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This government body oversees real estate in North Carolina, but should it?

Can you imagine what our economy would be like if businesses were given the power to block competitors from entering the market?

You don’t have to imagine, because that’s exactly what already happens in many industries across America. It’s called occupational licensing, and while it’s supposedly used to protect consumers, what it really does is protect business owners currently in the marketplace by restricting competition.

One industry that’s heavily regulated by existing practitioners: real estate. All 50 states require licenses for real estate agents. And while that may be the right approach to this specific industry, there are still clear opportunities for abuse.

In October, Watchdog Wire obtained North Carolina Real Estate Commission documents showing that three-quarters of real estate schools in the state were failing to meet state standards. In other words, the schools educating potential real estate agents weren’t producing enough students who could pass the state’s real estate exam.

Why was this happening, and what was the commission planning to do about it?

Book smarts

Information obtained by Watchdog Wire suggests that part of the problem may lie in the materials teachers and students rely upon to prepare them for the test. Emails between OnCourse Learning, the publisher of North Carolina Real Estate: Principles & Practices, and an employee of the commission show that a previous edition of the textbook was filled with errors.

“It’s a shame about all these errors in the original 7th edition of NC Real Estate Principles and Practices,” wrote Anita R. Burt, the Education and Examination Officer for the commission.

7th edition (Amazon.com)

7th edition (Amazon.com)

The publisher said most errors were grammatical or typographical. North Carolina Real Estate: Principles & Practices is one of two books approved by the Commission for pre-licensing courses.

Because of the errors, an “updated” edition of the book was released. The error-filled 7th edition, which had been approved by the commission, was needed because the 6th edition was outdated, yet still being used by at least one real estate school.

One of the co-authors of the 7th edition, Tom Mangum, is the Vice President and Director of HPW Real Estate School, the third-largest school in the state, and profits from its use. Like many of its peers, his school failed to meet the state’s passing standard. When reached over the phone, he referred me to Bruce Moyer, NCREC’s director of education and licensing.

Other educational materials are prepared by George Bell. These are for continuing education courses. In addition to publishing course materials, Mr. Bell is a member of the NC Real Estate Commission and has his own real estate school.

Could there be a conflict of interest with the commission’s regulation of real estate course materials? Not so, says Moyer.

“The Commission produces the mandatory update course materials,” Moyer explained. “For more than 15 years, Mr. Bell has taken those materials, had them bound, and then sells them to schools.”

To prevent a conflict of interest, Moyer says “Commission members recuse themselves from voting on matters where they might have a conflict of interest.” He added that all members of the commission have been vetted by the NC State Ethics Commission.

Multiple attempts to contact Mr. Bell for comment were unsuccessful.

License to kill

Unfortunately representatives of real estate schools contacted by Watchdog Wire would not answer our questions and referred us to the commission.

“After considering your request, I would ask you to discuss your questions with Bruce Moyer at the NC Real Estate Commission,” said Bill Gallagher, owner of Superior Real Estate, the state’s second largest school. One of his employees, Vic Knight, sits on the commission.

shutterstock_179757338So what do the big schools think about how the commission handles the licensing of their instructors? That remains to be seen. In our next report, Watchdog Wire will explore how smaller real estate schools get along with the NC Real Estate Commission.

One issue real estate instructors and agents could have: the man in charge of licensing once got in trouble with the state for not filing the proper documentation for his business.

Bruce Moyer once had his own firm, Urban Realty, LLC, which was dissolved by the state in 2010. A letter from the Secretary of State’s office explained why the dissolution was occurring.

“Recently, this office conducted an internal review of the annual reports filed for all Limited Liability Companies in North Carolina,” the letter read. “Unfortunately, the review indicates that the above referenced limited liability company [Urban Realty] is not in compliance with the North Carolina Limited Liability Company Act and is delinquent in delivering six (6) annual report(s).”

When asked about the dissolution of this company, Bruce Moyer pushed back.

“I did not lose a business license; I made a decision to close my own brokerage firm and go to work for another firm,” Moyer said. That firm was Superior Real Estate.

Moyer added: “I didn’t file an annual report with the Secretary of State because my business was closing, so they administratively dissolved the LLC, as I knew they would.”

That may be true, but such an explanation does not account for not filing reports (or paying the requisite fees) for the five other years. Moyer was also previously notified in 2004 that he was delinquent in filing an annual report.

If a business owner wishes to dissolve their LLC, the state has an official form you are required by law to fill out. As the commission’s director of education and licensing, Bruce Moyer oversees the commission’s licensing process and has the authority to punish licencees who have failed to file required documents.

All images courtesy of Shutterstock.com unless otherwise noted. 

Josh Kaib

Josh Kaib is the Assistant Editor of Watchdog Wire. Twitter: @joshkaib

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