Wednesday, February 12, 2014

The Howl of the Wounded Moose

I've got a den with a river view
Inman News published on Feb 11 an article on by a certified residential appraiser wondering why real estate brokers escaped blame over the housing-led financial crisis. He went on to write about the low entry bar to receiving a real estate broker's license  and how much more rigorous both education and training is for appraisers.

The wounded moose howled.

He received a few thoughtful comments, but by and large, they were the verbal equivalent of brokers exercising their Second Amendment rights. But it got me to thinking--what do lay people think? What kind of education and training should real estate brokers have?

The Colorado statute on broker licensing has an interesting preamble attached. I don't recall it word for word, but it says something to the effect that in representing buyers and sellers, real estate brokers are practicing law without a license. However, it goes on to say, the way real estate sales are being conducted doesn't seem to be particularly harmful, so the state won't require law licenses just yet for real estate brokers.

In other words, no harm, no foul.

Most buyers and sellers believe that a standard, MLS-developed real estate purchase agreement is a contract to buy and sell a house. That may be true in the abstract, but that's not what they really are. If you look at the language, penalties for not performing offer almost zero relief to either side. It's also designed to keep brokers out of court.

The reality is that it's primarily an earnest money agreement--who gets the earnest money if things fall apart and the centre cannot hold. And even fighting over that is a fool's game most of the time. For these reasons, new home builders have their lawyers create the contracts and don't use standard Realtor forms.

But back to the point. Should real estate brokers be required to have a bachelor's degree? An apprenticeship of sorts, as appraisers have to have? Should they have to have specialized training in finance?

It all gets down to the fact that despite the majority of real estate brokers being pretty much okay, there are a lot of bad actors out there, and there are enough of them that the public consistently gives brokers low esteem rankings. At the same time, the public consistently hires the bad ones along with the good ones.

I'm interested. What do you think?

Wounded moose howl, but what does everyone else say?