I’ll Title This Article Before it Runs (and other Deadline Disasters)
Real estate is a very time-sensitive business. From setting up the showings to closing the contract an agent needs to be able to plan ahead, use time as a negotiation asset, and track their clients' deadlines. Failure to do so has all kinds of potential to cause you harm, cost you money or even lose you the entire deal.
They tried to warn us.
In January of 2010 the state of Illinois decided that 45 hours of lecture-based training was not enough for someone who's selling your home or helping you to buy a home. For years that had been the minimum entry level training required for an Illinois agent to get their license. Effective May 1, 2012, the amount of training required has doubled to 90 hours, a mandatory interactive portion was added, and every real estate agent, from the smallest underdog to the biggest broker in the state, had to get a new license. In order to get the new license, they had to take some continuing education classes and pass an exam. It's a 20 hour commitment at most - half a work week.
Normally licenses expire every 2 years on April 30. Half of the agents' licenses expire in odd-numbered years and the other half expire in even-numbered years. Agents who have not taken their required education credits and paid the renewal fee get placed "on hold" and have to pay a penalty for renewing late. In most renewal cycles, continuing education classes in April are jam packed with agents who have waited until the last minute. This time around, because of the new laws, every Illinois agent's license expired on the same day - April 30, 2012. If they don't take care of things they will lose the ability to practice real estate altogether. They will need to start all over again and take the 90 hour "Real Estate 101" classes. The stakes are much higher, the chances of getting a seat in a class much lower.
Every real estate agent in Illinois has known this is coming for two and a half years. We have all been bombarded by mailings, email alerts, phone calls and warnings from our office to take care of this important issue. We have all been made aware that if we don't get a new license by May 1, we can no longer practice real estate and it will be very expensive in terms of time and money to resume business as usual.
30% of Agents Listened.
I'm writing this in early April to run on May 2, as I know that early May is always a mess. I have already completed the transition - in fact, I was finished with my continuing education credits by December 14, 2011 and had renewed my license by early February. Many agents will talk in their bios about how they "maintain awareness of current real estate trends through ongoing education." They're talking about continuing education classes here. I don't even mention it in my bio as I think this should be a given for professional in any industry. For all that agents claim to do the expected training, only 30% of my compadres have taken the necessary classes that will allow them to keep practicing real estate after May 1, 2012. First off, this means that it might well have been 2-4 years since your agent last had a refresher in the laws and restrictions that govern our business. But beyond that, let's talk about how a last-minute agent can harm your attempt to buy, rent or sell a home.
Failure to Plan = Failure to Launch
An agent who cannot plan ahead and use time in their favor could also cost you money, your reputation, or even the house you wanted to buy.
- 2 day advance notice to the current tenant is required to show occupied rental property. If an agent fails to give notice, the Tenant can sue the Landlord. The Landlord would have to pay 2x the deposit to the tenant plus attorney fees. The Tenant has a right to call the cops on any agent who shows with less than 2 days notice.
- There's a big difference between a showing tour where each location is planned on a map to minimize travel distance, and a tour that has you bouncing all over the city. An agent who can properly plan a tour can save you 50% in travel costs over the span of your home search.
- Once your contract is accepted, your agent is responsible for one thing - tracking the deadlines that the rest of your support team (attorneys, lenders, inspectors, appraisers, surveyors, contractors, etc) must follow in order to get you to the closing table on time. One missed deadline could mean that the entire contract is called off - or the inability to get out of a bad deal without a court battle.
- That awkward moment when you show up with your agent at 2:05pm for an open house that ended at 2pm. Don't let this happen to you.
- Buyer's agents who try to book same-day showings will frequently get shut down by the listing agents, especially when dealing with high-end, occupied homes. These homes need time to prepare, dogs need to be kenneled, children need to be sent elsewhere. If the listing agent decides that the buyer's agent is too much of a pain, it could result in you not getting in to see the property of your choice at all!
- Buyers, are you closing on January 31? You'll pay 3 months of property taxes at closing. Close on February 1? You'll have to pay 8 months of property taxes instead! (The same thing happens between July 31 and August 1.) Naturally there is a rush to close on the last day of the month. An agent who can't plan can seriously damage your cash flow.
- How about the listing agent who completely fills their weekend with buyer tours and leaves no room to show their own listings? One of those balls is going to get dropped. Don't let it be your house.
- Time is a major negotiating factor in both sales contracts and rental deals. Letting a buyer or seller sit on an offer for even a day can mean the difference between a good price and a GREAT price. In Chicago, with its abrupt change of market pace from summer to autumn, an October 1 lease start can mean a 10% higher net rent over November 1. A 12 month lease vs an 18 month lease could mean the difference between a vacancy in peak season or a vacancy in the dead of winter.
- Of course, there's also this guy from Monday's blog. Don't wind up like him.
Until the state of Illinois license lookup website catches up with the flood of transition requests there will be no way for a consumer to look up an agent's license status online. What I recommend in the meantime is that if you're working with an agent, ask to see a copy of their "pocket card." If they have it on them and it's valid through 2013 or 2014, then you're good to go. If not, then chances are good that they either waited until the last minute to renew, or worse, they're working on an expired license. Either way, consider how that kind of failure to plan ahead could hurt your bank account before you sign on to be their client.