Legislation would regulate real estate teams in Pa.

Citing a need to better protect homebuyers, a state lawmaker is drafting legislation backed by the Pennsylvania Association of Realtors that would regulate one of the industry’s biggest trends: the growth of real estate teams.

According to the National Association of Realtors, a growing number of agents – now 26 percent of its 1.3 million members – identify as a member of a real estate team, which agents form as a way to share costs and allow individual agents to specialize. Some may work only with sellers while others focus on representing buyers.

Teams are not only getting bigger but top teams are handling a bigger share of transactions. The top 250 real estate teams in the country handled an average of 533 transactions last year, up from 470 in 2017, according to Colorado-based Real Trends.

With more team growth projected, the state association says it’s time for Pennsylvania to formally recognize teams in state licensing law. The Cumberland County-based trade group also wants teams to follow standards – including requiring team leaders to have a broker’s license – to ensure consumers know where or whom to turn to if problems with transactions arise.

“They feel teams have become mini-offices without broker oversight,” said Earl Shirk, president of Re/Max Pinnacle in Manheim Township, who believes the proposed regulation could improve team accountability.

He and other brokers are awaiting to see how the final language shakes out and if a bill goes anywhere in the General Assembly.

Bucks County Republican Rep. F. Todd Polinchock began circulating a co-sponsorship memo for team-related legislation in the state House on May 22. He was not immediately available for comment.

However, his memo says that teams may be established only with permission of a broker who remains responsible for supervision. It also says that the team needs an administrator who will be the point of contact between the team and the broker.

Furthermore, it says any agreement between a broker and a consumer must identify whether services are being provided by a team and provide the names of each team member.

“I believe my legislation is a reasonable and practical response to the concerns surrounding the operation of real estate teams,” Polinchock said in the memo.

Making preparations

The State Real Estate Commission began talking about teams and advertising requirements in 2015. The Pennsylvania Association of Realtors said that discussion prompted a statewide task force to begin developing possible requirements.

Many agents caught wind of the team legislation and, as such, began to prepare by taking broker courses through local associations.

The Greater Harrisburg Association of Realtors said its nine broker credit courses last year served 104 students. So far this year, 95 students have gone through six courses.

CEO Kathy Ludwig said most of those students are still taking classes to earn their broker’s license, so the number of students served should go up.

But not all agents are going for those broker’s license just because they have teams or want to run their own companies.

“I don’t have a have a team and probably never will,” said John Esser of Re/Max Realty Associates in Camp Hill, who is working toward a license.

He said it’s more about the continued education to better serve his clients, many of whom come through referrals.

That said, he recognizes that many agents are preparing themselves for stricter oversight.

“I don’t think there is anything wrong with individual real estate licensees having a broker’s license,” he said. “If you are going to operate as a team, I am all for it.”

Esser also said he doesn’t think it will impact existing brokers. If anything, he sees it helping because it adds more associate brokers to a company, spreading responsibilities.

Other agents say the license affords agents greater opportunities to manage an office, handle property management or potentially open a new real estate company.

“It opens the door to be able to start something,” said Mike DeRemer, an agent with Keller Williams of Central PA in Hampden Township. “It may have that impact.”

Craig Hartranft with Berkshire Hathaway HomeServices Homesale Realty in Lancaster County, who leads the biggest team in Central Pennsylvania, said he could see some teams leave existing companies to start their own independent brokerage.

“If they do require a broker’s license, I could see teams opening mini-offices instead of being part of a big company,” he said.

He thinks agent flight is more likely to occur at smaller companies. Top agents looking to change firms or start their own often hesitate to leave behind deep-pocketed national franchise brands that can spend more to promote listings and drive sales leads.

But some leave for independents in search of a more favorable commission split or lower overhead costs. Others start their own companies.

Laurie Carney, president of Dream Home Realty in Lemoyne, opened her firm last year with Danielle Wadsworth. They focus on customer service and low-cost administrative support for agents.

The company has grown to 19 employees. Carney is currently in the process of getting her broker’s license so she can be a backup to Wadsworth, the firm’s broker of record.

“The team leader should have a broker’s license,” she said. “The team leader is acting like they have a broker’s license and should be responsible for their team members.”