Competency is a notion that many people can apply to others, but it might be hard to apply to themselves. It might be harder still for us to apply it to our own professions, whether we have been practicing for just a few months or even several years. Nevertheless, this self-reflection is important for a real estate licensee. Having the competency to properly advise and guide your client in order to protect their client’s interests is an important requirement for all licensees.
Unlike skills, which are learned, competency can be understood as inherent qualities which demonstrate the characteristics necessary for the efficient performance of a job. More often than not, competency is derived from formal training and experience.
Applicable Standards/Rules/Statutes:
To better understand this concept, it is best to start with the applicable rule and statutory requirements. For Brokers, Colorado Real Estate Commission (“CREC”) Rule 6.2 and § 12-10-217(1)(q), C.R.S. apply. CREC Rule 6.2 reads as follows:
6.2. Competency
A. In order to conduct Real Estate Brokerage Services, a Broker must possess the necessary experience, training, and knowledge to provide Real Estate Brokerage Services and maintain compliance with the applicable federal, state and local laws, rules, regulations and ordinances.
B. If a Broker does not have the necessary experience, training, and knowledge, the Broker must:
1. Decline to provide Real Estate Brokerage Services;
2. Obtain the necessary experience, training, and knowledge;
3. Obtain the assistance of their Employing Broker, Supervisory Broker, a Broker who meets the requirements as set forth in subsection A. of this Rule, or legal counsel that is competent in the matter; or
4. Co-list with another Broker who meets the requirements as set forth in subsection A. of this Rule.
Next, § 12-10-217(1)(q), C.R.S. states that a licensee has violated license law if they have “demonstrated unworthiness or incompetency to act as a real estate broker by conducting business in such a manner as to endanger the interest of the public.” In short, rules and statutes grant the Commission the grounds to discipline a broker’s license if the broker fails to take measures to gain the competence required for a transaction and violations of license law are substantiated.
Determining If Your Experience, Training, and Knowledge Constitute Competency:
For any transaction, whether it be a purchase, a sale, a lease, or otherwise, every real estate licensee should consider asking themselves the following questions:
- Do I understand what I actually know?
- Am I familiar with the type of transaction, the applicable contracts and disclosures, and the property’s geographic location?
- Do I understand the particularities of the geographical area of a transaction?
- Do I have expertise and training in:
- The needs and concerns of a typical buyer or seller for this type of property?
- Reviewing market reports for the type of property, area, and industry, if the property is used for commercial purposes?
- Do I generally know about the following topics?
- With title issues and title commitments?
- Understanding easements and property lines?
- Understanding related financial documents?
- Do I know when I should recommend experts such as attorneys, CPAs, and other experts?
What Can You Do If You Lack Competency?
Training, shadowing, consultation, and partnerships are ways to attain competency when you do not have it.
- Training:
- Take Continuing Education Classes
- Obtain Certifications and Designations
- Shadowing: Working with another agent through several deals until you have complete understanding of the type of transaction
- Consultation: Discuss the type of transaction you are interested in with:
- Employing Broker
- Supervisory Broker
- Another broker experienced in the area you are needing assistance
- Competent attorney licensed to practice law in the State of Colorado
- Partnership: Co-list with a broker with experience in a particular type of transaction
Competency Best Practices:
There are several steps a real estate licensee can take to obtain the competency needed to properly perform their responsibilities in a transaction:
- Attend Colorado Real Estate Commission meetings
- Review Commission-approved contracts and forms
- Understand the Commission-approved contracts and forms
- Review and share market reports with customers.
- Understand if the subject property is part of a metropolitan/special district or Common Interest Community.
Competency continues to be an essential aspect of every transaction. It also continues to be an important component of the Division’s analysis in every investigation. Therefore, possessing the necessary experience, training, and knowledge to provide brokerage services and complying with the applicable federal, state, and local laws, rules, regulations, and ordinances is imperative for every licensee.