It will come as no surprise that the number of realtors has declined fairly dramatically during the economic and housing downturn, but the exodus from our industry is a long way from over to return us to a more realistic number of agents practicing real estate in the US. Just for fun I decided to graph the annual population data from the US census versus the membership of the National Association of Realtors (NAR). (Not every agent is a member of NAR, but it is a pretty good proxy for the overall market.) The chart below shows how many US residents there are for each realtor.

The chart shows the dramatic increase in realtors during the inflation of the housing bubble. In 2000, there was 1 realtor for every 368 residents in the US. By the peak of the bubble, there was 1 realtor for every 220 residents. Between 2000 and 2006, the US population grew by 6% while the ranks of realtors grew by a whopping 77%! This is particularly striking when contrasted with the 90’s, where the number of realtors shrunk 6% while the overall population grew by 9%.

The lure of easy money for little work was powerful during the housing bubble, driving hordes of folks to get their real estate license. Compared to historical data, we still have way too many realtors chasing way too few deals. You may conclude that too many agents flooding the market would lead to more competition and lower fees for their services, but the inverse is true. With too many agents comes a powerful incentive for the industry to keep fees artificially high because the low-producing agents need to make a basic living. An overabundance of agents also leads to the sub-standard service levels that seem to plague our industry.

What is also striking is that the efficiencies brought about by the internet seem to have had little effect on the total number of agents practicing our profession. The ability to search for homes online has dramatically changed the role of the real estate agent and reduced the number of hours that they need to spend per transaction, meaning we actually need fewer agents to service the population. (If you don’t believe me, I will take away your internet connection and send you large binders of paper-based listings to find your next home!)

I think we have at least 3-5 more years of declines ahead of us in the number of active real estate agents in the US, perhaps more if the internet drives more efficiencies into the process of buying a home. I think it will benefit our industry tremendously to have fewer, better-qualified agents able to close more deals. Raising the barriers of entry to our profession and increasing the efficiency of each individual agent will lead to better service levels and lower fees.

The title of this post is sure to spark some controversy or even animosity from fellow real estate brokerages. I believe that there is a fundamental flaw in the real estate industry regarding agent and brokerage compensation. What is the goal of every real estate agent? Agents want to sell as many homes as possible to earn the highest commission from those sales. What is the goal of the brokerage that they work for? A logical assumption would be that brokerages also want to sell as many homes as possible, since they earn commission from every sale just like the agents. However, that is not true for an alarming number of real estate brokerages today. Many brokerages want to maximize the number of agents who are licensed with their firm and often seek agents who only close a handful of deals each year. This maximizes their income from administrative and desk fees, insures the highest possible commission split from sub-par agents, and insulates them from the volatility and seasonality of commission income that their agents experience. Real estate brokerages should exist to sell as many homes as possible. They should not exist to maximize their earnings from fees charged to agents.

A few definitions are in order before I discuss further. In order to be a licensed real estate agent, you need to place your license with an established real estate brokerage. That company is managed by a “designated broker” or “managing broker” whose job it is to oversee all of the agents whose licenses reside at the company. Most real estate brokerages do not employ agents as employees, rather the agents are independent contractors who operate under the oversight of the brokerage. There are a few brokerages who do take the extra step of making their agents employees, but that is still fairly rare. Agents are usually subject to a commission split for some initial amount of their income. After that limit is reached, they typically earn 100% of the commission. There are also ongoing monthly desk fees, franchise fees and transaction fees that are payable to the brokerage as well.

Brokerage Income Example

Let’s take a look at a hypothetical example to show you just how messed up this practice is. Brokerage A is a company with 20 top-notch agents. Each of those agents closes 18 transactions per year at an average sale price of $400,000. Brokerage B is a company with 72 mediocre agents who only close 5 transactions per year at an average sale price of $400,000. Both brokerages typically receive a 3% commission on each sale. They both have the same commission split of 75% agent/25% brokerage up to a limit of $25,000 to the brokerage. After that commission is paid at 100%. Both have identical transaction and desk fees. Monthly desk & franchise fees are $500/agent and each transaction is subject to a $200 transaction fee. Let’s take a look at the numbers.

Brokerages Love Mediocre Agents

Are you as surprised by these numbers as I am? Both brokerages sold an identical number of homes for the year (360) and both earned $4.32M in gross commission income. Brokerage B pocketed 129% more income than Brokerage A, yet Brokerage A has 20 “rock-star” agents. How did they do this? The brokerage companies earn WAY more money by employing armies of mediocre agents who never reached their commission cap limits. The commission splits are way more favorable to the brokerage for low-earning agents, plus by increasing the number of agents in the office, your monthly desk fee income also skyrockets, in this case by a whopping 260%.

There must be tremendous benefits that brokerages give to their agents for these big brokerage fees, right? Wrong. The primary benefits that an agent receives from a brokerage is somewhere to “hang” their license, a brand name to associate with, insurance coverage and broker oversight of their transactions. Agents remain responsible for their own marketing and lead generation, plus virtually all of their expenses.

Don’t believe me? Go around and interview to be a potential agent at numerous brokerages. Many have extremely low bars to entry and simply want an army of low-producing agents to fatten their brokerage income. Brokerages will try to attract armies of mediocre agents under the assumption that each mediocre agent has a network of friends and family willing to use them as a real estate agent each year. The mediocre agent ekes out a modest living via their personal network, and the brokerage takes home fat commission splits and fees. This is why the quality of agents remains strikingly low in our industry and is also a primary factor in why commission rates to sell your home remain so high.

The successful brokerages of the future will be companies who align themselves with the top-producing agents, not ones who gorge on the fee income generated by mediocre agents.

The data about home listings that you see on most real estate websites comes from organizations called Multiple Listing Services (MLS). Each geographic area is served by one or more MLS, and all of the local real estate agents become members of the MLS so that they can share data about the homes that they have for sale with other members of the MLS. Through this sharing agreement, when you list your home with one real estate agent, it is automatically shared with all of the other members of the MLS. They use this data to populate the websites that you use to search for homes. Agents update their listings to show when houses have changed prices, are under contract, or have sold. MLS organizations serve other purposes as well, mostly to standardize rules and procedures for how real estate is bought and sold amongst the agent community.

There are some popular real estate sites out there that are do not receive their listing data from the MLS, most notably sites like Zillow, Trulia, and Yahoo. Although there are a handful of cities where this does happen, such as Houston. Where do these sites get their information about homes for sale? There are a number of sources.

1. Home owners enter listings directly
2. Real estate agents enter their own listings
3. Real estate brokers send a feed of their listings to each site

As a technology guy, it would certainly be interesting if all of this MLS data about home listings was unlocked and freely available to software developers and the general public. There would be a wave of new websites and applications that could use it, and it would certainly help satisfy the consumer’s thirst for more and more real estate data. But will this happen? It is a complicated question with complicated and far-reaching answers. Let’s take a look at both sides of the debate and what may or may not happen in the coming years.

Who owns MLS data?

The MLS is first and foremost a “cooperative marketing agreement” between real estate brokers. No single agent has a broad enough reach to satisfy the selection of homes required by buyers, and no single agent has broad enough marketing to advertise your listing to all potential buyers. By combining all the listings, it makes for a compelling home shopping experience for everyone. The MLS agreement basically says that I agree to show your listings if you agree to show mine, plus a bunch of stuff about how agents get compensated in the process.

Because the MLS is designed to drive transactions through real estate brokers, these brokers maintain “ownership” of their listing data. The logic here is that by maintaining the best source of homes for sale, real estate agents become the best place to go when it is time to buy a house. Because their entire business is built upon this, real estate brokerages are wildly protective of this data, and in most cases do not allow it to be published on other non-MLS sites. This protectionism is not only for individual listings, but is also for a number of property details even on their own websites. Often things like price history, sales history, or even the address are hidden from public view with the hope that you will call a real estate agent who has the magical keys to this data. We don’t agree with this protectionism, and feel that consumer demand for information should take precedence over driving customers to a particular real estate brokerage. Many MLS systems in the US take these policies to a downright silly extent hiding details like listing address until you register with the website, hiding the entire listing until you register, or hiding the listing for only agents to see. A real estate agent’s primary duty is to act in the best interests of their buyer or seller, and quite frankly we think that by restricting data access, real estate companies are putting their own best interests ahead of the consumers they are supposed to represent.

It is important to note, there are a few data fields that should remain “agent confidential”. Information about how to access the home, whether it is vacant, or times that the homeowner will be away are clearly not meant for public consumption. However, we fail to see how restrictions on other details such as price history, past sales, selling commission, etc. are in the best interests of the real estate consumer.

It is also important to note that most MLS are run by private entities, not state or local government. Some are run by real estate companies, others are run by a local association of Realtors, and yet others are owned and operated by their broker membership. (Our Northwest MLS is broker-owned and operated, and is not affiliated with the NAR.) Many of these MLS are for-profit ventures, so not only do their members have a vested interest in protecting the data, the MLS itself doesn’t want to lose their grip on the data, lest they lose their revenue source.

The MLS will go away

What will it take for the MLS stranglehold on real estate listings to go away? There needs to be a viable alternative for home buyers and sellers that does not rely on MLS data. There are two components of this. First, the replacement sites must drive huge numbers of visitors. Without a huge base of home buyers, no seller in their right mind would rely on such a public listing service to sell their home. There are some interesting viable sites that may grow into this role, such as Zillow, Trulia, or potentially even Google. While their visitor traffic is substantial today, it still doesn’t exceed the pull of the thousands of real estate broker sites that rely on MLS data. Second, a listing site must be seen as a reliable data source. Consumers want assurance that a house they see for sale online is actually for sale, and a house that they see as sold is actually sold. There are issues of data quality with MLS websites today, with agents who try to game the system, fudge on property details, or are just lazy about updating their listings. However, there are fairly stringent rules in place for MLS members to gain some level of reliability and accuracy to listing data. Non-MLS listing sites suffer from much larger data quality issues today. A quick perusal of “public” listing sites will show you a listing that sold a year ago still being shown as “for sale”, or the most prevalent problem, which is that a large chunk of homes that are for sale are not even listed on the site at all.

The MLS is here to stay

The other side of this debate says that the MLS system of distributing listing data will remain intact. Real estate brokerages will not willingly give up their control of this data, and there are strong political forces in the industry that will resist changes to how MLS data is distributed. Data quality issues remain if the listing database is controlled by the general public, and these issues are not easily overcome. Lastly, in the face of online data, there remains a clear role for real estate agents to facilitate what is a messy and complicated transaction process. As shepherds of a real estate transaction, these agents are in the best position publish listing data, and their current compensation model relies on MLS participation to guarantee their income. That will be a difficult dynamic to change.

Where are we headed?

All of these local MLS systems are at risk of losing relevancy as more and more real estate data is placed online in. The thousands of local real estate agent websites are also losing relevancy as certain big websites gain huge market share for real estate search. There is clearly consolidation taking place where home buyers use only the biggest, most impressive websites to search for homes, even if their agent is not affiliated with that website. There is also consolidation occurring at the local MLS level, with various MLS organizations combining to cover larger and larger geographic areas. We’ve seen that happening in Washington, and I know that California MLS systems are doing the same. In the case of one of the most progressive MLS organizations, the Houston Association of Realtors (HAR) has actually created a public website highlighting all of their listings, doing away with the need for each individual brokerage to maintain a search website.

The debate over the future of MLS data will ultimately decided by consumers. Consumers will vote with their mouse clicks on how they prefer to search for homes, and the real estate industry will eventually follow. The changes will evolve slowly, as there are many factors in place that resist these changes, but brokerages of the future will not be able to ignore non-MLS websites that attract huge numbers of home shoppers. I personally believe that real estate agents will retain their role as the primary source of listing data, and they will ultimately publish their listings through a variety of MLS and non-MLS channels. However, many real estate agents will abandon efforts to drive home shoppers to search for homes on their websites, and will instead be servicing consumers who prefer a small number of popular, data-rich real estate websites.

Where do you think MLS data is headed in the future?

In the last week, a major controversy has erupted between real estate agents and the National Association of Realtors. The Indianapolis Board of REALTORS has blocked one of the agents from allowing their IDX listing feed from being indexed by Google. You can read more about it on this post from Agent Genius.

What is an “IDX feed” and why does it matter to you as a home seller? IDX stands for “Internet Data eXchange”. It is the technology that real estate brokers use to distribute your listings to other brokers. If you list your property with Broker A, that broker lists your property in their local Multiple Listing Service (MLS) database. The MLS sends out your listings via IDX feed to all other brokers on the local MLS. This is why your listing instantly appears on websites for Broker B, Broker C, Broker D, etc.

The agent in Indianapolis had a website where IDX listing data was being displayed and was being indexed by Google and other search engines. If you searched on Google, any listing in the agent’s IDX feed was appearing in search results, along with details about each property.

The controversy erupted when the local Board of REALTORS categorized Google and other search engines as “web scrapers”. Web scrapers are sites that copy content from other websites in an attempt to generate web traffic and advertising revenues from content that is not their own. They claimed that Google was a “web scraper” and forced this agent to prevent Google from indexing data from the MLS feed.

It may seem like a small technical issue, but home sellers should care a lot about this. It is a policy decision in Indianapolis that will potentially have far-reaching effects nationally. When representing a seller, our primary job is to look out for the best interests of the seller and maximize the marketing exposure for their listings, ultimately reaching the most potential buyers. Search engines like Google are a primary mechanism that home buyers are using to search for information. As a listing agent, I want to make sure that homes reach the broadest possible audience. If this means appearing on my competitors website, of course that is OK. If this means that Google allows a buyer to find my listing on my competitors website, even better!

Brokers with the NAR have implemented this policy to “protect their MLS data”. The idea is that listing agents should be able to “control” their listing data and where it gets advertised. The primary motivation behind this is that they want the clients that a listing generates to come to them, not their competitors. They also want to hold back information from the web so that buyers are forced to call an agent for their “expertise”. This obviously runs counter to the best interests of sellers, which is to provide the maximum market exposure for their listings.

The world has changed and consumers expect to find what they need on the web. It seems that there are many real estate brokers and NAR members who are clinging to “pre-web” notions of their role as information keepers. It looked like the NAR was going to revise this policy at their mid-year meeting, but the issue was referred back to committee for further consideration in November. Here’s hoping that the NAR and its members come to their senses. Home sellers expect their listings to appear everywhere in today’s online world, and antiquated policies from the NAR should not prevent this from happening.

We constantly get a lot of grief from other real estate agents who criticize our commission structure. Since home prices remain relatively high in Seattle, we believe in charging lower real estate commissions than are currently charged here, yet offer the same level of service that you can get from another full-service agent.

The other day we were working with a listing agent on the purchase of a new construction home for our buyer. When we informed her that we are sharing some of our commissions with our buyer in the form of a rebate, she said “Shame on you! Why would you do something so stupid? It is agents like you who are undermining our profession and making it difficult for the rest of us to make a living.” In a recent conversation with a former colleague, one of our agents was called a profanity and told that we are “hurtful to other agents and hurtful to the real estate industry”.

While I realize that commission rates are a contentious issue in our industry, I fail to understand why other agents would need to use profanities or belittle us to argue their position. From our perspective, we simply want the ability to set our own fees based on what we think it takes to provide service and turn a profit. We are able to set our commissions with home sellers directly, but when our client is a home buyer, our compensation has already been set by the home seller in their listing agreement. If we think that the compensation we receive is too high, we simply use a rebate to reduce our compensation and bring it in line with what we would like to charge. We’d prefer that we didn’t have to give a rebate, but until buyers are able to set the compensation for their buyer’s agent, we are stuck. Greg Swann from the Bloodhoundblog has been rallying agents to support this idea of the “divorced real estate commission”, which puts the decision of buyer’s agent compensation in the hands of the buyer and seller’s agent compensation in the hands of the seller, as it should be.

No one faults a consumer for shopping for the lowest insurance rates, cheapest stock trading fees or lower banking fees. We believe that the same sort of competition should exist in the real estate industry and fail to see how this sort of competition can be “hurtful” to other real estate agents. We were founded on the belief that we could provide full-service real estate brokerage for less than what traditional companies charge. It remains to be seen if we are successful, and we will tweak our business model based on results and customer feedback. We also remain committed to professional interaction with other agents, despite the controversy of our business model. We are certainly open to debate about our business model, but wish that the debate could remain professional and not degenerate into name-calling, profanities and berating.

Does it make a difference if your real estate agent is paid a salary or a commission? Will you get a better deal or better service one way or the other? This is a highly contentious question, and I'm sure that other agents will have strong opinions on it.

First, a disclaimer. Our company believes in paying our agents a salary + bonus. The bonus is based on things like our company profitability, agent performance and client satisfaction ratings. Unlike our company, most other brokers pay a straight commission. If you don't sell a home, you don't get paid.

So what makes for a successful agent? Here are the top attributes that I have seen.

1. Marketing and personal network - Highly successful agents have a strong referral network and established marketing program to bring customers in the door.
2. Customer service - Great customer service from the agent makes for happy customers who then refer their friends, families and co-workers.
3. Market knowledge - Knowledge of the local real estate market and recent trends is the sort of expertise you are paying for when you hire an agent. Market knowledge makes for a better negotiator and many times will get you a better deal.
4. Persistence & drive – Closing real estate transactions is a volatile business with lots of ups and downs. One month you’ll close 5 deals and the next month you’ll have 3 deals evaporate on you. A successful agent does need to be able to stay positive through these ups & downs.

I don’t believe that any of these attributes require an agent to be paid only commissions. It is true that an agent who is paid only a commission has a very strong motivation to close deals, and that motivation may improve their negotiation skills or customer service. However, there is a downside to working with agents who desperately need to close that next deal. Some agents will be motivated to close a deal to get paid that month, rather than be motivated to look out for your best interests. Professional agents know to avoid this conflict of interest, but there are plenty out there who are focused on closing a deal before focusing on their clients.

When I talk about salaried agents, the most common response from other agents is “The best agents can make far more money on straight commission, so naturally anyone taking a salary must not be a great agent.” When you calculate all of the expenses involved, the number of agents who make large amounts of money is very, very small. The vast majority of agents make a modest living, even if they are great agents. Many agents also love the rewards of helping people buy and sell homes, but hate not knowing where the next paycheck is coming from.

Our company’s compensation plan tries to address the need for a stable income via a salary, and then rewards our agents for individual and company performance to keep them motivated. There are a number of benefits that we see as well.

1. Focus on the deal – We have a centralized marketing department so agents get to focus 100% of their time on doing what they like to do best, which is closing deals.
2. Consistency – Having agents be employees allows us to offer a consistent service level, which is nearly impossible to maintain with an office of independent contractors.
3. Teamwork – Our agents are motivated (and rewarded) to work as a team. This improves our customer service levels and allows agents to better manage their work-life balance.

When choosing a real estate agent, don’t be afraid to have a frank conversation about how they are compensated. A professional agent will gladly tell you why they choose to be on commission or why they choose to take a salary. No matter what their compensation arrangement, stay focused on what matters the most, which is their customer service skills and market knowledge.

With the recent launch of findwell, we began a journey to try to do something a little different in the real estate industry. We are not the first to go down this path, and we have to give credit to companies like Redfin for leading the way. Our desire to provide full service brokerage with vastly lower commissions, plus the unconventional approach of paying our agents a salary is bound to ruffle a feather or two in the real estate industry.

Controversy about our business model will be inevitable, and we welcome the debate since it will ultimately benefit consumers. However, we don't want the debate to get in the way of the most important part of our business, which is helping folks buy and sell their homes. Despite our philosophical differences, we want to be a valued and respected company in the local real estate market. We wanted to share our commitments to the real estate industry.

1. Our clients come first - Our obligation to our clients always comes first. We will relentlessly protect the interests of our clients and will be tough but fair negotiators on their behalf.
2. Our agents are experienced professionals - We strive to hire experienced, professional agents. Your experience working with a findwell agent on the other side of a transaction will be the same or better than working with other professional agents in your market.  
3. We do our part of the work  -  Our business model does not involve passing agent responsibility to the other agent or to our clients. We get paid our commission to do our half of the work in a transaction.
4. Communication is essential - Communication is what makes for smooth transactions. We strive to be strong communicators throughout a transaction. 
5. We respond to feedback - Agent feedback on listings is an important part of the business. We seek feedback from agents who show our listings, and we return the favor when listing agents call us about our showings.
6. We value teamwork with agents - Closing a transaction is time consuming and requires the cooperation of both agents. If there is a scheduling conflict and we need to show your buyers one of our listings, we are happy to do so. We hope that you will return the favor when we have an occasional conflict and need a showing to occur.
7. Open and respectful - At times, our debates with the real estate industry will be heated. We will be open and honest in our arguments but will always be respectful of those who we are debating.

I take these commitments seriously and require our agents to do the same. If you work with us on a transaction and feel we are not upholding our commitments, I haven't done my job and I want to hear from you.

Recently I attended a meeting to talk about the strategic direction of our local Multiple Listing Service (MLS). Participants at the meeting were Seattle-area designated brokers. A designated broker is the person ultimately responsible for the transactions and oversight of all agents in a real estate office. Oftentimes that person is also an owner of the brokerage and has been in the business for decades. There were about 100 designated brokers in the room, so we had a fairly strong representation of local brokerages in the room.

Part of our discussion centered around how the MLS makes information available to both agents and the general public. Historically agents were the "keepers of real estate information". Prior to the Internet, that was certainly true, and a great deal of the value that agents provided was attributable to their access to information that wasn't accessible to consumers. There have been two major technology waves that now put all of that information in the hands of consumers. The first was when listings appeared online in the 90's and allowed consumers to directly search for homes that are on the market. The second wave was a series of startup companies like Zillow who have made the vast amount of publicly-available real estate records consumable by the general public. Now it is quite easy for consumers to search for homes online, find out data about previous sales, understand neighborhood trends, and even find out the size of mortgages currently on a particular property.

In this particular meeting, I was advocating for the MLS to make even more information available to the public. I was surprised at the backlash and anger it raised in the room when I voiced this comment. Here are some verbatim comments from that day:

• "If we are going to have any control of our customers, we as brokers have to control the data that they see." - Broker A
• "Doctors and lawyers do not have a publicly accessible database for their proprietary information (i.e. LexisNexis), so why should we as real estate brokers allow the public to access our data?" - Broker B
• "Information is power. I need to maintain this power to serve my customers." - Broker C
• "With websites like Zillow and Redfin taking away my edge as a broker, I need the proprietary information in the MLS to maintain my edge in this market." - Broker D

What??? I was stunned that this way of thinking is still prevalent in real estate brokerages. From our perspective, the days of real estate agents hoarding information are over. Online companies will continue their march forward, and more and more data will be freely available to consumers whether real estate agents want it disclosed or not. There is a huge hunger for this data, and allowing easy access makes it that much simpler for consumers to buy and sell homes.

I understand the motivation of brokers. Brokers want to maintain some control of the data so that consumers continue to call them and engage them during the real estate purchase process. We certainly want consumers to call us and use us as a trusted advisor. However, I think that the role of agents is changing rapidly, and many brokers are slow to recognize it. Buying and selling real estate remains complex, and there will always be a role for agents. We simply believe that the role as information provider is rapidly diminishing and agents will need to compete on service and knowledge going forward.

As you can see from our website, we are a real estate brokerage that is doing business a little differently than others. While our company is new, we have been around the real estate business long enough to develop a wish list of things that we would like to see changed.

Some of the items on the list are wishful thinking and will likely never come true. Others are already in the process of changing. Allow us to be idealistic for a moment. We would love to hear if you agree (or disagree).

1. Sellers pay the selling agent commission and buyers pay the buyer's agent commission. - This makes complete sense, doesn't it? But historically sellers have paid one large commission to the selling agent, who splits it in half with the buyer's agent. The result is that buyers get to use the services of their agent, and end up feeling that they are not paying anything for the service. In a perfect world, the seller pays his agent and the buyer pays her agent. That allows for open competition on commissions for both the buying and selling side of the transaction, which is the way it should be structured. However, the likelihood of this changing is slim. It has been a long-established business practice to have the seller pay all of the commissions, and changing it will fundamentally alter the relationship between buyers and buyers' agents. It is easy to see that this would put downward pressure on buyers' agent commissions, so many agents will not willingly want it changed.
2. Real estate data is made available freely to consumers, always - Historically, real estate agents have held on to key pieces of data and restricted what can be shown on MLS listings. This is an easy method to force consumers to contact real estate agents. In the age of the Internet, this no longer makes sense. Our customers should never have to call us if they want to find out a sales history for a property, how many days a property has been on the market, or what day a property has an open house. There is only one data point that should be kept private, which is information that would compromise the security of a home seller. (e.g., security system instructions or times when the owner/seller are not at home) Our local MLS has been making progress here, and certainly the pressure will continue as other sites like Zillow and Trulia continue to push out more and more data that used to be the exclusive realm of the real estate agent.
3. Higher education requirements for real estate agents - It is no secret that the bar to becoming a real estate agent is low. In the state of Washington, you are required to have 60 hours of education and pass an exam. In contrast, it takes 600 hours of training to become a manicurist, 1000 hours of training to become a barber and 1600 hours to become a cosmetologist. Keeping the bar to entry this low leaves us with too many agents, a lack of experienced agents, and too many agents fighting for too few commission dollars. Washington has made some progress recently by increasing educational requirements to 90 hours for a first time agent. This is a good start, but we would like to see even higher requirements. 
4. A single, unified online listing database - Real estate brokers and agents waste a lot of money recreating property search features over and over and over again. Both full service and discount brokerages will likely disagree with me here, as most want to create a web search feature that differentiates them from competitors. From a consumer's perspective, this does not make sense. Wouldn't it be ideal if there was a single, really awesome website where all brokers put their listings and you could easily search? The MLS databases already exist to enable this to happen, and the MLS organizations would be logical candidates to host such a site. However, the MLS is controlled by brokers who want to direct traffic to their own sites. My contention is that brokers should compete on service, market knowledge, and price, not on their ability to create a fancy search website.
5. Transparency in the mortgage industry - Throughout my years of real estate investing, I have had mortgage brokers attempt to rip me off on numerous occasions. I have caught it countless times on my client's HUD statements as well. Mortgages and mortgage pricing are complex and confusing to most people, but I fail to understand why the industry cannot adopt simple consumer-friendly policies. There should never be an opportunity to slam a buyer into a higher interest rate at the last moment (and pocket the proceeds).  If the buyer requests a rate lock, the broker should lock the rate and provide written confirmation. If the borrower does not need more cash to close the loan, the loan is sold at par with no Yield Spread Premium (YSP). If the borrower needs additional cash, the YSP is accurately disclosed and the buyer is made aware of the loan pricing matrix to see how the interest rate has changed to reflect the additional cash received from the lender. Lastly, and most importantly, the mortgage broker discloses how they are paid, and there is no opportunity to randomly change this. Seems simple, doesn't it? Being a mortgage broker is a lot of work and they deserve to be paid for that work. I am simply advocating for tougher consumer protections to be in place.

What changes would you like to see in the real estate industry?