The agencies that license real estate agents and appraisers in the state of Texas are ignoring a customer service “crisis” while hoarding money that could be used to address a laundry list of problems, a Texas government watchdog recently said.

The Texas Sunset Commission, a state government watchdog agency that advises the state’s legislature on the effectiveness of state agencies, said in a report published this month that the Texas Real Estate Commission and the Texas Appraiser Licensing and Certification Board are keeping excess revenue in their coffers to pay for a new building rather than using the money to deal with customer service problems that are “overwhelming” the agencies.

According to the Sunset Commission report, the Texas Real Estate Commission has not kept up with the state’s booming housing market. The report states that from 2013 to 2017, the number of Texas Real Estate Commission licensees grew from approximately 147,000 to 183,000.

But during that time, the TREC has not upgraded its infrastructure to handle that growth.

“Despite clear industry trends, the Sunset review found the Real Estate Commission failed to adjust quickly and decisively to the growth in the industry and the demands on the agency, ultimately to the detriment of license holders,” the Sunset Commission said in its report.

According to the Sunset Commission, the core issue is that in 2011, the Real Estate Commission and Appraiser Board were given “self-directed semi-independent” status, which meant that they agencies were essentially removed from the state appropriations process and gave the agencies full authority and flexibility to manage their own budgets and operations.

That status, which is rarely granted, was done in response to the growing demands of the real estate industry. The change also removed legislative oversight from the agencies. Basically, the agencies were in charge of themselves.

But, starting in 2014, the agencies began to allegedly hoard excess revenue to fund a new building for the agencies, rather than investing the money in improve the agencies’ operations.

According to the report, by last year, the agencies amassed $12.5 million in their building reserves while customer service problems “inundated and overwhelmed” the agencies.

“At the beginning of the Sunset review in 2018, customer service problems had reached crisis proportions,” the Sunset Commission report stated.

According to the report, the average caller to the agencies waits 18 minutes before being helped, and at one point, 68% of callers were hanging up before being helped.

The Sunset Commission also said that it received “numerous” complaints of hold times stretching from 45 minutes to one hour, plus “unanswered emails, a difficult-to navigate website, and a slow licensing process.”

The Sunset Commission said that its review concluded that the Real Estate Commission and Appraiser Board “failed to adequately assume and fulfill the critical oversight role the Legislature delegated to them under SDSI” by continuing to hold money for a new building rather than fixing the agencies “snowballing” customer service issues.

As such, the Sunset Commission is recommending shortening its review interval from 12 years to six years, meaning the agencies would have a much short timeframe to address their outstanding issues.

“Though the agency has recently taken steps to address some of its problems, the commission and board need increased oversight to ensure these efforts are long-lasting and effective,” the Sunset Commission report stated. “A six-year Sunset date would allow the Legislature to more quickly assess whether the Real Estate Commission, Appraiser Board, and agency staff have made necessary changes to get their house in order, restoring the trust of legislators, license holders, and the public.”

The Sunset Commission report also identifies several issues with the agencies licensing process itself.

“The Real Estate Commission’s and Appraiser Board’s licensing processes do not match model standards or common practices observed through Sunset staff’s experience reviewing regulatory agencies,” the report states.

“Specifically, unnecessary regulation over education instructors and branch offices burdens licensees and staff without enhancing consumer protection,” the report continues. “Additionally, certain pre-licensing requirements, such as home inspectors’ redundant education requirements, serve as barriers to entry and do not help ensure new licensees can competently serve the public.”

Additionally, the Sunset report states that commission and board also “lack standard authority” to deny license renewals if the license holder is not in compliance with commission and board orders, which “undermines their enforcement efforts and places consumers at risk.”

As such, the Sunset report recommends that the agencies eliminate instructor approval authority and eliminate the branch office license.

Additionally, the report recommends that the Real Estate Commission should review and streamline its inspector pre-licensing education requirements, as well as suggesting that the state authorize the Real Estate Commission and Appraiser Board to deny license renewal applications for noncompliant applicants.

The Real Estate Commission and Appraiser Board will be meeting later this week to “coordinate the agency’s written response,” which will be filed on Oct. 16, 2018.

(h/t Houston Public Media)