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Making It Harder to Get a Real Estate License

March 5, 2014

You hear it all the time: “If only it were harder to get a real estate license in the first place, then fewer bad apples would join the industry, or they’d learn earlier the right way to do business.” More than 50 percent of the AEs in our professionalism survey (page 16) said heightened education requirements to obtain or retain a real estate license would be the best way to boost professionalism. Several state REALTOR® associations are now working with their legislatures to change licensing requirements with this goal in mind.

Yet real estate licensing is a complex, political, and shifting issue that varies with each state, says Jeanne Jackson-Heim, executive director of the Idaho Real Estate Commission, current president of Association of Real Estate License Law Officials, and a former REALTOR® AE.

“In Idaho, for example, legislators have very little appetite for increasing licensing requirements for any trade,” says Jackson-Heim. “They often view any change to licensing requirements as imposing a ‘barrier to entry’ for that profession.” And, based on her experience, reluctance to increase licensing requirements is nonpartisan.

Nearly every state has, in statutes or rules, the number of hours the real estate licensing commission can require for a license, along with requirements for hours of continuing education and first-year, post-licensee education.

Idaho already requires 90 hours of prelicense education and 20 hours of CE every two years. So instead of proposing more requirements, the Idaho commission is suggesting to the legislature a change in the content of the education required for the first-time licensees. “We have seen a need for increased education in professionalism,” says Jackson-Heim. “It’s not that new licensees always have problems, but there is a predominance of new people getting into the business looking for ways to set themselves apart, and sometimes this can lead them down the wrong path.”

This is why Idaho’s push right now is for targeted new-licensee education. “I don’t think that most long-time practitioners need more education,” says Jackson-Heim. “We just want to help the new folks get off on the right foot.”

By contrast, the South Carolina Association of REALTORS® had drafted 38 license law revisions that it believes will raise the standards of professionalism for all practitioners in the state. The proposed revisions, which are expected to be introduced to the state legislature later this year, will double the number of hours of required prelicensing education to 120 and double the number of hours to 16 for required continuing education every two years. The proposal also includes a new continuing education requirement for brokers-in-charge and property managers, as well as a new “documented field experience” requirement for first-year licensees. Going even further, the revisions will require criminal background checks for all licensees and real estate instructors, eliminate the continuing education age exemption for those older than 65, and require ethics to be included as a topic in every prelicensing course.

Cashion Drolet, senior vice president of government affairs for the South Carolina Association of REALTORS®, is optimistic that the new regulations will pass, but it will be a two-year process. “We strongly believe this is ­another avenue toward improving professionalism in the industry,” she says. “Some changes we’ve asked for—increased inspections, random inspections, faster turnaround on disciplinary actions, and criminal background checks—have been en­acted via administrative action, while others require regulatory ­action.”

In Pennsylvania, the REALTORS® association backs a Senate bill introduced in 2013 that would heighten real estate license requirements to bring them more in line with national averages. For example, the bill would increase continuing education hours for all real estate licensees from 14 hours to 18 hours every two years. (According to ARELLO statistics, 18 hours of continuing education every two years is the average for the 50 states.) The bill would also require 95 percent attendance at prelicensure and continuing education courses, and require a high school diploma. All this “will help elevate the professionalism of all licensees, as well as provide additional protection to the consumers they serve,” according to the association. The legislation was passed by the Senate Consumer Protection and Professional Licensure Committee in April 2013 and is awaiting action by the Senate. “PAR believes these changes will result in an enhanced level of service for consumers and a higher level of competency throughout the real estate industry,” says association CEO Dave Phillips.

In North Dakota, the real estate commission is proposing an amendment to licensing regulations to curtail unprofessional behavior. The proposal will limit the number of continuing education hours a licensee can claim to have taken in one day to eight to minimize what appear to be fraudulent claims. “We have a lot of people taking their courses online now and it’s amazing some of the claims that go to the commission for the number of hours taken in 15 minutes,” says Nancy Willis, government affairs director for the North Dakota Association of REALTORS®.

Yet Jackson-Heim notes that licensing requirements are only part of the answer. “I think what else might help would be more broker involvement, more training and mentoring,” she says. “Brokers could be required to do more, show the new folks the ropes until they’ve gotten their feet wet. Perhaps Code of Ethics requirements could be more frequent than every four years, or perhaps there could also be some increased education to attain REALTOR® membership. There’s no right answer to this question or one right solution to this problem of professionalism. We should be attacking it on all fronts.”