Home sales have inched up since the housing bust in 2007, but that doesn’t mean there are more agents to sell them. Actually, there are fewer. And the downturn isn’t entirely to blame.
The number of agents in Indiana plunged 16.5 percent in 2014, thanks to a state law that took effect in July 2014 requiring agents to log more hours of education both to get and to keep their licenses.
Housing sales, meanwhile, inched up—to 75,062 from the 57,942 low in 2010, according to the Indiana Association of Realtors.
The upshot of fewer agents is a more professional and better-trained stable of agents, said Karl Berron, CEO of the Indiana Association of Realtors.
“With the old system, we heard a lot of complaints that it was too easy to hang your own shingle and start your own company,” he said. “We were also coming out of a pretty difficult time and, frankly, there were some actions [by agents and appraisers] that could have been done better.”
The number of licensed real estate agents and commercial brokers in Indiana totaled 38,711 at the end of 2013—six months before the law took effect. By the end of last year, the number had dropped to a 10-year low of 32,336, according to the Indiana Professional Licensing Agency.
The agency doesn’t distinguish between residential real estate agents and commercial brokers when tallying its number. But the agency and those in the residential real estate industry attribute much of the decline to the new law.
“Some of those people who were more hobbyists probably dropped out,” said Nick Goodwin, PLA’s director of communication and legislative affairs. “They didn’t see the benefit of paying the additional money. But the flip side is that you have a higher standard of professionals.”
Indeed, most of those who relinquished their licenses likely were part-timers and seasoned veterans approaching retirement who decided their licenses weren’t worth the extra time and money to keep them, real estate experts said.
On the same level
Under the new law, residential real estate agents no longer earn a sales associate license but instead receive a broker license, essentially putting them on par with a commercial broker in terms of the amount of training they receive and what properties they can sell.
“There is no distinction between residential and commercial,” Goodwin said. “If you’re licensed, you can sell both.”
Training hours required for licensure increased from 60 to 90. The law was passed in 2012, which gave existing real estate agents two years to obtain their 30 additional hours. For agents who might have let their licenses expire, they’ll need to start over and earn all 90 hours if they want to re-enter the profession.
The amount of required continuing education also increased—from 16 hours every two years to 36 hours every three years.
Indiana is not alone in its attempts to strengthen real estate licensing requirements. Many states now require at least 90 hours of training with some even wanting more than 100 hours. In Ohio, entrants into the real estate field must complete 120 hours of coursework and, in Texas, 210 hours.
Cost for the 90-hour course offered by 30 schools ranges from $250 to $400. Entrants into the field also must pass a state exam to become licensed.
Much of the expense comes later, said Stacy Gillen, director of operations for the Indiana division of RE/MAX Midwest. Local agents pay annual dues of up to $1,500 to the Metropolitan Indianapolis Board of Realtors, she said. Agents can spend just as much on top of that marketing themselves.
The extra burden of completing more coursework might not have been worth the expense for some who didn’t sell many homes, Gillen said.
“Why would you spend $3,000 a year to be in something you’re not really in?” she said. “The serious real estate professional—the ones that consider it a career—they stayed.”
The new coursework is also more targeted toward certain subjects and not as broad as it once was.
Jim Litten, president of F.C. Tucker Co., the metro area’s largest agency based on value of homes sold, favors the change in continuing education.
“The intent was to make these courses appropriate to increase the professionalism of the agents in the business,” he said. “In reality, over the years, those courses became about anything.”
Despite showing signs of a recovery, the housing market remains brittle. Locally through July, 19,000 home sales were pending—an increase of 8.9 percent compared with the first seven months of 2014, F.C. Tucker statistics show. But home-sale agreements slipped 4.5 percent in July and have fallen four of the past five months compared with the same time last year.
Whether the tepid numbers scare prospects away from the occupation remains to be seen. But the number of licensees already is starting to rebound. Through the first seven months of 2015, the number inched up 2.9 percent, to 33,273. That’s still well below a 10-year high of 40,744 reached in 2007 before the collapse of the housing market.
The slight uptick isn’t enough to convince Gillen at RE/MAX that selling residential real estate will become the hot new career.
“I still think you’re going to see the numbers drop over the next couple of years,” she said.•