This quarter’s California Bureau of Real Estate (CalBRE) Real Estate Bulletin focuses on:
- how to improve the quality of real estate practice through more stringent licensing standards;
- common mistakes made in trust fund accounting; and
- the best way to represent your sellers and buyers on the sale of common interest developments (CIDs).
Raising the bar for real estate licensees
Before we start: CalBRE has not announced any changes to the licensing or State Exam requirements for sales agents or brokers.
However, Real Estate Commissioner Wayne Bell does respond to claims made by the real estate trade union that the low bar for real estate licensure has led to an increasing numbers of licensees who provide poor real estate services.
Here’s one of those rare times we actually agree with the trade union: the bar for entry into the professional practice of real estate is extremely low. This is particularly concerning in light of the money at stake in most real estate transactions. For the majority of buyers, the purchase of a home will be the largest financial decision of their lives — and California brokers and agents need to be held to the highest standard of quality possible to maintain trust in the industry.
The trade union suggests harder State Exams and increased licensing education as solutions.
As Commissioner Bell points out, the exams are plenty challenging as they are: on average, only 42-45% of broker applicants and 49-60% of sales agent applicants pass the State Exam. (Need help passing? Check out our State Exam Prep book and our affiliate’s live crash course. We’re also hard at work on a brand spanking new online video crash course, to be released in a couple months!)
And while we’d love to sell you more licensing courses, the education is only half of the recipe for a great agent.
The other half is training. We’ve talked about the need for state-mandated agent training for years. Our suggestion? A probationary trainee status, similar to the one imposed on new appraisers by the Office of Real Estate Appraisers (OREA). See the full write-up on this idea here.
But we know you readers — most of you aren’t fond of the idea of increased government regulation. Well, good news: improving the industry isn’t solely in the hands of regulators and pundits. After all, today’s top agents learned to provide great service in the current system. There’s no reason new agents can’t learn in the same system.
Successful brokerages know the secret to a solid real estate business is a team of well trained licensees. Training programs — whether private one-on-one mentorships or third-party sales training — are crucial to turning a new real estate agent into a productive and compliant member of the industry.
Suggestions Commissioner Bell provided for enhancing in-house licensee training include:
- mentorships;
- web-based video training;
- transactional and customer service training; and
- practical checklists.
In addition to providing free RPI (Realty Publications, Inc.) real estate forms, marketing flyers and critical up-to-date information on the California real estate market, we’d like to know about the training products we can help develop for you.
We’re already developing some practical training videos for the proper use of RPI real estate forms, set to be released in late 2016.
And, as always, we’re open to any products you’d like us to develop, or topics you’d like us to write about – just email editorial@firsttuesday.us with your requests.
Trust fund handling
Dozens of licensees get nailed on trust fund violations each year — don’t be one of them!
The Spring 2016 Bulletin also reminds you that trust fund handling and reconciliation requirements are not met simply by purchasing accounting software, then going on autopilot. Accordingly, blaming your fancy accounting software for improper handling of trust funds won’t fly if you’re audited by the CalBRE and need to defend your license against a trust fund handling violation.
Here’s an article on proper trust fund handling to give you a quick refresher. CalBRE also offers a downloadable PowerPoint presentation on how to properly complete your trust fund account reconciliations.
The Trust Funds course is also included in all first tuesday 45-hour continuing education packages.
Do your due diligence on CIDs…or else!
Both buyer’s and seller’s agents need to apply an extra layer of diligence when dealing with a transaction involving a common interest development (CID).
As CalBRE rightly points out, the failure to provide a very specific list of documents can expose a seller and their agent to liability. Likewise, a buyer may find themselves in a litigious mood if they fail to review the CID restrictions before purchasing a property, and later find out something which significantly hampers their enjoyment or intended use of the property (called material facts, in industry parlance).
To best fulfill your fiduciary to your seller clients, make sure your sellers timely provide the correct documents to prospective buyers before a purchase agreement is entered into. The CalBRE provides a short list of mandatory documents on the recent bulletin.
Alternatively, for your buyer clients, make sure you confirm your buyers have received all the CID-specific documents required of the sellers, and counsel them to read and understand the documents. Important restrictions will apply!
Here’s the latest about CIDs on the magazine.
Other notes
The Spring 2016 CalBRE Real Estate Bulletin also includes a review of the burden and degree of proof required in the administrative hearing process and a digest of 2015 laws affecting real estate.
To see our list and analysis of these new laws, see our list of Legislative Watches here.
Check out the Spring 2016 CalBRE Bulletin here.
See you in a few months!