Sara Geimer is the manager of REALTOR® Magazine's Good Neighbor Awards and a former senior editor with the magazine.
The Law & You: Single Licensure Gaining Ground?
Thumbs up from Colorado, but other states are slow to follow
June 1, 1999
It has been two and a half years, and no other state has followed Colorado’s move to single licensure. Will the single license become a national trend or remain a one-state wonder?
As many as 10 other states are considering single licensure, which eliminates the salesperson license--leaving only the broker license--and imposes higher entry requirements. But only two--New Mexico and Oregon--have introduced legislation in the past year; both bills failed, largely because of lingering questions about how single licensure would impact the industry. Texas instituted single licensure in 1975, but repealed it in 1981 after its requirements were deemed too onerous.
Colorado’s experience offers a glimpse at the transition and should encourage single licensure’s proponents in other states, says Mike Gorham, director of the Colorado Division of Real Estate and president of the Association of Real Estate License Law Officials. “Single licensure has been enthusiastically accepted in Colorado,” says Gorham. “It’s been a major step forward in advancing professionalism without affecting office practice.”
Naturally, practitioners and regulators around the country are curious to see single licensure in action, but they're not yet convinced it's right for their state. "Everyone's talking about it," says Craig Cheatham, executive vice president of ARELLO (www.arello.org), " but they're taking a wait-and-see approach." Cheatham says he expects single licensure to gain momentum.
Colorado, well on its way to becoming a broker-only state, hasn’t experienced the upheaval some predicted. Dissenters feared that the more difficult and time-consuming entry requirements would discourage new people from entering the field. Educational requirements in Colorado more than doubled, from 72 hours for the former salesperson license to 168 for the new single broker license, but applications haven’t suffered.
“We had an initial drop-off in testing and applications--largely an aftereffect of the pre-deadline surge to get in under the old requirements--but the figures are back almost to normal levels,” says Gorham.
Another fear was that giving all licensees broker status would result in practitioners leaving offices en masse to start their own shops. That hasn’t been the case in Colorado, where the law creates a three-tier system. A new broker must have two years of experience to become a sole proprietor and must take additional management training to employ other brokers.
Higher bar, more responsibility for salespeople
Single licensure’s advocates say it will provide the public with a better-educated real estate professional and give licensees more independence and responsibility.
“Consumers generally don’t distinguish between brokers and salespeople,” says Gorham. “They expect all licensees to have full knowledge and competency.”
Under a single licensure system, everyone receives the same training, usually emphasizing contracts, closings, and the practical realities of the industry. Higher educational requirements raise the bar for competency and professionalism, says Gorham. “Licensees are now much better prepared to face the independence they’re finding in the workplace.”
But along with higher-level training comes increased responsibility. Single licensure makes all licensees directly accountable for their own activities, relieving the broker of some liability.
“We’re shifting the burdens of supervision and individual responsibility,” says Gorham.
That makes sense, he says, because hands-on brokersupervision has become impractical as technology has enabled salespeople to spend less and less time in the office.
“Realistically, the broker can’t be following people around all the time,” says Gorham. “We recognize that reality by putting very competent practitioners out there who can be held responsible when they’re at fault.”
Clearing up misconceptions
When states consider single licensure, one of the biggest questions is what to do with existing salespeople. Rather than subject practicing professionals to rigorous new standards, states have sought to ease the transition with softer requirements and long timelines. Colorado gives existing salespeople at least three years to upgrade to broker status by either passing the new licensing exam or taking 24 hours of course work in contracts and closings.
That transition is progressing smoothly. About half the salespeople in Colorado have upgraded to broker status already, and by 2002 the salesperson license should be phased out entirely.
Initially, Colorado had dissenters, too. But Colorado regulators took it slow, appointing a task force to investigate the issue and making sure everyone understood the proposal. “We were successful because we had buy-in from the industry, the legal profession, and the commission,” says Gorham. The law took effect on Jan. 1, 1997.
Other states--including Oregon and New Mexico--have had more trouble. In Oregon, single licensure legislation failed because licensees misunderstood the consequences, says Scott Taylor, commissioner of the Oregon Real Estate Agency. “Brokers thought salespeople didn’t have to do enough to achieve broker status, and salespeople resisted the additional requirements.”
Colorado was able to overcome similar objections through education. Now “most salespeople are pleased to have the higher designation, because so many of them were operating independently anyway,” says Gorham.
Taylor says that the Oregon Real Estate Agency plans to pursue single licensure in the next legislative session but that it will try to better prepare licensees for the change. He’s optimistic that the law will pass, because “it’s just a codification of reality,” and because, in the end, single licensure benefits the industry.
“New people will be better prepared and will perform at a higher level,” says Taylor. “That’ll make practitioners more valuable to the consumer and reduce complaints and litigation.”
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