Market glut

Everybody's a real estate agent these days, but few know what they're doing or actually make any money

By Larry Wills

Thousands of job-hungry Nevadans are being caught in a revolving door called real estate sales. They shell out hundreds of dollars for schools and testing, only to find the pot of gold simply isn't there.

But the quest for good jobs keeps more than 11 real estate schools operating at full bore as hundreds of students keep signing up.

"We're inducting 400 a month," Deirdre Felgar, past president of the Greater Las Vegas Association of Realtors, says of new licensees. "And we're losing 300 a month."

There's a glut in the market. The association lists up to 16,000 members in Southern Nevada, while the state Real Estate Division reports about 15,000 of those are active brokers and sales people. Considering 2,500 houses are sold each month in Clark County on average, some sales people may be working less than full time. Others may be considering a new career.

Elaine Wiser, a sales representative at Century 21, calls the turnover at her business very high. "Not even 10 percent of the people stick," she says.

Felgar blames the exodus on unrealistic expectations. "They think they'll do lunch, drive a big car and talk on cell phones. I'd like to see a higher level of education, at least a GED. We need a two-year college degree or an apprenticeship program." Applicants now have no minimum educational requirement.

Prospective agents are required to shell out $600 to $800 for a 90-hour class on the complexities of real estate law and contracts. Then they pay another $100 to take two tests, which few pass the first time.

Patrick Garry, a test proctor for Psychological Services Inc., the state-contracted examiner, calls the failure rate appalling. "Only one in 20 pass the test the first time. I've seen people fail the test 30 times. There are people who are mature and have graduate degrees who fail."

Applicants cough up another $100 for each retesting. Garry blames the failure rate on inconsistent standards in the real estate schools. "It depends on what school you went to," he says.

But students are not given information on each school's success rate, and passing the exams becomes the luck of the draw. "I studied really hard," Wiser recalls. "When I took my test, I passed it by the skin of my teeth." Others were not so lucky. One friend of hers took the exam seven times before passing, a bonanza for testing companies. "They really make a lot of money on those people."

Sales agent Andy Salas says students often are blindsided by the exams. "It's not an easy test. It's a common thing not to pass it the first time."

If that weren't bad enough, Wiser says the exam was unrealistic. "You don't know how to do real estate when you get out of school."

Gary Coles, another past president of the association, agrees. "The tests have very little correlation with the knowledge required. There are a lot of trick questions and a lot of good people drop out. "

Felgar calls the whole process disconnected from the industry. "The tests are absolutely out of touch. The last time it was rewritten was in the early 1990s. In three weeks you cannot teach someone what they need to know." Many students can't handle the math needed, such as calculating percentages. "If they flunk up to 15 times, they're not meant to be realtors," Felgar says.

Coles also worries that the schools are painting a rosy picture of the business. "It would be nice to give people the idea of how tough this business is to get into." Both Coles and Felgar conduct in-house training for their new sales agents.

Part of the problem is inconsistencies in the real estate schools. "There aren't minimum standards," Felgar says. "Half the staff in real estate schools are teaching things not applicable to real life. They teach them how to pass the test. They don't teach them real estate."

And the stakes of the profession are high, dealing with someone's life-long investment--his home--and how to recognize when a potential seller should not unload his property. Along with that come legal liabilities and maintaining ethics standards. "I am so dead set against new licensees placed in situations where they can damage the public," Felgar says.

And she believes in-house training is impractical for many brokers. "We have brokers who have 1,000 agents. How can a broker teach 1,000 people?"

Even when students pass the exams, they get another shock. "Ten percent of the people make 90 percent of the commissions," Felgar says. "Somebody is not making any money. After five or six months, they realize this is not for me."

Brett Greenwood, a spokesman for PSI, says the testing is in line with Nevada Real Estate Commission objectives. "They control the curriculum," he says. He calls Nevada standards akin to those in the 14 other states where PSI conducts tests.

"Candidates have the perspective that we're deliberately trying to block them," Greenwood says. "But we understand the seriousness of what we do here."

Matt Diorio, education and information officer at the state Real Estate Division, says there is an expectation that training will continue after students assume sales positions and continuing education is needed to renew licenses. The first license lasts only one year and after that licenses cover two-year periods.

"Brokers have an obligation to continue the training," Diorio says. And he says the Real Estate Commission now requires post-licensing training. "It will be up to 30 hours in specific areas. It should go a long way in teaching practical aspects. We want to make education more meaningful."

Other improvements may be on the horizon, including a new state exam. "There are other issues that need to be addressed," Diorio says. "It's clear when we hear from consumers that training might be needed in ethics instruction." One such session is scheduled for late April.

He concedes that new sales people are not required to have much schooling. "There are pretty low entry-level requirements. But the brokers have to have the equivalent of an associate's degree."

Only brokers are permitted to handle sales on their own. Sale representatives must be supervised by brokers.

Felgar calls the state process "so overwhelmed it's unbelievable" with the sheer number of licenses. She says the Legislature needs to step in. She's calling for tougher entrance requirements and a more realistic education program. "The Legislature needs to act. The schools are not going to tell them the truth unless they're made to. New people don't have a chance."