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National Association of Realtors Warns of Incompetence

Updated on June 26, 2015

Real estate customers could be at risk without improvements

The D.C.-based National Association of Realtors issued a searing report in June 2015 that criticized the real estate industry’s professionalism, commissions and leadership.

The DANGER report created suspicions that a crackdown on real estate agents’ ethics and training might follow soon.

A common challenge for brokerages is trying to comply with regulatory policies they have overlooked but that are aggressively enforced by real estate commissions, the report said. It was summarized by The Legal Forum at www.legal-forum.net.

Among the policies are the Consumer Financial Protection Bureau’s anti-kickback and referral fee rules. The rules restrict brokers’ financial arrangements with title companies, lenders and other industry associates.

Most brokerage companies are either ignorant of the fact or believe they are in compliance, the DANGER report says. Most [brokers] are likely in violation already.

DANGER stands for Definitive Analysis of Negative Game Changers Emerging in Real Estate. The NAR commissioned the 160-page study to identify challenges the industry faces. It can be found on the Internet at www.dangerreport.com.

Surveys of 7,899 realtors led to devastating conclusions in the DANGER report:

(1) The real estate industry is saddled with a large number of part-time, untrained, unethical and/or incompetent agents,” the report said. “This knowledge gap threatens the credibility of the industry.”

(2) The ease of becoming a realtor has contributed to incompetence. Many professions require college degrees or at least hundreds of hours of training but realtors average only 70 hours of training to get licenses.

(3) The best real estate agents increasingly understand that the not-so-good agents are bringing the entire industry down, the DANGER report said. However, there are no meaningful educational initiatives on the table to raise the national bar.

(4) Consumers stung by high housing costs are creating pressure on the real estate industry to reduce commissions below the 6 percent average.

(5) The real estate industry is being transformed by a growing new generation of brokers and agents . . . exploring . . . new business models and pricing models that will most likely become commonplace in the next 5 to 10 years, the report said. It referred to discount brokers, such as Redfin, using new technologies to make discounted commissions more available to clients.

The implication of the report for consumers is that they should carefully check the qualifications of their real estate agents.

The National Association of Realtors Calls for Industry Improvements

A National Association of Realtors report calls into question the professionalism of real estate agents.
A National Association of Realtors report calls into question the professionalism of real estate agents. | Source

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    • Tom Ramstack profile imageAUTHOR

      Tom Ramstack 

      2 years ago from Washington, D.C.

      That's a problem with any industry. The state real estate commissions try to do their best to monitor the situation but there's only so much they can do. Unfortunately, there's always an element of buyer beware when you hire a real estate agent.

    • profile image

      Jan 

      2 years ago

      I'm on my second agent. The first tried to frighten me out of my house and wanted me to sell cheap so she could make a quick deal. This new one is only marketing to her ethnic group or chasing away anyone with an agent. She wants to be the sole agent and collect all of the 5% commission herself. It's a nightmare for the homeowner. (seller?)Add Your Comment...

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