May 18, 2007: New Arizona real-estate licensing law fails consumers
My real estate license is up for renewal -- just at the wrong time. Under current law, I am obliged to renew my license every two years, but under a new state law that is to take effect on July 1, 2007, I will only need to renew every four years.
The change will be convenient for me, the next time I renew. To qualify for renewal, I have to take eight three-hour continuing education classes, so my education requirement will go from twelve hours to six hours a year.
And the change will make things much easier down at the Arizona Department of Real Estate, where everyone always seems to be harried and frazzled.
But how does the consumer benefit?
The licensing requirement for real estate agents is a bad joke. Would-be licensees are required to take 90 hours of classroom instruction. There are real estate schools that will permit you to fulfill this obligation in ten consecutive days. The course material consists of tips and tricks for taking the state test, and the state test has almost nothing to do with succeeding -- or even surviving -- as a real estate agent.
How do we know this? Because more than 90% of new licensees do not renew their licenses. They fail within the first two years in business. Successful navigation of the licensing process is useless as an indicator of success as a real estate agent.
The state's licensing procedure actually serves to deceive consumers. The implication is that a licensed practitioner is competent. Far too often, this is untrue.
What would work better? The free market. If competition for reputation were the only standard for judging agents, new entrants would have to get themselves hired by already-established big-name agents. Through a process akin to apprenticeship, they would learn how to work well and wisely in real estate -- or they would get fired with dispatch.
And instead of depending on a useless talisman from the state, twice as useless starting in July, consumers would know they are entrusting their most valuable asset to an experienced, competent professional.
Greg Swann is the designated broker for BloodhoundRealty.com, a full-service Metropolitan Phoenix real estate brokerage. This article originally appeared in the West Valley regional sections of the Arizona Republic.
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