Self-righteous Or Poorly Trained, Too Many Agents Spoil The Pot

“It happens all the time,” my buddy Chris Carter, a Florida real estate agent and mortgage broker who writes the popular and informative “Florida Real Estate Blog,” tells me. Most often, he says, “the idiot agent” fails to get the buyer to do the things he needs to do within the contract’s allotted time frames

Carter’s not alone. Years ago, Todd LaBorwit of Topaz Mortgage lost a deal because the listing agent sent the appraiser to the wrong house. And judging from the complaints I see and hear, I’ll bet everyone who has read this far has raised his or her hand.

Incompetency, it seems, runs through the entire real estate business. “Realtors are the worst,” said someone who posted on Reddit. And this guy says he is one. “The worst part of this job is dealing with other incompetent, rude, and unprofessional brokers who act entitled and self-righteous.”

(FYI: To use the term Realtor to describe all agents is incorrect. Realtors are members of the National Association of Realtors, but not all agents are NAR members.)

Sometimes, the complaints are against male agents, sometimes female. Sometimes it’s seasoned veterans who draw a client’s ire. Other times, it’s a brand new agent just starting out. But in an interesting and surprising take on the problem, a loan officer who works “with more Realtors than I can count” posted that the agents who are the most difficult to work with are the ones who sell the most houses.

Popular Doesn't Mean Good

“I’ve found that the most successful agents are not only difficult to work with but, in many cases, incompetent,” the loan officer wrote. “Unfortunately, the skills required to be a successful agent are different than the skills required to be a good agent.” The easiest closings, he added, are with agents who sell seven-to-10 houses a year. “They are my favorite to work with because they understand my role and theirs.” Meanwhile, those who sell more houses “often try to tell me how to do my job.”

Let’s stop here for a moment: This is not to denigrate all real estate agents. Many do excellent work, and some often go way beyond their duties, usually to correct the errors made by the agent sitting across the table. But it is to point out how agents of all ilk can score a deal. And then screw it up.

According to a new report from the Consumer Federation of America, half the estimated 1.5 million licensees sell just one house a year, if they sell any houses at all. “Shocking” is the way Stephen Brobeck, a CFA senior fellow and the report’s author, described that 50% finding to me. “And that’s not just new agents, that’s the people whose pictures are on their firm’s websites.”

Worse, many of them, but especially rookies, are ill-equipped to properly serve people who are about to partake in what is likely to be their largest-ever financial transaction, the study found. They are inexperienced and untrained and likely must have income from other sources to survive.

Most brokerages tend to hire anyone who can fog a mirror and turn them loose with hardly any training other than what they learned to pass their licensing tests, tests that in some places are so simple that, well, why bother? And as a result, the business is overrun with too many agents chasing too few deals.

The high ratio of agents to sales — 1.5 million agents for five to six million sales annually — “virtually guarantees that most agents cannot support themselves only from sales commissions,” the CFA report maintains.

Trimming The Fat

“The residential real estate industry is truly a part-time industry, with most agents working sporadically and holding another job, often full-time,” Brokeck says. “There is no other financial services industry or profession where part-time, marginal workers are so ubiquitous.”

Brokers contribute to the over abundance of agents by continually advertising for new blood, largely, according to the report, because new hires “bring with them new clients, often friends and family members.”

There are other reasons for the glut. For one thing, the turnover rate among agents is high because many realize they can’t make the living they thought they could selling houses; for another, many agents pay “outrageous” fees, according to one agent quoted in the report, to their brokers to cover overhead expenses.

But the report says new hires are not adequately trained or supervised. “Through lax hiring and training, many companies sponsor agents that have too little knowledge and experience to adequately serve consumers,” says Brobeck, who found that nearly all the national and large realty agencies offer training in “the practicalities of selling property” but the courses are typically online and not required.

The study reports that mentoring programs are infrequent. Sometimes, the most senior agents are given the responsibility of looking over the shoulders of new ones, but they often have too many agents under their wings to adequately oversee them.

Who's The Boss?

Overall, the report says, the “large majority” of new hires are not adequately supervised.

The study examined the sale records of 2,000 randomly selected agents working for four major companies in four markets — Orlando, Tucson, Minneapolis, and Central Pennsylvania. Nearly half sold only one house in the previous 12 months or none at all, and almost three-quarters of them sold five or less.

The median figure is barely two.

As a result, perhaps, the 2021 household income of agents responding to a NAR survey — likely the most active — was ‘significantly” larger than that generated from their real estate work. Active agents, a limited group working for major firms, reported a median income of $38,000 from real estate but a median household income of $110,000.

Where the extra money comes from is anyone’s guess. But the CFA’s Brobeck supposes that either someone else in the house earns the lion’s share of the income, the agent’s income is supplemented from social security or a pension, or they work at another job, possibly full-time.

Circling back to the lack of training, the report says a new agent is rarely sufficiently prepared to sell someone’s house or help them buy a new one. Some states require additional classroom work to keep a license active. But “a large majority” of rookie agents “apparently are not required” to do more, either by their states or their companies, than pass their initial exam.

The glut of agents practically “ensures that many will not receive adequate personal training or mentorship,” the report says. “Yet, many large firms keep recruiting.”