Realtors in the House ®
(and Senate, City Council, and Planning Board...)
IS ARTIFICIAL INTELLIGENCE THREATENING MY JOB? p6 THE LATEST CLASS ACTION CRAZE p10 PRESIDENT'S MESSAGE: GIVING BACK p20
Realtors® in the House
(and Senate, City Council, and Planning Board...)
IS ARTIFICIAL INTELLIGENCE THREATENING MY JOB? p6 THE LATEST CLASS ACTION CRAZE p10 RENTAL REAL ESTATE INCOME DEDUCTION p24
Inside this issue of Bay State REALTOR®
2 From the Editor Getting Involved REAL ESTATE @ WORK 4 4 Relationship Building is Key: State of the Listing Presentation Shelby O'Hare
5 Fed Explores Student Loan Debt 6 Ask a Millennial: Is Artificial Intelligence Threatening My Job? Leslie Fowle
8 2018 Profile of Home Buyers and Sellers Massachusetts Report
LEGAL NOTES 8 10 Legal Realtor® The Latest Class Action Craze Stephen M. Perry, Esq.
12 MAR Legal Hotline; From the Bench; The Importance of
More from MAR » www.baystaterealtor.com Online Exclusive – Building Your Knowledge of Home Energy to Seal the Deal By Lauren Mendoza, Partnership for Realty and Oilheat Success (PRO$) Nearly one-third of all Massachusetts homes use oil as their primary heat source. Learning more about heating oil so that you can answer your clients’ questions and market those listings will go a long way. A Clear Path to Closing By Betsy Boggia, Fairway Independent Mortgage A 2018 survey revealed that 42 percent of home buyers found the mortgage process “stressful” and 32 percent described it as “complicated.” As lenders, we work every day to drive those numbers down, but we could use your help. When it comes to having a successful home loan process, there are several do’s and don’ts you can share with your clients to help minimize the stress of getting to the closing table.
» Massachusetts Association of Realtors®Facebook
Proper Licensing and Agency Disclosure for Real Estate LLCs 15 The Legislative Cycle Justin Davidson
FEATURE 16 16 Realtors® in the House (and Senate, City Council, and Planning Board...) Bridget McCrea
MEMBER VOICES 18 20 P resident’s Message Giving Back Anne Meczywor
21 Commercial Real Estate Resources; Apply to Leadership Academy Class of 2019-2020; Calendar; Recognize a Realtor® Who Goes Above and Beyond; Save the Date: 2019 Realtor® Day on Beacon Hill
24 Insider Rental Real Estate and the 20 Percent Qualified Business Income Deduction Chris Bird
ADVERTISER DIRECTORY Realty Guild....................................IFC PROS.............................................3 Osterman Propane.............................5 MassHousing...................................11 RMS.................................................13
Fairway Mortgage............................21 Exit Realty........................................22 ASAP Environmental.........................23 Pearl Insurance............................. IBC MLS PIN.......................................... BC
Cover Image Credit: Sharon Womble
March/April 2019
1
{from the editor}
Getting Involved
THE OFFICIAL PUBLICATION OF THE MASSACHUSETTS ASSOCIATION OF REALTORS®
BY ERIC BERMAN
MARCH/APRIL 2019 VOL. 66, NO.2 PRESIDENT
Have you ever flipped through your cable channels and happened across your public access station broadcasting some local meeting? If you’re curious like me, you might stop your thumb from hitting the channel button and watch. Sometimes, I’ll try to figure out what they’re talking about or see if I happen to know any of the people I’m watching.
Anne Meczywor, ASR, CBR, CRS, AHWD PRESIDENT-ELECT
Kurt Thompson, CBR, CRS, LMC TREASURER
On those occasions when I do stop, I often look at the folks on the screen and wonder what made them decide to raise their hand and get involved. Do they have a child in the school system? Was it because the position falls into their professional bailiwick? Or is it something else? Regardless of what made them participate, they need to be committed to it. In the 2018 March/April edition of Bay State Realtor® Magazine, we looked at how Realtors® gave back to their communities by volunteering their time and energy with charitable organizations. This year, we decided to look at how Realtors® give back to their communities by participating in town and state government. In her article titled, "Realtors® in the House (and Senate, City Council, and Planning Board...)" on Page 16, writer McCrae talks to Realtors® across the state who volunteer (and are often elected) to serve on town and state boards and commissions. She investigates what it means to them to participate, what it’s like to hold those positions within their communities, how it impacts their real estate careers, and even how you can get involved. Who knows, maybe after reading this article you’ll find yourself on public access cable helping your city or town solve an important issue.
Profile of Home Buyers and Sellers Since 2003, MAR has produced its "Profile of Massachusetts Home Buyers and Sellers" in conjunction with the National Association of Realtors® "National Profile." This comprehensive report, which is highlighted on Page 8, looks at buyer and seller demographics, trends, the market, and more. This year’s report found that, despite the lack of homes for sale in Massachusetts in 2018, we still have a higher percentage of first-time home buyers than the rest of the country. All members have access to the comprehensive report on the Market Data Page at www.marealtor.com.
Artificial Intelligence By now, I’m sure you’ve heard the term “AI” or “Artificial Intelligence” being used in the media to describe numerous products and services that will change our lives for the better. It’s hard to know what’s hype and what’s not. To help answer these questions, in her “Ask a Millennial” column on Page 6, Leslie Fowle looks at AI and the tools you can use to better your business.
2
Bay State REALTOR®
Dawn Henry, CHMS, CNS IMMEDIATE PAST PRESIDENT
RITA COFFEY, CRB, LMC COMMUNICATIONS DIRECTOR/ EDITOR IN CHIEF
Eric Berman, RCE ART DIRECTOR
Sharon Womble MANAGING EDITOR
Leslie Fowle, MPH ADVERTISING SALES
Julie Lewis (508) 612-4841 (Publication No. 703-610) ISSN: 0891-5539 Published by the Massachusetts Association of Realtors®, Mailing Address: 333 Wyman Street, Waltham, MA 02451-1139 (781) 890-3700 The Bay State REALTOR® magazine is published bi-monthly (Jan./Feb., March/April, May/June, July/August, Sept./Oct., Nov./Dec.), as a member service. Subscriptions are $2.50 per year for members and are paid out of member dues. Non-member subscription rate is $40 per year. The comments and opinions expressed herein are those of the authors and do not necessarily reflect the opinions, views, or policies of the Massachusetts Association of Realtors®. Copyright 2019. All rights reserved. Periodical postage paid at Boston, MA. POSTMASTER: Send address changes to: Massachusetts Association of Realtors® 333 Wyman Street, Waltham, MA 02451-1139
Get the Facts and Sell More Homes This Spring
T
he weather is warming up, the Red Sox are getting back on the field and
Efficiency Matters!
the real estate market is kicking into high gear. Buyers across the Bay State will be looking for the perfect home for their families. And homes that heat with oil are some of the best choices out there. Here are a few talking points you can use to guide your buyers to the house of their dreams:
The energy efficiency potential of a
Meet the new heating oil - Every gallon of heating oil in Massachusetts
on their mind when purchasing it, but it can
now includes biofuels from renewable material like soybeans and vegetables. This new fuel is called Bioheat•, which is domestically produced and requires no modifications to your existing system. Bioheat is a clean burning, ultra-low-sulfur fuel, and using it reduces emissions, lowers maintenance requirements and improves system efficiency. Today's storage solutions make it easy to heat with oil-Modern-day
aboveground tanks are a far cry from the steel tanks you'd find underground. Many of them are double-walled, providing an extra layer of protection that will put your clients' minds at ease-they're virtually worry-free! The ultimate freedom of choice -Homeowners have the power to
choose which oilheat company they want to do business with, and what type of services they receive. Recent oilheat customer research confirms that local dealers are trusted by their customers over other energy providers by a more than three-to-one margin.
What PRO$ Can Do for You If you've been looking for an edge on listing and selling
□
more oil-heated homes, look no further. PRO$ is a nonprofit educational program that works with Realtors® across the state to overcome objections, answer questions, and close deals faster and for more money. Schedule a 15-minute PRO$ Presentation with one of our local experts in your office. They'll get you up to speed on what to do and what to know for your next oil-heated listing. To get started, visit OilheatPros.com/ma or email our Program Director, Susan Janett, directly at sjanett@oilheatpros.com. You'll be ready to boost your business in no time.
home may not be the first thing buyers have be a big deal down the road. If your clients are
looking at an oil-heated home, let them know
just how energy efficient that home can be:
� A gallon of heating oil generates more heat output than any other fuel. This means
homeowners will use less of it, saving money and energyr
� New high-efficiency heating oil systems are up to 95% efficient.
� Massachusetts homeowners have worked with their local energy experts to save
as much as Li8% on their energy bills by
improving efficiency in their homes.• Now, that's a big deal r
To learn more, visit OilheatPros.com/ma
and order the FREE Oilheat Energy Effi ciency Guide today! * Energy Research Center, Field Measurement of Boiler Energy Savings, NYSERDA
MA I FFF A"
PRO$
PARTNERSHIP FOR REALTY AND OILHEAT SUCCESS™
MIEIMIA Paid for by the National Oilheat Research Alliance and the Massachusetts Energy Marketers Association
real estate @ work
N E W S , T R E N D S , & T O O L S F O R R E A LT O R S ®
Relationship Building Is Key: State of the Listing Presentation BY SHELBY O’HARE The Realtors® Property Resource® (RPR®) recently released its 2018 "State of the Listing Presentation" survey. The goal of the survey was to help you understand the keys to successful listing presentations and how they can result in more signed contracts. Face-to-Face
Seller Proceeds Worksheet Your Service Levels/ Commission Rate
Phone Calls
Your Bio
Past Sales in the Area
Other
00%
Copy of Contract and Agency Disclosure
20 %
40 %
60 %
80% 80
100 100%
How do you typically“meet” with a prospective client for a listing presentation?
According to the 457 people who took the survey, the success of listing presentations lies primarily in client relationships. Most respondents (93%) reported that they gave listing presentations with prospective clients in a face-to-face setting. Less than seven percent reported using other methods such as phone calls, emails, or “other.” Phone Calls
Seller Tips (i.e. Prepare Your Home for Sale) Marketing Plan Estimated Home Value
20% 30% 40% 50% 60 00% 10 10% 20 30 40 50 60% 70 70% 80 80% What information do you provide during the listing presentation?
of the contract and agency disclosure; a history of past sales in the area; your bio, you (or your broker’s) commission rates; seller proceeds worksheet; what makes you different from other agents; references and testimonials, and a questionnaire for the seller to complete regarding the needs of their home.
Text Strongly Agree
Social Media Agree
Handwritten Notes Neutral
Emails
Disagree
Did Not Follow Up
00%
20% 20
40% 40
60% 60
80% 80
100 100%
How do you follow up after a listing presentation? The clear preference for face-to-face meetings emphasizes the value you place on your client relationships. However, followups were also cited as an important part in the process. Phone calls were the primary way respondents chose to follow-up with sellers (86%), with emails coming in second at 59 percent and handwritten notes coming in third at 40 percent. Respondents also reported that their references (63%) had the most positive impact on the number of listings they secure, underscoring the importance of relationships and how they can lead to more signed contracts. Realtors’® online presence (46%) also had a significant impact on the listings they were able to secure. When it comes to what to include in your listing presentation, some of the most popular and effective items were: a competitive analysis; a market analysis; a marketing plan; seller tips; a copy 4
Bay State REALTOR®
Strongly Disagree
00%
10% 10
20% 20
30% 30
40% 40
50% 50
60% 60
70% 70
80% 80
It is extremely important to present an accurate valuation model in the first meeting with the seller. The home valuation is also a key driver of the success of listing presentations. The survey found that 84 percent of respondents agreed that presenting an accurate valuation model in the first meeting is important. Valuations tend to be a confusing topic for sellers, so listing presentations create the perfect opportunity for you to bridge this information gap and help your clients understand what it means and how their home valuation was calculated. When provided with an accurate valuation during or before a listing presentation, sellers feel more confident in your expertise. This trust between the you and the seller, in turn, sets you up for a more positive relationship with your client, ultimately leading to more signed contracts.
Fed Explores Student Loan Debt In January, the Federal Reserve bank introduced a new article series titled, “Consumer & Community Context,” that will highlight the Federal Reserve’s research and analysis of the financial conditions and experiences of consumers and communities. In the very first issue, the Federal Reserve focused on an issue that Realtors® have been concerned about for a while—student debt.
In the article “Can Student Loan Debt Explain Low Homeownership Rate for Young Adults,” by Mezza, Ringo, and Sommer, the authors explore the impact that the increase in student loan debt levels may have on homeownership rates among young adults. “According to our calculations, the increase in student loan debt between 2005 and 2014 reduced the homeownership rate among young adults by two percentage points. This represents over 400,000 young individuals who would have owned a home in 2014 had it not been for the rise in debt.” They also found that student loan debt can have broader implications than the ability of consumers to buy homes:
Student loan debt early in life leads to a lower credit score later in life; Increased student loan debt causes borrowers to be more likely to default on their student loan debt; and While investing in postsecondary education continues to yield, on average, positive and substantial returns, burdensome student loan debt levels may be lessening these benefits. To read the newsletter, go to https://www.federalreserve.gov/ publications/files/consumer-community-context-201901.pdf
PROUDLY PROPANE Help your client understand the value contained in these tanks.
More and more homes beyond the reach of natural gas mains are taking advantage of propane. Whether new construction, renovations, or even older homes switching away from fuel oil and electricity, propane is leading the way. The next time your listing includes a propane tank, remember these selling points: Clean – propane emits a fraction of the CO2 & particulate emissions of fuel oil or electricity made from coal. Versatile – heating, hot water, cooking, clothes drying, pool heating, emergency power. Efficient – new appliances operate at up to 96% AFUE giving you the most value for your energy budget. American – nearly all of the propane used in our region comes from domestic sources.
www.ostermangas.com/realestate March/April 2019
5
Ask a Millennial: Is Artificial Intelligence Threatening My Job? BY LESLIE FOWLE Back in 2016, Inman magazine ran an experiment that pitted three different brokers against a bot to test their ability to do something buyer agents might say is their primary function: find the right home for their client. In all three trials, the buyer preferred a listing recommendation chosen by the bot.
John Rebchook, who acted as the buyer in the experiment, later told Inman, “I couldn’t really differentiate between what [listings] the bots picked and the humans picked. I tried to find a pattern to the picks, but could not. I guess if computers can beat us at chess and Go, they can best us at picking houses, too.” Rebchook's words might make you nervous, especially if you are a buyer agent that relies on your unique mix of emotional intelligence and knowledge of the market to find the perfect home for your clients. The increasing sophistication of the algorithms and artificial intelligence that feed online searches have killed Realtors’® status as the sole proprietors of listing information. In fact, savvy buyers in today’s market may come to the table with a list of homes they’ve found online and are determined to see. They may pass on your input and set up meetings with the listing agents directly. Before we declare the death of the buyer agent, it is important to note that artificial intelligence is also an important tool that can be used to your advantage. Real estate agents are still a necessary ingredient to most aspects of the home buying process: humans still need to answer phones, show houses, and negotiate contracts. According to the National Association of Realtors® 6
Bay State REALTOR®
"2018 Profile of Home Buyers and Sellers," 88 percent of Massachusetts buyers used a real estate agent as a source of information in the home search process. Importantly, 24 percent of Massachusetts buyers still contacted an agent as a first step in the home buying process—even before going online. Now that we’ve hopefully assuaged some of your fears, let’s talk about some ways you can harness the power of artificial intelligence in your business to attract, retain, and satisfy more clients.
Put Your Smart Speaker to Work The market research tells us smart speakers and their respective digital assistants (Alexa, Siri, and “Hey Google!”) that use AI technology are not leaving anytime soon. A recent report by NPR and Edison Research found that 53 million adults in the U.S. own at least one smart speaker and the total number of devices in homes has increased 78 percent since 2017. The research group eMarketer estimates that this number will rise to 76.5 million users by 2020, almost a quarter of the population. The takeaway is that a significant portion of consumers are interacting with their smart speakers to answer questions and complete basic tasks every day. These millions of users and interactions represent an emerging market on which the real estate industry is prime to capitalize.
Voicester Pro is among the first businesses to carve out a space for Realtors® in the smart speaker world. The voice search company was founded in 2015 by a real estate broker and his son, a software developer, as a way to bring real estate businesses and consumers together through smart speaker technology. Voicester Pro allows potential home buyers to ask their devices to find listings in their area based on budget, number of bedrooms, etc. “These devices are not going away, and people are looking to do more with them than play music and turn the lights on and off,” said Sal Privadera, Chief Operating Officer at Voiceter Pro. “You can be making dinner, multitasking, and say, ‘Hey Google open Real Estate Search.’ You don’t have to fire up the computer to do it.” After a prompt to open a real estate search, the smart speaker will go through a series of questions to nail down your potential new client’s dream home. When the details are ironed out (a demonstration revealed Alexa to exclaim ‘Bingo!’ after she collects the necessary data—the development team wanted the interaction to be as conversational as possible) an email is sent to the consumer with listing recommendations and a note that an agent will be in touch soon. On the other end, the brokerage that has made
the real estate search possible with Voicester Pro receives an email about their potential lead.
Work While You Sleep with AI As a Realtor®, you may be all too familiar with burning the candle at both ends to satisfy your clients and keep your business afloat. You also know the modern consumer expects you to be reachable almost 24/7 to answer their most pressing questions. This is where artificial intelligence comes in handy—it can work to generate leads and answer client questions while you’re catching up on sleep, making time for family, or, you know, having a life. Not unlike that bot that Inman tested in 2016, RealScout is a listing alert platform that uses machine learning software to recommend properties based on consumer behavior. Still, don’t be concerned that this machine will somehow supersede your role in your client’s process, especially because the platform is basically a dashboard where agents and clients can collaborate. The AI component just tracks client behavior and spits back that information in the form of regular alert emails with more listings like those they’ve viewed. It’s the combination of this interactive functionality with machine learning that brought brokerage Jack Conway & Company, Inc. to provide
the service for its agents and clients. “Say, for example, as an agent I sign you up for the platform. You’re looking at homes in Norwood between $400,000 and $500,000 and you start getting updates. As you start looking at them, maybe you start looking at homes that have pools, a nice view, or maybe you’re even looking at a different price range than you originally wanted. RealScout sends you things similar to what you’re actually looking at. Clients really like it,” said Al Becker, Executive Vice President/ COO of Jack Conway & Company, Inc. If your clients are satisfied while you get a little more rest, artificial intelligence may start to seem like a winwin. And if you’re not quite ready to pony up for a service like ReadyChat, social media platforms like Facebook are starting to integrate AI tools (like chatbots) that you can use to answer common questions, generate leads, and follow up with potential clients. So, rest easy for now, artificial intelligence is here to augment your business and help you do more in a fastpaced world. What does the future of AI hold? Perhaps RealScout’s website says it best, “[We are] dedicated to this vision of the future, where technology is an essential complement, but not a replacement for the real estate ecosystem that exists today.” March/April 2019
7
2 018 Profile of Home Buyers and
HOME BUYERS 40
%
5%
LESS PEOPLE IN MA ARE FINANCING
FIRST-TIME BUYERS
FINANCING
OF ALL MASSACHUSETTS BUYERS IN 2018
42
MEDIAN AGE:
MEDIAN INCOME:
4 YEARS YOUNGER THAN NATIONAL MEDIAN
58%
$106,900
INCREASED $5,200 IN MA SINCE 2017 INCREASED BY $2,800 IN US OVERALL
15%
MARRIED MARRIED COUPLES COUPLES
THEIR HOME 87% FINANCED PURCHASE STUDENT LOANS 65% RESPONDED MAKE DOWNPAYMENT DIFFICULT
SINGLE FEMALES
15% UNMARRIED COUPLES
10% SINGLE MALES
%
34 RIVEN BY
D ASE O OWN H C PUR ESIRE T E M D A HO
4% INCREASE IN MA
2%
US HAD DECREASE.
14% % ACTIVE-DUTY SERVICE MEMBERS 2
NATIONAL AVERAGE
VETERANS
BUT THERE ARE STILL
5% FEWER
5%LESS THAN THE
MARRIED COUPLES IN MA THAN US
HOME SEARCH PROCESS
24% 49% 75%
FIRST STEP WAS CONTACT A REAL ESTATE AGENT WANTED AGENT'S HELP TO FIND THE RIGHT HOME FOUND AGENT TO BE USEFUL SOURCE OF INFORMATION
Compared to 2017 Statistics
8
Bay State REALTOR®
THEY LOOKED AT AN AVERAGE OF
10 HOMES OVER
13 WEEKS MA INCREASED BY
1 WEEK
SINCE LAST YEAR PROBABLY DUE TO HIGHER PRICES AND LESS INVENTORY
CHARACTERISTICS OF HOMES PURCHASED
9% 45% 10
NEW HOMES PURCHASED NEW TO AVOID RENOVATIONS NUMBER OF YEARS EXPECTED TO LIVE IN HOUSE
1,790 SQ. FT. AND BUILT IN 1970
TYPICAL HOME WAS
d S ellers Massachusetts Report Prepared by the National Association of Realtors® Research Division
SELLERS -$800 HOME SELLERS
MEDIAN INCOME IS LESS THAN LAST YEAR
55 45 MEDIAN INCOME: $119,300 MEDIAN AGE:
SELLING EXPERIENCE
21%
OFFERED INCENTIVES
68%
PLEASED WITH SELLING PROCESS
94%
WORKED WITH A REAL ESTATE AGENT
SELLING INFLUENCES SOLD THEIR HOUSE 19% BECAUSE IT WAS TOO SMALL
13
2% INCREASE
YEARS
3%
HIGHER THAN NATIONAL AVERAGE
PEOPLE LIVED IN THEIR HOMES BEFORE SELLING
SELLING PRICE MORE THAN PURCHASE PRICE
HOME SELLING PROCESS
62
of sellers found their agent through a referral from a friend, neighbor, or a relative or used an agent they had worked with before
75%
of sellers contacted only one agent before finding the right agent to work with
93%
of sellers listed their home on MLS
37%
of sellers have recommended their agent three or more times
%
47,500
$
116,000
$
IN 2018
IN 2017
SELLING HOMES FOR ALMOST 70K MORE THAN THEN THEY WOULD HAVE IN 2017
March/April 2019
9
legal notes T R A N S L AT I N G T H E L A W F O R Y O U
{legal Realtor ®}
The Latest Class Action Craze BY STEPHEN M. PERRY, ESQ ., Casner & Edwards, LLP If you are like me, you’ve received an annoying number of robocalls on your cell phone disguised to appear as though they are of local origin. I also get recorded calls from New York that start out, “Ni hau,” which is about as much Chinese as I can understand. Sometimes an unexpected and unwanted text message may arrive as well. Unless you signed up to receive these robocalls and text message blasts, they are generally unlawful. However, in many cases they are sent anonymously or transmitted with impunity from abroad.
On the other hand, when it is an identifiable domestic company that has made the robocalls or sent out unwanted text message blasts, the company may be asking for trouble. This past year has seen the continuation of a nationwide explosion in class actions filed against prominent businesses for engaging in improper telemarketing practices. Several of these class action cases have been brought against real estate brokers. In a recently filed Florida federal court class action, the plaintiff alleged that the Real Estate Empire Group unlawfully sent out text message blasts in an attempt to recruit sales associates. In another recent class action, a consumer accused the Miami branch of a national real estate firm of unlawfully texting advertisements. Similar federal class action cases have been filed against real estate brokers in a number of other jurisdictions.
Telephone Consumer Protection Act These class actions arise under a federal statute known as the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227. Among other things, the TCPA 10
Bay State REALTOR®
generally makes it illegal to use an automatic telephone dialing system to call or text someone’s cellphone without that person’s consent. The TCPA imposes penalties of $500 for each unlawful call or text, which can increase to up to $1,500 per unlawful call or text in the case of a willful violation. The plaintiff does not need to prove any actual damages. The potential liabilities can be truly staggering in the context of a class action.
By its terms, the TCPA does not apply to a manually dialed call or text. It applies to calls made through an automatic telephone dialing system. So, the million dollar question, literally, is what constitutes an automatic telephone dialing system for
purposes of the statute? Right now, unfortunately, that is anybody’s guess. Based on the statutory language, some courts have held that the TCPA only applies to dialing services that randomly generate or serially dial phone numbers. Most telemarketing programs do not operate in that manner; these days they typically use a stored database of numbers.
The Courts In September 2018, in the case of Marks v. Crunch San Diego LLC, the United States Court of Appeals for the Ninth Circuit rejected this narrow construction of the statute. Recognizing advances in telemarketing technology, the court held that the TCPA applies to any devices that can (a) store a list of numbers and (b) dial or text them automatically. In the Marks case, the defendant’s telemarketing system allowed it to compose text messages that would be sent at a designated time to numbers that could be manually selected from a stored list. The court held that this system fell within the scope of the statute.
The Federal Trade Commission is expected to issue new guidance on what constitutes an automatic telephone dialing system for purposes of the TCPA. The new guidance is needed because the United States Appeals Court for the District of Columbia struck down the old guidance last year. Considering that there is already a disagreement among the United States Courts of Appeals on the issue of what constitutes an automatic telephone dialing system, it is an issue that may ultimately be decided by the Supreme Court. In the meantime, class action lawyers are filing dozens of new claims each month based on a broad construction of the statute. And, as noted above, a number of these cases have targeted real estate brokers.
an automatic dialing system to send advertisements or generalized marketing to a wireless number. A second important requirement of the TCPA is that the communication include instructions that recipients can follow to easily opt out of receiving such messages in the future, such as by replying “STOP,” or the like. One recently filed class action in the real estate industry is based largely on the allegation that the operator of a real estate website wrongfully continued to send texts even after the recipient had repeatedly
requested that they stop. Perhaps this was a programming glitch of some type, but liability under the TCPA does not require bad intent. In sum, real estate brokers should make themselves aware of any use by the firm or any of its agents of automated phone calls or texts. If such telemarketing is being employed, make sure it is being done in compliance with the TCPA. If there are any doubts, consult with a qualified professional. The stakes are too high to take any chances.
What You Should Do To stay out of the line of fire, you should assume that the TCPA may apply to any automated system that makes calls or sends texts. Firms should further assume that they may be held responsible for the conduct of their agents. If a firm or any of its agents or associates are using what may be considered an automatic dialing system to send text messages or to make robocalls—either on their own or through a telemarketing company—it is essential that the program be carried out in compliance with the provisions set forth in the TCPA. First and foremost, in order to be in compliance with the statute, the sender needs to have the prior express written consent of the recipient before using
March/April 2019
11
Notes from the MAR Legal Hotline BY JUSTIN DAVIDSON, ESQ., Government Affairs Director & General Counsel CATHERINE TAYLOR, ESQ., Associate Counsel
Q: What do I need to know about the new tax on shortterm rentals? A: The new law expands the state's hotel and motel tax to include the short-term rental of homes. Massachusetts is one of the last states to adopt this type of tax. The tax applies to all rentals for a period of 31 days or less, regardless of whether the rental is for recreational, personal, or business use. At the insistence of MAR, the new law only applies to short-term rentals, meaning ordinary tenancies, such as an annual lease or a tenancy-at-will, are not covered by this bill. The short-term rental rate varies by locality and is the total of the following rates: State: 5.7% Local: up to 6% (Boston 6.5%) Cape Cod & Islands: includes additional 2.75% to fund Cape Cod and Islands Water Protection A community impact fee of up to 3% may be assessed locally on professionally managed properties (Owners of two or more units in one town). The law applies to all rental contracts that were signed on or after January 1, 2019 for stays on or after July 1, 2019. The Department of Revenue will continue to update its guidance throughout 2019. Please see www.marealtor.com for more information and important documents. Q: Is a landlord required to screen prospective tenants? A: No, landlords have no affirmative duty requiring them to screen prospective tenants. However, it is in a landlord’s and their other tenants’ best interests to do so. Landlords may be liable for tenant violations of local bylaws and ordinances regarding noise or other disturbances, as well as for damages or injuries to other tenants and neighbors caused by problem tenants. A landlord may face legal liability if: s/he failed to discharge a duty of care owed to the victim, the harm was reasonably foreseeable, and the negligence was the proximate or legal cause of the victim’s injury. A best practice is to begin the rental process by having prospective tenants complete a rental application containing basic, non-discriminatory personal information. This form 12
Bay State REALTOR®
can be found in the MAR Forms Library. Landlords may also choose to complete other screenings such as credit, criminal background, and sex offender registry checks, as well as requesting references from past landlords. A landlord should make sure to get the appropriate consent from a prospective tenant prior to performing any screening. When all screenings are complete, a landlord must assess each prospective tenant individually. For example, a landlord cannot automatically disqualify all applicants with criminal or sex offender records. If a landlord intends to deny a prospective tenant because of their criminal record, they must provide them with certain information about the denial and an opportunity to correct errors in their record. Prior to undertaking any policy regarding tenant screening, it is advisable that the landlord and/or property manager consult with an attorney to mitigate the risk of liability. Q: What is my responsibility as a homeowner for snow removal? A: All Massachusetts property owners have a duty to use “reasonable care” for the protection of visitors and are legally responsible for the removal of snow and ice from their property. This duty extends to landlords, who are responsible for snow removal at their rental properties. The sanitary code requires property owners to keep all means of egress free from obstruction. Landlords must maintain all means of egress in a safe, operable condition at all times. This includes keeping all exterior stairways, fire escapes, egress balconies and bridges free of snow and ice. These obligations cannot be negated by any lease provision.
The landlord may require the tenant to remove snow and ice only when a tenant has an independent means of egress not shared with other tenants, and the requirement is contained in a written lease agreement. Therefore, in situations where there is a single or multi-family home and the occupant has his/her own exclusive means of egress, be sure to review the lease to determine who is responsible for keeping exclusive means of egress clear of snow. However, placing this responsibility on the tenant may still not absolve the landlord, as the owner of the property, from liability if someone suffers a personal injury on the property due to snow and ice. Every property owner should take care to do the following: 1. Review insurance policies to be sure that there is adequate coverage; 2. Determine whether contractors or others hired to remove snow and ice have insurance; and 3. Be vigilant when there is newly fallen snow, melting, or
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freezing. If complete clearing is not possible, warning signs may be appropriate. Clients that have specific questions regarding their duty to clear snow should consult their attorney. The information and services provided through the Massachusetts Association of Realtors® is intended for informational purposes and does not constitute legal advice, nor does it establish an attorney-client relationship. The Massachusetts Association of Realtors®, by providing this service, assumes no actual or implied responsibility for any improper use of responses to questions through this service. The Massachusetts Association of Realtors® will not be legally responsible for any potential misrepresentations or errors made by providing this service. For more information regarding these topics authorized callers should contact the MAR legal hotline at 800-370-5342 or e-mail at legalhotline@marealtor.com.
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From the Bench: The Importance of Proper Licensing and Agency Disclosure for Real Estate LLCs BY THE MAR LEGAL TEAM In 2014, the Board of Registration of Real Estate Brokers and Salesmen (the Board) initiated proceedings against real estate licensee Michael Thomann. The Board alleged that Thomann had bought and sold real estate on behalf of clients through an unlicensed limited liability company (LLC), in violation of two sections of the Massachusetts Code of Regulations (CMR).* The Board also alleged that he violated a third section of the CMR by failing to provide a proper notice of agency disclosure to the seller.
Michael Thomann v. Board of Registration of Real Estate Brokers and Salesmen highlights the importance of proper licensing and agency disclosure for Realtors® that operate their business through an LLC or other corporate entity.
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The Law
The facts strongly suggest that this is not true, as he used the unlicensed LLC’s name on paperwork and even ended up suing the client for broker’s fees under the name of the LLC. He also stated that it was his routine business practice to provide his clients with the agency disclosure form.
Massachusetts regulations provide that licensees may not engage in the business of real estate brokering in an LLC or other corporate entity unless the entity is licensed by the Board. To gain and maintain its license, the LLC must always have at least one officer with a current broker’s license. A broker who engages in the business of real estate brokering through an unlicensed LLC would violate another regulation that bars brokers or salespersons from assuming duties and responsibilities beyond those for which they have adequate preparation and for which competency has been acquired and maintained. In addition, Massachusetts regulations require real estate brokers or salespersons to provide an agency disclosure form to prospective purchasers or sellers at the first meeting for the purpose of discussing a specific property.
The Decision The Board suspended Thomann’s license to practice real estate for 10 days. Thomann appealed the decision. Ultimately, the Massachusetts Supreme Judicial Court (SJC) agreed with the Board that Thomann had violated the CMR by engaging in the business of real estate brokering through the unlicensed LLC. The SJC also upheld the Board’s determination that Thomann violated the agency disclosure requirements by not providing the seller the agency disclosure form as approved by the Board. Although, it may be industry practice for real estate brokers to forgo the use of the agency disclosure form in commercial real estate transactions, the Board and the SJC found that Thomann’s failure to use the form was a violation of the regulations.
The Case
What This Means for Realtors®
Thomann was the sole manager of Boston International Group, an LLC with a certificate of organization that stated it would engage in business including “commercial real estate.” However, the LLC did not have its own real estate broker’s license. Despite this oversight, the Board found that the LLC was both a party to the listing agreement of a commercial property and that the entity was actively engaged in real estate brokering activities. Thomann denied the allegations and asserted that he had conducted his real estate brokering activities through a properly registered business or trade name. Thomann argued that he conducted all of the brokering activity under his individual real estate broker’s license and not through the LLC.
Michael Thomann v. Board of Registration of Real Estate Brokers and Salesmen highlights the importance of Realtors® ensuring that if they are operating their business through an LLC or other corporate entity, that the entity is properly licensed under the Massachusetts Code of Regulations. This case also emphasizes the importance of using and maintaining a proper record of the agency disclosure form—even when dealing in commercial real estate. *CMR sections violated: 254 CMR 2.00(11) and 254 CMR 3.00(14)(e) for engaging in the business of real estate brokering through an unlicensed LLC; and section 254 CMR 3.00(13)(a) for failure to provide proper notice of agency disclosure to the seller.
Bay State REALTOR®
The Legislative Cycle JUSTIN DAVIDSON , Esq. Government Affairs Director & General Counsel 2019 marks the start of a new two-year legislative session in Massachusetts, the 191st in our state’s history, and MAR is excited to advocate on your behalf. In this session, we’ll continue our support of innovative policies to increase housing production, support housing affordability, and help you do your jobs. While we’re already months into the session, we wanted to give you a glimpse into how it all works so you’ll be able to follow and participate in the process.
Fresh Start
Each session is a fresh start for the legislature. All bills that did not pass by the final day of the 2017-18 session are wiped clean, and all bills must be filed or re-filed anew. In the coming months, legislative committee memberships will be announced and committees will start holding hearings on bills by the spring. Every one of the thousands of filed bills will receive a public hearing. Some will pass throughout the session, many will not be enacted until the end of formal session in the summer of 2020, and most will not pass. MAR will be reviewing hundreds of bills relevant to our priorities.
opportunity to override those vetoes to finalize the budget. MAR works to influence dozens of pieces of legislation and portions of the budget through support, opposition, or simply clarification to help legislators better understand the practical implications of their proposals. We accomplish this through several avenues, including conversations with legislators and staffers, testifying at hearings, and making public statements. We have worked hard to cultivate relationships with legislators and staffers and are proud to be a respected resource on housing and zoning issues.
The Budget
Our Priorities
Each session features two budget cycles for the state’s fiscal year, which ends on June 30th. The governor’s office will release their budget by the end of January. The House and Senate will both develop budgets throughout the spring, culminating in the creation of a conference committee. A conference committee is made up of three members of the House and three members of the Senate. These members will negotiate a compromise budget by late June. Once enacted by the legislature, the compromise budget will be sent to the governor who can use a line item veto to remove provisions that he disagrees with. The legislature will then have the
Once again, we will support proposals to increase housing production in Massachusetts. We will support the H.O.M.E. bill that MAR developed in 2014, which seeks to remove existing barriers to housing production. We will also continue to support other proposals such as An Act to promote housing choices, which gives municipalities more tools and incentives to increase housing development. The bill nearly passed last session and Gov. Charlie Baker has again named it one of his top priorities. We are also excited to be supporting a new bill in response to concerns we heard from many of you about challenges you faced in earning
continuing education course credits. The bill, filed on our behalf by Sen. Paul Feeney (An Act further regulating the continuing education requirements for real estate brokers and salespersons), will enhance the Real Estate Board’s ability to approve courses for continuing education credits. Feeney is a member of the Joint Committee on Consumer Protection and Professional Licensure. We are also on the lookout for bills that would negatively affect the real estate industry and homebuyers and sellers. One example is a proposal from Gov. Baker to increase the transfer tax on home sales by more than 50 percent in order to fund climate change resiliency programs. If enacted, such a tax hike would drive up the already high cost of housing in Massachusetts and strip homeowners of the equity in their property. Stay tuned for regular updates on our advocacy and we urge you to get involved. Don’t hesitate to reach out to us or your legislative officials directly to share your concerns. March/April 2019
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Realtors® in the House (and Senate, City Council, and Planning Board...)
BY BRIDGET MCCREA
These Massachusetts Realtors® divide their time between their real estate businesses and their civic duties as either elected or appointed government officials. Here’s how (and why) they do it.
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If there’s one thing that Peter Davies has learned by serving as both a full-time real estate agent and an appointed official for his city’s Board of Assessors, it’s that those two worlds collide more than one might think. Take the time Easthampton City Arts (ECA) worked with the Easthampton Cultural Council (ECC) on a revitalization project. The Boardwalk and Promenade Park on the Nashawannuck Pond project included the dredging of a large pond, construction of an impressive promenade boardwalk, and the addition of fishing and boat rental facilities. The revitalization project also included the addition of a beautiful stainless-steel sculpture that’s become a focal point for the town, and that was funded by a National Association of Realtors® (NAR) Creative Placemaking Grant and a Cultural District Grant from the Massachusetts Cultural Council. A brokerassociate with Borawski Real Estate in Northampton, Davies helped the city get the grant by introducing other leaders to the program and then serving as the go-between for the paperwork and other requirements. Davies served as an important connection point between a city that needed funding to finish up its revitalization project and a funding source offered by an association he’d been a part of for more than three decades. “I knew that NAR offered the program and thought it would be a great fit,” says Davies, a 33-year real estate veteran who has served on the Easthampton Board of Assessors for eight years, “so I worked with our arts council to make it happen.”
In some cases, Davies’ appointed position puts him in touch with buyers and sellers, or creates referral opportunities. As long as there’s no conflict of interest Peter Davies involved, those opportunities are there for the taking. “You do get some business out of it, but that’s not the main thrust of serving as an appointed official,” says Davies. “That’s a side benefit.”
For the People, By the People Since the U.S. became a country in 1776, it has relied on a solid stable of people who are ready, willing, and able to serve as government officials. With “for the people, by the people” as its cornerstone, the U.S. works with the guiding ideal that officials are elected or appointed to represent us, versus their own personal interests. This aligns well with the real estate professional’s commitment to always do what’s best for their buyers and sellers— precisely why agents and brokers are so well suited for public office. “Realtors® vote, they go to the polls, they know where signs can be placed, and they basically have an instant constituency of fellow agents,” says Paul Yorkis, president of Patriot Real Estate in Medway. “Not all Realtors® are of the same political persuasion, of course, but we all belong to the Realtor® party and share the same concerns about affordable housing, housing production, and many of the issues that come before local boards and commissions, as well as the state legislature.” State Representative Carole Fiola concurs, and says real estate agents have
the kind of careers that put them in front of many different people. “They see the financial troubles as well as the financial growth that people are managing, they’re helping them with estates when someone passes away, and they’re assisting during tough times like divorce,” says Fiola, a sales-associate with RE/MAX Right Choice in Fall River. “When you’re around people and helping them with all of these lifechanging activities,” says Fiola, “it prepares you very well for all of the life changes and situations that we deal with as legislators.”
A Front-Row Seat Since 2001, Fiola has held an elected position on the Governor’s Council, a board that approves the governor’s appointments. She also worked at the Office of Economic Development under Mayor Carlton Viveiros. Fiola has also worked on a variety of projects for different charities like Healing Little Hearts, which promotes research for pediatric heart conditions. A licensed Realtor® for nearly 30 years, Fiola got active in the industry after being sworn in as a member of the Governor’s Council (at which point she was VP and GM of a local radio station). “I realized that, to handle a job along with being an elected Carole Fiola official, I needed to do something else,” says Fiola, who started a real estate agency with her husband. In 2009, when the market began to shift, she decided to hang her license with RE/MAX Right Choice. Two years later, when she decided not to run for office again, Fiola ramped up her real estate career and became the top
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producer in her office. When the political bug bit again five years ago, she ran for state representative and won. And while she’s had to pare back her real estate career to accommodate that obligation, Fiola says her work as a top-producing agent gave her a solid background for success in politics. “I was in people’s homes and in their offices, meeting with them and understanding their life situations,” Fiola recalls. “That gave me a front-row seat to the constituents in my district here.” From his vantage point as a brokerowner, Yorkis also has a front-row seat with his own constituents. In real estate since 1991, he served a three-year term as a member of the Board of Registration of Real Estate Appraisers, four years as a member of Medway’s planning board, and nine years (before he became a Realtor®) as a member and chair of the Conservation Commission. Politically active by nature, Yorkis has held myriad other positions, including federal political coordinator for Congressman Joseph Paul Yorkis P. Kennedy III; state political coordinator for the Senate President Karen Spilka; and presidentelect of the Realtor® Commercial Alliance of Massachusetts. So, how does Yorkis balance out all of those (and other) commitments with running a successful real estate brokerage? It’s all about good time management and letting people know how much he can (or can’t) do. “I just make time for it,” says Yorkis, who lets the groups know exactly when he is or isn’t available for meetings well in advance, knowing that there will be schedule conflicts. “If I can’t meet on a certain night, I’ll often participate under Massachusetts’ open meeting law (which requires that most meetings of public 14 18
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bodies be held in public),” says Yorkis, “and just have them call me where I am and participate that way.”
A Natural Alignment With 14 years under his belt as a member of the Northampton City Council, David Murphy of The Murphy’s Realtors® in Northampton has been doing things for his city since 1978—the year he sat on the committee that introduced cable television to his town. He’s since served on numerous city committees—from the local housing partnership to historic districts, the latter of which by law must include a Realtor®-member in Massachusetts. Celebrating his 40th year in real estate in 2019, Murphy says his work served as a launching pad for his political career. Dually licensed as a broker and an appraiser, he says he “got tapped into the tax assessor position because their [job] is to value property, and I knew how to do that.” That segued into the elected position that Murphy has held since 2005. In assessing the applicability of real estate professionals as elected officials, Murphy says there’s a natural alignment between the two careers. As Fiola pointed out, Realtors® know a lot of people and professionals in their communities, making them a recognizable choice on election day. They also have their fingers on the pulse of their communities, and tend to know a lot about the properties, infrastructure, taxation, zoning, and other important issues. “It really gives us a leg up when it comes to contributing to an elected/ appointed position,” says Murphy. “We have a lot of the answers before we even get started.” On the other hand, elected officials aren’t always as popular as, say, Realtors® or brokers—due to the decisions that they have to make. Murphy says this just comes with the territory. “Some decisions are no-brainers in terms of what does or doesn’t need
to happen,” says Murphy. “In other cases, you may have gray areas where decisions have to be made that aren’t right for everyone, and someone gets upset. Even if you only annoy two people a year as a city councilor, that adds up after 14 years.” To minimize those annoyances, Murphy says he stays tuned into his constituents and tries to base decisions on what’s best for the majority of the people. “Serving in public office is very rewarding,” he concludes, “but you do need a thick skin and to be willing to put in the time.”
Stepping Up to the Plate Elaine Miller has always been the type of person who keeps up with current events and ponders how she might be able to step in and change some opinions or otherwise make a difference. She got that opportunity two years ago when a position opened up on the Tisbury Planning Board just as her daughter, Stephanie Roache, was ramping up her own real estate career. In real estate for 26 years, this associate with Sandpiper Realty in Edgartown applied for the planning board and was offered a position as a permanent member. Since then, Miller has been active on the board, which has helped change zoning regulations, accommodate more affordable housing, and represent the town on the Martha’s Vineyard Transit Authority (VTA). A Land Bank representative, Miller has set a 2019 goal for herself of learning everything she can about the town’s zoning bylaws and Elaine Miller how they apply in specific situations. This 6-month commitment isn’t too far afield from all of the area and property knowledge she had to acquire in order to become a successful agent.
“As diligent real estate professionals, we do so much of our own research on our communities and on individual properties,” says Miller, “and spend a lot of time preparing information for our buyers and sellers. That segues well into governmental positions.” What doesn’t gel well are the potential conflicts of interest that can crop up when you’re wearing dual hats. For example, Miller was representing a piece of property that she wanted the Land Bank to purchase, but she had to give up the former and take no commission in order to make the latter happen. “I actually had to stop talking to my client and explain that if the deal moved forward the relationship had to be severed today,” says Miller. “It was a complex deal and she understood, but literally within one hour I had to recuse myself and step out of that transaction due to my position with the planning board.” Currently in her second term as an elected member of the Fall River City Council, Pam Laliberte-Lebeau divides her time between that commitment and her position as a Realtor® with Keller Williams, South Watuppa. Unanimously voted to serve as VP of the council this term by her colleagues, Laliberte-Lebeau says that real estate is a lot like public
office in that agents are serving the needs of your clients/constituents. “People want reliable, personable, honest, accessible, and hard-working councilors,” she says, “the same qualities that they would look for in a Realtor®.” Being elected on the local level comes with the bonus of being completely up to date on your area, she adds, including services, future development, and improvements, and then being able to relay that information to buyers and sellers. “On the flip side, being an agent gives me the opportunity to learn why people want, or don't want, to move to certain cities and towns, and what they are and aren't willing to pay for services,” says Laliberte-Lebeau. “This is a wealth of information to have when votes are before us as they pertain to taxes, water and sewer rates, and funding public safety and education.”
More Rewarding Than You Can Imagine To agents considering a governmental position, Laliberte-Lebeau says her favorite part of the job is being able to help others. “That’s why I keep doing it, and it goes the same for real estate; it’s very much the same feeling,” she says. “A lot of people think they won’t be smart or savvy enough to take on a position, but I think anyone who is interested should give it a shot.” Davies agrees, and says a good starting point is a short visit to the town hall to sit in on a few meetings and see how things work. Pick something that aligns with your own interests (e.g., schools, arts, culture, planning, etc.) and find out what positions are available. Be realistic about the time commitment, Murphy adds, knowing that the position will require more work that you thought it would. “It's going to be harder than you think it's going to be, but if you do the work and put in the time,” he says, “it’s also going to be more rewarding than you could have ever imagined.”
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member voices R E A LT O R ® V I E W S
{president’s message}
t
Giving Back BY ANNE MECZYWOR The cover feature in this edition of Bay State Realtor® Magazine is all about Realtors® giving back in their communities. I know that Realtors® like you don’t generally consider your volunteer efforts to be worthy of note. We view it as a welcome responsibility of being part of a community. That sense of responsibility is just ingrained. We know that communities are only as strong as the people who get actively involved. We also know that involvement greatly adds to quality of life and benefits everyone in a community. Simple supply and demand dictates that if involvement drives desirability, more people will want to live in a community and property values rise. But is that the reason behind your involvement as Realtor®? I’m willing to bet that doesn’t cross your mind when you are on the front lines, making your community a better place to live. When we claim to be “neighborhood experts,” we are not talking about knowing all the cold, hard statistics (although that’s important to know) as much as knowing the lifestyle of our neighborhoods and what makes them special. We want the area where we live to be the best it can be. So, we volunteer at our schools, or ask to be appointed to a town committee. We pick up trash along the highways or participate in clothing drives. We go to town meetings and make our voices heard, we have regular conversations with elected
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officials, we write letters to the editor, we register voters, and sometimes we even run for elected office and win. When state and national Good Neighbor Awards are announced, I am in awe of the things our fellow Realtors® do to give back at such a large scale. It is truly amazing, and I know I’m not the only one who needs to reach for a tissue when hearing their stories. However, I’m in awe of those of you who do the little things too, because it adds up to a lot. I really think we make a great impact across the entire state. We know our neighbors, and we care about them. We help
others because, well, we just want to. We like that feeling. We can’t walk by and not take notice of need—and we are compelled to help. Whether it’s at an open house or the House of Representatives, we really are about making houses into homes and streets into communities.
Save The Date for Realtor® Day on Beacon Hill: In addition to giving back to our communities, one more way that we can make a difference is through advocacy at the grassroots level. Each year we talk to our elected officials about issues that are important to Realtors®, homeowners, and people who want to be homeowners. So, I want you to save Wednesday, June 12 for our 34th Annual Margaret C. Carlson Realtor® Day on Beacon Hill. This is when you get the opportunity to join your fellow Realtors® to talk to your state legislators on a range of issues that affect the real estate industry. It’s the definition of participating in the democratic process, and it’s really fun and inspiring. I hope to see you there!
Commercial Real Estate Resources If you are practicing or interested in commercial real estate, then you will want to become familiar with The Realtors® Commercial Alliance of Massachusetts (RCAMA), the only local Realtor® Association in the state that specializes in commercial real estate. The RCA-MA hosts regular networking events across the state to help members promote their properties and to locate properties for their buyer and lessee clients. Because commercial real estate is not as local as residential real estate, it is vital to network with other commercial professionals to gain exposure for your listings and client needs. The RCA-MA hosts industry-specific courses and recently hosted an event with Mayor Nicole LaChapelle of Easthampton who provided insight into the economic development side of our local municipalities and how commercial members can best work within the needs of our cities and towns. The RCA-MA also offers “Discovering Commercial Real Estate,” a six-hour comprehensive course
designed to explain this important side of the business and introduce many of the concepts, tools, and other resources needed to pursue a commercial transaction or a career in commercial real estate. All members of the RCA-MA also receive NAR’s quarterly “Commercial Real Estate Outlook.” And did you know that the Realtor®-exclusive Realtors® Property Resource (RPR) benefit has a commercial platform that provides essential data to assist you in preparing market reports? We also provide annual training on Commercial RPR. Interested in kickstarting your commercial real estate career or taking it to the next level? As a member of the Massachusetts Association of Realtors®, you can join the RCA-MA as a secondary member for very little investment. We also have many opportunities for our commercial business partners. If interested in joining the RCA-MA and/ or serving on its Board of Directors, please contact 2019 President, Justine Snyder, justine@finepropertiesinc.com. March/April 2019
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CALENDAR March 5 Online License Renewal with the Board of Registration of Real Estate Brokers and Salesmen 10:00 a.m.–2:00 p.m. MAR HQ - 333 Wyman St. Waltham, MA 01760 The Board of Registration gets you up to speed with the new online license renewal program. The day will start off with an hour-long presentation, followed by “office hours” where you can get your specific questions answered. Bring your own laptop or tablet.
March 14 & 21 Graduate Realtor® Institute 102: Managing Risk and Avoiding Lawsuits March 14: 8:00 a.m.–5:30 p.m. March 21: 8:00 a.m.– 4:30 p.m. MAR HQ - 333 Wyman St. Waltham, MA 01760
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Bay State REALTOR®
Apply to Leadership Academy Class of 2019-2020 If you have only just begun to tap into your leadership potential, MAR wants to help you learn how to become a leader in business, your personal life, and the Realtor® organization. MAR Leadership Academy is a yearlong training course that combines individual study, group sessions, team-building exercises, goal setting, personal profile analyses, network building, and communication skills. The robust curriculum training is designed to train, nurture, and inspire tomorrow’s leaders. Find more information on marealtor.com and apply to be one of the 15 participants in this exclusive program by April 30.
Recognize a Realtor Who Goes Above and Beyond ®
Do you know a Realtor® who has gone out of their way to make their community or their association a little better? Have you ever wanted to recognize that person formally but weren’t sure how? The MAR Gratitude Project was created by the 2018-2019 Leadership Academy as a way to recognize the unsung heroes of the Realtor® community. Honorees must be Massachusetts Association of Realtor® members and must have engaged in or performed a discernable act of kindness/ charity/service outside of their ordinary duties as a real estate professional. Those recognized will receive a small token of gratitude in the mail along with a personalized thank-you card from the MAR President. Please visit www.marealtor.com/gratitude and fill out a short form to nominate a Realtor® you know for this recognition.
Save the Date:
2019 Margaret C. Carlson Realtor® Day on Beacon Hill Wednesday, June 12, 2019 Massachusetts State House Attend Realtor® Day on Beacon Hill to get up close and personal with legislators and make an impact. Hear from MAR staff and an exciting key note speaker (TBA) about the key legislative issues that will affect the real estate industry and private property. Local associations are encouraged to meet with their legislators after the speaking program. Do not miss out on this grassroots opportunity to show that Realtors® are directly involved in the legislative process.
To advertise in Bay State Realtor®, contact Julie Lewis at (508) 612-4841 or Julie@MARadSales.com
Gratitute Project Task Force Chair Mary D’Ambra hands off the ‘Gratitude Tile’ to honoree Jeffrey DeMoura
March/April 2019
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{insider}
Rental Real Estate and the 20 Percent Qualified Business Income Deduction CHRIS BIRD, CFP The Tax Cuts and Jobs Act of 2017 (TCJA) provides a new deduction the likes of which I have never seen. The Qualified Business Income Deduction (pursuant to Internal Revenue Code Section 199A) provides a 20 percent deduction of profits from any trade or business. The purpose of this article is to provide some clarity to the real estate world pertaining to the IRS requirements for real estate rental profits to qualify for this deduction. Obviously, this is a complex deduction and the services of competent tax advisors is a must. Since December 22, 2017, the date that the TCJA became effective, and throughout 2018, the tax professional community was uncertain as to how this deduction affected rental property profits. Thankfully, the IRS clarified the issue for us this January.
Safe Harbor On January 18, 2019, the IRS issued Notice 2019-07, which provides a safe harbor for investors in real estate rentals. An IRS safe harbor provides guidance, that if followed, will assure the tax-payer that the IRS has little interest in conducting an audit on the issue. The safe harbor covers both residential rental property and commercial, but specifically excludes properties subject to a triple net lease. The safe harbor requires very specific record keeping of real estate property owners beginning January 1, 2019. Due to the date of the safe
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harbor, the extensive record keeping requirements do not apply to 2018. The safe harbor requires that rental real estate owners must spend 250 hours or more per year on their real estate rental enterprise. A rental real estate enterprise may consist of one property or multiple properties. (I recommend the latter.) In counting the 250 hours, the owner may include time that they personally spend on the properties, as well as the time spent by employees, managers, or independent contractors. The safe harbor specifically lists the activities for which time can be counted, and basically includes everything an owner, manager, or independent contractor will spend time on, except for analyzing financial reports, construction or major renovation hours, and time spent traveling to and from the property or properties.
I believe those real estate investors with one or two rental properties are going to have difficulty in coming up with 250 hours per year. In addition, if your real estate rentals consistently show losses on your tax return, then the safe harbor is of no use to you. Only rental real estate owners with enough properties and profits will truly benefit by the IRS Notice, if the owners are willing to take the time to keep the necessary records. This safe harbor is not to be taken lightly, as the IRS requires a statement under penalty of perjury to be attached to the tax return claiming this safe harbor. I recommend that all property owners using this safe harbor read IRS Notice 2019-07 carefully. Chris Bird, CFP is a tax expert and national lecturer on individual and corporate income taxes, and real estate issues.