The most expensive purchase a person will make in their entire lives is likely to be a piece of property. Whether they’re doing it as investment, for their business, or it will be a place to stay, a real estate agent plays a very big role. A good agent with connections will be able to find property that’s a good fit for the buyer.
For that reason, there have been calls for quite some time to have the qualifications and training of agents lifted. The Real Estate Institute of New South Wales (REISW) is calling for changes to the regulatory environment for the property services industry, particularly the paltry 4-day training requirement to get a qualification to enter the real estate practice.
Should Labor win in the upcoming state elections in NSW, they have promised to make sweeping changes, a move the REISW welcomes. And we’re here to discuss just that with Tim McKibbin, the CEO of REISW.
What changes will Labor make?
Labor said that they will move the property industry out of the fair trade and put it into property New South Wales. As a consequence of that, the industry will be dealing with people who also have experience in property and real estate.
Tim says that it is completely ridiculous to think that someone can acquire the skill set, not to mention, experience of a real estate agent in only a few days. Agents were required to do three years of training before, and that was during a simpler time with less complicated legislation and education, but now it’s only going for less than a week.
Issue with Fair Trading
The problem that the industry has about Fair Trading is that they [Fair Trading] believe competition is the only market influence. Now, competition is a good marketing influence, no market is healthy without good competition, but it must be among competent professionals. Allowing someone to go into such a complicated practice with less than a week of training is just irresponsible.
Who should do the training?
Some people may think, “Then why don’t the Institutes train new agents?” Well, the Institutes aren’t responsible for licensing. They can’t give out licenses. That obligation currently sits with regulators around the country.
Tim can’t speak for other states, but the problem with that in New South Wales is that they don’t have people who understand the industry in those places of power.
“80% of people who come into the industry churn out in the same year.”
If there’s an indication that training isn’t comprehensive enough, is that 80% of people who enter the industry fizzle out within a year. And that’s a very sad thing because we’re sending people out without proper training and these are people who want to have a career in real estate. They’re just not getting the support they need.
The property industry is the biggest in Australia
The Institute is pushing for the property services industry to be moved out of the New South Wales Fair Trading locale and moved to under the regulatory control of a commissioner for property services. The industry needs to get into an environment where there are people who have industry experience, who understand the complexities of property transactions, and those who will support both the professionals and consumers.
Never lose sight of the fact that the property industry is the biggest industry in the country. It dwarfs all of them. It has an annual turnover exceeding $107 billion annually in NSW alone. This is far greater than the aggregate of all the other industries regulated by NSW Fair Trading, in fact, it is greater than the mining ($21 billion), retail ($22.8 billion), and tourism ($38.1 billion) industries combined.
Property purchases are high-value, low-frequency, and has complex laws
Under NSW Fair Trading, the property services industry is squeezed in among 40 other different trades and service providers. Most of these are low-value, high-frequency, and have relatively simple laws. These industries include tattoo parlours, second-hand dealers, hairdressers, and tow-truck drivers. The NSW Fair Trading doesn’t have the required industry knowledge and experience to support, much less oversee, the property services industry.
Poor legislative decisions
The NSW Fair Trading have made poor legislative decisions that have created big problems for consumers. For example, it removed the need for an auctioneer to be licensed in 1993, reinstated it in 2002 and recommended its removal again in 2018. Additionally, it amended consumer protection legislation associated with trust accounts, which had severe consequences. The total cost, which is being funded by the NSW taxpayer, is still being calculated. Despite several efforts to rectify this, consumers remain unprotected today.
We’re excited to see what happens at the NSW elections on March 23, 2019.