BLOODHOUNDBLOG.COM

There’s always something to howl about

Real estate licensing laws are a criminal conspiracy against the consumer created by and for the benefit of a cartel

When I walk into a supermarket, the first thing I look at are the floors. If they aren’t buffed to a blinding glow, I walk right back out. Why? Because if the manager isn’t staying on top of the floor maintenance, he isn’t staying on top of anything else, either. Without doubt, I am “protected” by vast armies of federal, state and local food cops, but it turns out that they are not willing to get food poisoning in my place. If I fail to guard my own self-interest, the courts might make me (or my heirs) whole — after-the-fact. But nothing can protect me if I won’t protect myself.

Surely you effect many similar sorts of “consumer protection” in your own behalf, possibly believing in your heart that the laws can protect you, yet exercising caution to protect yourself even so. But consider this: If, when selecting electrical equipment, you had to choose between oversight by government functionaries or the Underwriters Laboratories — but not both — which one would you choose?

If you said government, you can stop reading now. You’re hopeless. For those still with us, what we’re doing is exploring the implications of doing away with real estate licensing laws. And if that idea makes you shiver, you can settle down: No matter what I say, the real estate laws are not going to be repealed any time soon.

But imagine for a moment that your neighbor’s mother introduced an old friend to the FSBO seller up the street. This is brokerage, introducing buyer to seller. The principals are unrepresented, but they can do everything they need to do — in Arizona, at least — at the offices of a title company. Nothing unlawful has occurred — until grandma takes a finder’s fee from either the seller or the buyer.

At that point she is in violation of real estate licensing laws. She can connect buyers with sellers all day, every day — provided she does not get paid for doing so. The purpose of the real estate licensing laws is not to protect buyers and sellers from chatty grandmas, who may or may not know anything about real estate. Instead, those laws exist to limit artificially who can be compensated for introducing buyers and sellers.

Before the advent of licensing laws, chatty grandmas and underemployed barbers, among other people, brokered real estate on the side. In the name of “protecting” consumers, the NAR got state legislatures to pass laws putting those innocent souls out of the real estate business. These are the actions of a cartel. Even now, the NAR is trying to pass federal legislation forbidding banks from brokering real estate.

This is important. We’ve already established that laws and regulations will not protect you in the marketplace if you are unwilling to protect yourself. Moreover, we’ve agreed that — as with the Underwriters Laboratories — where free-market oversight systems are in place, they are preferable in your own opinion to government laws and regulations. Finally, with respect to real estate licensing laws, we have demonstrated that the purpose of the laws is not to protect the consumer, but, rather, to protect licensees from the brokerage efforts of chatty grandmas and underemployed barbers — and banks — and anyone else who might introduce buyers and sellers for less money than licensed brokers want for them to have been charged.

From where I sit, there is no cogent rationale left to defenders of real estate licensing. We know from first-hand experience that self-protection buttressed by free-market oversight actually works at achieving true consumer protection. We also know that government laws and regulations do not work at achieving consumer protection. And we know that the real estate licensing laws are the result of a conspiracy against alternative vendors, with the far greater population of secondary victims being buyers and sellers of real estate. If you wish to defend these laws, I say you have nothing left to defend.

I am in league with the Greeks. I believe in questioning absolutely everything, and I am not afraid to risk being wrong on the path to discovering what is right. It is far beyond pellucid to me that real estate licensing laws are an abomination. If I could effect only one of my desired real estate reforms, I would divorce the commissions, but it remains that the real estate licensing laws — and occupational licensing laws in general — are by far the greater crime.

So, while you’re here, let’s consider some other ideas in the neighborhood. This is email I had from a Phoenix-area Realtor:

I read your article in the Arizona Republic about licensing laws. I totally agree.

I also wanted to ask you what your feelings are regarding part-time agents. I feel that there should be a disclosure requirement for agents with other employment. We all know that it can hurt our clients if we are not able to assist them in a timely manor.

It needs to be disclosed that employment with someone else could delay an agent’s ability to service the client properly.

Ethics and fiduciary is talked about all of the time but isn’t it unethical not disclosing an agents status?

I think this is a fine idea, except by now we’re talking about torts — civil court cases — not statute law or regulations.

If the real estate licensing laws were repealed, I think buyers and sellers would — as they should now — exercise much greater care in choosing whom to employ. Without the shield of the state-issued license to cover their asses, I would expect managers of real estate brokerages to exercise much greater care in choosing whom to hire. And I would expect the Errors and Omissions underwriters to step up their oversight in a big way.

There’s more: The NAR — or a more-honest competitor — would have a far greater incentive to vet the ethics of its membership, as would the MLS system or whatever might replace it. As with the Underwriters Laboratories, these “professional” organizations might become something more than dues-devouring paper tigers at setting and enforcing standards of care.

It might turn out that you could not employ a chatty grandma or underemployed barber even if you wanted to. The state license does nothing to prevent the lowest common denominators — intellectually and ethically — from becoming real estate “professionals.” But the free-market entities that arise to replace — and actually undertake — the oversight function could prove to be far more exacting than anything we can imagine in the current context.

In a comment to my column from Friday’s Arizona Republic, Athol Kay asks three questions:

If the laws’ purpose is to limit entry, why are brokerages packed wall to wall?

Because the barrier to entry is still very low. The real estate licensing laws put the barbers — particularly — out of business, and they forbade people with a casual or isolated interest in real estate brokerage from collecting compensation for their efforts. But, unlike other occupational licenses, almost anyone who wants a license can get one.

Wouldn’t that excess supply of agents drive prices down?

It tends to keep the median income for licensees very, very low.

Why didn’t NAR require/suggest licensing being a high hurdle instead of a low one?

For the reasons discussed in the article commented on: Because the broker-level license is a license to steal. A steady supply of gross incompetents with stars in their eyes is the main profit center in many brokerages. The real estate licensing laws were hugely unpopular when they were first passed, so their scope was very limited. But where salespeople may or may not have clients, a broker’s clients are salespeople — and there is plenty of money to be had out of them before all but the smallest few of them fail. The NAR and the MLS are in on this game, too.

Athol continues in a post at his own weblog:

If you’re complaining about haphazard training, wouldn’t the more obvious solution be higher standards for licensure?

No, for all of the above reasons: The license cannot substitute either for due diligence on the part of consumers or for free-market oversight entities. Moreover, further limiting the supply of providers of a function any reasonably intelligent barber can do is simply a more egregious form of the current conspiracy. If market forces demand greater training — as our own E&O underwriter does — that is the right way to effect it.

There’s more: The license, no matter what training it requires, is fundamentally anti-intelligence, anti-experience, anti-due diligence. The license not only deludes consumers into thinking that all agents are the same, it permits newly-minted licensees plausibly to make that very stupid claim. Where vendors compete for reputation, experience matters. Moreover, in a market where reputation and long-standing successful practice matter, new entrants would have to align themselves with established firms to get the traction necessary to go out on their own. This allows for the training that mostly doesn’t happen now, along with a weeding-out that doesn’t happen at all. You can hang your new real estate license practically anywhere, since you’re all profit to your broker. If licensing laws were repealed, managers of successful brokerages would be very careful not to hire — and to terminate with dispatch — people who might destroy their reputations.

More:

No licensing means there would be no more agents. The legal construct of “a real estate agent” would vanish. With that change the entire category of Agency Law would be null and void.

Not to be mean, but this is dumb. The law of agency is ancient, at least as old as the Greeks. If anything, the trend in statute law is to weaken the duties imposed by the common law of agency. To be frank, I would happily bid farewell to the entire category of laws designated as malum prohibitum — wrong because forbidden by statute law, with the civil courts handling the tortious claims now designated as malum in se — wrong in itself. In any case, where a party is injured in a real estate transaction, the case is handled in civil court, and this would not change if the real estate licensing laws were to be repealed.

One more:

Why would NAR seek to limit the number of Realtors anyway?

It doesn’t. The NAR’s interest is in limiting the number of non-Realtors.

Put a fork in this one. It’s done. The real estate licensing laws are not going to be repealed, more’s the pity, but I don’t think there is any rational defense to be made for them. They are a conspiracy arrayed directly against alternative vendors, and indirectly against all consumers, created by and for the benefit of a cartel. They do not protect consumers. They serve instead to induce consumers to be careless about their own interests, even as they encourage licensees to misrepresent their knowledge and experience. Moreover, they prevent the spontaneous creation of truly-viable free-market alternatives to licensing. They not only do not protect consumers, they effectively prohibit the means by which the interests of consumers could be protected.

If you can dispute any of this, make your case in cold, clear reason. And if you cannot dispute this argument, a gracious concession would be an unexpected delight.

Technorati Tags: , ,

46 comments

46 Comments so far

  1. Brett June 10th, 2007 8:29 am

    “If the real estate licensing laws were repealed, I think buyers and sellers would — as they should now — exercise much greater care in choosing whom to employ.”

    You are arguing to protect the consumers from themselves…that seems to be the same reasoning that the NAR is using…hmmm maybe the two of you have more in common than you think:) Also, I doubt if the licensed barber you speak of earlier would condone the unlicensed Grandma giving his clients haircuts.

    The general public does not need to be protected against licensing laws…they simply accept that there is a pre-screened group of individuals that meet the necessary minimums to handle their real estate needs. After that, it is a free market. There is no guaranteed business just because you have a license. If the Grandma and barber would like to become a licensed agent, nothing is stopping them. In fact, by your own words, it would be easy for them to do so.

  2. Greg Swann June 10th, 2007 8:39 am

    Hi, Brett,

    > Also, I doubt if the licensed barber you speak of earlier would condone the unlicensed Grandma giving his clients haircuts.

    The formal name for this logical fallacy is Two Wrongs Make a Right. Obviously, the arguments I’ve made here apply to all occupational licensing laws.

    > After that, it is a free market.

    But it is not a free market, for the reasons I’ve named. The imposition of force, no matter how mild, distorts behavior in ways detrimental to the consumer.

  3. Sock Puppet June 10th, 2007 2:21 pm

    >Obviously, the arguments I’ve made here apply to all occupational licensing laws.

    Just so I’m clear on this point. You’d want all other occupational licenses done away with too? Including Medicine? Law? Nursing? Plumbing?

    Are you against licenses of all kinds? Eg fishing licenses, drivers licenses, gun licenses?

    -Athol

  4. Greg Swann June 10th, 2007 5:00 pm

    > Just so I’m clear on this point. You’d want all other occupational licenses done away with too? Including Medicine? Law? Nursing? Plumbing?

    > Are you against licenses of all kinds? Eg fishing licenses, drivers licenses, gun licenses?

    1. It is very easy to deduce my position on these questions.

    2. I answered them all explicitly in an aside in the post.

    3. Nevertheless, the questions are irrelevant. Q: “What justifies real estate licensing laws?” A: “Doctors should be licensed.” This is the Fallacy Non Sequitur.

    4. Either you can contest the issue at hand or you must concede it. Cum taces, clamas — when you are silent, you shout — and not just you. Can you offer any rational defense of real estate licensing laws? Once we’ve dispensed with the main point, we can take up side issues — purely as a matter of sport.

  5. RE Agent in CT » The Feed Bag June 10th, 2007 5:06 pm

    […] I pull aggro on Greg Swann, who responds with Real estate licensing laws are a criminal conspiracy against the consumer created by and for the benefit of a cartel […]

  6. Gerry Davidson June 10th, 2007 5:06 pm

    Greg,

    I am an avid reader and fan of your posts and really appreciate the bite of your positions, but I have to say my eyebrows are still up to my hairline on this one. As to this most recent post on licensure I find Disraeli’s words to Gladstone applicable: “You are a sophisticated rhetorician inebriated by the exuberance of your own verbosity.”

    My first thought was that you were just trying to get a rise out of your audience, which I often enjoy. But then who would write such a long post on Saturday night unless he was really wound up about the subject? Relax. Enjoy life. And wait for the clear light of day before pushing “Publish”.

    I’m completely with you though about the huge need for reform. My position about the status quo in real estate is that it needs an explosion to alleviate the toxic gases. But why waste your time on such a foolish argument over eliminating licensure, except as a fruitless mental exercise (oxymoron?)? I just don’t fall for your position. It takes on the forcefulness of “often in error, never in doubt.”

    Since this is your blog and you get to set the rules which were, “if you can dispute this then make your case in cold, clear reason. And if you cannot dispute this argument, a gracious concession would be an unexpected delight.” A gracious concession it will not be. OK, I’m game.

    I am not a lawyer and so I am on unprofessional ground, but if a blogger can have an opinion, this is mine. Real estate licensing law protects the public to the extent that the only people who can assist a buyer or seller in a real estate transaction for a fee is an individual who has been licensed by the state (and found not to be a felon wanted for bank robbery) and has been instructed on the terms of these real estate laws and regulations (except for lawyers — are you a lawyer, is that what this is about?) In some cases it is a shortcut to the subject of real estate from general statutory law – transparency, clarification. Otherwise an opinion of real estate law would have to be extrapolated for application to the real estate transaction from the morass of statutory law. Now that is obviously a piece of cake for you, but for the normal practitioner it is quite an unwelcome task and one for which they would probably have to hire legal counsel. Also, I don’t mean to pick on your barber, but I am not comfortable with earnest money being held under the aegis of the red and white barber pole. I am really more comfortable with the FDIC insured escrow account governed under state law.

    The state legislators set the real estate law and the state board or commission administers the licensing, complaints and disciplinary actions (which only includes the stockade.) A wronged consumer is protected by the laws only if they pursue recourse by filing a complaint and or/civil suit. What better incentive for law-abiding real estate agents than to be deprived of their livelihood? I agree that just because real estate laws are set forth and our license says we understand them and agree to abide by them or suffer excommunication, does not assure consumer protection as to the competency of a given licensee, or customer satisfaction, or whether a licensee is stupid, dishonest, or insane. Of course a consumer should check the real estate agent he chooses to work with to insure that they have the level of expertise to provide the services requested. Duhhhh! Isn’t that the case with everything we contract for as consumers — it is ultimately our responsibility. As a matter of fact, every contract I’ve ever signed as a broker says to the consumer, “I’m really a dumb ass. You cannot rely on anything I say, do, or represent. You are completely on your own and if you listen to me you are a dumb ass as well!” Or something to that effect.

    But back to my point…at least the licensing of real estate agents says to the consumer that the practitioner has had at minimum the vermouth bottle of knowledge waived over the proverbial martini. Is it perfect? Far from it, but it beats the anarchy that would result with no licensing. I can just imagine your harangues if you were truly sharing commissions with the barber! Surely you are not serious when you suggest that “licensing laws exist to artificially limit who can be compensated for introducing buyers and sellers.” Are you saying an introduction is worthy of commission and that agents should pay the barber? For sure, one thing that the absence of real estate licensing law would resolve — the need for you to ever worry about acting in dual agency!

    I think there is some muddy water between the state license law and the National Association of Realtors. The NAR is a trade organization and a self proclaimed “Self Regulatory Organization” but for its members only. It has nothing to do with the state licensing requirements (unless you count the world’s largest lobby, but they really like to go after the Fed’s on the big issues like banking). It is the NAR and the associated MLS’ that deserve your ire — and I’m with you! They are the ones that took the system and the laws and manipulated them into a self-serving voracious machine. I’ll bet you dinner with Snoop Dog that you have more clout with your legislators than with the NAR! You can email your legislators but you can’t email NAR. I tried!

    You talk about training and again I agree that it is practically non-existent. The classes sponsored by the local Realtor&174; boards for their designations are a sham. They give you the answers!!! The instructors actually say “you will see this on the exam.” You give them the money you will get your designation unless you are a complete and utter idiot. At least our state licensing exams are for real.

    I also beg to differ with your statement that “incompetents with stars in their eyes are the main profit center in many brokerages.” That would be a very, very broken business model. The money for the 100% models is from the producers’ MLS fees via dividends. Don’t worry; anybody banking on making a go from desk rentals won’t be around to rankle us next year.

    As far as eliminating the licensing of real estate agents — be careful least you get what you seek…in all its ugly manifestations.

    Now I’m really mad. I’ve spent my Sunday evening responding to what I found unworthy of your talent. Who’s the fool here? You got me to respond! Good night and good bye.

  7. Greg Swann June 10th, 2007 7:13 pm

    Hi, Gerry,

    > Disraeli’s words to Gladstone applicable: “You are a sophisticated rhetorician inebriated by the exuberance of your own verbosity.”

    That’s the Fallacy Ad Hominem. Disraeli had no answer to make to Gladstone, so he attempted to ridicule him. In that respect, it was an Appeal to the Mob.

    > But then who would write such a long post on Saturday night unless he was really wound up about the subject?

    I work when I have time to work. I work a lot. I enjoy it a great deal. I am never wound up about anything. None of this matters.

    > But why waste your time on such a foolish argument over eliminating licensure, except as a fruitless mental exercise (oxymoron?)?

    In order to unearth and explore important principals of reality.

    > It takes on the forcefulness of “often in error, never in doubt.”

    Fallacy Ad Hominem again. I don’t take it personally.

    > A wronged consumer is protected by the laws only if they pursue recourse by filing a complaint and or/civil suit.

    As I discussed, there would be nothing different about this in the absence of real estate licensing laws. Your statement is true of any civil action, regardless of the statue law. If anything, statute law impairs the rights of consumers to pursue civil claims — for example, by limiting by fiat the time available to make a complaint.

    > Otherwise an opinion of real estate law would have to be extrapolated for application to the real estate transaction from the morass of statutory law.

    I think this is the Argument From Convenience: Doing the right thing is onerous, ergo doing the wrong thing is justified. That fails on its own, but working from case law instead of statute law is hardly onerous. You can be sure your E&O provider will be delighted to keep you up to date.

    > What better incentive for law-abiding real estate agents than to be deprived of their livelihood?

    Except it doesn’t work. Are you now arguing that you would prefer have your electrical appliances inspected by the government but not by the Underwriters Laboratories? Free market solutions work better, for two simple reasons: Success results in profit and failure results in liability. Neither of these motivations is true of government, and for this reason, among many others, we rightly hold government in contempt.

    > at least the licensing of real estate agents says to the consumer that the practitioner has had at minimum the vermouth bottle of knowledge waived over the proverbial martini.

    I addressed all of this last night. Absent licensing, we would reasonably expect agents to be better trained, more professional, less likely to make stupid mistakes. Their employers would not have the licensing laws to fall back on, and their E&O underwriters, among other professional oversight entities, would have every incentive to police bad behavior.

    > Surely you are not serious when you suggest that “licensing laws exist to artificially limit who can be compensated for introducing buyers and sellers.”

    You are now disputing clearly established historical fact.

    > [The NAR] has nothing to do with the state licensing requirements

    The NAR wrote the model legislation upon which state licensing is based.

    > Now I’m really mad. I’ve spent my Sunday evening responding to what I found unworthy of your talent. Who’s the fool here? You got me to respond! Good night and good bye.

    I’m very sorry you feel you’ve wasted your time. I don’t see that you’ve actually responded to what I wrote. I have addressed some of your concerns, but they are not of the essence. The essential point is this:

    [Real estate licensing laws] are a conspiracy arrayed directly against alternative vendors, and indirectly against all consumers, created by and for the benefit of a cartel. They do not protect consumers. They serve instead to induce consumers to be careless about their own interests, even as they encourage licensees to misrepresent their knowledge and experience. Moreover, they prevent the spontaneous creation of truly-viable free-market alternatives to licensing. They not only do not protect consumers, they effectively prohibit the means by which the interests of consumers could be protected.

    Your basic argument would seem to be that repealing the real estate licensing laws would result in the total absence of consumer protection. This is not what I said, nor is it a defensible position — although it is a common resort when the subject of repealing any law comes up.

    In fact, the true protection of consumer interest at present is not the real estate licensing laws but, first, the due diligence already being effected by consumers, and, when that fails, the civil courts. When we stop trying to pretend that people with no incentive either to pursue success or avoid failure are somehow our fearless protectors, we can open up our minds to better alternatives. The real estate licensing laws not only do not protect the interests of consumers, they serve to prevent the creation of free-market entities that would zealously guard the interests of the real estate buying and selling public.

    I would be grateful if you would go back and reread what I wrote, ruminating on the argument point by point. I have no doubt that I am right, but I have nothing whatever to gain by persuading you. Even so, the principal is important, and if you and other people reading here can master the principal behind this argument, you will be that much more secure from the rapine mercies of the state.

  8. Gerry Davidson June 11th, 2007 5:13 am

    Greg,

    Thanks for your prompt response. My quote from Disraeli was nothing more than a description of my impression of your blog, not an attack on the mob. Good deflection though. Really, between your conspiracy theory which evokes memories of Hilary’s paranoia and your radical rantings which remind me of McCarthy’s crusade to quell the red threat, I’m beginning to be a bit uncomfortable. I’ve enjoyed the repartee but I’m moving on. I prefer to engage in more applicable debates that have a relevance and resonance to those I would like to engage. Good night and good bye, but unlike Edward R. Murrow, I’ll be back.

  9. […] The business people I meet everyday don’t conspire against consumers but rather are reacting to and responding to duplicitous commercial behavior. This is a market response that will win – eventually. Interestingly there are others looking at this as well. One the one side are those, like Greg Swann in this wordy post, that believe that regulation should be replaced with personal responsibility and free market solutions as it relates to, for example, real estate agents. On the other hand, there are those like Elizabeth Warren, a Professor of Law at Harvard Law School, that make an argument for more regulation in a post entitled “Unsafe at Any Rate” referencing the dangers of various consumer financial products and services. […]

  10. Will Farnsworth June 11th, 2007 1:29 pm

    I really enjoyed reading the back and forth on this issue between the 2 heavyweights. Gerry, I think that if you are truly “so angry” over this post that you ought to truly dissect Greg’s post and engage in a civil debate. And although I pretty much agree with Greg, I really hope you do so.

    It is unfortunate that more participation in this discussion has not taken place. Although, I am sure that if you put the words Redfin or Lindsay Lohan into your post that it would get more responses from your “frequent contributors.” Pathetic!

    It ironic; support an alternative to traditional RE (Redfin) and you will be crucified by Realtors. But attack the very foundation of their being and they fall silent.

    Or maybe just a poor

  11. […] As such the debate and opposite viewpoints we have over whether real estate agents should be licensed or not, are merely footnotes in the larger world view differences between Anarchism and my belief that the State has a important role to play. […]

  12. Brian Brady June 13th, 2007 6:41 am

    I’m happy to throw my hat in the ring here after an extended leave of absence chalked up to some professional training.

    Greg makes a rational argument against occupational licensing. Occupational licensing is a scam to collect fees under the cloak of consumer protection. The UL seal example is perfect. I remember looking for that as a teenager when buying appliances for a Mother’s Day gift. I also remember reading Consumer’s Guide rather than a government report.

    Whom to Trust? A licensing entity for hotels or tripadvisor.com? In a vacuuum of information(which we have), the free market will always be preferable to a government alternative. Why?

    It’s all about the Benjamins, baby. The free market will be rewarded for providing credible information about proficiency of real estate experts while the government continues to see regulatory board as a profit machine.

    Moreover, Greg’s argument about consumer responsibility for due diligence rings true. I don’t know if I’d be as judicious about the highly polished floors in the supermarket as he but that is a question of standards, not my reliance on a licensing entity to pass judgment on the service offering.

    Do away with licensing and you’ll have a flood of VERY low earning real estate salespeople and a tier of VERY accomplished professionals. The demarcation of professional competence would actually be much more clear without the implied expertise a piece of paper represents.

  13. […] The Bloodhound Blog’s Greg Swann has been making his argument for elimination of agent licensing altogether. Call me busy (I have it on authority that the cat-who-hates-Steve just hurled her Fancy Salmon Feast again), call me distracted with other issues of import (paying my utility bill and my quarterly taxes weighs heavily on me right now), or accuse me of lacking the Big Thinker gene (”big” as in larger than Paris Hilton’s legal bill). I disagree with his proposition that occupational licensing is criminal, but I lack the mental agility and clarity of thought to tackle this weighty thesis this morning. That would require self-sequestration in a windowless room appointed only with black lights and the soothing background sounds of Ayn Rand’s talking book series. […]

  14. […] Greg Swann at BloodhoundBlog tells us why real estate licensing laws are a criminal conspiracy against the consumer created by and for the benefit of a cartel. […]

  15. Altos Research Real Estate Insights June 25th, 2007 12:48 pm

    Carnival of Real Estate June 25 2007 Edition…

    The fabulous blog fest, the Carnival of Real Estate, finds its way to our humble home today. While we came up short on working out a clever theme (Summer Solstice? 4th of July? Yankees vs. Giants? Gay Pride Parade?) for judging this week’s mound o…

  16. Jason Buberel June 25th, 2007 8:28 pm

    Greg,

    This is an issue that I would be the fine people at the Institute for Justice (the people who brought the recent eminent domain suit to the supreme court) would love to get on board with. They have similar efforts going on to fight other professional cartels – hair stylists, cab drivers, etc.

    http://www.ij.org/

    Specifically see their page on Economic Liberty:

    http://www.ij.org/economic_liberty/index.html

  17. Greg Swann June 25th, 2007 9:35 pm

    > This is an issue that I would be the fine people at the Institute for Justice (the people who brought the recent eminent domain suit to the supreme court) would love to get on board with.

    Never even thought of that. Clint Bolick is in Phoenix, now, too…

  18. Trulia Blog » Carnival of Real Estate June 26th, 2007 6:21 pm

    […] For Real Estate Professionals Greg Swann of BloodhoundBlog explains that ‘Real estate liscensing laws are a criminal conspiracy agains the consumer created by and for the benefit of a cartel’ (What a mouthful!) and Kimberly Wester of Active Rain asks ‘Agents: Can you ‘name’ you listings? Your buyers can. . . and do!’. […]

  19. Searchlight Crusade June 27th, 2007 3:29 pm

    Links and Minifeatures 06 27 Wednesday…

    Senate Republicans Block Labor Bill

    Senate Republicans on Tuesday blocked a bill that would allow……

  20. […] Greg Swann’s (Bloodhound Realty) blog about doing away with licensing laws is no different from any radio talk show host throwing out possible topics of discussion at the beginning of their program shift. Occasionally, the host will bring up what seems to be an excessively outrageous subject. The radio host’s intent to get a dialogue started is sealed. Sealed with a firestorm of regular listeners calling in stating, “long time listener of your show, first-time caller…you can’t possibly believe…”, etc. Of course, this is always (a) on a slow news day and (b) later referred to by the host as “good radio.” […]

  21. Jennifer Kirby July 3rd, 2007 9:55 am

    Hi Greg,

    I have a college education in Chemistry, but I wouldn’t feel comfortable going and finding a job right now in that line of work. I just no longer have the knowledge to support it. So I am a real estate agent who has a lot of experience in the field.

    I dislike very much big government, and I equally hate it everytime a new law is passed limiting how I run my business, or better yet any new laws that are created to “protect the consumer”. Most of the time it doesn’t concern protection, just concerns someone saying that they “did this”, and using a military term, is just a “bullet in their fit rep”.

    What every happened to consumer personal responsibility? If you didn’t read the contract yourself, and missed an important provision, then it is no ones fault but yours, Mr. Consumer. Forgot what date the inspection was due? Well, I might be here to help guide you, but it is not my responsibility to keep your calendar of events for you.

    I am ready for we as a society to stop relying on our government to do everything for us and make new laws everytime there is an issue. The responsibility is ours to make a change. You make some good arguments Greg, and while I may not agree with them all, I think we both can agree that more laws are not the answer, especially licensing laws. I believe some good does come out of licensing laws, but think it has by far gone over the line of usefulness to the public.

    I am visiting here in Indiana over the 4th and just read where Indiana is now going to require Interior Designers get a license. You’ve got to be kidding me! Now I need to have proof from the state that I know how to coordinate yellow with green. This is just a recent case how things are getting out of hand.

  22. […] Part 2 Real Estate Licensing Laws Are Not Strict Enough […]

  23. […] Only good solid real estate Standards of Care and counseling can avoid what buyers are later trained to say in depositions: I relied on my agent” and “I didn’t understand what a contingency meant.” […]

  24. […] I’ve made no secret of my opinion that current real estate licensing is a catastrophy and that it is ruining the industry and hurting the public. I’ve written about fixing it before, but here’s my solution to the problem (and it doesn’t call for eliminating all requirements and making things worse.) […]

  25. Jack Payne August 4th, 2007 6:05 pm

    In Phoenix, Arizona, you can drop in on many a real estate or mortgage “broker” who turn out to be 22-year old, long-haired, pony-tailed, nose and ear-ringed, tatooed specimens of humanity.

    Sure makes you wonder about the value of licensing when you run into something like this.

  26. J. Ferris August 4th, 2007 8:42 pm

    In Phoenix, Arizona, you can drop in on many a real estate or mortgage “broker” who turn out to be 22-year old, long-haired, pony-tailed, nose and ear-ringed, tatooed specimens of humanity.

    Sure makes you wonder about the value of licensing when you run into something like this.

    I get what you are stating but I am 22 and have always been extremely professional when handling real estate transactions and clients and have been since I was 18 and new to the business so I take offense to this comment. While you’re out next time, sniping the bottom of the real estate office drains, be sure to pick out some of the grannys with pics of their poodles, themselves talking on their cell phones or posing with grandkids on their business cards, on their sweaters and smeared across the dashboard of their vehicle. Self expression is hardly an indicator of performance or competence in any business.

    If anything there should be a technology proficiency course required as a prerequisite to real estate licensing classes because I’ve never seen so many technologically retarded people in an industry as I’ve seen in real estate.

  27. […] Not replacement. We can’t get rid of it, no more than we can get rid of the cartel-creating real estate licensing laws the NAR foisted off on an unsuspecting public. We can’t kill this vampire, no matter how much blood-sucking havoc it wreaks. But we can rob it of all its power. […]

  28. […] Interestingly, if we were to completely repeal the real estate licensing laws, all of the problems we’re talking about would go away in very short order. The sort of quality-rating organization we are talking about would come into existence virtually overnight. And, while people with little training and experience in real estate could lawfully broker transactions, no sane person would let them. The Minnesota Association of Realtors wants to know why the incipient failures won’t quit the business. It’s because the stupid license told them they are “professionals.” […]

  29. Searchlight Crusade September 26th, 2007 5:48 pm

    Links and Minifeatures 06 27 Wednesday…

    Senate Republicans Block Labor Bill Senate Republicans on Tuesday blocked a bill that would allow labor unions to organize workplaces without a secret ballot election. The article makes it plain who the reporter favors: Unions complain that employers h…

  30. […] Toughening or eliminating real estate Licensing Laws have fostered discussions on the internet, beginning with Greg Swann’s Bloodhound Realty weblog, which sparked more comments from others, such a Athol Kay of REAgentinCt and Russell Shaw of NoHassleListing. […]

  31. […] Only good solid real estate Standards of Care and counseling can avoid what buyers are later trained to say in depositions: “I relied on my agent” and “I didn’t understand what a contingency meant.” […]

  32. […] Real Estate Attorney Douglas White, of Hoge, Fenton, Jones & Appel, Inc., speaks out on the critical role of the licensee when representing a client. Many licensees brag about being hired because of their beautiful brochure and/or presentation folder. Real estate attorneys often mention that while marketing is important, the skill-set of the licensee should be scrutinized. While the licensee is selling their marketing and/or knowledge of a neighborhood, this should not be the reason a customer becomes a client.Real estate attorneys often comment the consumer’s focus should be the licensee’s knowledge of the different contracts, clauses and avoidance of transactional pitfalls. In addition, the licensee should have deft negotiating abilities. After all, the licensee is the consumer’s representative in the marketplace. The actions of a licensee are a direct reflection on on the client, in more ways than one. There is nothing worse than a licensee getting in the way a sale and/or worse, create a legal problem for the ones they were hired to protect.Toughening or eliminating real estate Licensing Laws have fostered discussions on the internet, beginning with Greg Swann’s Bloodhound Realty weblog, which sparked more comments from others, such a Athol Kay of REAgentinCt and Russell Shaw of NoHassleListing. […]

  33. Lord January 4th, 2008 4:05 pm

    Before licensing, everything was handled by attorneys. Still are in many eastern jurisdictions. Still would be without licensing, either beforehand or afterwards when principals end up in court.

  34. […] Greg Swann’s (Bloodhound Realty) blog about doing away with licensing laws is no different from any radio talk show host throwing out possible topics of discussion at the beginning of their program shift. Occasionally, the host will bring up what seems to be an excessively outrageous subject. The radio host’s intent to get a dialogue started is sealed. Sealed with a firestorm of regular listeners calling in stating, “long time listener of your show, first-time caller…you can’t possibly believe…”, etc. Of course, this is always (a) on a slow news day and (b) later referred to by the host as “good radio.” Unbeknown to the host, “good radio” is listening to the radio host engage in verbal gymnastics by rationalizing their position with every angry caller’s point and counter-point. Swann’s “good blogging” created a lot of written gymnastics on his part including the friendly exchange with Chris Berg, of San Diego (heck, they are friends) Berg demonstrated the common California line-of-thought regarding real estate licensing laws. […]

  35. […] Inquirer brings us a nice illustration of why occupational licensing laws really exist: Not to protect the consumer, but to protect the licensees from free-market competition: Mary Jo Pletz was really, really good at eBay. But now the former stay-at-home mother and gonzo […]

  36. […] or eliminating real estate Licensing Laws have fostered discussions on the internet, beginning with Greg Swann’s Bloodhound Realty weblog, which sparked more comments from others, such a Athol Kay of REAgentinCt […]

  37. Claire Tinsley February 18th, 2008 2:09 pm

    I think the point he’s making is that there are too many stringent regulations involving real estate licensure. I do agree with this basic premise and like the author, what I am against is abuse/usury on the part of corrupt officials. Just in case you weren’t sure, this EO insurance that real estate brokers make you pay is a FRAUD. The broker/owner must take out a blanket EO insurance policy that covers ALL of his agents/brokers, without this purchase of the policy, he wouldn’t be in business. When the agents “pay their EO insurance” they are actually reimbursing the broker for what is already in existence. Oh, the EO blanket insurance that is purchased along with filing of the business license fees, covers all existing and future agents. Even if you never pay your EO insurance as an individual contractor/agent, you are already covered by the broker. You’re just putting money back in his pocket for something he has already paid for.

  38. […] is right up my street. Occupational licensing laws are a bad joke on the consumer. At best, licensing is regulation by the regulated, cronyism punctuated by outright crime. At […]

  39. Randal May 15th, 2008 10:06 am

    Although real estate licensing laws are not in a consumers best interest, you failed to mention the relationship of our banking community to the real estate industry.

    If a bank of the state was created, it would be possible to mandate 0% interest on home loans forever. In addition, it costs the taxpayers nothing because borrowers still get foreclosed on for non-payment. There is $10,000 of qualifying for every 1% interest. Based on a 30 year mortgage rate of 5% that is $50,000 that each and every single one of us would gain instantaneously regardless of who we are or what we own. But that is not all of the story. That is only the immediate and instantaneous benefit. 0% interest would filter through the economy and within 3 years everything would come down and not just housing.

    I encourage you and other readers to remove lending institutions from the residential market and put them back into commercial industrial and syndicated loans and put them back into the public interest. If you have 0% interest mandated on home loans, the lending industry will be forced to change their portfolio. As far as I am concerned, bank have no business doing student loans or home loans. Such programs should be direct obligations of the US Treasury Department instead.

    From a historical perspective, it is important to note that the banks didn’t cause this problem and the origins of much of the problem came from President Richard Nixon. Nixon floated the dollar and took the US off of a silver standard in 1971. In 1973, the same year he resigned, he ordered the nations largest financial institutions to loan more than 1 trillion dollars abroad. He lied to everyone and told them he was doing it to fight communism, but what he was really doing was devaluing other countries currency so that big business could get out of the country and make it cheap.

    From a historical point, it is also important to note that the democrats fully supported everything that Nixon did, the same way they support George Bush on tax cuts for the oil industry and the Iraq War. Watergate was intended to give the appearance that they did not support Nixons policies, but the democrats were very careful not to change his monetary policy or anything else we have done. Ever politician since Nixon has gone along with this.

    The american public needs to wake up and smell the roses. Although the feds created the mortgage crisis, the solution has been and always be a state one. Each state whos citizens have been oppressed should organize and create a bank of the state. A bank of the state should be financed by a $1/person tax assessed annually. In addition, a state bank should only be limited to residential loans in any state region and agricultural loans that are only in incorporated areas. Currently the Federal Farm bank won’t do farm loans in downtown Manhattan, downtown Los Angeles, Downtown Seattle, Downtown Houston. They won’t do these loans because they want private banks to be able to squeeze the public and leech their living.

    Creating a bank of the state is not without peril. Currently the US military is somewhat dependent on congress to finance military operations and the federal reserve has historically played a part in this dating all the way back to Wolrd War I, the war of its inception. For this reason, it would be absolutely essential that the states come up with significant financing and manpower to help the US military and insure that the federal government is able to continue to provide the services we all expect — such as providing for the common defense and the military, and other financial matters.

    Another risk is that you don’t want to put private banking out of business. Private banking is important. For this reasons, a Bank of the State should be limited to home loans and urban agricultural loans. There are other venues that commercial banks should be focused on, but can’t because of state and federal banking policy.

    I don’t think representative government is going to be much of a friend when it comes to reforming the system. The expansion of the money supply has enabled congress and their friends to receive financial benefits that they couldn’t have obtained over 40 years ago. Unfortunately the actions of President Nixon have set the state for the end of the middle class (working class). The good news is that one simple initiative petition in each state can reverse it quickly. You can be assured of rampant deflation once such an act got passed because the value of virtually all residential property is not based on what you have, but what a bank is willing to loan you.

    I encourage each of your readers to investigate the Bank of the State of North Dakota and see if it is appropriate for their own community in the state they reside.

    I encourage your readers to research the Bank of the State of North Dakota; the only state owned and controlled bank in the entire United States.

  40. […] away by incompetent marketing. What matters is protecting incompetent Realtors from competition. This is the purpose of the real estate licensing laws — written by the NAR — and it is the motivation behind everything the NAR […]

  41. […] The NAR cartel and how to supplant it […]

  42. […] are these issues? The real estate licensing laws do not exist to provide you with consumer protection. They exist to “protect” you from cheaper competition. The IRS “safe […]

  43. Bob Hamme October 7th, 2008 7:50 pm

    I believe real estate sales people ought to be licensed. And I’ll go so far as to say I think they license should be prominently and conspicuously displayed at all time on their collar worn around their necks….well maybe as a badge, or identification card lanyard worn around the neck and openly displayed. When a automobile is licensed in a state, does not the plate have to be displayed on the vehicle so authorized? How does a customer KNOW the person being dealt with is licensed, if the “Plate”, is not displayed? Is it not true we register and license pets? And do we not require tags recording pet required vacinations to be displayed on teh pet at all times? As the borker’s “pet”, so we not do the same when we allow the brokers pets to “play with other people and strangers”? I mean atleats this way the customer would know which “pets” are safe to pet or play with, and if “bit”, we’d know if it was from a registered, and vacinated entity. Why stop at licensing a salesperson’s knowledge, which is what we test so they can earn their “diploma”, or license? Why don’t we “vacinate them”, by also certifying and then issuing licensing of thei “ETHICS”. Would we not agree, thre is probably more harm done by a broker or saleperson who intentionally does things unethically, than is done by those who are trying to do what is right, but just not very competent?

    My vote, license and vacintate, lets subscribe to agents and brokers standards that include both competency as well as subscription and training, and cerification of obtained high levels of ethics. And yes, I always want to have my cake and eat it to. Why else would you want the cake? As a decoration?.

  44. Bob Hamme October 7th, 2008 7:53 pm

    I think he can spell, I question his ability to type.

  45. Crystal L. Cox November 6th, 2008 2:53 pm

    The Real Estate Industry is Hurting the Real Estate Consumer. There is No Consumer Protection in Real Estate – the Only True Real Estate Insurance that you have is Knowledge. The E and O insurance that REALTORS have is to Protect Realtors from Real Estate Consumer. I am a Real Estate Broker Owner – I went to School One Week to Get my Brokers license, I learned how to pass a real estate test. This after being a Sales Agent for One year. It is EASY to be a Realtor – there is no Quality Control over the Data or the Realtors and this has created the base for a perfect storm to create a financial nightmare for the Real Estate Consumer.

    Realtors Do Lie to the Real Estate Consumer, the NAR members Do Violate Anti-Trust Laws – they have no choice. NAR Says that Real Estate Agents Choose if they want to be members of the National Associatio of Realtors – this is NOT True. Learn More Folk and Protect yourself from the Realtors Cartel.

  46. Robert December 11th, 2008 4:18 pm

    I read the posts above. Real estate licensing laws are established to protect consumers. The testing is very comprehensive, in which case, most people can not pass it without studying.

    The NAR is the backbone of the real estate industry. I have made a great career in real estate; and, I owe a part of that success to the National Association of REALTORS.