This week I received an e-mail from the Virginia Real Estate Board that, among other things, advised the schools that the requirement for CE and PLE instructors have changed. This is a good start, but we must do better…

Up to this point, schools submitted their classes to VREB for credit and included an instructor’s name and bio. There wasn’t much more required than a loose idea that the instructor could teach the topic. The new requirements state that the instructor must have three years experience in their area of instruction, letters of reference, etc… I am a fan of high quality instruction, but I am not sure that we’re attacking the issue of practitioner competency from the correct angle. I fully agree that it starts with the instructor. Not everyone who is teaching is effective. These requirements, although a bit cumbersome, will help.

Beneficial Changes?

There are other changes going on this year as well. Two significant changes are coming up as of July 1, 2008. The first is that licensed Brokers (Associate, Supervising and Principals) will be required to earn eight additional hours, on top of the limited services two hour requirements and the 16 hours of Continued Education. It’s obviously a good move to require those who carry the title of broker to get that higher level of training that most consumers perceive the broker as having. I’ve been surprised at the number of Associate Brokers who have balked at this requirement. I don’t even know what to say about that, other than the fact that it’s necessary and it’s only one extra day out of the 730 that you have between license renewals.

The other significant change is that VAR and VREB worked together to have legislation passed to require agents licensed after July 1, 2008 to obtain 30 hours of Post Licensing credit in the first 12 months of licensing. The theory, as I understand it, is that there are obvious failings in the pre-license program, as the 60 hour requirement does not typically carry information about the practical practice of real estate. There is so much theory and principle that things such as drafting a contract, short sales and marketing simply don’t find their way into the training.

I fully support the idea that the 30 hours should be “everything that we should have learned in pre-licensing and did not” but I think we’re going to see the nature of unintended consequences. Having sat as an association staffer now for the past few months and getting many daily phone calls from agents who find the relicensing program complicated, I have found that many (most) are taking the path of least resistance and simply taking an all inclusive on-line program. Many of these agents are very honest that the 30 hours can be gotten in 10 hours and they can do it while watching television.

Online Education Isn’t Cutting It

I’ve ventured through some of these online programs, and they can be done in far less time, than the “learner” is given credit for. At some point I have to ask: “Why do we even bother requiring CE or PL hours?” Almost all adult learning studies I’ve reviewed show that online learners have a much lower retention rate than those who learn in a classroom. The relicensing process for many is too complicated and frustrating to keep track of and they feel that there is no other option but these online classes. To compel the issue even further, most schools only have a limited number of these classes approved and don’t offer them often enough.

Learners have to take 30 hours, with 15 of them being in mandatory topics and the other 15 in a variety of electives. No one can get credit for taking any one class more than once. So, if I take “Short Sales” and get my three hours, but feel I need to take it again, I will not get an additional three hours, unless I take that topic through a different school.

How To Gauge The Retention

However, even aside all these issues, my real concern is that we never establish a mechanism by which to gauge the retention of the student. How do we know that the student really learned anything? What’s the point of requiring the student to meet certain criteria, if we’re not evaluating the student to see if they retained the information? I know that by suggesting that written evaluations be implemented I will become the least favorite person here, but really, how can we otherwise gauge our effectiveness? If the student is required to pass a written evaluation, then the instructor will be sure to deliver that material better and the learner will pay more attention.

Here are my suggestions:

First, we should consider requiring all mandatory PLE and CE classes be in a classroom setting, with a written evaluation. (Otherwise, what’s to stop an agent from reading a romance novel or comic book for the three hours I am supposed to be taking ethics?)

Second, electives can be taken in a classroom or online, but if they are taken online than it should require some mechanism to ensure that the learner is interacting at intervals that equal the clock time of the program. So, maybe you have to have mouse or keyboard activity every five minutes for the three hours, or you have to start all over. The technology is out there. All online training should require written evaluations at the end of the course.

Third, licensing and relicensing should be more relevant to the discipline of the practitioner. I am curious to see if anyone else thinks that Commercial, Residential and Property Management should have different licenses, with separate pre-licensing and separate post licensing requirements. There are a lot of different litigious pitfalls involved with these various types of practice and it seems that most all of pre-licensing and post licensing programs are directed to residential.

There are folks smarter than I am looking at the issues and overhauling as we go, but I just don’t feel our current structure is as effective as it can be. I am sure that there are some solid objections to these concerns, but if we’re all interested in improving the competency of agents than we need to find a better way to proceed in the future.

WE’RE TAKING ON simple, routine, non-controversial topics this time, involving the Attorney General, the Real Estate and Appraiser boards, foreclosures, fraud – things like that.Support the troops

Q. Have you heard from the Attorney General lately?

A. I got a nice call a couple of weeks ago, thanks. Actually, an attorney from the Coast Guard called and asked me to remind all REALTORS® that regardless of what your landlord’s lease provides, a landlord subject to the Residential Landlord Tenant Act may not charge members of the military for early termination of their leases, if termination is done in accordance with the Act. Mitigation is no longer permitted, even if the lease so provides. (The Act was amended a year or two ago, but old leases may still be in effect.) According to the Coast Guard, the AG is watching Virginia property managers and landlords closely, so remember that whatever your lease says, mitigation is no longer permitted, and you may not charge active duty tenants for early termination. Please be sure that all new leases are consistent with the Act as amended.

No licensed agent? no open house

Q. May my unlicensed assistant conduct open houses if she merely permits access and hands out general information about the property and does not answer any questions about the house or give advice to the visitors?

A. There are two theories about how unlicensed assistants can legally do open houses in Virginia. Unfortunately, neither works. The Real Estate Board (REB) has long considered holding open houses to be the practice of real estate, and thus appropriate only for licensees, regardless of whatever is said or done at the open house. When the subject was raised again recently, I asked REB to revisit the issue and let us know whether its position had changed. The board confirmed its long-standing position that only licensees may hold houses open. I realize there has been quite a bit of information disseminated lately to the opposite effect, in articles, on blogs, in continuing education courses and elsewhere. In many cases, this information deals with the law in other states where the law may be different. In Virginia, however, at least in the opinion of the REB, this practice requires a license.

Pay up…dead or alive (or retired)

Q. An agent left my firm with several deals pending, but was not affiliated with another firm by the time the deals closed. If the agent’s license is inactive, may I legally pay him the commission he is owed on these deals as they close? If he has affiliated with a new firm, must I pay the commission to his new broker?

A. There is a great deal of confusion on this matter, so let’s clear it up once and for all. The only relevant issue is whether the agent was actively licensed at the time he performed the act for which the commission is due (obtaining the listing or buyer agency relationship, obtaining a purchase contract or lease, or whatever it is that gives rise to the entitlement to a commission). His license status at the time of payment is irrelevant. So if, for example, he obtains a listing, and it goes under contract while he is at your firm, you may pay him at closing whatever his status. The verity of this can best be illustrated with the following example. Suppose a commercial agent obtains a ten-year lease with a ten-year renewal, on which the firm is to be paid its commission monthly as rent is received from the tenant. Can we really require the agent to remain actively licensed for the next 20 years to receive his monthly commission split? What if he died during the term of the lease? Obviously, we can’t outlaw retirement or death for this fellow, but may pay him, or his estate, or his designee, whatever his license status at the time of payment. It is license status at the time of his actions giving rise to the entitlement that matters, not what he decides to do thereafter. He can go to Tahiti and paint the natives while basking like a lizard on a rock, or he can keep working. You can pay him either way. By the way, if he joins another firm, you pay him, not his new broker. Your debt is to him, and the new firm has no entitlement to any of his fee. The broker of the firm receiving the commission on the deal is the broker the REB regulations are speaking of when they require all fees to be received through the firm’s broker.

An exemption…with exception

Q. Do foreclosing lenders have to provide disclosure statements, Property owners Association (PoA) packets or condominium resale certificates to buyers who buy at the foreclosure?

A. No. The relevant statutes exempt foreclosing lenders and their trustees from these requirements. As to REO, the lender is likewise exempt from the requirements of the Residential Property Disclosure Act, and thus does not have to provide a disclosure statement. Lenders selling REO must provide the POA packet and the condominium resale certificate, but buyers may waive the right to receive the condominium resale certificate, although they may not waive the right to receive the POA packet. Got that? I knew you would. Be very careful about language in REO contracts attempting to affect a waiver as to these documents.

These provisions often say something like “to the fullest extent allowed by law” buyer waives the right to receive the information, but Virginia law is clear that contract waiver language is unenforceable against buyers of POA property. The Condominium Act has no such prohibition against waiver, so I assume the right to receive the resale certificate can be waived by contract.