Licensing Exam Hassles Threaten Would-Be Arizona Realtors

March 16, 2020
By Mark Flatten

Renee Greene should have been able to go to work selling real estate in Arizona quickly, easily, and with minimal bureaucratic red tape.

That’s what the law says.

But new testing procedures by the Arizona Department of Real Estate short-circuited the effort to ease licensing hassles for new arrivals in the state less than a month after the law took effect. Department officials now say they are working to fix the problem after receiving complaints from applicants and “feedback” from the governor’s office.

Greene was a licensed realtor in Utah with no complaints against her when she and her husband moved to Arizona in July 2019. That should have been enough to qualify her for an Arizona real estate license with minimal paperwork and testing. Arizona’s new universal licensing law says that a person licensed for at least a year in another state with no disciplinary actions qualifies for an equivalent license here. One of the few exceptions is that certain licensing boards can administer a state-specific test focused solely on unique nuances of Arizona statutes.

Realtors historically have had to pass two separate tests in Arizona. One was on national real estate laws and practices, and it is virtually identical to the national tests administered in other states. The second test was on Arizona statutes. The two tests had historically been administered separately, and the applicants were required to pass both portions to qualify for a real estate license.

Under the old testing procedures, it would have been an easy transition for the real estate department when the new universal licensing law took effect August 27. Since it already had a separate state-specific test, that would be the only one new applicants under the law would have to pass.

But beginning September 23, the Department of Real Estate changed its testing procedure by combining both the national and state tests into a single exam. Since there is now only one combined test, anyone seeking to take advantage of the new law must take the full test, despite the specific language in the statute.

Greene found that out when she started researching what she would need to get a real estate sales person’s license last November. She was familiar with the new Arizona law, and she had used it to get a license from the state Board of Cosmetology, a process she described as quick and easy.

Despite the state-only testing requirement, Greene was told no such test was offered by the real estate department and she would have to take the full national and state exam. “I just kept hitting this barrier,” Greene said. “Nobody knew what I needed to do. I contacted the department and they kept responding back with real basic ‘you need to take the exam.’

“I knew that there were things that I would need to do. But I didn’t realize that I would have to take a national exam again coming from one state where I took the national exam.”

It might have ended there, except that Renee’s husband Brian is an attorney and former state legislator in Utah. He’d led efforts in that state to remove bureaucratic barriers for licensed professionals, and he was a former chairman of the Utah House Occupational and Professional License Review Committee set up to ensure regulatory boards implemented the reforms.

Brian viewed the real estate department’s combining of the national and state tests as a way to circumvent the new law. He and Renee contacted the department, pointing out the specific language in the statute and insisting the state should offer a state-specific exam. But to no avail. The department’s terse reply was that Renee would have to take the combined test if she wanted an Arizona realtor’s license.

They eventually took their complaints to the office of Gov. Doug Ducey, who had championed the measure in the Legislature and signed the law in April 2019. Brian said he’d dealt with reluctant bureaucracies as a Utah legislator, and so he was not surprised when the real estate department threw up barriers.

“This is what they do,” he said of regulatory boards reluctant to give up their power. “They think they are the policymakers. The regulatory agencies, they jealously guard that power that they think they have. They are not the policymakers. They are the implementers of the policy. They don’t quite get that.”

Louis Dettorre, spokesman for the Arizona Department of Real Estate, acknowledged that the national and state tests were combined in September in what amounted to “bad timing.” But the reason was an update of the department’s teaching and testing curriculum, not an attempt to circumvent the new law, he said.

Over the past couple of years, the department has been revising its educational curriculum, which had not been updated since 1995, Dettorre said. After that was completed, a new combined test was developed based on the new standards, which is what was put in place last September. The revision process started long before the new law was approved, he said. “It was really coincidental and difficult that it did happen at the same time in a measure of bad timing,” he said.

The department got complaints about the combined test and its apparent conflict with the universal licensing law. That, along with concerns expressed by the Governor’s office, prompted a re-evaluation of the testing procedure.

So beginning the first week of April, the department plans to offer a state-only exam to people who qualify for a license under the universal recognition law, Dettorre said. New applicants from other states, including anyone who previously took the combined test but did not pass, will be allowed to take the state-only exam to obtain a real estate license.

Brian Greene said he does not necessarily buy the department’s explanation. Even if the combined test had already been in the works, department officials should have known that it would conflict with the universal licensing statute and created a stand-alone state test. They chose not to do so, even after complaints were raised pointing out the conflict, and apparently until the Governor’s office intervened, he said.

The fix, when it comes, will not do Renee Greene much good. She finally got fed up with the runaround she was getting from the real estate department, and in early March, she took and passed the combined test. “I don’t want to delay. I don’t know how long fighting it will take,” she said in explaining why she gave up and took the test. “I just kind of said how long do I want to keep dragging this out, or do I want to start working? So I scheduled the exam.”

Taking the test is no small thing, she said. It is an intensive exam that requires a great deal of study. It’s particularly frustrating because she’d taken the national portion of the exam when she got her Utah license.

Jon Riches, director of national litigation at the Goldwater Institute, said the real estate department would clearly violate the universal licensing law by requiring a test that is not specific to Arizona statutes. Regulatory boards and agencies often resist licensing reform because the industries they represent benefit from making the process more difficult, which restricts competition and thereby drives up the prices they can charge for their services, he said.

“Regulatory boards in Arizona should get used to the fact that it is no longer business as usual when they are considering applications from those who are licensed elsewhere and want to work in this state,” Riches said. “Rather than resist a reform that is good for consumers, good for licensees, and good for the state, they should do everything in their power to effectively implement it.” 

Mark Flatten is the National Investigative Journalist at the Goldwater Institute.