Cards on the table. I was born in 1945, first licensed in real estate in British Columbia in 1970, qualified in the ’70s as a branch manager, as an agent or nominee as we were then called in the ’80s and I continue to be licensed under the current nomenclature as a managing broker with 70 licensees under my supervision.
So I’ve been around. As the old joke goes, if I’d known I was going to live this long, I would have taken better care of myself.
In early 2016, at the request of the Real Estate Council of B.C., the former Superintendent of Real Estate convened the Independent Advisory Group (IAG) to address matters of concern within the real estate industry. Since June of that year – when the IAG chiselled its recommendations into stone only to have God take a brief look, grab the tablets and shoot the messengers – the real estate industry has been waiting for the high heeled pumps to drop.
The government shortly after accepted all recommendations and is now running with them under the guidance of a new Superintendent of Real Estate and the Real Estate Council (REC). While the current focus is Recommendation No. 1 – embedding a Code of Ethics in our legislation and No. 2 – eliminating dual agency, managing brokers should be eyeing those few bullet points a little way down the list. Bullets that will, if implemented, launch them into a higher pay grade, sadly without a commensurate increase. Except for an increase in risk. They include:
- 7 – reviewing and approving Disclosures of Interest in Trade by licensees before a sale is entered into.
- 9 – retaining all offers received on any transaction and at some future date creating a multiple offer registry accessible to buyers.
- 10 – deciphering how the application by the REC of “more stringent suitability assessment criteria” may affect the numbers of prospective licensees.
- 11 – reporting to the REC all misconduct and receiving misconduct reports from licensees.
- 16 – facing increased misconduct penalties up to $250,000 per contravention and increased administrative penalties up to $50,000 per contravention.
- 22 – working under “a maximum ratio of licensees per supervising managing broker”.
- 24 – even more record keeping requirements.
I feel older just reading the list. Speaking of age, I’ve been discussing my eventual retirement with my boss and I think 75 is a nice number to work with, ending a career at 50 years. He – my real estate boss – has no idea where his next managing broker is coming from. Although qualified by license, his skill is sales and quite frankly, he couldn’t live his lifestyle on a managing broker’s compensation, as generous as that may be.
But I’m lucky. My management career – award winning in several categories – has mostly been fully salaried. In my opinion, competing with salespeople for listings and sales inevitably creates conflict and impedes recruiting. Many business models offer salaries to managing brokers that force them to sell. Small offices can’t afford a non-selling manager.
And that’s the other problem – thin margins in the brokerage model. Slim profitability, licensees who can and do leave without notice, escalating costs and the increased financial liability looming from the regulator. What’s not to like about this career path?
Who cares? Well, the real estate education industry for one. The University of B.C. and the British Columbia Real Estate Association have significant investments in pre-licensing and ongoing education for salespersons and managing brokers. While the industry entry door for sales is broadly paved and banked for high speed, the career path for their supervisors is cobwebbed over, cluttered with warning signs and hampered by doomsayers hovering over a smoking cauldron fuelled by low pay and financial liability.
Who should care? The public – in the person of the new Superintendent and his Real Estate Council.
Why? Demographics. In the overall population of B.C., the age group 51 -70 accounts for about 27 per cent of the total. (Males vs. females break down within half a percentage point.) Based on data received from the REC as recently as March 24, 2017, 75 per cent of the managing brokers of B.C. are over 50! And 75 per cent of managing brokers are male. (No wonder women live longer; they get out of the high stress jobs!)
So, we have a comparatively high, older population of managing brokers, aging in place and like the Dead Sea, with relatively little fresh water being added. Not my problem, sales associates say. Or is it?
How many inmates – sorry – salespeople are being supervised by the older cohort? This is where it gets interesting. Sixty-eight per cent of licensees are supervised by managing brokers aged 51 – 70. To put it another way, when 10 Realtors tour a listing, seven of them can probably outrun their managing broker.
And for a final stat: 10 per cent of all licensees in the province, 2,696 to be precise, have a managing broker over 70. The industry should be recognized for its contribution to employing the elderly, proving there is life after a stint as a Walmart greeter. As proof, 249 licensees are supervised by octogenarians.
So when the other shoe drops and managing brokers assess their circumstances, particularly in light of the number of years remaining where they can purchase reasonable travel insurance and enjoy a second martini, I think there may be an exit of substantial proportion.
The industry is between a rock and a hard place. The government – regardless of political stripe, there will be no relief from the left or right on this issue – is resolute and the superintendent has his marching orders. The Real Estate Council, now all “civilian” but for two members, will be determined to confirm the government’s wisdom in their selection. The press, which took a very narrow sample and painted 24,000 licensees with the same brush, will no doubt be receptive to future headline opportunities.
Managing brokers who are approaching the retirement horizon are in a good position. Assuming they have made some preparation for their golden years (and like me, they raise a glass to Ottawa and the younger generation in the last week of every month when CPP and OAS enrich their coffers) when the ultimatum for new regulation comes, they can say, “Excuse me but I don’t think so,” and hit the links – or the pickle ball court.
The regulator does have a challenge. Charged with limiting the number of licensees per managing broker and a declining and aging population of suspects, what direction is likely? There are currently around 1,339 managing brokers supervising 24,516 licensees or roughly 18 licensees per managing broker. But I manage 70 and my competitor manages a similar number. And we know there are a significant number of mega-offices in larger centres with 100 licensees or more. There are about 340 managing brokers who supervise more than one office and there are larger offices with multiple managing brokers. To be fair, there are 1,593 individuals currently licensed as associate brokers, engaged in selling one assumes, who could assume the mantle.) How is that circle to be squared? What is the magic number?
In 1992-93, during my tenure as chair of the Real Estate Council of B.C., a little fuss had been in the public eye involving a real estate licensee, the former premier, a foreign buyer and a bag of cash. The then superintendent fixed us with a piercing eye and asked, “Where was the nominee (managing broker)?”
The knee jerk was a proposal to limit the number of licensees per managing broker to 55. At a subsequent meeting of Vancouver brokerage owners where I introduced the concept, torches, pitchforks and molten tar were wheeled into the room, signalling the crowd’s mood. The idea quickly became an orphan.
That was then.
There’s a new sheriff in town. And you, my managing broker associate, are on his list.
And by the way, if you think any of this is likely to happen prior to the provincial election in May, reminding 24,000 typically Liberal government supporters of the bus they were recently thrown under, then you my friend, are amazing!