Editor's note: This is the final part of a continuing series on single licensure.

Following Colorado's lead, South Dakota and Oregon are raising the bar on real estate licensure by instituting single-level or broker-only real estate licensing. While there are accommodations to "grandfather" existing salespeople, those licensed before Oregon's deadline of July 1, 2002 and South Dakota's deadline of January 1, 2003 will have to meet the educational requirements to become a broker associate by a certain period, or to pass the broker's exam to become a managing or employing broker, also known as a principal broker.

A number of reasons have been cited as to why these real estate commissions sought to change educational requirements for licensees, making the only difference between principal brokers and associates a matter of passing the broker's exam and a few years of experience.

"I first heard Mike Gorham in Colorado talk about it in 1995," says Scott Taylor, state commissioner for the Oregon Real Estate Agency,. "I thought, you know, that makes sense, and I watched our complaints numbers.

"We were finding a disproportionate number of complaints filed against salespeople over negligence or they didn't know what they were doing," continues Taylor. "Over 90 percent of complaints were against salespeople, and they are only 83 percent of our licensees."

The real estate industry has also changed, notes Taylor. "In my position you have to be appointed out of the industry," he explains. "And I come from the industry. I can see the business has changed. In 1979, brokers knew what people were doing, now you could have a branch with hundreds of people, and they are being expected to perform at the broker level - that was the expectation of the consumers."

Taylor says that initially there was some resistance to single or broker-only licensure. "I talked about if for three years before we proposed the legislation. We proposed it in 1999, and at the 11th hour we had a broker in the metro area who was upset. He was reacting to salespeople who said that if we went through with it, they would just quit or retire. For the most part, the licensees thought it was a good idea, and this last time, the Realtor association, which had been wishy-washy before, supported it."

When July 1st rolls around, what will change? "There will be a shift in responsibility for the individual's work product to the individual," says Taylor. "Business won't change, but we will see the negligent types of complaints dropping off."

"We don't expect to see a tremendous amount of fallout," adds Taylor. "It didn't happen in Colorado. If this raises the level of professionalism, then a lot of people coming out of college may see real estate as a career. Ultimately, it will be better for recruiting.

Will the number of licensees drop? "Competition is making it drop," states Taylor. "From 1995, through August 2001, we have seen licenses drop by 5 percent a year. Oregon has been a strong market over that period of time, and now it has flattened. I think most people would rather have fewer highly productive people than non-productive people."

Oregon's new licensing law will require real estate professionals to have a broker's license to list and sell. If they want to manage other brokers, they must have been licensed for three years, and take some additional management courses, and pass the broker's exam. Managing or employing brokers will be known as principal brokers.

Salespeople licensed before July 1, have three years to take 30 hours of classes which will apply to their continuing education credits.

The requirements in South Dakota are similar, except that its start date is January 1, 2003, salespeople have two years to comply with new educational requirements, and anyone can sit for the broker's exam regardless of the number of years he or she has been licensed.

Explains Larry Lyngstad, real estate commissioner for South Dakota, "There are some concessions to some of the statutes that exempt licensees from having to pass another exam. Part of the logic is that they do not want to legislate anyone out of business. They can complete the broker education, but they don't have to take the exam to be a broker associate, but neither can they open an independent office unless they have completed the broker's exam, including the completion of the brokerage management course."

Lyngstad also sees the more stringent licensure as an opportunity to attract more young people to the industry.

"I think those people who are upgrading to broker level that are new to the business and young - I expect they will complete the requirements and take the exam and open every door," says Lyngstad, "and what better time to do that than when you have completed the education?"

"The ones who have been around a long time, who weren't interested in having their own business, won't take the exam," muses Lyngstad, "They will say, 'I really don't need the label, I need the education, and I've got that.' The older we get the more frightened we become of tests - fear of testing is real, Those people will be able to complete their education and serve out their years and retire as broker associates.

South Dakota is also following some of its own traditions. "We paved the way in 1996 when we expanded the responsibilities of the sales person and increased their education and removed requirement to serve in the industry for two years, so they have been able to enter at the broker associate level and complete the requirements so broker associates are reasonably well accepted," says Lyngstad. "We have come full circle. In 1955 when the first license law was enacted in South Dakota, people could come in and start at the broker level."

How will the public respond? "The public should respond like the legislature," states Lyngstad. "- whole heartedly. It should give them more knowledge of the level of service. Education is only one part of the licensing process, but it will require a higher level of commitment on the part of licensees."

Published: May 13, 2002

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