Wednesday, March 22, 2006 | As licensed real estate agents continue to flood into California’s shaky housing market, industry experts and Realtors have questioned how standards can be maintained within the realty profession.
A new bill, sponsored by the California Association of Realtors, aims to address some of the industry’s concerns by forcing potential professionals to complete their required education before getting their license to buy and sell real estate – instead of being issued a license before they’ve finished their classes, as is the current practice.
But critics say the changes proposed by the legislation are not much more than cosmetic and would do little to promote professionalism among future licensed real estate agents. Further reform is especially needed, they said, because many of the new agents have never dealt with a cooling market, having entered the profession during a period of unprecedented growth.
The bill’s promoters said it is part of a broader effort by the industry to promote professionalism in its growing ranks and California’s Realtors can expect more changes to come.
The number of licensed real estate agents in California has skyrocketed in the last few years, as more and more people have been drawn to the promise of lucrative commissions born of a superheated market. Currently, there are some 480,000 licensed real estate agents in the state; that’s an increase of almost 200,000 licensees since 1998.
As things currently stand, anyone hoping to get their real estate license can do so in two ways. They can take three college-level real estate classes and then take the California Real Estate Exam. If they pass that and a background check, they will be given a four-year license.
The other option is to take only one class, then pass the exam, at which stage the applicant receives a Conditional Salesperson California Real Estate License. To renew that conditional license, the applicant must complete two more college-level real estate courses within 18 months or their license will be revoked.
Eighty-five percent of the more than 100,000 licenses issued by the Department of Real Estate in the last three years have been conditional licenses.
What the proposed legislation would do is make the completion of all three requirements an absolute prerequisite to getting a salesperson’s license. Essentially, that eradicates the conditional license option.
Alex Creel, the CAR’s chief lobbyist, said the organization is not trying to discourage people from becoming Realtors. Rather, he said, they are trying to raise standards across the industry.
“We hope to get increased professionalism and increased consumer service, because we all rise and fall together,” Creel said.
That message was echoed by the office of Assemblywoman Gloria Negrete McLeod, the Chino Democrat who authored the bill. Her legislative assistant, Andrew Langley, said the push for the legislation grew out of a feeling of discontent within the real estate industry at the low barriers to entry for real estate professionals, a problem compounded by the recent spurt in license applications.
“Basically, they just want to make sure that you have the education before you go out and deal with people possibly spending their life savings on buying a house,” Langley said.
But local critics argued that the legislation does not go far enough. Some experienced Realtors from San Diego said the current licensing requirements are profoundly ineffective and improving professionalism in the industry will take a lot more than what is being proposed by the CAR.
“The overwhelming majority of agents are so ill-equipped to handle this marketplace, it’s embarrassing,” said Jim Klinge, a Realtor from North County San Diego with 21 years of experience.
Klinge said the proposed changes are little more than cosmetic, and will not address the central issue of a lack of basic training requirements for real estate professionals.
That need for adequate training has only increased in the last few months as the housing market has begun to flatten, Klinge added. Real estate agents who have only ever worked in a booming market now find themselves unable to meet the needs of their clients, he said, and simply asking them to complete the existing requirements up-front will not solve the problem.
“Is it going to improve the quality of the service provided? Absolutely not. It might get it there a little quicker, but it’s not going to improve it at all,” he said.
“Those classes are pathetic, let’s face it. There isn’t anything you’re going to learn in there on a weekend course or over the Internet that’s going to have anything to do with properly serving the client,” he added.
Kelly O’Neill, a Realtor with Prudential California Realty in San Marcos, was not quite as vocal in her criticism of the educational requirements for the industry. O’Neill said that when she got her real estate license in 1984 there were practically no barriers to entry to the profession. The requirements these days are a matter of going through the motions, she said. Indeed, to a real estate agent engaged in their first 18 months of work, she said, they could be more of a hindrance than a help.
“It’s even more of a pain, because you’re in the industry and you’ve got to say ‘I have to pull back and put my attention here to finish these classes,’ ” O’Neill said.
O’Neill said that unless the educational requirements are significantly stepped up they will have no effect on increasing the quality of services within the industry. She said that’s only going to happen if the Department of Real Estate begins to require their licensees to have degrees in real estate or the equivalent.
But Charles Jolly, president of the San Diego Association of Realtors said the proposed legislation is a step in the right direction.
Jolly said Realtors in general need to be better trained before entering the workforce, but that at least requiring Realtors to complete some education before they are licensed makes perfect sense.
“I like it, I approve of it, I think it’s important for better client care and better for our members,” Jolly said.
Jolly stressed that most licensees receive their fair share of training apart from what is required of them for licensure. All the big realty companies offer in-house training that is ongoing, he said, and real estate agents usually have access to extensive resources, such as in-house counsel, to help them grow as professionals.
The CAR-sponsored bill is currently on its way to the state’s Standing Committee on Business and Professions, which McLeod chairs. Her assistant said the bill should be considered by the committee in the next 30 days.
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