Falling market, rising complaints

The housing market drops, the number of consumer complaints against real estate professionals rises.

It seems like a logical premise: when people are making money on housing then all is well, but when home prices decline and people lose equity -- or worse, lose their homes -- then there's a problem. Lots of problems, actually.

Tim Reed, a real estate agent who has served as chairman of the Indiana Real Estate Commission since 1998, told the Indianapolis Business Journal that the rush of foreclosures will likely lead to more complaints with that regulatory agency against real estate professionals: "(Homeowners) will become upset after they go into foreclosure and then they'll start filing the complaints."

In California, the number of cases received and screened by the state's Department of Real Estate grew from 8,371 in the 2004-05 fiscal year ended in June 2005 to 9,581 the following year and 11,201 in the year after that.

The number of investigations climbed from 6,206 in the 2003-04 fiscal year and has grown every year since, to 9,103 in the 2006-07 fiscal year. Those numbers relate to both real estate and mortgage professionals, as both are licensed by the same regulatory agency in California.

Tom Pool, a spokesman for the California Department of Real Estate, noted that the department added about 39 staff in 2005-06, the vast majority of whom were hired to work in enforcement.

While the number of licensed agents, complaints received, investigations and license denials have been climbing for the past several years, the number of license suspensions and revocations have not -- license suspensions declined from 120 in fiscal year 2003-04 to 110 in 2004-05 and reached 113 in the 2006-07 fiscal year. License revocations, meanwhile dropped from 486 in 2004-05 to 395 in 2005-06 and 394 in 2006-07.

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