commission-based independent contractors, it’s relatively easy to land a first job, Gilbukh says, as brokerages don’t have to offer new agents benefits like health insurance or even a salary. And there’s no guarantee a new agent will receive further training or mentorship at that brokerage, either.
Teaching for the test, not the trade
In the view of Aliyah Gary, broker at iCare Realty in Cambridge, Massachusetts, and founder of the Cambridge Real Estate Collaborative, the licensing course simply teaches people what they need to know to pass the state exam, not what it takes to succeed as a real estate agent. So, Gary developed an additional training course, called APEX, that better prepares new agents for the realities of the business.
Participants first learn how to make a business plan and what type of brokerage will help them achieve their goals. “The next step is to complete an entire transaction through role-playing,” Gary explains, from finding a client to setting up and performing the listing presentation to completing all the paperwork and disclosures. “From there, we go through a mock open house, offer presentation and negotiation, and the final walkthrough,” she adds. Trainees even get coached on dealing with difficult clients in mock scenarios. By the time they finish the course, Gary says, “an agent has experienced, firsthand, an entire transaction.”
Gary says that while the bar to become licensed has risen over the years, with more topics on the exam and new background check requirements, this still doesn’t ensure agents will uphold a high standard of business ethics and service. Rather, she advocates for mandatory mentorship, apprenticeship and ongoing training in ethics and accountability.
Others share that sentiment. In a survey of Houston Agent readers, more than two-thirds of respondents (71%) felt it was too easy to become an agent and that the licensing process failed to prepare them for a career in real estate. “I don’t think a license should be harder. I do think an apprenticeship should be a requirement,” said one respondent. (Agents looking for additional certifications and practical training on more than 70 topics can check out our AgentEDU online learning platform.)
Another agent suggested borrowing a training model from a related industry: “Inspectors have to apprentice for quite a long time. Realtors should have to apprentice, as well. You’re dealing with huge amounts of money, and proper guidance and support is critical.”
And 93% of respondents said they’ve had to compensate for a co-broker who was unprepared to handle their side of the sale at least once in a while. Boston-area Realtor Mary Gillach says she recently worked with a new agent who was oddly cocky for having only ever completed one rental deal. “They were insisting on all these things that were just really not normal at all — and it blew the deal up,” she recounts. “It doesn’t serve the consumer very well, that’s for sure.”
A bad reputation
The lack of preparation among new agents entering the field isn’t just bad for consumers, Gilbukh says, as experienced agents worry it will affect their own reputations. “If their market is full of people who don’t know what they’re doing, who are completely new,” she remarks, “there gets to be an overall perception that agents don’t bring any value — so it’s not great for the profession.
In a brisk, inventory-starved market like this one, most homebuyers seek out an experienced agent who can give them a fighting chance in a fast-moving, multiple-bid situation, Gillach reports. Sellers, however, are another matter.
“Sellers say, ‘Oh, I’ll just use Aunt Betty’s uncle’s brother’s dog to list my house, because we have a relationship, and anybody can sell a house right now,’” Gillach says. “And that’s true. They won’t necessarily close, and they won’t get the best price — but it’ll sell.”
Indeed, about three-quarters of consumers work with the first real estate agent they interview, according to NAR surveys. “It seems like people don’t look too hard for real estate agents, and they might not believe that it matters that much,” Gilbukh says. Her research has proven otherwise: In difficult markets, at least, she found that sellers with inexperienced agents get demonstrably worse service in terms of the probability of sale.
The tragedy for the consumer and agent alike is that they’re “getting guidance from somebody who doesn’t have any guidance himself,” Gillach says, “because agencies don’t do a very good job of training.” In fact, she argues, there’s almost an incentive against it, since top agents generally keep a larger portion of their commissions.
Many brokerages operate on a numbers game fueled by new agents and their social circles, Fruh says. “They’re not trying to teach you how to do the business correctly,” he comments. “They’re trying to leverage your relationship sphere.”
For example, Fruh says, imagine a newly licensed agent who’s also a popular community figure. “He knows nothing about the business: He doesn’t know how to structure a transaction correctly, how to do it efficiently, how to negotiate — but he knows a ton of people in town, because he’s the baseball coach,” Fruh offers. “That’s what the broker wants. The broker wants tons of bodies that have influence over the consumers in their day-to-day sphere. But there’s very little training on the obligations of protecting people contractually.”
Gary says she had to learn the trade the hard way, without the benefit of a mentor. It’s not something she wishes on anyone else. In a business where every day and every deal is as different as the clients you’re serving, she says, there’s no question that mentorship is the key to helping train and retain new agents.
“No two transactions are the same, and you can’t be prepared for everything,” Gary notes. “Most new agents are very motivated to do well in the business, and they need someone available to them for questions and guidance.”
If it weren’t for a mentor, Fruh says, he may not have even considered real estate as a career. He fell into the business after he and his brother, sick of paying rent, bought a fixer-upper after college “that probably should have been condemned,” he recalls. “I was sleeping in an outdoor sleeping bag, in a house with no heat in Newburyport in the middle of the winter,” he says, with a chuckle of disbelief at his younger self.
But the owner and broker of the local Century 21 office at the time happened to be flipping the house next door — and convinced Fruh to get his real estate license if he planned to do the same. Sales had never crossed his mind at that point. “I just wanted to drive around in a pickup truck with a dog and fix up houses,” Fruh says. “But then when I realized how much you could help people, and the earning capability, and how everything’s in your head and there’s really no overhead, it was amazing. It was like a light just went off.”
That broker took Fruh under his wing for the next few years. “He mentored me a lot — a ton,” he says. “Taught me to understand the business, understand the contracts, understand the relationships, understand your duties.”
Fruh eventually became the office’s top agent and, after a successful stint at Keller Williams, opened his own brokerage with his wife two years ago. There, he tries to pay it forward by teaching his agents all he’s learned. “I’m trying to teach them sort of the old-school way of doing it, like a relationship-based business off of referrals and hard work and doing things correctly, instead of buying internet leads,” he says.
In an ever-changing business built on relationships, perhaps it’s no surprise that learning from an experienced mentor over time — and not just passing a test — has helped so many agents hone their craft and find lasting success. “Being in business is a never-ending path of learning,” Thompson says. “Inexperienced people focus on the transaction; experienced people focus on the relationship,” he adds. “Because you don’t just want to sell one person a house. You want to sell the whole family a home… and those are things that you learn through good mentorship.”