I. Introduction and Summary
“It appears that the driving forces behind the increased use of varied formats for the delivery of instruction are fundamental changes in society combined with continued rapid technological change”
Distance Education Standards, IDECC, 2001, p.4.
In general, the process of education is simple and verifiable. An instructor offers an organized body of knowledge in a specific area and the student absorbs the knowledge to the degree that student’s own talent allows. The process can be either formal, as all of us have experienced, or informal, as when a mother teaches her child to cook or a father teaches the child to fish. In both cases, the degree of learning should be verifiable. Testing in a formal environment gauges student mastery of the material presented, edible meals are prepared or fish are caught.
In reality, however, this simplicity has been lost. Large formal education systems have necessitated large bureaucracies and large scale testing. This has led to debates over standards and course design, many of which have become politicized at state and national levels. The focus has shifted from outcomes to processes. Additionally, the time crunch felt by many Americans has reduced the opportunity for passing on lore from generation to generation resulting in the entry of even this type of education into a formal setting.
How does all this relate to real estate? It’s exactly the same situation; processes have superceded outcomes as the focal point of real estate education. The industry has long been concerned with the quality of its practitioners. Licenses are granted only upon completion of a course of study and presentation of evidence, via examination, of mastery of the contents of that course. Continuing education is required in virtually all jurisdictions as a criterion for license renewal. But real estate has also been caught up in the inevitable relationship of outcome and process. Pre-license training is outcome based. While content and in some cases delivery is specified, the real proof of education comes with the license examination. Pass the exam and you are deemed to have successfully achieved the educational goals. On the other hand, continuing education is almost purely process oriented. There is extensive front end scrutiny by licensing authorities, certifying both the content of the course and the credentials of the instructor. That done, there is virtually no back end verification that any learning has taken place. Mere attendance is sufficient for the practitioner to earn the credits necessary for license renewal.
With the permeation of the Internet in all our activities, education, including real estate education, has entered a new age with a new set of challenges. Most learning has been imparted in the physical setting of the classroom. Distance learning, where it occurred, usually meant correspondence courses. It now means online delivery of educational materials. This creates challenges for real estate education. With online education, process and outcome are entwined in a way that resembles classroom learning without the physical presence. This requires that close attention must be paid to some things, like scope of content and verification of identity, that are now part of the classroom process, as well as some others, notably verification of learning, that are not necessarily done.
Most industries have moved into the world of online learning, some more swiftly than others. The delivery of airline pilot continuing education and training, for example, moved online very early, to accommodate the uneven schedules of the professionals using the training. Real estate is moving into that area but has not been as quick as other, similar, professions in switching over from physical classroom instruction to cyberspace.
This paper looks at the state of online education in real estate, from the viewpoint of standards, costs and structures. Throughout, we take as the goals of real estate education are :
• Real estate educators will provide the best quality courses to the largest portion of the industry in the most accessible fashion;
• Real estate professionals who have successfully mastered these courses will be providers of effective and excellent service to the consuming public. This changes the focus from process to outcome.
Under this approach, we do not expect that all real estate education will (or even can) be delivered online. Nor do we require that the current structure of the system delivering real estate will remain as it is. Nor do we expect that one single standard or process will fulfill these goals. Since online education is fundamentally different from classroom education, things like market structure, regulatory standards and other aspects of the business may evolve differently in a world where online education is a major feature. Flexibility in approach is a necessity. If the student displays mastery of the material presented, then any channel of learning that gets her there is legitimate.
Our general conclusion is that the financial and educational nature of online learning requires a great deal of flexibility, especially as regards providing a set of standards that are accessible for all reputable providers. This will open the market to maximum choice for practitioners, and will allow educators with proven records of success to deliver education online without being forced into a particular process.
We also reach seven specific conclusions, each of which is developed in the remainder of this paper:
1. Real estate is moving more slowly into online education than other professions, and slower than its current potential would suggest;
2. Classroom teaching will never disappear, and indeed will remain the channel for the majority of real estate education; online education could eventually command up to 30 percent of all real estate education;
3. State regulations that allow for the granting of continuing education credit with no verification of learning represent a significant barrier to the growth of online education;
4. State regulations that prohibit online delivery of education also present a barrier to development of real estate education;
5. Current standards, as represented by the ARELLO-IDECC Distance Education Standards are reasonable in the current environment as a way to organize the market, but they are not the only way to do this;
6. Online education requires rigorous standards but only if they serve the purpose of furthering the educational process to the benefit of the student;
7. Current standards are also over designed and expensive to implement, particularly when compared to other industries, and represent a financial barrier to the growth of online education; the standards represent only one possible approach—the university learning model—to real estate education;
8. Those with vested interests in real estate education—primary and secondary providers, ARELLO, REEA, state regulators, Realtor associations—should come together and agree upon a general set of guidelines within which alternative standards can be developed and recommended to state authorities.
The conclusions presented in this paper are the result of examination of current standards and practice, as well as discussions with experts from all aspects of real estate education. The list of those interviewed is contained in Appendix A to this document. They have all been helpful in developing the results of this study, but in no way are responsible for the conclusions. For that reason, we do not attribute any of the comments cited in this report.
II. The State of Real Estate Education Delivery Channels
Real estate education, both pre-license and continuing, has traditionally been delivered in a physical classroom setting. The major channel for this has been the independent real estate school serving the local area. This is reasonable given the fact that standards are administered at state level and each state creates and enforces rules that differ from every other state. It also makes sense from a business point of view. Since real estate is a local industry, schools provide a locale for networking by future licensees and recruiting by local brokers.
Those who develop courses are termed primary providers. Those who deliver education are termed secondary providers. Real estate schools can be either secondary providers or both primary and secondary providers. Primary providers can either be individual designers or large companies, like Dearborn or Thomson Southwest, who provide a great number of courses in different industries designed to be delivered through a variety of channels. In some cases, real estate schools do business in several states. In some cases, these schools train people for other industries, like insurance, as well.
The face-to-face interaction between instructor and student has always offered added value to the educational process, particularly in the case of pre-licensing education. In both pre-licensing and continuing education, the practical experience that the instructor has gained, and the interaction of the students can produce an experience that transcends the written course materials.
Distance learning has been and continues to be a noticeable part of the landscape of real estate education. Traditionally, distance learning meant correspondence courses, with written materials mailed to students who then submitted finished tests to determine mastery of the materials. This was less than optimal for a number of reasons.
• As we described above, the physical interaction provided by the classroom is a large part of the educational process; it is missing in correspondence courses.
• Moreover, any interaction between instructor and student was cumbersome, relying either on phone connections or the length of time the mails took to move between the two.
• Design provided another drawback in that the courses usually required only one point of mastery verification, the end, and that was often too late to resolve any problems that the student had with the material.
More recently, distance learning has come to mean online presentation of courses. As it has been implemented in real estate education, online learning has suffered from many of the same drawbacks that affected correspondence courses. In addition, verification of identity and the duration of the course presented yet other concerns. Now, not only was the educator required to think about the design of the course content, he was also challenged to design a delivery system that created an effective and legitimate educational experience. Classroom education and correspondence courses differ from this in that the delivery channel was naturally linked to content. Both have been a part of the real estate education landscape for so long, no instructor really had to give a second thought to the delivery channel.
Cost has also been an issue hindering the growth of online education in real estate. Since the content and the process of delivering the course are both more onerous with online education than they are with classroom education, the costs are higher. In some cases, primary providers have created online courses that can be used by secondary providers, and Dearborn has developed helping technology that allows for efficient delivery by secondary providers. But the technology of delivery is still mostly in the hands of the schools. They need to match their technology with the students’ and this requires investment. Often schools are too small to afford the capital requirements necessary to become an online deliverer of real estate education. This is particularly true if the ARELLO standards must be used (See Section IV below).
A final issue has affected the use of online education in real estate. Most states have been reluctant to allow courses, either pre-licensing or continuing education, to be delivered online. Currently, few states allow real estate education (either prelicense or continuing) to be delivered online. Additionally, the regulations governing online delivery differ in stringency from state to state. In some states, like Virginia, verification of identity is easy, while in others, like New York, regulations are much stricter and compliance is harder.
Because of all these reasons, online education has not penetrated the real estate industry to the extent that it has other industries. From the training of airline pilots to the certification of cosmetologists, online education has deeply penetrated most businesses. While it is unlikely that online education will ever constitute the majority channel of real estate education, one could argue (as many experts have) that real estate has fallen far short of even its current potential for the use of electronic delivery of educational services.
III. The Potential Growth of Online Education in Real Estate
Classroom education will always be the standard for real estate education. No one familiar with the subject would contend that online education will ever be the dominant channel here. The question remains, however, as to the potential for growth of online education in real estate. Most experts suggest that within the next five years, online delivery could constitute 25-40 percent of all real estate education, with the percentage lower (i.e. 15-20 percent) for pre-license education, because of the nuances in pre-license training that require physical interaction.
Online instruction carries with it several advantages and these will naturally cause an increase in the amount of real estate education delivered online. First of all, online education allows for the tailoring of courses to individual needs. Content can be scaled to the individual’s need, background and learning capacities. Since online courses are delivered to one individual at a time, they can be designed in modular fashion, and the modules treated as building blocks that can be arranged in any fashion necessary. This advantage, of course, applies primarily to continuing education, but it is significant in an industry where the levels of learning, expertise, experience and competence vary as dramatically as they do in real estate.
The other major advantage that accrues to online education is the ability of the student to shape the learning period around his or her schedule. As the innovators of television-based distance learning, like those involved in the ReMax process, discovered, their courses were more effective when repeated over the network at different times during the day. This allowed the real estate professional, whose schedule very rarely conforms to the normal work week, to receive the educational content at convenient times. Online education takes this flexibility to its highest possible level in that the student controls (within broad limits) the exact timing of the class. This is a major advantage in real estate, since it allows complete access by all potential students.
Online education will grow in real estate because it has these advantages. But the exact percentage of all real estate education that it will represent will depend on five major factors. All of them are related, but it is useful to separate them in order to allow for the discussion of the standards governing online education set forth in Section IV.
• Cost. The process of online education is relatively new to real estate educations. More importantly, as a technology based channel, online education processes need to be constantly monitored and improved. Finally, process is as important as its content. All these make the creation and delivery of online courses a more expensive proposition. In the classroom channel, the logistics are relatively simple (and more importantly, are familiar): the deliverer of the education provides a space, engages an instructor and either creates or buys a course. Administrative details like registration of students, verification of identity and attendance and certification of learning (in the case of pre-license) are all required as well. With online learning, the process becomes more complicated. Now, the provider of education must develop or buy the technology that will allow the transmission of content electronically to the student, maintain a feedback system for the student, and continually monitor, coordinate delivery technologies with the receiving technology possessed by the student, and verify the identity of the student. In addition, instructors must have the ability to communicate across time and space with students who are largely faceless. The time commitment by the instructor and the skills he needs are different. All these things add to the cost of providing education online, sometimes prohibitively.
• Regulation. This is a major issue. Clearly, online education can only grow if it is allowed. In the real estate industry, educational delivery is regulated by the states. They set the standards for real estate licensing and enforce the regulations guiding the renewal of licenses. Content and course hour requirements differ from state to state. States also define the allowable delivery systems. Right now, online education in real estate is allowed in only a handful of states. It will not grow as an educational delivery channel in real estate unless it is accepted under state regulation. A major step in this direction has been the development and promulgation of standards for online education by ARELLO and IDECC. These have given regulators a bit of reassurance that online education is a feasible channel. To the extent that regulators allow online education in pre-license and continuing education, the channel will grow.
• Technology. The market for online education will ultimately be customer-driven. The demand on the part of real estate professionals to receive course on line will spur the development of the channel more than anything else. Right now, issues like bandwidth and linkage speeds provide a real challenge to the delivery of online education. Many real estate professionals have not yet moved to high-speed Internet access, and operate on computers with small bandwidths. This makes online learning more of a chore than a convenience, sometimes outweighing the convenience offered by having the courses available on demand. Similarly, many providers do not have the capability of delivering courses online in an efficient manner. This is, of course, linked to the cost considerations outlined above, but remains an obstacle. This particular factor will disappear in time as more and more potential students upgrade their technology on the receiving end and the ease of delivering education increases as the use of technology becomes simplified. In particular, a the next generation of programming language standards (like XML) will enable the easy personalization of courses, both reducing the cost to the provider and increasing the accessibility to the student.
• Course Provision. As we mentioned, the provision of courses online is more complicated than it is in the classroom, because of the interaction of content and process. One of the bases on which regulators certify courses is the amount of content relative to the proposed instruction time. In the classroom setting, because of the long history of the delivery channel, this is relatively easy. With online education, the issue is whether the content is sufficient to absorb the hours for which the course is rated. Faster learners will complete courses in less time than is available or required (as in the classroom), and slower learners will not get the material in the time allotted. It is, however, harder online than in the physical classroom setting to determine whether the average learner will put in the requisite hours. Currently, online course rating systems rely on word count—e.g. 300 words on a screen is the equivalent of one page of text—to create an equivalence between online and classroom content. But this is imperfect at best and ignores the real differences between online learning and classroom learning. Primary providers like Dearborn and Thomson Southwest have been working to overcome this barrier and it will diminish in time. But for now, it is an element that has slowed the growth of online education in real estate.
• Demographics. The real estate industry is populated by practitioners that are on average older than the general population. The typical Realtor is in her early fifties, and has been in the business for nearly two decades. That means she took her licensing education and her continuing education in the classroom, and likely sees that as the most comfortable (and perhaps the only) way to receive necessary training. In addition, classroom education provides an opportunity for networking, a core element in real estate business success. Finally, many licensees wait until the end of the licensing cycle to complete their continuing education requirements and prefer to take all their hours at one time. Combine all these with the tendency that we all have to harden in our opinions as we age and you get a picture of the real estate industry as being reluctant to move out of the classroom. If online education is to be customer-driven, these are not customers who will drive it. Ironically, pre-license education courses are often filled with younger, more technologically-savvy individuals who would be glad to take education online. Unfortunately, pre-license education is the area least likely to be heavily affected by a movement to online education. As with any demographic process, this will gradually change; the speed with which older Realtors are replaced by younger ones will go a long way in determining how much of real estate education flows through the online channel and how fast it reached that volume.
• Vested Interests. While teaching an old dog new tricks may be difficult, it is often just as difficult to be willing to learn new tricks to teach the dog. Many schools operate in several states and some provide education in other industries besides real estate. This allows a diversified and steady stream of revenue. Since the content of many of the courses offered by the schools changes only gradually, the revenue stream comes at relatively low variable cost. Changing to online delivery is a costly and cumbersome process. It is almost the same as starting a business over again. Technology needs to be acquired, courses and instructors recertified and delivery systems revamped. Additionally, the market is small, making the costs even more onerous. There is little incentive for existing schools to switch to online education right now, although some have. When the customer base begins demanding it and when the regulators authorize it, they will do so, but probably not until then.
Despite these issues, real estate education does have a history with online learning. The Georgia Real Estate Commission approved distance learning over a decade ago and providers in the state began using computer-based education for real estate pre-license and continuing education immediately upon that approval. The approval standards for Georgia, which do not require ARELLO certification (although they accept courses that are ARELL0 approved), were originally based on a mastery principle built into the methodology used by the vendors to create the course. In effect, the course would not allow the user to move forward in the program without proof of mastery of the material just covered. This allows for an individual student to move through a course without instructor interaction unless the student has a specific question re content. The school must provide the student means of contacting an instructor in such an instance. In the 12 to 14 years these courses have been offered there have been very few questions of that type.
Other industries have shown that there is a great deal in potential for online learning in a variety of professional area. Many universities currently offer mid-career “mini” MBA degrees that are delivered mostly on line. The model for these programs requires participants to gather in person at the beginning and end of the program, taking courses online, with the instructor leading and monitoring the coursework and coaching students online through a listserve process. Adaptations of this model may serve real estate education well. In areas like aerospace, aviation and the military, online education has raised training standards by allowing higher levels of learning in shorter periods of time and in more realistic conditions.
These all hold a lesson for real estate. If the industry is devoted to continually upgrading the level of competency and standards of practice of its participants, online learning will grow as part of the educational establishment in the business. The factors cited here are real, but most of the barriers will melt away if the reward for using online delivery of real estate education is large enough. If this is the case, an estimate that, within five years, online learning will constitute 30 percent or more of all real estate education is not overly ambitious.
IV. Standards in Online Real Estate Education
The nature of online education requires that the industry adhere to a set of standards that will ensure the delivery of quality services. The questions of online identity, verification of learning and “attendance” during course sessions all require that the provider of instruction create, monitor and maintain an educational process that has every bit the integrity of the physical classroom instruction. Since the elements of time and distance separate teacher and learner, the process of education and the delivery technology must replicate face-to-face contact.
Although states have the power and the wherewithal to set standards of content and instructor credentials, few have the resources necessary to set and enforce standards of online delivery. As a result, they have used outside vendors to fill this function for them. Two private companies—Promissor and Experior—are quite active in providing the verification needed by regulators in insurance, real estate and other occupations in the online education setting. They will verify applications—checking for student credentials against state regulator standards and rosters—and administer computer-based testing. They will audit courses and give regulators their recommendations for any necessary changes.
By far the most comprehensive attempt to provide a set of standards for online education has been the work of the International Distance Education Certification Center (IDECC). In conjunction with a task force of ARELLO, Dr. Robert A. Meyer of IDECC published distance education standards in 2001. The standards say little about the content of courses, except to suggest that course objectives should be stated in performance terms; content remains the work of the state regulators. Adherence to these standards and the successful completion of the associated application is required for course approval in ARELLO member states.
The standards do a thorough job of defining the delivery, verification and assessment mechanisms for online education and were meant to address many of the concerns about online education developed above. However, they also set standards for the manner in which secondary providers should be organized and should be capitalized (i.e., the technology and the personnel they should be using to ensure certification.)
The standards are very strong in their emphasis on interactivity. The statement contained in the introduction, “We are finding that higher levels of interaction enhance the learning when the instructor and the student are separated by distance,” echoes throughout the work. The standards guiding interactivity, student support services and evaluation and assessment are all designed to overcome the problems posed by distance for the educational experience.
Taken as a whole, the IDECC-ARELLO standards organize a process that absolutely needs to be organized. But taken by themselves, the standards constitute more of a draft than a finished product. They are a kind of “Version 2.0”, with later, improved versions necessary. To illustrate this, we start with a basic premise about real estate education.
The market for online education in real estate will gravitate toward value (i.e., the interaction of quality and price) as long as the value solutions meet regulatory norms. If the course content, student verification and student assessment procedures are developed and monitored, and if the credentials of the instructors are reviewed, verified and approved, the market will sort itself out.
Judged against this criterion, the standards developed by IDECC and ARELLO are over designed and focus on the wrong end of the educational process. More specifically, the course design section of the standards—by far the longest and most comprehensive section—place a burden on the provider that is nearly impossible for the smaller schools to meet. The standards specify a scope of operations that require levels of technical skill and numbers of functions that are unnecessary for the normal operations of most secondary providers.
The course design standards specify in great detail the inputs that must go into the provision of online education, when in reality it is the outcome of that education that the industry cares about. If the system can produce and certify well-trained, competent individuals, it matters little through what process that training took place. In a way, this mirrors the practice of state regulators in continuing education, who review and approve detailed course curricula, and inspect instructor credentials. The difference is that the IDECC standards handle verification of outcome very well, while the state administrators ask for no such verification.
The matter of adherence to these standards is no trivial matter. ARELLO’s is the prevailing certification in nearly three-quarters of all the states, so adherence to these standards is a requirement if courses are to be approved in those states. This is significant since many of these states will enter the online education field or the first time with only the ARELLO-IDECC standards as guidelines. But adhering to these standards is costly and burdensome. A number of secondary providers point out that simply filling out the application form is a time-consuming process. Others point to the need for increased personnel and capital plant in order to comply with the standards. These are secondary providers who have had great success in getting approval for courses delivered in the classroom, and in producing trained students.
The general feeling is that the standards are far too academic in approach and ignore the complications that the standards must encounter in the real world. The cost element is one of these complications. As described above, adherence to IDECC-ARELLO standards would entail investing large additional sums in their businesses for many secondary providers. Additionally, the cost of ARELLO approval is steep: for primary providers, $ 750 for the first course and $ 400 for each succeeding cost; for secondary providers, $ 250 and $ 225. In contrast, Promissor and Experior provide essential
