This is me from today’s Arizona Republic (permanent link). (Nota bene: What you are seeing here is actually my own original draft text of this column.)
New 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.
Technorati Tags: arizona, arizona real estate, phoenix, phoenix real estate, real estate, real estate marketing
Jim Gatos says:
I couldn’t agree more, Greg…
In Massachusetts, having a license or taking the continuing education courses tend to make me wonder WHY so many agents even bother to do it; a good number of them don’t sell much of anything..
Your way is kinda like “on the job” training. I used to think more education would “weed out” the “baddies”.. Now I think that would probably just keep those folks in longer. It gives them something to do. However, on the other side of the flipped coin, the NAR would like everyone to think the more designations an agent has, the more money they statistically make…
That’s partly true, but in this field, I think EVERYTHING is partly true…
Jim
May 18, 2007 — 2:00 pm
Seth Winkleman says:
I think the licencing procedure may be flaed BUT the fact that you have to take a test, and recieve a license is important. Now the requirements may be not that extensive but I believe it is very similar to the requirements that other professions follow. Also it holds the Realtor accountable for his actions and sets guidelines they must follow. There are rules of ethics a Realtor must follow. If not the Realtor may lose their license.
Believe me I’d rather have the four-year renewal in CT. It would save some money!
May 18, 2007 — 2:03 pm
Jay Thompson says:
“Now the requirements may be not that extensive but I believe it is very similar to the requirements that other professions follow.”
Not really, at least not in Arizona. Want a real estate license? Just be 18, with a clean criminal background and take 90 hours of classes. Want to cut hair? You have to have two years of High School, be at least 23 and have 1,600 hours of classes.
May 19, 2007 — 9:50 am
Jeff Kempe says:
Greg…
I’m just going to link this here – http://prosecity.blogspot.com/2007/05/redfin-sixty-minutes-and-state-of-real.html – but it links to other of your posts as well.
I’ve decided: just to link permanently to Bloodhoundblog; I’ll never have to write anything again!
Best.
Jeff
May 19, 2007 — 1:06 pm
A. Flipper says:
Yeah, the license renewal is a drag and many agents still don’t know their way around a house or negotiation. Maybe that will change. I’d like to share this with you. A company called TVsellsRealEstate.com produces real estate TV ads for free along with one of heir inexpensive air time packages. Free ads are always a good thing in a down market.
May 19, 2007 — 11:57 pm
RNBEsquire says:
Greg:
As you probably have heard by now, the continuing education requirement will not change. You will still need 24 hours every 24 months. Commr. Wercinski has two groups working on the issue of pre-license and continuing education right now. A lot of bright people are examining these issues, and they would welcome input from you and the amazing folks who read your blog.
Comments and suggestions are welcome by the Department, but as a practical matter, utter anarchy is not an option, so it’s back to decaf for you, amigo!
Cordially,
RNBEsquire
May 24, 2007 — 4:11 pm
Greg Swann says:
> As you probably have heard by now, the continuing education requirement will not change. You will still need 24 hours every 24 months.
Yes. Who’d’ve thunk it? What a treat for everyone to try to sort the certs.
> utter anarchy is not an option, so it’s back to decaf for you, amigo!
In fact, the only protection anyone has, in commerce or on the streets, is the anarchy of self-defense. The courts can try to rebalance interests after an injury has occurred, but the idea of an instant avenging Batman is strictly for the comic books. People get hurt worse because they believe in Batman, all evidence to the contrary.
I think I’m going to write about doing away with licensing at greater length — not that this will actually happen — just because the philosophy is interesting to me.
Inlookers, my interlocutor is one of the great names of Phoenix real estate law. Sir, I would love it if you would stop by more often. I’ll pry open a spot in the roster if you would like to write with us.
May 24, 2007 — 7:43 pm