There’s a Problem in Commercial Real Estate No One’s Talking About
You would expect that your dentist went to medical school, or that your kid’s teacher went to teacher’s college, and I'm sure you would ensure your financial advisor at least has a BA in Economics—but what about your commercial real estate agent?
Selection Criteria for Commercial Real Estate Agents
For years, the primary real estate regulatory organizations, RECO and CREA, have spent a plethora of marketing dollars to convince the public that the real estate industry has evolved from a sales-based service to a consultative profession. While this may be the case for a small percentage of high-performing agents, it is not indicative of the industry at large due chiefly to the fact that RECO, CREA, and all the other various real estate boards have created a self-servicing system.
Unlike most recognized professions, the criteria for becoming a real estate agent are decidedly un-stringent. Achieving a real estate license is a relatively simple task, after which no apprenticeship or articling is required; an agent can start working as soon as a brokerage hires them. This relatively low barrier to entry floods the industry with less than desirable agents, tainting the profession as a whole.
The solution seems simple enough—raise the educational and training requirements to increase barriers to entry. This, however, would drastically reduce the amount of practising real estate agents and organizations such as RECO, CREA, OREA and TREB would experience significant revenue drops due to decreased membership. Since these organizations control licensing for the industry, it is unlikely that any real change will ever be enacted.
How to Select a Competent Commercial Real Estate Agent
What’s the best thing consumers can do to protect themselves against choosing the wrong agent? Vet prospective agents very carefully. Make sure you ask the right questions and choose based on the agent, not the company they work for.
Our blog post, Why the Agent Promising the Best Results is Often the Worst Choice, has lots of great tips on how to choose a competent commercial real estate and an excellent anecdote on how selecting the wrong agent can cost you a lot of money.