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New law means smarter new California agents are coming

By Broderick Perkins

The only downside to a timely new law forcing newly licensed real estate agents to be better educated in the changing California market is that it will take another full year before consumers can fully benefit.

With the market doing an about-face in both sales and home price appreciation, consumers need skilled realty representatives to see them through what could be some hard times.

Gov. Arnold Schwarzenegger recently signed AB 2429, a measure that bumped up the level of education necessary for real estate agents to obtain a license.

Under existing law, administered by the state's Department of Real Estate, a conditional real estate salesperson license is available to otherwise qualified applicants who need only pass an accredited "Real Estate Principles" class as well as the required written examination.

The conditional license comes with a requirement that, within 18 months, salespeople must also pass two more accredited courses, a "Real Estate Practice" course and another, accredited elective chosen from the disciplines of appraisals, property management, finance, economics and law among others.

"Currently, an applicant may take (and pass) one class, pass the exam and receive a conditional license, then take up to 18 months to complete the required course- work, all the while engaging in licensed real estate activity," said California Association of Realtors president Vince Malta.

"AB 2429 will increase the foundational knowledge of sales licensees entering the profession, and prevent ill-equipped licensees from engaging in licensed activity," Malta said.

Under the new law, which isn't effective until Oct. 1, 2007, conditional licenses are abolished, and applicants must pass all three classes and the written test before obtaining a license.

The California Association of Realtors supported the legislation because the housing boom also generated a boom in real estate career opportunities, but most newcomers--85 percent in the last year--opted to enter the field with the quickie shingle.

CAR membership has nearly doubled since 2000, when there were approximately 97,500 members. By the end of 2005, there were approximately 187,400 members, according to CAR.

"This is something the industry has needed for some time. Yes, there is a large number of people in, and still entering, the business, but this law is more about raising the minimum level of education, which will have a positive effect on the minimum level of service agents can provide to their clients," said Edwin Resuello, president of the Santa Clara County Association of Realtors and broker-owner of Realty World-Silicon Valley Homes in San Jose.

In today's market, consumers, especially home sellers, are in dire need of sharp real estate agents who are trained to market and sell homes quickly before prices fall, while squeezing as much as possible out of listings.

Silicon Valley's median home price dropped 6.1 percent during July and August, lopping $50,000 off the median price, the largest dollar amount ever over a two-month period, according to Richard Calhoun, real estate broker with Creekside Realty in San Jose and publisher of the Bay Area Real Estate Market Newsletter.

Some agents say current changing market conditions are reason for consumers to select only seasoned professionals who've experienced market swings both up and down.

The new law is a start in the right direction.

The "Real Estate Principles" curriculum includes studies in agency, finance, contracts, appraisal, taxation, title and transfers, among other subjects. "Real Estate Practice" is a sort of a refresher course that also adds studies in ethics, business practice, marketing, communications, negotiations, investments and others.

The third course will help prepare an agent for a broker's license and further ground him or her in a specific area, including property management, loan brokering and lending, common interest developments, office administration and other chosen fields.

Of course there's no law that says an agent has to wait to bone up now on requirements that won't take effect for another year.

Real estate writer Broderick Perkins, executive editor of San Jose-based DeadlineNews.Com, writes regularly for this newspaper.