It’s a close one! Of the 271 first tuesday readers who voted in our recent poll, 55% (149 voters) support the consolidation of the Department of Real Estate (DRE) into a bureau within the Department of Consumer Affairs (DCA). 45% (122 voters) disagreed.
The Governor included the merger proposal in the January 2012 state budget proposal, citing the administrative costs such an effort would save. Elimination of managerial redundancies between the DRE and DCA would additionally improve the enforcement of real estate licensing regulations.
The regulatory agency in charge of a heavily-scrutinized industry such as real estate must be extra vigilant in creating a stronger, more capable licensee base. However, decades of leadership deeply rooted in California politics have bent the will of the DRE in favor of real estate trade unions. As a result, enforcement of ethical standards and consumer protection regulations has become lax. first tuesday endorses the bureaucratic reduction and further recommends eliminating the titular role of the DRE Commissioner to free the real estate industry of the political pressure preventing a long-overdue revamp of the broker and agent licensing requirements.
first tuesday supports an improved real estate licensing scheme modeled after the standards of the Office of Real Estate Appraisers (OREA). Under such a licensing scheme, newly licensed sales agents complete a two-year trainee program working alongside an experienced broker or agent – part of a team – before earning a “certified” sales agent’s licensing status. Only then could they operate independent of constant oversight in the handling of client affairs.
Requiring prospective agents and brokers to obtain a four-year college degree prior to applying for a license is another control on licensee quality. This was attempted 40 years ago. Before it became effective, it was drummed out of the educational requirements and remains so to this day. Real estate could use a bit more brainpower, considering the level of influence agents and brokers have over the real estate assets of such a huge percentage of the population. [For information about the public reputation of real estate agents, see the November 2011 first tuesday article, Damage control: restoring public trust in real estate professionals.]
The new DRE must also be transparent and responsive in their dealings with licensees, other regulated entities (such as DRE-sponsored education providers) and the public. If there are systemic problems in the policies or procedures governing licensees (say, with the low entry requirements for becoming a real estate agent), the DRE must acknowledge and act on the issues swiftly. The current political influences and byzantine bureaucracy prevent this type of open discourse, except when absolutely required by law.
And, most importantly, once the DRE has implemented these new regulations, there must be follow-through enforcement to ensure results. If licensees and regulated entities are allowed to disregard regulations with impunity, how then can it – or any such government agency – consider itself a regulator and retain the faith of the public?
To cast your vote and read more about the governor’s proposal, see the January 2012 first tuesday article, Rumors of DRE enlightenment by consolidation.