There’s always something to howl about.

Arizona real estate licensing fuels debate

This is me in today’s Arizona Republic (permanent link). I don’t write the headlines. The implication of this one, I think, is that I am debating with myself — always possible — since no one else talks about these things.

Arizona real estate licensing fuels debate

I wrote a couple of weeks ago about a new real estate licensing law, and it turns out I got an important fact wrong. After July 1, licensees will only have to renew once every four years, but they will still have to take 24 hours of continuing education every two years.

As a result of that column, I got to meet newly appointed Real Estate Commissioner Sam Wercinski, an earnest, soft-spoken man who seems genuinely committed to making positive changes in the rules and laws that govern real estate transactions in Arizona.

After meeting Wercinski, I spent a while talking to Tory Anderson, legislative liaison for the Arizona Department of Real Estate. She wanted to lasso me into volunteering for committee duty, but I disabused her of that notion by detailing what I consider to be the three most important reforms that could be enacted in the real estate industry.

What are they?

First, I would love to see licensing done away with altogether. We are mentally the captives of our civics teachers, so we are apt to think that it is laws that protect us from harm, when in fact our only protection is the reputation for integrity of the people we trade with and our own good care in shopping for that integrity. To the extent that licensing laws give us a false sense of security — our belief that the license guarantees competence — they do more harm than good.

Don’t fret, though. Despite every principle of economics, there is no chance that the state will do away with real estate licensing laws. So here’s a fallback reform: The state should eliminate the distinction between the broker’s and salesperson’s license.

The way things are done now, your employment contract is not with your own Realtor, but with that Realtor’s designated broker. An agent can change brokers — but the contracts stay behind. This system, an artifact from the original real estate licensing laws, serves to trap agents in unhappy situations at the same time that it inhibits innovation.

We’ll talk about other unlikely reforms in forthcoming columns.

 
Further notice: This article from today’s Republic provides a nice example of the fool’s paradise engendered by occupational licensing. The homeowners thought they were “safe” because they were dealing with a licensee. They didn’t do any true due diligence: They didn’t ask about bonding, insurance, performance penalties, escrowed funds, etc. Even in a truly free market, things can still go wrong. But the license gives a color of legitimacy to crooks and incompetents at the same time that it encourages thoughtless, careless behavior on the part of consumers.

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