Military Real Estate Voice by Jim Rake

His Needs, Her Needs

2009-07-09T13:39:00Z

Have you ever heard the popular phrase, “Men are from Mars, Women are from Venus” when discussing the differnces between men and women? Of course, as many people know, that phrase comes from the title of the best selling book by John Gray, written in 1992. While the title is often remembered, the subtitle, which is the essence of Gray’s book, is rarely, if ever cited. That is, “A Practical Guide for Improving Communication and Getting What You Want in Your Relationships.”

The author’s focus is on the differences between behaviors and desires of men and women. From there, the book centers on recognizing these differences and learning to communicate effectively to meet the needs of each party. Understanding the expectations of one another, and communicating each others’ desires, are two keys to a successful relationship.

Yesterday, a fellow agent held me captive while recounting their latest adventure with a client of theirs, who had decided they wanted to “move on” and use another agent. In this case, the clients had informed the agent that they believed the agent wasn’t meeting their needs. So, now, it was time to find another agent, one that would do a “better” job of keeping them informed of “all of their options.” According to the agent, the clients talked to the husband’s brother who provided them with valuable information their agent neglected to tell them. From what my fellow agent said, the client’s brother provided a layman’s explanation of the need to make “back up” offers on properties they liked. Specifically, back up offers on Short Sale properties they liked.

Well, for those of us that have handled a few Short Sales – back up offers on short sales, while doable, probably aren’t the easiest road to success. By the way, did I mention, the client’s brother has never had any training in Real Estate? None, zero, zip! Also, these clients wanted to be in a house as soon as possible. So, as many of you know, ASAP and short sale are mutually exclusive. In other words, you can’t get there from here.

After listening to the agent’s tale, I had to ask if they began their relationship with their buyer by doing a “needs assessment.” Were expectations discussed before they began to look for homes? If not, why not? As happens in many real estate relationships, especially with buyers, the foundation that is necessary for a successful relationship is never established at the outset. In the rush to run out and look at homes, the clients, and the agent, sacrifice the most important step that’s vital in establishing a successful relationship – business or otherwise. And when things in the relationship begin to break down, it’s usually due to a lack of proper preparation.

So, what should that initial needs assessment, or discussion of expectations consist of?

1. Clear statement of clients and agents expectations.

2. Ground Rules. The What, Where, When and Why of the relationship. This simply means a review, or preview of what the normal operational parameters are. With expectations already discussed, this clarifies how you’ll look for homes, who will do what, when various parts of the transaction will take place, where things will take place, etc. It’s simply a way of providing a clear picture to the client of the transaction from the outset to the settlement table. No one likes surprises, an this should preclude that.

3. A discussion of a Realtors responsibilities and our of Code of Ethics. This isn’t an in-depth conversation, but simply a reminder to the client of the professional they’re relying on to make their transaction a smooth one.

Unmet client expectations are never helpful in business relationships. To avoid them, it’s essential to clarify, from the beginning, in a manner understood by all, what’s to be expected from all parties involved. While it may temporarily delay the buyer’s house hunting road trip, it’ll likely prevent misunderstandings or problems further down the line. And in a Realtor’s business, where you aren’t compensated until closing, getting there is worth the reward.

How Much Tax is Enough?

2009-07-07T13:49:27Z

The nationwide push to get the ear of elected officials found its way into Stafford on Independence Day. Like many local communities across the county, a T.E.A. (Taxed Enough Already) party took place at the Courthouse.

What began earlier this year, and significantly this Spring, on April 15th, that saw hundreds of thousands of citizens gather in more than 800 cities across America, to voice their opposition to what they characterize as “out of control” spending, has continued to gain traction, and is alive and well in the Stafford and Fredericksburg, VA area.

The local turnout was in the hundreds, and according to the organizer, Vince Ellis, that number was higher than expected. According to Ellis, the event was, “A celebration of the holiday as well as a grass-roots effort to send a message to Washington because they aren’t listening to us.”

While some critics have characterized the protest as strictly an anti-tax, conservative Republican movement, others refute the monolithic label. Instead, they argue, it is anything but partisan. It is simply anti-Washington, anti-spending, anti-big government, and has no party affiliation.

While some of these anti-tax protesters may find their inspiration from the original Boston Tea Party of 1773, they hardly look the part of those that cam before them. The colonists were revolting against unfair tax policies. Today’s gatherings are just the beginning of a milder form of protest against what many see as runaway government spending and the threat of a greater tax burden.

So, if you’ve ever had the itch to get involved in a “movement”, and your’s is an anti-tax voice, this appears to be a local platform custom made for you.

Short Sales – The Good, The Bad, The Ugly!

2009-07-03T12:18:20Z

The term “Short Sale” has become common place in housing markets over the past few years. Yet, for many, what a short sale is, and how it becomes a reality, is still a mystery. A short sale is a sale of real estate in which the proceeds from the sale are less than, or “short of”, what’s owed on the balance of the loan securing the property being sold.

The Good

At first glimpse, one might wonder why a lender would ever entertain such an arrangment, accepting less than what’s owed on a loan. In most cases, the owner(s) are “upside down” with their mortgage. In other words, they owe more than their property is currently worth. While there are various reasons why owners are in their current distressed state, the good news is that banks have begun to embarace the short sale process. Foreclosing on properties isn’t in anyone’s interest – especially banks. According to the legal counsel for the Virginia Association of Realtors (VAR), the average foreclosure costs the bank approximately $65,000. That’s not what they lose on the loan payoff. That is simply what it costs the bank to handle or manage the foreclosed property. For banks, avoiding foreclosure simply makes monetary sense.

Additionally, the Administration and Congress have moved to stem the foreclosure rate and make short sales a more standardized and acceptable choice for lenders. A push from lawmakers to improve and simplify short sales has encouraged banks to embrace this option for homeowners, avoiding further emotional and financial pain that would ensue if foreclosured on.

The Bad

From a Realtors point of view, handling a short sale transaction is never easy. On the selling side, there are two other major participants in the process, the homeowner (Seller) and the bank (Lender). Each of these bring with them potential problems. The good thing is, the homeowner is usually approaching the transaction as a motivated party. Unfortunately, that rarely seems to be the bank’s case.

Complicating matters further is the lack of national standardized short sale procedures, and no mandated cummunication timelines between banks and realtors (who represent their clients). If there’s anything more frustrating for the real estate community than their fruitless attempts to reach the proper point of contact at the bank when dealing with a short sale, I’m unaware of it. If the short sale cummunication and coordination process was designed any poorer, it would be DOA. But, fortunately, despite the piecemeal structure, many of the transactions do close….eventually. But, “muddling through” is no way to conduct business.

The difficulty in successfully executing a short sale is due to more than poor coordination and communication. Aside from these stumbling blacks, two other hurdles must be overcome. The first involves the banks, the other, the real estate community.

The Ugly

While we’re almost four years into the Mortgage Meltdown, banks have yet to hire enough personnel to handle their short sale and foreclosure workload. We’re routinely informed that negotiators and asset managers are beset with caseloads of 300 or more. With numbers like those, how can we expect success? Within the Realtor community, it isn’t the numbers that are the problem, it’s the lack of know how.

Many Realtors handling short sales or foreclosures lack the training needed to properly do the job. The Commonwealth of Virginia has no training requirement for handling these types of transactions. Many agents, if trained at all, do so after “muddling through” their first few such transactions. Wouldn’t it be smarter to have the training prior to accomplishing the task? How can a professional do the job without knowing what has to be done? And, who is paying for the mistakes made along the way?

Both Short Sales and Foreclosures have excellent certification programs available. For the former, the Certified Short Sale Professional (CSP), and the latter, the Certified Foreclosure Specialist (CFS). But, unfortunately, many who should be taking these courses aren’t.

Today, in many regions of the country, shorts sales and foreclosures account for more than fifty percent of real estate transactions. Luckily, there is an abundance of information on the subject available from lenders, the real estate community, and best of all, online. Time and experience has resulted in greater success in navigating each of these unconventional property sales approaches. But the players involved, and the processes, have miles to go before can begin to claim the process works well.

Four Steps to Getting the Foreclosure You Want

2009-06-29T20:58:22Z

For many of us, the current housing market feels alot like, as Yogi Berra might say, “deja-vu all over again.” Five years ago, in the midst of the runaway market, many homes were on the market for less a day before we witnessed multiple offers presented to the seller. In hindsight, one might conclude that the market was “out of control.”

Today’s market landscape looks very similar. As they say, the players have changed, but the “song remains the same.” Much like then, the multitude of today’s bargains comes in the form of foreclosures.

While there’s been much in the press about the the ugly side of foreclosures (owners destroying the property, evictions, mold, etc), many foreclosures on the market are in excellent condition. Very much like the condition they were in when purchased at the height of the market in 2004-2005. Yet, many of these properties are purchased for 35-50 percent lower than what the current owner paid for them. And, in a few cases, even cheaper. But, how do you find these properties before the competition? How do you level the playing field with the investors that have been in the business for years?

While there is no full proof method for success, there are three important steps that dramatically improve your opportunity to successfully purchase foreclosed properties.

The Steps to Success

1. Identify the property the first day it’s listed for sale on the Multiple Listing Service (MLS).

Better yet, locate the property before its actually foreclosed on. many of these properties have been on the market prior to foreclosure, as a resale of short sale. If this doesn’t result in a sale, they’ll be ripe for the pickin’ at the lower foreclosed price point. But, once they’re on the market as a foreclosure, it is, as they say, “the early bird that gets the worm.”

Seeing it on day one of its listing on the MLS probably depends on getting that information from your Realtor. So, hopefully, your Realtor has set you up with a direct feed of Foreclosures. Most MLS programs now offer the Foreclosure option. If that’s the case, have your Realtor provide you an automated feed of new Foreclosures on a daily basis. While this step a must do if you expect to catch the listing on day one, the second step to successfully getting the foreclosure you want is equally important.

2. Strike quickly.

Submitting a contract as soon as possible is vital to getting your contract accepted. As I discuss with my buying clients, during the contract process, we take things one step at a time. Our goal is to “get to the next step.” By that, I mean that we take things one step at a time. In the case of a foreclosure, we want to have the first contract submitted. The sooner we submit a contract, the less opportunity we give competitors to do the same. Multiple contracts are NEVER in the interest of the buyer. The preparation or due diligence necessary to protect my buyer should have been done ahead of time. Things like looking at comparable properties, neighborhood issues, history of the property, unpaid liens, should be done prior to the offer. But, many of these can be examined prior to the submission of the contract. Another key to securing the property is the terms the buyer is asking for.

3. Make it Easy For the Seller

If your goal is to buy a foreclosure, many pruchasers are looking for as little work as possible. For REO, or bank owned properties that are on the market as foreclosures, the banks are looking for the same thing; as little pain as possible. Since the onset of the current mortgage meltdown, lenders have been inundated with defaults. They aren’t in the property management business, and want to rid themselves of their properties as quickly as they can.

Avoid contract contingencies. Routinely, foreclosed properties are sold “As Is“, which means the buyer will take the property just as it is, at the time of the offer. Should you include a Home Inspection contingency in your offer? That is certainly an option, but not one I’d recommend. Remember, your goal is to get to the next step and provide the bank with few, if any, reasons to say no. However, asking for a home inspection for informational purposes can serve the same purpose, if, at some point, after ratification you decide to withdraw from the contract. Additionally, often, in bank owned (REO) foreclosures, the necessary bank Addendums to the contract will often allow you to alter terms before the contract is “fully” ratified by both parties. While the interaction with various banks are routine and standardized, there are some often differences from bank to bank, with specific procedures. Many banks negotiate one contract at a time. And, you want your contract to be the one they’re considering. So, banks are keying in on the “net” cost to them, make sure your terms aren’t providing the bank a reason to say no to your offer.

4. Go with Experience.

Real estate transactions can be easy, or they can be…not so easy. Make sure you’ve enlisted the services of a professional real estate agent. What does that mean?

It begins with experience and competence. While those traits don’t necessarily go hand in hand, they’re often found in pairs. First, it helps to have someone on your side with foreclosure experience. While the transaction process is fairly straight forward, having an agent that knows how the process works, and knows how best to “work the process” is invaluable. They’re familiar with the necessary timing, procedures, and strategies to accomplish the objective. Further, as the process unfolds, they’ve worked foreclosures with banks previously, and understand what it takes to get you to closing. They have the experience and the competence to close the deal.

Good deals abound in today’s housing market for home buyers. Many of those deals come in the form of foreclosed homes. Capitalizing on the foreclosure opportunities involves a few simple steps. By taking the time to become aware of what’s available, and acting decisively with the aid of an experienced professional, you can maximize your chances for success. Of course, you first have to find something you want to buy. So, how hard is that?

When You Know You’ve Made the “Big Time”

2009-06-25T03:34:45Z

Life is full of events that flag certain milestones in life. These milestones come in different forms, be they job related, academic, social, emotional, or another. Significant achievements often designate what we might call a ”rite of passage“. A sort of coming into our own. Well, many who found themselves in Fredericksburg this past weekend, may have witnessed just such an event in the life of our City. What was the big event? The opening of Fredericksburg’s very own Wegmans supermarket. But, as anyone whose been inside a Wegmans can tell you, it is anything but your father’s neighborhood grocery store.

While Wegmans has some seventy stores, they’re exclusively in the Northeastern U.S. Many shoppers outside of this area have never heard of Wegmans, much less stepped inside their doors. From its birthplace of Rochester, N.Y., it’s stores have spread to neighboring states New Jersey, Pennsylvania, Virginia, and Maryland. Store features include:

1. Cheese Shop

2. Bakery

3. Coffee bar

4. Patisserie

5. Sushi Station

6. Seafood Bar (with wine & beer by the glass)

7. Burrito and Panini bar

8. Crab Cake Counter

9. Thai & Indian Buffet

10. Kosher Deli

And much more, to include the two levels of seating for diners, who would rather sit down to enjoy their food. This includes the upstairs balcony, where those who enjoy the touch of fresh air feel right at home.

For those of us who avoided the 20,000 or so shoppers who were brave enough to wade into Wegman’s on opening day, there’s plenty left to be had. I happened to stop in earlier today, and the shelves have been fully re-stocked, while the aisles are still quite busy. Its something new, and not your ordinary “shopping” experience. As a matter of fact, the kids I witnessed in the store, seemed to be enjoying themselves as much as their parents.

Many have chosen to call Fredericksburg home because of its location, or history, or family in the area, or for its culture, or lifestyle reasons, among others. And, availability of shopping is an important consideration for many. With Wegmans moving into the neighborhood, we’re beginning to look a bit more like the “Big Time.” Now, if we can just convince Trader Joe’s that Fredericksburg is big enough for them too, we might be on to something!

Are You Looking for the Four E’s?

2009-06-23T19:45:19Z

Have you ever wondered what it takes to be successful? Of course, “successful” means different things to different people. But, for the sake of our argument, let’s use Webster’s definition, ” a favorable or desired outcome.”

Most of us would probably agree with that characterization. But, what does it take to get there, to achieve that end?

In the real estate business, many of us define personal success in terms of goal achievement, and numbers or monetary sales goals met. For others, it may be as simple as satisfied clients. But, whatever measure is used, what strategy do we use to acheive those goals? What about clients, home buyers or sellers? What methods do they use to maximize their chances of success?

For years, Fortune 500 companies have looked for certain qualities in their future employees. For many, they are looking specifically for the ”braniacs”. But at least one of those companies, has, for years, used a different approach.

Jack Welch, General Electric’s Chairman and CEO from 1981 – 2001, used a another approach. He looked, not necessarily for brains, but for what he called the Four E’s.

According to Jack Welch, it’s as easy as Four E’s.

This is the criteria he used to assess employees at GE.

1. Do they have the energy – postive energy? Do they start the day with enthusiasm, and end it that way too?

2. Do they energize others? According to Welch, “it doesn’t do you much good to be a whirling dervish if you don’t end up exciting other people.”

3. Do they have edge? Do they have the ability to say ‘yes’ or ‘no,’ and not ‘maybe’? Do they make the tough calls?

4. The fourth E is execute. Do they get the job done? In other words, do they deliver?

Said Welch, “Integrity is assumed. These four E’s—when you look at people and want to evaluate them, and when you look at yourself and evaluate yourself this way—give you a pretty good read on where you stand.”

According to Welch, this recipe for success will work in any environment.

If that’s the case, should we be looking for the Four E’s when we hire employees? Are those considerations we’ve used in selecting peers for leadership positions? If not, why not?

Are buyers and sellers looking for these qualites in the agents they hire to represent them? It would certainly make perfect sense. If they’re not, and, at the end of the day, leave the settlement table dissatisfied with their agent’s performance, they’ll have nobody to blame but themsleves. It’s called, “Due Diligence.”

Can You Say Convenience?

2009-06-10T18:57:40Z

As an old friend used to remind us, “We all going to make a little bit money, but none of us is going to get any more time.” Wasting time is something none of us can afford to do (well, at least I can’t). But, it seems that no matter how hard we try, it’s “built into the system”. In other words, it’s just part of life. Many of the processes we’re involved in are controlled by others. We don’t control all the moving parts, the timing, the content, or, the logistics of getting to the finished product. But, what if we could find a way to make things “better, faster, cheaper”, would we?

Callaborative platforms or software allows us to do just that. Collaborative management tools like videoconferencing, online chats, instant messaging, application sharing, Wikis, and many others, allow us to leverage technology to, in essence, make it easier to accomplish a task. Among other things, it provides users with access to the same material or event at the same time. In other words, simultaneous task accomplishment.

In yesterday’s real estate Google Alerts I ran across the article, New Business Eliminates Real Estate Paperwork, highlighting an effort by a couple of agents in Cincinnati, Ohio, to develop software that provides those involved in reale estate transactions the capability to track negotiations and complete transactions online, and yes, that includes using electronic signatures. The software is called MLS Contracts and is currently being Beta tested by their brokerage firm.

This looks like another tool to improve our business process. It’ll make the process more convenient and productive for agents and their clients. Let’s hope the Beta test is without too many hiccups, and before we know it, we’ll all be using MLS Contracts, or something similar.

Cracking the Code

2009-06-03T21:00:33Z

“It is not only what we do, but also what we do not do, for which we are accountable.“

Moliere

Have you ever tried to improve something? Put something together? Assemble an item? Did you remember to follow the directions? Frequently, the directions are more of an afterthought instead of the “how to” they’re meant to be.

Unfortunately, failure is an important part of the road to success. But, if you’re like me, one of your first lessons in failure occurred while attempting to assemble that store bought item you or someone in the family had to have. Probably, in the rush to put together the item, directions were NOT followed. (Who needs them – right?)

Real estate practice carries with it a professional responsibility. Our responsibilities are outlined in the Code of Ethics which serves as the “golden thread” binding us together as a profession. They are our “directions.” In Betty Jasmund’s estimation, they’re more than that, they are a gift.

As the National Association of Realtors publication, Professionalism in Real Estate Practice specifies, the Code outlines our ethical obligations, based upon moral integrity and competent service to clients and customers, and dedication to the public interest and welfare. 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?

Ms. Jasmund, the Fredericksburg Area Assocation of Realtors, Professional Standards Co-Chairman (and one of the wisest Realtors I know), recently authored an article, Why Filing a Complaint Against an Agent is Good for Everyone’s Business, on the value of the Code, in the Association’s latest quarterly publication, FAAR Side. While the entire commentary was instructive, perhaps Ms. Jasmund’s most significant words were:

“….in 1978 by William North, EVP and General Counsel of NAR, he stated that “the integrity of the Code and the value of its vision of the real estate industry depends utimately upon its use.” So if we don’t use it we diminish our ability to monitor our industry. By using the Code of Ethics we present a vision of our profession as it could be and should be.”

The Code of Ethics has had a few changes since its origination in 1913, but its purpose has been the same; to provide clear and conspicuous guidance to Realtors about how their profession should be conducted. Its 17 Articles leave no doubt as to the Do’s and Don’ts of how the profession should be practiced. But, if you were to ask a Realtor you met on the street to cite any one of the Articles, they probably couldn’t. They might be able to tell you the intent of the Code (well, at least, I hope they could), which to them would probably mean “to act in the best interest of the client, and to act with integrity”. But, other than that, who knows what they’d say.

That begs the question, “Should agents have better than a faint idea of what their operating guidelines are?” And, if so, how well should they know the Code? Well enough to know a Code violation if they witnessed one?

More importantly, as it relates to Ms. Jasmund’s point, how can we use the Code more effectively to police our profession? In our efforts to improve real estate practice by improving pre-licensing requirements and establishing a mentoring program, shouldn’t we begin by using the one valuable resource we already have, our Code of Ethics? It is our blanket of accountability. In Stephen Covey’s words, “Accountability breeds response-ability.” And that is exactly what we’re looking for.

Mentoring Real Estate Professionals

2009-06-02T11:31:23Z

“In every art beginners must start with models of those who have practiced the same art before them.”

Ruth Whitman

Mentoring programs designed to develop younger workers have long been a foundation of corporate training for Fortune 500 companies. These programs establish a relationship between the mentor and ”student” or “protege/mentee” that encourages individual as well as corporate development. The protoge relies on the mentor for, not only instuction on how to do the job, but also for professional guidance, and problem solving advice, through the establishment of a working relationship that benefits all participants; the mentor, the student, and the company.

According to Terri A. Scandura, a management professor and dean of the graduate school at the University of Miami, most Fortune 500 companies see mentoring as an important employee development tool, with 71% of them having mentoring programs.

If mentoring is a valuable teaching or developmental tool, why isn’t the real estate industry using it? While there may be isolated cases of individual brokerage firms using mentoring as a teaching tool, why doesn’t the industry encourage it more or adopt it as a necessary business practice? Perhaps, as the second stage of mandatory training necessary before a real estate licensee is certified to operate on their own?

I recently participated in a leadership development program hosted by three of the area real estate Associations. One of the tasks assigned was to examine the idea of a mentoring program for new agents, and to develop an outline of requirements for those licensed in the Commonwealth of Virginia. Our group put together the following outline:

MENTOR PROGRAM

VISION

To raise the standards of performance of Realtors by improving their education and career development through a mentor/internship program.

MISSION

To provide a comprehensive mentorship training program whereby all Realtors are provided with the educational tools, hands on instruction, and career counseling necessary to execute the responsibilities of a real estate professional.

PARTICIPANTS

Virginia Real Estate Board (VREB) – Establishes mentoring standards.

Virginia Association of Realtors – liaison between VREB and local Associations, overseeing standardization and coordination of Mentor Program.

Local Association – Advise and coordinate program with local Brokers, to include identifying mentors.

Brokers – In coordination with the local Association, responsible for establishing company Mentor Program. This includes:

1. Procuring curriculum. Ideally, a standardized curriculum, developed by the VREB, VAR and local Association will be used, and can be tailored by broker. However, minimum standards/ requirements must be adhered to.

2. Identifying mentors. This includes not only identifying mentor candidates, but ensuring they’ve been properly trained. Minimal standardized training requirements set by local Association in coordination with state agencies, resulting in Mentor Certification.

3. Identifying Students. While all new agents are required to complete program, those returning to an active role as a Realtor may also need the program.

4. Establish procedures and verify student’s progress.

Mentor– Responsible for instructing, encouraging and monitoring Protégé/Student progress in accordance with program standards.

Student – Realtor enrolled in Mentor program. Required to complete program in accordance with standard program criteria, and to the satisfaction of Broker.

MENTOR REQUIREMENTS

Individuals selected as Mentors should meet minimum standards to include:

· Minimum of 5 years Realtor experience

· Broker shall be qualified through a “mentor certification program” at the local board level

· Mentor will be qualified through a “mentor certification program” at the local board level

Selected and endorsed by broker as an appropriate mentor. Clarification – Some agents are unwilling and others not qualified to mentor

· Brokerage shall compensate mentor at a minimum of 25% per mentor assisted transaction

· Mentors shall, at a minimum, provide agent with Mentorship Program Handbook that includes:

NAR’s Professionalism in Real Estate Practice
Contract documents
Overview of mentor program
Local Board’s Education Calendar
Local Board’s suggested Tools of the Trade

STUDENT REQUIREMENTS

· Mentorship program minimum duration of 6 months, or as long it takes to accomplish minimum of 6 closed transactions, to include 3 listings and 3 sales

To include listing presentation
CMA
Marketing plan per listing
Buyer counseling session

· Competent understanding of Code of Ethics and Agency as well as having completed the post licensing continuing education requirements for each

· Build Business Plan to include Plan of Action

· Must demonstrate understanding of all contract documents

· Must demonstrate understanding of their market and product

· Must be acquainted with rental transaction

· Marketing & Technology orientation – the necessity to succeed

· Vendor Orientation – 30 min to 1 Hour per vendor

Objective – understand role and responsibilities of industry partners, to include, but not limited to:

1. Home Inspector

2. Settlement Agent

3. Lender

4. Pest Inspector

5. County clerk/representative

6. Appraiser

PROGRAM EVALUATION

Identification of goals, standards of measurement and methods of feedback are necessary for the effectiveness of any developmental program. The following must be established, examined and reviewed throughout the course of the program:

During the course of the program

· Goals – established weekly, monthly, and transactional objectives.

While some goals can be achieved by simply finishing a document or transaction, others can only be achieved with the subjective approval of the mentor/broker. It is important to discriminate between the two.

· Standards of measure – established by state agencies in coordination with the local Association and Broker to measure success of student and/or mentor.

· Feedback – establishment of a functional feedback mechanism for both student questions and inputs.

Post Program Review

· Establish feedback loop to evaluate program six months after program completion.

· Inputs from student, mentor, and Broker

While our outline is is not a perfect blueprint for an effective mentoring program, it is a starting point. Developing better competency and professionalism in the real estate industry is an ongoing process that all of us as individuals, and as a profession, should be encouraging. By establishing stricter pre-licensing requirements and developing a mandatory mentoring program for agents, each of us will be better equipped to practice our profession.

While these added requirements might improve our practice, how effectively are we using the current standards we, as agents, are obligated to follow? Is the Realtor Code of Ethics, established in 1913, outdated? If not, why it so poorly understood by agents, and rarely used to hold agents accountable for their actions?

Reforming Pre-Licensing Requirements for Real Estate Agents

2009-05-27T21:09:11Z

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.