The One Change That Would Dramatically Improve the Real Estate Industry

There is a dirty little secret in the residential real estate industry. Agents know it, brokers know it, and even homer owners sense it. What is the secret? There are too many damn real estate agents.


There are about one million full-time, active real estate agents in the United States. Now, since there are about five million homes sold every year, that equates to around five homes sold per year per agent, on average. I doubt any real estate agents outside of Beverly Hills or Manhattan could make a living selling five homes a year.

Why are there so many real estate agents? Two reasons: low barriers to entry and the myth of instant riches.

What does it take to become a real estate agent? Not much. Do you need a college degree? Nope. Do you need some minimum work experience in the industry? Nope. Do you need the thousands of dollars it would normally require to start your own business? Nope. (By the way, when you become a real estate agent you are in fact starting you own business.) The only requirement to becoming a real estate agent is you must pass a test. And judging by the number of people who have passed the test, I think is fair to say that it is not an overly challenging test. Certainly nothing along the lines of the bar exam or the CPA exam. And probably not as difficult as the SAT test. Anybody who can pass this nominal test, becomes a real estate agent. That is a pretty low barrier to entry.

This explains why there are so many real estate agents. What other business opportunity can you start with little training, little money and offers the promise of instant and almost unlimited riches?

If the real estate industry really wanted to improve how it does business and how it is perceived, it would eliminate both these sources of agent oversupply. And how could it do that? The same way plumbers and electricians do it: with a mandatory apprenticeship.

During this period, the real estate apprentice would serve under the mentorship of a senior agent, really learning the business, but not making a lot of money. The result would be an industry with fewer, but more highly trained, agents. And more importantly, these would be people who really wanted to be real estate agents.

How many current real estate agents can honestly say they would have become a real estate agent if they had to serve a two year apprenticeship, knowing full well there was no chance of making the big bucks during that time?

I doubt this change will ever happen. Since most real estate agents pay some sort of fee to their broker, even if they sell one home or no homes, they still represent a source of income for the broker, who is motivated to have as many agents working for them as possible (i.e., masses of asses). So, until the brokers change the way they do business, the dirty little secret will persist.

To see how ReaListing intends to reduce the surplus of real estate agents, click here.


To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.