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Have you ever heard the saying “the more things change the more they stay the same“? In my 33 years in Real Estate many, many things have changed. I remember when the fax machine was a new and revolutionary development. Now 33 years later we transmit information and documents globally within seconds and take it for granted.

 

In the 80’s and for decades before, there were many more registered Real Estate agents than the Industry required to service the amount of business. Now in 2016 there are still many more agents than the Real Estate Industry needs to service the number of transactions.

 

In nearly all other service industries the work force is generally “right sized “to meet the demand.

Why then does the Real Estate Industry continue to be burgeoned with far too many Sales People than economic realities would justify?

 

The reasons are many and varied, but the most prevalent reason is that Real Estate has a relatively low Education Requirement as opposed to many other similar financial Industries. It also has relatively low costs to become licensed, remain licensed and remain current with all the governing authorities having jurisdiction over the Industry.

 

The reason above was a much larger factor in the past, but the evolvement of the “ desk renting “ phenomenon has transformed most brokerages from centering on Sales Production and enjoying a commission split from each sale, to renting out office space or in many cases a desk, or just access to basic office facilities. The owner broker focuses on collecting fees from the agent and is much less concerned with sales. The more agents that the brokerage has under their umbrella the more fees that are collected.

 

Some of these Brokerages make it relatively easy and inexpensive to remain in the Industry and in many cases, Sales People remain for many years paying the basic costs and producing little to nothing in the way of sales. Therefore gaining little to no practical experience or guidance. It is very easy to remain licensed in the Industry if you are otherwise employed or have a spouse who works. Some just exist in the Industry to justify tax deductions on their vehicle etc.

 

The Industry, from the governing authorities to the various Real Estate associations and Real Estate boards, encourage maintenance of the higher numbers as the high numbers provide employment security to all of them.

Is this good for Consumers of Real Estate Services? I say generally no! However it is not a simple answer.

As there are many Sales People who might do only a few transactions a year, but are diligent and keep up with education, many other changes and who do an excellent job on each transaction, there are also top producers who do not do a particularly good job but have managed to brand themselves in a way that brings them a vast amount of business.

 

While the number of salespeople and brokerages gives the consumer a lot of 

choices it also creates a lot of hidden pitfalls.

 

I believe that the time has passed where the Industry should be less concerned with harbouring an unreasonable number of sales persons than making sure that each operating licensee is qualified, educated, available and has the management back up in place to facilitate good business AND trustworthy  practices in each and every transaction. The current system allows many agents to work at other jobs, be unengaged in the industry for months, even years but remain legally eligible to handle a transaction on their own.

 

As a consumer of Real Estate services one should expect that the sales person they have chosen has a reasonable level of knowledge and experience to know how to handle their business in a professional and knowledgeable manner. Should the Consumer not expect that if that agent is committed to a full time job in another industry, hadn’t been active in Real Estate for months or perhaps years, didn’t have direct back up or support from their Brokerage, perhaps had never handled a Real estate transaction ever on their own, that this should at least be required to be disclosed to the Consumer to allow them to make an informed choice? Yet it is not required!

This is exactly the reason why the numbers of Agents in the industry needs to be finally “right sized “, and the remaining Sales People need to be completely compliant with the law. A requirement for Sales Persons to fully disclose any factors that might affect their availability or ability to carry out their duty in a reasonable manner should be implemented.

 

The Consumer is blind-sided to realities and often ends up the wrong Sales Person. Often the results are very costly and very often the Consumer never knows.

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