The Truth About NAR and Real Estate Licensing
In honor of this week’s NAR convention …
Let’s put aside the fanciful conspiracy theories about the National Association of REALTORS. Some will argue NAR exists solely to limit entry into real estate by pushing a requirement for licensing (shudder) as if this is the only business in which licensing is required.
Licenses are required to practice law or medicine. Too heavy? You also need to have a license to box - I don’t think the written exam for being smacked in the head is too severe, but neither is the real estate exam.
Want to be a professional masseuse? Hairdresser? Beautician? Barber? Dentist? Teacher? Chiropractor? Nurse? Physical Therapist? Stockbroker? Insurance salesman?
Step up and get your license.
The notion that licensing is unnecessary is borne of delusions of a free market society in which government plays almost no role. If you’re looking for such a construct, you ought not look to the United States Constitution. Rather, take a hard look at this map. You’ll find the land you seek at the top - Fantasyland.
NAR’s leadership has watched its membership swell over the past several years as more and more people flocked to real estate for the so-called easy money. Whether this is good or bad for the consumer is irrelevant to NAR as it’s a trade organization. Arguing that NAR should be serving as consumer watchdog is akin to expecting UAW to argue in favor of more reasonable automobile prices and limits on commissions earned by car salesmen. It’s a futile, misguided argument.
Having said that …
NAR goes too far in its effort to protect those in the industry, taking on quixotic battles such as limiting MLS access while failing miserably on more meaningful quests such as securing health insurance for its membership at rates less than the GNP of Guatemala.
There’s an old-school mentality that persists when it comes to now-basic fundamentals such as IDX feeds of listings. As I asked my branch manager today, how does the broker stand to make more money - from me attracting buyers solely off my listings or by my attracting buyers through the IDX feed on my website? The answer’s fairly clear.
NAR spends far too much time attempting to spin the market in a day and age where the information is readily available. Pravda could tell the Russian citizenry whatever it wanted and it would be believed. (BawldGuy tells one story; I always think of the reaction after the 1980 Miracle on Ice where many Soviet citizens thought the score was a hoax - Capricorn One on ice.) Today, there are far too many information sources for such blatant incorrect spin to have any impact other than making the organization and its members look ridiculous.
NAR has multiple problems, both within and without, but eliminating the entity entirely makes little sense (despite what Tobey may have written in anger in the past; change would be sufficient.)
Back to the original point …
Requiring licensing does not guarantee quality of service or knowledge of anything but the most mundane (and often irrelevant) minutiae of real estate. But it does create a hammer - perform sufficiently poorly, if not egregiously incompetently, and you lose the ability to sell real estate. It happens every day.
The argument that licensing allows otherwise unqualified individuals to enter and remain in the business regardless of their own ability is specious on its face. Agents come and go all the time - in this environment, far more are going than coming. Why? Because those who have the ability to adapt while providing excellent service are surviving while those who lack those basic skills are being shunted into other professionals. Darwinism at its best.
It’s true that many homeowners have purchased or sold real estate without assistance from a real estate professional, much less a REALTOR. But it’s also true that many find themselves in situations that easily could have been avoided with a little more knowledge, a little more experience.
All that eliminating licensing will do is exacerbate the latter issues. It’s because the bar to enter the professional is so low that anyone unwilling to clear such low hurdles clearly has no business performing the business.
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Well said. Very well said. There is nothing I can add other than to second everything you wrote.
I’ll third it.
[…] Meanwhile, read this from Jonathan Dalton.: The Truth About NAR and Real Estate Licensing […]
Much appreciated, gentlemen!
Great article! I hope the ‘masses’ read this as well!