Real Estate is the hottest topic in Australia at the moment (and has for years). But are Estate Agents properly regulated and should more be done?
Putting it simply, Real Estate is a problem industry. From underquoting to smoky curtains, Real Estate agents are vilified and often hated. Every day we see a new method, application or start-up aiming to replace the ‘agent’. But is this mere coincidence? Should the general public feel bad for the regular everyday estate agent? The answer is no. They should definitely not. In fact, many have every reason to be lambasted and hated.
But this is not going to be an agent hate piece. I’ve read my fair share. I’m a registered real estate agent myself, and some of the arguments raised in said articles are elements of the standard marketplace beyond an estate agent’s control. But tarring all agents with the same brush, good or bad, is the wrong idea.
Often, it is quoted that real estate agents make bucketloads of money for very little work. It is often said that real estate agents charge far too much commission. But yet, according to Payscale, the average real estate income (including commissions) is $48,924. Not a lot of money is it. The money factor is a misconception. Even if you add up the highest upper amount on Payscale, you get $160,223. Still an excellent amount of money, don’t get me wrong, but a far cry from the millions people seem to think that agents make.
Now granted, the top agents in the industry can make up to $4-5 million a year, a quick look at Ben Collier, Adrian Bo, Richard Shalhoub and James Tostevin among other big names in Real Estate are an example of this, but they are in the industry’s minority. It’s like an iceberg. For every Collier, Bo, Shalhoub and Tostevin, you have 25 times the amount of agents under the surface who combined make less than just one of the top operators.
There are thousands of agents out there, who slog it out every day making next to minimal wage, barely making targets and getting by. And while half of these individuals may be good real estage agents, there is the other half that drag the rest through the mud.
My real point here, aside from the financial component, is that it is categorically far too easy to become a real estate agent in Australia. Take myself for example, I did a week long course through an online provider (which makes it very easy to copy and paste answers straight into the ‘exam’ – which was also completable at home) and after an exchange of a minimal amount of money, I was a registered agent in NSW.
Fast forward a year, and I have to undertake continuing professional development (known as CPD Points) to renew said registration for another year. Another mailed ‘course’ to my home address completed in 6-12 hours about minor changes to Fair Trading Practice and I’m registered for another year.
Again, while many agents are diligent and practice ethical and moral standards in the field, it is far too low a barrier to enter the industry. Let me be straight again – it’s too damn easy.
NSW Fair Trading (and similar organisations in other states) laud their registration system as a method to employ and enforce real estate compliance. Following on from that, recent changes to underquoting laws in NSW are another sign that they are not completely shying away from the topic. But in practicality, the registration system is a method of tracking, and that is simply it.
An individual working in the industry can often display whatever they want in their line of work. ‘Specialist’, ‘Manager’, ‘Advisor’, ‘Property Professional’. I’ll be honest, in days gone by working in residential sales, even I displayed some of these tag lines. But on what grounds?
12 hours work a year and we allow these individuals the power to manage the sale of what is for many families the largest, most expensive debt ridden asset they will ever own. A transaction that can make or break retirement, portfolios and families. And the power and management is often vested in underqualified, dodgy operators.
We’ve seen changes in other industries. Just recently the Australian Securities and Investment Commission (ASIC) looked into Financial Planning, and made a variety of changes. One of these include the replacement of the ‘Accountant’s Exception’ for advice on Self Managed Superannuation Fund (SMSF – the exception allowed them to provide advice) and introduced an Australian Financial Services License alongside their existing degree which was required to provide advice on SMSF matters.
You read that correct. A person with a strong degree, Accounting, alongside their 4-5 year degree now requires a separate license to provide advice on matters you’d assume (as a reasonable person) that they would be well qualified in already doing. But yet we allow Estate Agents open discretion to apply their 12 hours (a year) of professional training and knowledge to provide advice on what is effectively a Financial Market.
90% of Estate Agents have absolutely no business providing any sort of market commentary or advice on market movements (aside from solid historical data), and the everyday investor/buyer/client should take any such ‘advice’ with a pinch of salt. The only business a real estate agent has to provide are signed rental appraisals (in property management), marketing (for the sale of a property) and comparable sales providing an opinion (read: not a valuation) on the property’s likely selling price in the marketplace. Anything aside from that, is not the domain nor expertise of a property agent.
What is the solution?
There really isn’t a straight forward solution, but it comes down to regulations and accreditation. The first step, on accreditation is addressed by recent changes announced by MP Victor Dominello. But what else should be addressed?
There are estate agents out there undertaking (or holding qualifications) undergraduate degrees for various purposes, be it Business, Economics and Marketing – all of which are relevant to the real estate industry. Further to that, there are degrees at UTS, Deakin University ,UNSW, Bond University, CQU, UniSA (and I’m sure many others) that are a Bachelor in Real Estate. Those that undertake such degrees, should be rewarded for their dexterity and pursuit for further knowledge.
Disallowing agents from using the word ‘Specialist’, unless there are regulated grounds (perhaps University Qualified Agents) is another method, allowing the general public to differentiate the qualified from the masses.
Providing more indepth training programs for agents is another step. The 6-12 hour a year CPD program should address ethics in practice and moral standing in business (officially it’s meant to, but practically it does not).
Real Estate training should not be viewed by operators as a checklist or an annoyance, but rather a pursuit to further their craft. Those that undertake further qualifications should be rewarded for their efforts, and thus this should reflect in agent titling, registration and accreditation. At the moment, if you finish a Bachelor in Real Estate and Property, your qualification sits in your bio and resume, and not in your job title.
Again, simply put, Real Estate Regulation and Compliance is not at a level we should be happy with. We should be pushing for greater professionalism in the industry. You cannot simply remove agents from the transaction, nor will that be the solution to the issue (human nature and greed is the argument against cutting out the middle-man in these transactions), but we should hold agents of value on a higher pedestal.
Agents who comply and practice for a long period of time, holding ethical standards and who achieve results consistent with their pay-grade should be rewarded. They should be accredited higher than the rest. I’ll bring back Collier, Bo, Tostevin, Shalhoub and co back into the discussion here. These agents, hold the same qualification (officially) as every other licensed Real Estate Agent in the industry. But you’d 110% trust them to achieve a top result. So why not accreditate them and put in place avenues to value these ethical standards of operation and industry achievement?
Touching again on the first point of money, the argument of agents being paid high is weak at the best of times, and to put it to bed, these top agents deserve the fees they charge. So why not give the general public a way of knowing who is who? You get what you pay for. So why not give consumers a way of knowing what they are actually paying for?
At the end of the day, I know a lot of agents will be reading this piece. And you should know that this is not an attack on agents (quite the contrary). But if you are reading this piece (as an agent) and hating the sheer idea of this, you are part of the greater problem within the industry.