p 26
THERE ARE
SIGNS OF LIFE M aryl and ’s E conomy i s G e tti n g B etter
p 9
Q&A About QR Codes
p 17
rom the Hotline F 2010 Review
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President’s Perspective Cathy A. Werner
Focus on Opportunities in
a Challenging Market
MAR’s Consulting Economist Anirban Basu of Sage Policy Group says
I urge you to watch your email for our “calls to action” as the
that “Maryland’s economy is getting better” in our cover story on
session proceeds. Be prepared—visit the Political Action Center at
page 26. As I travel around the state, I hear anecdotally from members
www.mdrealtor.org. As our legislators grapple with ways to find more
that their phones are ringing again and there is a definite uptick in buyer
revenue, all Maryland REALTORS® must be engaged and understand the
interest. It’s important for us to keep our focus on the opportunities and
critical issues that face us as professionals and the property owners we serve.
less on the negative factors that confront us. “Friend” us on Facebook as another conduit for legislative update videos In this issue, we offer our annual recap of the most popular “From the
and other association information—an additional value to you as a MAR
Hotline” articles, updated and edited to provide timely information
member.
on a variety of subjects critical to you as a practitioner (See page 17). This is a good reminder that one of our most valuable benefits of MAR membership is four free calls annually (unlimited for brokers and managers) to the Legal Hotline. Our expert attorneys provide you advice and information to help you in your everyday practice. Visit www.mdrealtor.org to ask your question online, or call the hotline at 800-888-1272.
SAVE THE DATE In late January, REALTORS® from all across Maryland visited their state legislators and briefed them on REALTOR® issues coming before the Maryland General Assembly in 2011. We had an excellent turnout of members and elected officials, giving us the opportunity to let them hear from REALTORS® across the state about the issues we are concerned about. See page 15.
September12-14, 2011 M A R Y L A N D R E A L T O R ® February / March 2011
3
February / March 2011
9
Features
9 Q&A AbOut QR Codes in real estate
12 Where is america moving? 14 Partnership in housing Maryland Home Makeover 15 MAR’s 2011 Legislative Day
12
17 From the Hotline 2010 Review 22 An open letter about the mortgage interest deduction
table of contents Departments
17
3 PRESIDENT’S Perspective
6 MAR 2011 LEADERSHIP TEAM
23 Regulation News Looking Ahead for the Real Estate Commission 24 MARYLAND REAL ESTATE COMMISSION NEWS Agency and Supervision CE Classes Ready to Go 26 RESIDENTIAL SALES There Are Signs of Life
26 4
M A R Y L A N D R E A L T O R ® February / March 2011
30 MRIS UPDATE What RETechnology Can Do for You 31 snippets & Industry tips 33 COMMERCIAL CONNECTION Zoning: The Change or Mistake Rule 34 FROM THE HOTLINE Power of Attorney Law
2011 Maryland Association of REALTORS® Leadership Team
Maryland Association of REALTORS® 200 Harry S Truman Parkway | Suite 200 Annapolis, MD 21401-7348 800.638.6425 | www.mdrealtor.org
Cathy A. Werner President RE/MAX American Dream 9414 Belair Road Baltimore, MD 21236-1504 410.529.7900 Fax 410.529.7906 cwerner@remax.net
Patricia A. Terrill President - Elect Prudential Carruthers REALTORS® 7500 Coastal Highway Ocean City, MD 21842-2937 410.524.7000 Fax 410.524.5695 pat.terrill@gmail.com
Executive Leadership Team Cathy A. Werner | President Patricia A. Terrill | President-Elect Carlton J. Boujai Jr. | Secretary Carole A. Maclure | Treasurer Steve Meszaros | Immediate Past President Mary C. Antoun | Chief Executive Officer
Editor Deborah L. Hager | debbie.hager@mdrealtor.org
Advisory Committee Ken Montville | Chair Ron Howard | Vice Chair
Advertising & Publication Design
Carlton J. Boujai Jr.
Carole A. Maclure
Secretary Exit Realty Prosperity Group 5300 Westview Drive Suite 105 Frederick, MD 21703-8339 301.698.8700 carltonboujai@mris.com
Treasurer Long and Foster Real Estate, Inc. 4650 East West Highway Bethesda, MD 20814-5330 301.907.7600 Fax 301.907.6610 carole.maclure@longandfoster.com
Art Comp & Design Alison Cooper | Senior Designer 1921 York Road, Timonium, MD 21093 410.252.4027 | www.acd1.com
Mission Statement The Maryland Association of REALTORS® exists to support all segments of its membership and their specialties. The Maryland Association of REALTORS®, through collective efforts with local boards/associations and the National Association of REALTORS®: ■ Develops and delivers programs, services and related products that
maintain and elevate the high standards of the real estate business and the professional conduct of its practitioners; ■ Assists members in ethically and professionally serving the public; ■ Promotes and preserves the right to own, transfer and use real
property; and ■ Protects the right of members to conduct business within a framework
of fair and reasonable laws and government regulations. In principle and in practice, the Maryland Association of REALTORS® values and seeks diversity and inclusive participation within the field of real estate and recognizes each member as a unique individual.
Steve Meszaros Immediate Past President Long and Foster Real Estate, Inc. 568-A Ritchie Highway Severna Park, MD 21146 410.544.4000 Fax 410.544.6072 steve.meszaros@longandfoster.com
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M A R Y L A N D R E A L T O R ® February / March 2011
Mary C. Antoun Chief Executive Officer Maryland Association of REALTORS® 200 Harry S Truman Parkway, Suite 200 Annapolis, MD 21401-7348 800.638.6425 mary.antoun@mdrealtor.org
Maryland REALTOR® (USPS 0016-017) is published bimonthly by the Maryland Association of REALTORS®, 200 Harry S Truman Parkway, Annapolis, MD 21401-7348. Periodical postage paid at Annapolis and additional mailing offices. Postmaster send address changes to: Maryland REALTOR ®, 200 Harry S Truman Parkway, Annapolis, MD 21401-7348. Member subscriptions of $3.81 are paid with annual dues. This publication is designed to provide accurate and authoritative information regarding the subject matter covered. It is offered with the understanding that the publisher is not engaged in rendering professional advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Articles that appear in Maryland REALTOR® are an informational service to members. Their contents are the opinions of the authors alone and do not necessarily represent those of the Maryland Association of REALTORS®. Permission to reprint articles appearing in Maryland REALTOR® magazine must be requested in writing. Also include purpose for request. While this magazine makes a reasonable effort to establish the integrity of its advertisers, it does not endorse advertised products or services unless specifically stated. ©2010 Maryland Association of REALTORS®, Inc.
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Q & A Abou
t QR Codes in Real Estate By Matthew Ferrara
a QR codes are great way to connect your e online and offlin ts marketing effor using free technology. M A R Y L A N D R E A L T O R 速 February / March 2011
9
QR codes tion a m r fo in in As mobile Internet access explodes across ta n o c the country, real estate professionals have that can be more opportunities to engage customers with new marketing channels. Today’s smartphones red by a e h ip c e d combine their digital cameras with specialized applications (“apps”) to help bridge the gap code-reader between offline marketing and online information. a application on One of the newest ways to do this is with a smartphone specialized “bar code” technology called QR codes. Here’s what you need to know to start using them as marketing tools.
A QR code? What’s that?
A QR (Quick Response) code is a kind of “two dimensional” barcode similar to the classic barcodes we see on product packages. QR codes look like postage stamps that have a “fractal” display on them. Just as a traditional barcode contains the stock number and price of a product, QR codes contain information that can be deciphered by a code-reader application on a smartphone. When you “scan” a QR code with your smartphone, the application “deciphers” the content stored in the code and presents it on your phone’s screen as normal text, numbers, hyperlinks and even graphics.
How do QR codes work?
QR codes contain between 4000-7000 characters of information. They are created using software or free websites that translate one kind
of information (letters, numbers, hyperlinks) into a coded image (see Figure 1). You can encode web URLs, text, phone numbers and SMS messages into the image that a smartphone can use to access web content or people (by calling you).
For example, if you encode a URL into a QR code and place it on a print advertisement, prospective customers can read the ad and scan the QR code, which will display a web link that takes them to a website for additional information.
So how do people “scan” the QR code?
New smartphones have QR code readers built into them. Usually there is an application in the phone which activates the scanning features of the camera. A user simply starts the app and points the camera at a code image. The phone scans the code “points” to decipher its content in a process that usually takes about 2-3 seconds. The “contents” of the code will then be displayed on the phone’s screen, such as a URL, text or a phone number.
How do I create a QR code?
There are several free QR code creators on the Internet, which can be found by searching for “qr code generator.” One of the more popular sites is qrstuff.com, where you can enter a variety of content types and generate a QR code image which can be downloaded and printed. The site even makes it possible to apply the QR code to marketing products like postcards, t-shirts, coffee mugs and other items. In most cases, all you’ll need is the downloaded code image, which you can then place on printed materials such as listing sheets, mailing pieces and magazine ads on your own.
Where does it make sense to use QR codes?
Figure 1: QR Code Generator application on the web
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M A R Y L A N D R E A L T O R ® February / March 2011
Adding a QR code to listing sheets, postcards and newspaper ads lets smartphone-savvy customers go from the offline piece to online content very easily. It’s faster than requesting information by TEXT/SMS and it saves space by using a small
image instead of long text strings. Anywhere you can place a printed QR code presents an opportunity to connect the physical item to the virtual online content world. QR codes are a novel way to help your customers receive additional information from traditional media, especially printed items.
New smartphones have QR codes readers built into them
What can I encode into a QR code? Think of the many types of information you can offer; you can encode them in a QR code. Just about anything that can be referenced by an Internet URL can be encoded into a QR code—maps, podcasts, videos, social network profiles, blog entries, and even a vCard with contact information. QR codes can enhance “limited-space” marketing media with more robust content that customers can interact with, save and share with others as well.
QR codes are a great way to connect your online and offline marketing efforts using free technology. They provide consumers with a ready-to-go and low-risk tool to receive additional information. And QR codes make it possible to extend the value of your print media investment by driving traffic from offline media to online content. With only a few minutes of practice, real estate professionals should be able to create, distribute and leverage QR code technology across their marketing plan, opening the door for new ways to connect with customers in a mobileempowered world.
QR Code to the Maryland REALTOR® website:
GRI – The Next Level
Here’s what you can expect from attending GRI –
■ networking and referral opportunities
■ increased knowledge on a wide array of topics and skill enhancements
■ confidence building through in-depth knowledge, skills training and better understanding of industry practices ■ earn a national designation which has proven greater income potential ■ receive continuing education credits, and
■ earn credits toward your broker/associates broker’s license.
Why wait? For class schedules and program details, visit www.mdrealtor.org. Click the Education tab and scroll to REALTOR® Institute (GRI), GRI Overview. M A R Y L A N D R E A L T O R ® February / March 2011
11
Where is America Moving? E ve ry ye a r , mov i n g companies su c h a s Atl as a n d Alli ed ( A MAR A f f in it y Pa rt n er ) a n a ly ze where t h e ir c u s tomer s h av e mov ed in t h e pr e vio u s t welv e mont h s .
12
M A R Y L A N D R E A L T O R ® February / March 2011
SOME FACTS FIRST H Number of Atlas moves completed in 2010: 74,541 H Tracking period: Sample includes all moves between January 1, 2010 through December 31, 2010 H How are moves defined? Atlas included interstate and cross-border moves for the USA and Canada only. Note that the numbers listed for Canadian provinces includes households moving between the US and Canada, not between Canadian provinces. H What are inbound and outbound states and how are they defined? According to Atlas, each state and province has a threshold value, determined by the total number of household moves multiplied by 0.55. For a state to be considered “outbound,” the household moves out of the state must exceed the threshold amount. For a state to be considered “inbound,” the inbound moves exceed the threshold
According to the 2010 Atlas Van Lines Migration Patterns study, more Americans are on the move. In 2010, Atlas saw increases in the number of household moves, a possible sign that the economy is improving. For some states, the number of outbound moves was notably large. Due to high unemployment, especially with declining manufacturing and automotive jobs, residents of the Rust Belt continue to relocate. Adjacent states saw a large increase in the number of inbound moves.
top results H Highest Inbound: Washington, DC At almost 69%, the Capital had the highest percentage of households moving into the area. For every one household moving out of DC, 2.2 moved in. This trend has remained steady for five years in a row. H Highest Outbound: Ohio Just over 4,500 moves occurred both inbound and outbound in Ohio last year. Indeed, outbound moves outranked inbound by almost 60%, with 1.37 times the number of outbound household moves compared to inbound.
For the first time in two years, Kentucky joined its surrounding Mideast states—North Carolina, Maryland, and Washington D.C.—as an inbound state. For the fifth year in a row, Washington D.C. had the highest percentage of inbound moves, while Ohio came out the clear leader in the highest percentage of outbound moves.
Déjà vu For several states, economic ups and downs have had little influence on the number of residents moving in or out of that state. For ten or more years, six states—California, Alaska, North Carolina, Kansas, South Carolina and Indiana—have remained constant in their inbound, outbound or balanced status in Atlas’ annual study. Silver lining
Despite high foreclosure rates and poor housing sales, a large pocket of southeastern states, including Florida, Alabama, Georgia and South Carolina, had no significant increase in the number of outbound moves. In fact, they remained balanced in the number of outbound and inbound moves. A reason for the balance could be these states’ popularity as a retirement destination.
Regardless of economic highs and lows, several states have remained constant in status for ten or more years. California, Kansas and South Carolina have been balanced, Indiana has been outbound, and Alaska and North Carolina have remained inbound. As the year progressed, Atlas saw increases in the monthly totals of household moves. Summer months continued to see the highest number of moves per season. Overall, the total for 2010 was 74,541.
A closer look at relocation patterns in 2010 Westward-ho! Much of the West continues in a balanced state. For the first time in three years, Idaho moves from an outbound state to a balanced state, joining California, Oregon, Washington, Nevada, Montana, Colorado, Utah and Arizona.
For an excellent interactive map of population increases, visit http://2010.census.gov/2010census/data/index.php For full results of the migration study and to view a map and annual histories for each state, visit www.atlasvanlines.com/ migration-patterns/
M A R Y L A N D R E A L T O R ® February / March 2011
13
President’s Perspective
Continued from page X
MARYLAND MARYLAND HOME HOME ™ MAKEOVER™ MAKEOVER Gambrills, Maryland
Gambrills, Maryland
The Partnership for Housing and Maryland The Partnership for Housing and Maryland REALTORS®® work closely to provide REALTORS work closely to provide basic housing needs and improve the quality basic housing needs and improve the quality of life for Maryland families through the of life for Maryland families through the MARYLAND HOME MARYLAND HOME MAKEOVER™ program. The most MAKEOVER™ program. The most recent project in Gambrills included extensive recent project in Gambrills included extensive renovations made possible through the renovations made possible through the support, commitment, and generosity of support, commitment, and generosity of REALTORS®, Harkins Builders, and our other REALTORS®, Harkins Builders, and our other partners—contractors, suppliers, friends, and partners—contractors, suppliers, friends, and community groups—that fulfilled a family’s community groups—that fulfilled a family’s dreams of accessibility. dreams of accessibility. To learn more about the Partnership for To learn more about the Partnership for Housing and MARYLAND Housing and MARYLAND HOME MAKEOVER™, please HOME MAKEOVER™, please visit www.partnershipforhousing.org. visit www.partnershipforhousing.org. The Partnership for Housing Foundation The Partnership for Housing Foundation and the Barry Family express their and the Barry Family express their deep appreciation to the contractors, deep appreciation to the contractors, suppliers and community organizations suppliers and community organizations for their generosity and enthusiasm for for their generosity and enthusiasm for this program. this program. ContraCtors and suppliers: ContraCtors Harkins Builders and suppliers: Harkins JohnsonBuilders Lumber Johnson Lumber Charles A. Klein & Sons Charles Klein & Sons ColonialA.Electric Colonial Electric East Coast Poured Floors East Coast Poured Floors RPM Construction RPM SACOConstruction Industries SACO Industries ABC Building Supply ABC Building Supply Chaney Concrete Chaney Concrete CMC Concrete CMC JW &Concrete Sons Drywall JW & SonsWaste Drywall Diamond Services Diamond Waste Services POS Construction POS East Construction Coast Exteriors East ExteriorsWashington/Baltimore SearsCoast Commercial, Sears Commercial, Washington/Baltimore ViWinTech ViWinTech Davenport Insulation Davenport Insulation C & G Carpentry CCarpentry & G Carpentry Hardware Services Carpentry Hardware Services Chesapeake Floorscapes / Family Flooring Chesapeake Lach Tile Floorscapes / Family Flooring Lach H & ETile Equipment Services HAmerican & E Equipment LumberServices Co. American Lumber Co. Arford Home Improvement Arford Home Improvement
14
M A R Y L A N D R E A L T O R ® February / March 2011
APEX Deck Company APEX DeckCedar Company American & Millwork American Cedar 1 Choice Realty & Millwork 1Home Choice Realty First Title Group Home First Title Group Mills Services Mills SmartServices Box Smart Box& Landscaping BP Lawn BP Lawn & Landscaping Chip Keener, Architect Chip Keener, Architect Empire Builders Empire Builders Royal Gutter Royal Gutter Contributors: Contributors: Maryland Association of REALTORS® Maryland Association of REALTORSof® Anne Arundel County Association Anne Arundel®County Association of REALTORS ® REALTORS Anne Arundel County Women’s Council Anne Arundel Women’s Council ® of REALTORSCounty ® of REALTORS Mary C. Antoun Mary C. Antoun Four Seasons Community Association Four Seasons Community Association Consumer Credit Counseling Services Consumer Credit Counseling Services of MD and DE of MDHome and DELoans MetLife MetLife Home BB & T Bank Loans BB & T Bank Regional Information Metropolitan Metropolitan Regional Information Systems (MRIS) Systems (MRIS)
Anne Arundel County Anne Arundel County Safeway Safeway National Association of REALTORS® ® National Association Steve Danneman, CPAof REALTORS Steve Danneman, CPA Ilene Kessler Ilene Kesslerat Waugh Chapel Chick-Fil-A Chick-Fil-A at Waugh Chapel JoAnne Poole JoAnne Poole Washington Savings Bank Washington Savings Bank Volunteers: Volunteers: Ray Spradling Ray MikeSpradling Zahn Mike JackieZahn Zahn Jackie Zahn Ed Miller Ed Miller John Fischer John RandyFischer Scarbro Randy Scarbro Doug Wilson Doug Wilson Heather Williams Heather MehganWilliams Barry Mehgan Barry Katrina Barry Katrina KathleenBarry Barry Kathleen Barry Ryan Barry Ryan DannyBarry Barry Danny Maura Barry Martin Maura Martin Sean Martin Sean Martin
Kia Fortan Kia Fortan Heather Yeager Heather Yeager Robin Suda Robin Suda Salaki Madelaine Madelaine Salaki Greg Lamberson Greg Greg Lamberson Rutter Greg Rutter Fern Dannis Fern Dannis Ted Applegate Ted Applegate Marvin Mills Marvin JoAnneMills Poole JoAnne BarbaraPoole Zeitz Barbara Zeitz Brenda Jackson Brenda Jackson Dave Quinn Dave Quinn Matt Terry Matt Todd Terry Souder Todd SteveSouder Bell Steve Bell
EQUAL HOUSING
OPPORTUNITY EQUAL HOUSING OPPORTUNITY
REALTORS® Attend
2011 MAR Legislative Day
Maryland Lt. Governor Anthony Brown and other key speakers address MAR members in Annapolis The Maryland Association of REALTORS® hosted its annual Legislative Day reception at the Lowes Annapolis Hotel on January 24, 2011. The reception provides an excellent opportunity for Senators, Delegates, and REALTORS® to meet and discuss issues of concern during the 2011 Legislative Session. s
Lt. Governor Anthony Brown
s Senate Leadership with MAR Leadership. Mary Antoun, CEO; Joanne Darling, MAR’s NAR RPIC Rep, Senate President Mike Miller, Vice Chair Nic D’Ambrosia, MDREC (MAR Past President); MAR 2011 President Cathy Werner.
s MAR 2011 Officers with Maryland Comptroller Peter Franchot (2nd from right). Treasurer Carole Maclure (MAR Past President), President Cathy Werner, President-Elect Pat Terrill; Secretary Carlton Boujai s Mid-Shore Board of REALTORS®. MSBR President Lee Holt, Gretchen Panuzio (GAD), Julie Fox, Alex Fountain, Del. Jeannie Haddaway-Riccio, Doug Firth, Billy Parker, Sen. Richard Colburn, Del. Addie Eckardt, Bill Neary (MAR Past President), Susie Hayward, Dempsey Mizelle and Alma Colburn.
t Anne Arundel County Association of REALTORS®. (Back) Tim Blanchfield, Dee Miller, Tom Quattlebaum (CEO), Julie Blanton, Bob Johnston (GAD), Catherine Ebersberger, Kristen Hart, Tom Levin, Michele Cordle, John Pilkins, Rick Rall. (Front row, seated) Leigh Lawson, Kristi Krankowski, Jennifer West, Jan Greene, Noni Rondeau, Del. Nic Kipke, Joanne Poole s Coastal Association of REALTORS®. (Front) Jenny Cropper Rines, Laurie Crawford, Joan Strang (GAD), Del. Charles Otto, Sheila Dodson (CEO), Del. Jeannie Haddaway-Riccio, Chris Jett, Alma Colburn. (Back) Wesley Cox, Sen. Richard Colburn, Joel Maher, Jack Tellman
s Prince George’s County Association of REALTORS®. Susan Pruden, Calvin Clark, John Harrison (MAR Past President), Isaac Showell, Boyd Campbell, Casey Lewis (REALTOR®, PG Central Committee Member), Vivian Dodson (seated), Ben Horton, Beverly Ball (REALTOR® and PG Central Committee Member), Mike Graziano (GAD), PGCAR President Mike Cerrito, Del. Jolene Ivey, Del. Marvin Holmes (both REALTORS® also), George Mitchell.
Frederick County Association of REALTORS®. Buzz Mackintosh, Sen. David Brinkley, Del. Kelly Schultz, Carlton Boujai (MAR Secretary), Del. Kathryn Afzali, Sen. Ron Young, Tamar Osterman (GAD), Del. Patrick Hogan, Del. Michael Hough
s
s Carroll County Association of REALTORS®. Janice Kirkner, Dan Hoff, Del. Justin Ready, President-Elect Steve Ferguson, President Marie Shantz and Sharon Hiner (CEO).
s Southern Maryland Association of REALTORS®. Paul Fenton, SMAR President-Elect, Del. John Wood, Paula Martino (GAD); Nancy Lohr, Del. Wood’s Legislative Ass’t, MAR VP Legal Affairs Chuck Kasky
M A R Y L A N D R E A L T O R ® February / March 2011
15
Pe n Fe d R e a l t y i s a m e m b e r o f t h e Pe n t a g o n Fe d e r a l Cr e d i t U n i o n f a m i l y.
Economic Forecast
Continued from page 13
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16
M A R Y L A N D R E A L T O R ® February / March 2011
The MAR Legal Hotline was just as busy (1922 calls) in 2010 as in past years. Given the challenging market conditions and ever-evolving real estate industry, it’s no surprise that the calls covered a variety of topics,
From the
hotline 2010 Review
not just distressed properties.
The Hotline articles published in 2010 covered a wide array of subjects, as you will see from this compilation. Our Legal Department is ready to help you navigate through the complexities of the practice of real estate. We are pleased that so many REALTORS® continue to take advantage of this valuable member benefit.
By Charles A. Kasky, Esquire
M A R Y L A N D R E A L T O R ® February / March 2011
17
I hope you can help me. I am hoping to supplement my income (such as it is) as a real estate
about new lead paint rules that seem to affect
salesperson by providing property management
property renovations and repairs. Is this true?
services for some property owners. Is property
Do the rules affect me as a REALTOR® or
management a licensed activity that I must
property manager? What should I be doing to
provide through my broker or should I create a
comply?
new, separate company?
The issue of licensing property managers is, unfortunately, a complicated matter. For the reasons more fully explained below, the answer is no, property managers generally are not licensed under Maryland law even though the license law seems to require it. However, it is perfectly acceptable, and not uncommon, for a licensed real estate salesperson to conduct property management services as part of licensed activity. When that happens, the agent’s property management activities are conducted under the supervision of the broker and the broker is liable for the wrongful actions of the licensee affiliated with that broker. If, on the other hand, the agent is providing property management services outside the scope of the licensee’s affiliation with the broker, those activities must be completely independent of the brokerage. This means no shared time, work space, advertisement, etc. Many individuals have created companies to facilitate this. Although the term “brokerage services” for purposes of the licensing law includes “leasing” real estate, the law also provides an exception for an agent while “managing or leasing” property. The Maryland Attorney General has applied a broad construction on that exception, so that a property manager would not need to be licensed, even if the manager’s principal activity as an agent was leasing apartments and collecting rent for that property – activities that would ordinarily require a license. The AG’s opinion specifically states that “someone who lists, shows, and rents property is engaged in providing real estate brokerage services and would ordinarily be required to be licensed; however, the statute exempts an agent of a real estate broker or of an owner of real estate from the licensing requirement while managing or leasing that real estate for the broker or owner.” Therefore, if 100% of the person’s time is dedicated to negotiating leases and collecting rents, that person must be licensed. But the exemption applies (no license is required) even if the property manager’s “principal and regular business” involved leasing property and collecting rents. So under the exemption, if any of the person’s time is spent on activities other than listing, showing, and renting property, no license is required. This could be as simple as arranging for a contractor to do work on the property or calling a plumber to unclog a drain. The history behind the exemption suggests that the Legislature understood that the exemption applies unless the person focused exclusively on negotiating leases and collecting rent. Further, the materials before the General Assembly when it enacted the exemption referred to traditional property managers, for whom leasing and rent collection are but two of a host of activities. So a property manager’s leasing of apartments and collecting of rent for the owner are within the exemption, almost whatever proportion of the manager’s total duties they represent. The General Assembly may alter the statute at any time, but has not yet seen fit to do so.
18
I recently saw information on the NAR website
M A R Y L A N D R E A L T O R ® February / March 2011
It is true that new Lead Renovation, Repair and Painting (RRP) Rules imposed by the Environmental Protection Administration (EPA) are set to take effect soon. On April 22, 2008, EPA issued a rule requiring the use of lead-safe practices and other actions aimed at preventing lead poisoning. Under the RRP rules, beginning in April 2010, contractors performing renovation, repair and painting projects that disturb lead-based paint in homes, child care facilities, and schools built before 1978 must be certified and must follow specific work practices to prevent lead contamination. After April 22, 2010, all 210,000 firms that perform renovations will have to be certified by EPA and the rule covers the 235,000 individuals who will have to take a class in order to become certified renovators. Most renovation firms are small companies with one or two employees. REALTORS® and property managers should be aware of the requirements in the RRP Rule. Engaging in activities like cashing checks from client for contractor may make you responsible for compliance with the Rule, which is triggered when there is a renovation performed for compensation to a property built before 1978 where paint is disturbed. REALTORS® often arrange for contractors, make referrals to clients contemplating having work done, or provide guidance to clients on what to look out for. As a REALTOR® you may also be managing property you own or on behalf of another owner. HUD estimates that there are 35 million homes in the U.S. with lead paint and 8.4 million renovations involving paint disturbance each year. Before any renovation work is begun, the owner and occupants must be given the new EPA brochure “Renovate Right” available at www.epa.gov/lead. All recipients of the information must sign an acknowledgment of receipt. This requirement actually went into effect December 22, 2008. EPA estimates the additional cost of compliance with the rule to be $65 per job, which assumes the worksite is properly prepared and sufficiently cleaned after work is performed. If these conditions are not present, the cost of compliance will be higher. To protect your clients, keep an eye on any renovations they may be undertaking. First, ensure contractors are qualified. This means the contracting firm has a certificate from the state or EPA and the worker(s) are certified. Second, during the project the contractor must post a warning sign prohibiting residents from entering the area. Next, the work area must be contained, which means doors and vents are sealed by thick plastic sheeting and duct tape. A certified renovator must regularly direct the work. The goal is to minimize the production and spread of lead dust. Property owners who renovate, repair, or prepare surfaces for painting in pre-1978 rental housing or space rented by child-care facilities must, before beginning work, provide tenants with a copy of EPA’s lead hazard information pamphlet Renovate Right: Important Lead Hazard Information for Families, Child Care Providers, and Schools. Owners of these rental properties must document compliance with this requirement. NAR has developed a series of guidance videos aimed at REALTORS® and property managers: www.realtor.org/government_affairs/lead_paint_main. The EPA’s RRP Rule website is: www.epa.gov/lead/pubs/renovation.htm.
No matter how much I read (and I really do read) about
I receive contract offers with the First-Time Homebuyer Addendum where the
RESPA and administrative fees, my head keeps
parties simply want to split transfer and recordation taxes. Paragraph 24 of the
spinning. I don’t know what the law really requires,
MAR Residential Contract of Sale seems to address this situation, but it appears
or whether a broker in Maryland can charge a fee.
to do it in a conflicting way. The first part says that the
Recent articles seem to recommend a new
Seller will pay all of the state and local transfer tax.
approach to compensation. Is this permitted in
The second part says that the Buyer and Seller
Maryland and does it address my concerns?
will share the costs. Please explain. And if the parties agree to split these costs, even if the buyer is a first-time buyer, we don’t even need
You are not alone. Even lawyers who specialize in Real Estate Settlement Procedures Act (RESPA) law are scrambling for answers. Early in 2009, a federal district court ruled in Busby v. JRHBW Realty, Inc. that an administrative fee of $149 paid by a home buyer to the broker that represented her was not sufficiently related to any specific settlement service performed for her benefit, resulting in a violation of Section 8(b) of RESPA. That section prohibits charging for “real estate settlement services” unless the fee charged is for “services actually performed.” The court found that the fee was an additional charge to the buyer to defray the overall costs of brokerage services, including the broker’s overhead and administrative costs. However, because the fee was separately itemized on the settlement statement from the percentage brokerage commission, and not specifically justified as compensation for other discrete “real estate settlement services” provided, the court viewed it as a duplication of the percentage commission charges, thereby rendering it an unearned fee in violation of RESPA. NAR then asked HUD, which enforces RESPA, for a clarification on the intent of Section 8(b). Earlier this year, HUD responded in a letter that although RESPA regulates how a real estate broker discloses its charges, it doesn’t regulate how those charges are determined. “The commission may be determined using a flat fee, a percentage of the sales price, or a combination of these methods,” HUD Counsel said. Brokers should make clear that administrative fees are a part of the overall real estate commission and are tied to services performed. The key is to make sure that the commission figure on the HUD-1 lines up with the commission structure contained in the listing agreement or buyer agency agreement. In January 2010, the MAR Listing Agreement and Buyer Representation Agreements were amended to address this development. Broker Compensation is no longer broken into component parts. The broker should simply specify what the compensation is in terms of percent of sales price, flat dollar amount or some combination. Additionally, brokers should disclose fees and commissions as a single figure on the HUD-1 settlement statement. In summary, brokers should review how they characterize compensation. Placing separate labels on or disclosing components of compensation in different parts of the brokerage agreement exposes the broker to the allegation that each separately labeled charge represents a fee for a distinct service. Disclosure of the firm’s compensation should clearly indicate that both the percentage-based and the flat fee components represent payment for services provided by the brokerage. These combined amounts should be disclosed in the 700 section of the HUD-1 as the broker’s compensation. Finally, do not create the impression that any particular fee is for a separate service if that is not the case. If that is the case, ensure the charge is commensurate with the value of the service.
the First Time Buyer Addendum, correct?
You are correct. If the parties agree to split the costs, you do not need the Addendum, even if one of the parties is a first time Maryland homebuyer. But many agents still attach it, because they don’t understand Paragraph 24. Let’s start with Maryland law. It creates two presumptions. First, for most sales of real property, the law presumes the parties will share equally the costs of state transfer tax and local transfer and recordation taxes. This presumption is stated in the language in Paragraph 24A. But the law turns that presumption around if the buyer is a first-time Maryland homebuyer. In that case, the law presumes the seller will pay the entire amount of local transfer and recordation taxes, as well as the seller’s portion of the state transfer tax. This legal presumption is recited in the first part of Paragraph 24B. (Remember that the buyer’s half of the state transfer tax is waived in this situation.) The law provides that this presumption (the first time buyer pays no part of local transfer and recordation taxes) may be changed if the parties expressly agree to a different arrangement. This is what the contract language specifically provides — that the parties will split the costs of recordation and local transfer taxes. In other words, despite the legal presumption that the first time buyer pays none of these costs, the contract provides that the parties agree to split the costs. In the vast majority of cases, this is what is agreed to; buyers typically do not take advantage of the legal presumption that the seller pays the entire amount. Because that is the most common agreement, the language in Paragraph 24B reflects that practice, effectively reversing the legal presumption without the need to attach the addendum. Again, under the second part of Paragraph 24B of the Contract, even if the buyer is a first-time Maryland homebuyer, the parties expressly agree that the local transfer and recordation taxes will be split evenly between the buyer and the seller. Because the contract itself contains this agreement, if the buyer is a first-time Maryland homebuyer, and the parties want to evenly split the local transfer and recordation taxes between the buyer and the seller, the parties do not have to attach the First-Time Maryland Homebuyer Transfer and Recordation Tax Addendum. The contract already contains that agreement. However, if the parties want to agree to a different arrangement, such as the seller paying all the recordation and transfer taxes, they should attach the addendum. In other words, the language in Paragraph 24B under the heading RECORDATION AND LOCAL TRANSFER TAX is the “express agreement” of the parties that the recordation and transfer taxes will be split (and not paid entirely by the seller). But remember, if the Seller is going to pay all of the taxes, the parties need to attach the First-Time Maryland Homebuyer Transfer and Recordation Tax Addendum and check that box.
M A R Y L A N D R E A L T O R ® February / March 2011
19
As a Maryland real estate licensee, I know that I am required to disclose material facts I know or should know. How is that standard measured? I’m feeling pressure to know more and more and to disclose it, even if the “fact” relates to a condition that is not on the property I am listing. Can you make some sense of this? I agree that industry trends appear to place an increasing burden on listing agents to disclose facts concerning property condition despite the availability of a home inspection performed for the very purpose of alerting the buyer to these same facts. Also, the law is somewhat unsettled as to your duty to disclose conditions that exist outside of the property boundaries. Add to this the different standards that apply to a seller’s duty to disclose latent defects, and it’s no wonder agents have questions. Article 2 of the National Association of Realtors® Code of Ethics advises members not to conceal pertinent facts about a property. Also, the Maryland Real Estate Commission may reprimand a licensee who fails to disclose to any person a material fact that the licensee knows or should know and that relates to the property. Further, the licensee is required to make a reasonable effort to ascertain all material facts concerning every property for which the licensee accepts the agency. The reasonable effort required of real estate agents is not excessively demanding. It most likely does not include areas that are not reasonably and normally accessible and does not demand expertise in fields such as construction, structural engineering, or hydrology. Courts have expressed the standard as the degree of care that a reasonably prudent real estate licensee would exercise and is measured by the degree of knowledge required to obtain a real estate license. Contrast this with the seller’s duty to complete the Residential Property Disclosure/Disclaimer Statement. It is quite clear that in Maryland, a seller’s disclosure duties apply to physical defects within the boundaries of the property being sold. Such language seems to preclude the necessity of disclosing off-site conditions. The Maryland statute calls for the residential property disclosure statement prepared by the seller to disclose items about the physical conditions in the property. One unresolved issue, and a source of the tension you are feeling, is the scope of the Maryland agent’s obligation to disclose off-site conditions affecting the property. Disappointed buyers have filed suit for failure to disclose conditions external to the property itself. Examples of off-site conditions include noisy neighbors, a nearby highway, an adjacent wastewater treatment plant, construction of an apartment complex in the area, a neighbor’s plans to build a tennis court, and a toxic waste contamination problem on a neighboring property. The question is not whether the condition is a “defect” because as noted above, the law only requires the seller to disclose on-site conditions that meet the definition of “latent defect.” The question is whether the fact is material. Many more conditions are considered “material” than are defined as “defects.” Also, sellers are only required to disclose defects of which they have actual knowledge, while licensees must disclose facts they know or should know. As a result, the duty of disclosure imposed upon a Maryland real estate licensee may in many respects exceed the duty imposed on the seller/client. Courts have found that off-site conditions need not have been disclosed because information about such facts was equally available to both the buyer and the seller. For example, in one case, the sellers did not have to disclose the existence of a highway approximately 300–500 feet off the property because it was a readily observable, known physical condition. The highway was easily visible to the buyers during their many visits to the property, as was the noise level and its resulting effect on the property’s value. Although there is no Maryland case directly addressing the issue, disclosure is probably required where the agent knows of facts materially affecting the value of the property that are not readily observable and not known to the buyer. In other words, use the same test for the disclosure of off-site conditions as you use for on-site conditions.
20
M A R Y L A N D R E A L T O R ® February / March 2011
Is it true that a seller can no longer offer owner financing to a buyer? As usual, the answer is “It depends.” In 2008 Congress enacted the Secure and Fair Enforcement for Mortgage Licensing Act, commonly referred to as the SAFE Act, requiring licensing or registration of loan originators. This legislation led to a variety of activities related to implementation, including indirect imposition of requirements on seller financing and legislative and regulatory activity at the state level. The SAFE Act is intended to enhance consumer protection and reduce fraud. The law requires states to establish loan originator licensing requirements with respect to residential mortgage loans made primarily for personal, family or household use. Loan originators who are employees of banks are subject to less onerous registration requirements. All states, including Maryland, have enacted legislation requiring licensing through the Nationwide Mortgage Licensing System and Registry (NMLSR). The SAFE Act does not exempt individuals who choose to finance the sale of residential property they own (often referred to as seller financing), but HUD guidelines and its proposed rule do provide some exemptions. Specifically, the SAFE Act exempts from licensing: • Homeowners selling and financing their own residences. HUD does not limit this exemption to a principal residence, so the sale of a vacation home with seller financing is also exempt. • Realtors® representing homeowners selling their residence with seller financing are also exempt, to the extent they are performing real estate brokerage activities, not lending activities compensated by a lender. This means that the vast majority of REALTORS® are NOT required to be licensed as loan originators. • Real estate owners selling property to someone who intends to use the property as a rental. Investors selling non-residential property, with seller financing, are also exempt. These categories are exempt because the financing must be primarily for personal, family, or household use to trigger the licensing requirements. Now let’s look at who’s not exempt: • If you own real estate other than your own home and want to provide seller financing for the sale of the property to a buyer who plans to use the property as his residence, you are not exempt. • If you provide financing for a property you do not own, you are not exempt. In other words, anyone who wants to provide seller financing for a residential property to a buyer who will use the property for personal, family or household uses is not exempt from the loan origination licensing requirements under the SAFE Act, unless he is selling his own home. In response to the SAFE Act, the 2009 Maryland General Assembly revised the State’s mortgage lender and mortgage loan originator laws. Chapter 4 of the Acts of 2009: 1) altered the licensing requirements, initial license terms, and renewal license terms for mortgage lenders and mortgage loan originators; 2) required applicants and licensees to submit certain information and fees to the Nationwide Multistate Licensing System and Registry (NMLSR); 3) increased civil penalties for violations of the mortgage lender and mortgage loan originator laws; and 4) authorized the Commissioner of Financial Regulation to issue interim mortgage loan originator licenses and affiliated insurance producer/mortgage loan originator licenses. Chapter 4 also requires an applicant for a mortgage lender or mortgage loan originator license to provide the NMLSR with fingerprints for a criminal history background check and established pre-licensing education, pre-licensing testing, and surety bond requirements for mortgage loan originators.
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An Open Letter About the Mortgage Interest Deduction
22
M A R Y L A N D R E A L T O R ® February / March 2011
Regulation News Mark Feinroth
Looking Ahead for the
Real Estate Commission Just before the 2010 holiday season, officers of the Maryland Association
The next leap forward in service to licensees will be an online continuing
of REALTORS® met with Labor, Licensing and Regulation Secretary Alex
education (CE) data base that will allow the Commission to end the
Sanchez along with the key personnel responsible for the operation of the
practice of random CE compliance audits. Education providers will
Real Estate Commission. The group meets periodically to discuss the
provide the Commission with electronic CE class rosters, which the
Commission’s operations and program development. Licensing fees are
Commission will link to its online license renewal system, so that the
the primary source of the Commission’s funding, and those come mainly
Commission will have an electronic record of all CE that each
from Maryland REALTORS .
licensee has taken. Thus, at renewal time, the system will allow only
®
licensees who have fulfilled the continuing education requirement to The Commission’s annual operating budget is now $1.149 million and supports a staff of 15. The Commission has dramatically improved its service delivery in the past few years, and it is clear that the two major drivers of the improvement are the funding and staff. Two years ago, the Commission took the bold step of setting licensing fees at a median level compared to other States. The result was a stable source of funding, despite a declining number of licensees. Under the leadership of Executive Director Katherine Connelly and Assistant Director Steve Long, the staff has deployed technology to track and streamline the processing of consumer complaints, eliminating the long standing consumer complaint backlog.
renew their license. Maryland REALTORS® who are also licensed in the District of Columbia are already familiar with the system used in D.C. to track continuing education compliance. The Maryland Real Estate Commission plans to develop a similar system, housed internally at the Department of Labor, Licensing and Regulation. We were advised that it will take up to two years for the system to be functional, but there would be no need for a time consuming procurement solicitation because the DLLR technology office is able to do the work without an outside vendor. When the new system is operational, education providers need only to export their licensee
Technology is now used to improve communications with licensees and
participation data on an Excel spreadsheet to transmit the CE credit to
better serve the public. The Commission now notifies brokers when
DLLR.
licensees transfer affiliation, and an electronic newsletter allows the Commission to provide licensees with information about laws and
If you have any specific suggestions as to additional services
regulations governing real estate brokerage.
the Commission could offer, please feel free to contact me at mark.feinroth@mdrealtor.org. Mark Feinroth, Esquire, Director of Legal and Regulatory Affairs Maryland Association of REALTORS®
M A R Y L A N D R E A L T O R ® February / March 2011
23
Maryland Real Estate Commission News Katherine Connelly
Agency and Supervision
CE Classes Ready to Go Last year Governor O’Malley signed into law legislation that requires
The Commission took extensive measures to ensure that licensees receive
continuing education (CE) courses in “agency” for all licensees and a
the correct information when attending the new classes. We established
“supervision” class for brokers, branch office managers and team leaders.
two separate task forces to develop the curriculum for the new agency and
The proposal was developed by the Maryland Real Estate Commission
supervision classes. Instructors, attorneys and members of the Maryland
because a growing number of consumer complaints has stemmed from
Association of REALTORS® were invited to participate in creating course
failures to comply with agency law. Very often, those failures were not
materials and outlines. We instituted a mandatory instructor training
detected by a broker or manager.
program to ensure that teachers understand the material the Commission intends to be taught. Those sessions have been conducted at several
The new mandated classes are three hour classes developed by
locations throughout Maryland.
the Commission, and must be taken at least once every four years. All licensees must take the agency class prior to license renewals on or
The new courses were each assigned a letter category. Licensees should be
after January 1, 2012. Brokers, branch office managers and team leaders
certain that the agency and broker supervision classes in which they enroll
must also take the supervision class before license renewals starting
are advertised as approved by the Maryland Real Estate Commission for
January 1, 2012.
credit under category “H.” After March 1, 2011, the only agency or supervision classes that will meet the requirement for license renewal are
The minimum number of continuing education course hours required for
the MREC developed courses. However, the Commission will accept for
license renewal remains at 15, unless the licensee has earned a graduate
license renewals in 2012 any of the three hour courses in agency or
degree in real estate from an accredited college or university and is not a
supervision offered and taken during 2010 by approved education providers.
broker, associate broker or team leader. Licensees are required to take these classes in “alternate licensing periods”— every four years. Licensees
As always, licensees who have questions about matters involving
who renew between January 1, 2012 and December 31, 2013 must take the
continuing education or license law can contact the Maryland Real Estate
courses again prior to renewals beginning in 2016 and 2017 respectively.
Commission at mrec@dllr.state.md.gov.
Katherine Connelly is the Executive Director of the Maryland Real Estate Commission For more information, visit http://www.dllr.state.md.us/license/mrec
24
M A R Y L A N D R E A L T O R ® February / March 2011
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Residential Sales Anirban Basu
There Are
Signs of Life
Maryland’s Economy–Getting Better Interpreting year-end data about housing market activity in Maryland is complicated by a number of factors, as discussed below. Nevertheless, when viewed as a whole, the data indicate nascent and emerging momentum toward recovery.
November 2010 vs. 2009 The state’s economy is getting stronger, particularly with respect to job creation. As of this writing, Maryland unemployment rate has stabilized at 7.4 percent, the 15th lowest unemployment rate in the nation. Among the 20 largest metropolitan areas in the nation, the Washington metropolitan
Units Average Price County 2010 Allegany 28
2009 Change
2010
2009 Change
40 -30.0% $121,501 $104,996 15.7%
area boasts the lowest unemployment rate nationally, and the Baltimore
Anne Arundel 347
463 -25.1% 327,478 334,287 -2.0%
metropolitan area the fourth lowest. The U.S. economy is likely to expand
Baltimore City 345
493 -30.0% 126,058 158,017 -20.2%
Baltimore County 390
645 -39.5% 258,860 242,811 6.6%
more than 3 percent this year, and Maryland will be among the nation’s better performers, due in part to anticipated base realignment effects.
More jobs will accelerate household formation, which in turn will increase demand for housing, whittling away at the still elevated inventory of unsold homes. One of the complicating factors lies in the federal tax credits in effect in 2009 and 2010. The initial first-time homebuyer tax credit was slated to expire in November 2009. Not surprisingly, home sales spiked that month as people raced to qualify. In November 2010, when the credit was no longer available, sales volumes paled by comparison.
Moreover, the federal tax credits render year-over-year median and average sales price comparisons are more complex than usual. The credits influenced the composition of buyers, as first-time buyers were a larger proportion of all buyers when the credits were in effect. This most likely biased sales prices downward, further complicating year-over-year comparisons.
These effects are reflected in the most recent figures. Statewide, home sales in November 2010 were 26 percent lower than they were in November 2009.
Sales volumes declined in 20 of 24 Maryland
jurisdictions. All four of the markets that experienced rising sales volume in November on a year-over-year basis are on the Eastern Shore: Kent County (up 88%), Caroline County (46%), Queen Anne’s County (12%) and Worcester County (10%). Most probably, the reason is that these jurisdictions were less affected by first-time homebuyers than more urban, job-rich counties: as we noted at the time, the spike in sales in those areas in November 2009 was not as high as in the rest of the state.
Calvert 65
73 -11.0% 294,753 336,940 -12.5%
Caroline 16
11 45.5% 139,829 183,298 -23.7%
Carroll 92 129 -28.7% 289,875 295,224 Cecil 47 Charles 109
-1.8%
72 -34.7% 226,085 214,451 5.4% 119 -8.4% 241,065 247,164 -2.5%
Dorchester 15
29 -48.3% 221,100 174,081 27.0%
Frederick 154
216 -28.7% 261,781 259,688 0.8%
Garrett 19
22 -13.6% 290,258 453,568 -36.0%
Harford 166
259 -35.9% 243,968 254,332 -4.1%
Howard 191
258 -26.0% 387,464 355,428 9.0%
Kent 15
8 87.5% 149,062 375,750 -60.3%
Montgomery 697
923 -24.5% 468,000 402,938 16.1%
Prince George’s 536
632 -15.2% 197,880 218,027 -9.2%
Queen Anne’s 38
34 11.8% 405,764 314,471 29.0%
Somerset 13
18 -27.8% 103,422 150,828 -31.4%
St. Mary’s 72
92 -21.7% 298,479 307,839 -3.0%
Talbot 24
28 -14.3% 432,037 590,899 -26.9%
Washington 65 118 -44.9% 165,187 173,628 -4.9% Wicomico 40
73 -45.2% 147,592 182,704 -19.2%
Worcester 111
101 9.9% 285,432 296,247 -3.7%
Total 3,595 4,856 -26.0% $289,719 $281,397 3.0% Figures reflect resales and new properties. Residential resales are reported by MRIS ® and local boards MLS systems.
As a result, there was statistical room for year-over-year sales growth. M A R Y L A N D R E A L T O R ® February / March 2011
27
Residential Sales
Continued from page 27
By contrast, the state’s most densely-populated, job-rich counties each experienced significant declines in year-over-year sales. For instance, Baltimore County’s sales declined 40%, Harford County 36%, Baltimore City 30%, Howard County 26%, Montgomery County 25%, Anne Arundel County 25% and Prince George’s County 15%. Were Congress to reauthorize tax credits for home purchases in 2011, these jurisdictions would presumably be among the chief beneficiaries.
The statistical story in December 2010 stands in stark contrast.
Units Average Price County 2010 Allegany 35
2009 Change
2010
2009 Change
29 20.7% $81,934 $115,524 -29.1%
Anne Arundel 355
347 2.3% 349,156 354,213 -1.4%
Baltimore City 422
400 5.5% 136,650 144,123 -5.2%
Baltimore County 488
423 15.4% 243,533 296,246 -17.8%
Calvert 75
87 -13.8% 319,563 356,060 -10.3%
2009 level. Fully 16 of Maryland’s jurisdictions recorded year-over-year
Caroline 16
19 -15.8% 173,406 341,527 -49.2%
increases in sales in December, potentially an indication of improving
Carroll 86
90 -4.4% 286,339 265,060 8.0%
Cecil 66
68 -2.9% 223,246 250,898 -11.0%
Statewide home sales in December 2010 were 5.1% above the December
conditions.
However, interpreting the December data is also complex. Beginning in
Charles 117
130 -10.0% 254,911 282,187 -9.7%
late-November, mortgage rates began to rise. This induced a certain
Dorchester 27
21 28.6% 183,226 209,907 -12.7%
fraction of fence-sitting prospective buyers to enter the market, which
Frederick 192
180 6.7% 252,474 251,193 0.5%
may have boosted December 2010 sales. If that is the case, December may ultimately be viewed as a month of fleeting improvement rather
Garrett 32
28 14.3% 295,073 250,346 17.9%
than the beginning of a secular upswing in housing market momentum.
Harford 200
163 22.7% 281,841 286,865 -1.8%
Data from early 2011 will allow us to better comprehend the causal
Howard 204
201 1.5% 405,601 415,625 -2.4%
factors behind and significance of December’s year-over-year sales gains.
Median and average sales price data are similarly mixed. In November 2010, median sales price declined by about 1%, but average sales price rose 3%. Compare that to November, when median sales price declined in 19 jurisdictions on a year-over-year basis, while average price fell in 16.
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December 2010 vs. 2009
M A R Y L A N D R E A L T O R ® February / March 2011
Kent 11
15 -26.7% 303,073 350,920 -13.6%
Montgomery 759
756 0.4% 470,357 451,106 4.3%
Prince George’s 637
617 3.2% 192,851 214,083 -9.9%
Queen Anne’s 33
38 -13.2% 381,500 404,923 -5.8%
Somerset 16
12 33.3% 88,669 204,585 -56.7%
St. Mary’s 75
71 5.6% 287,421 289,231 -0.6%
Talbot 42
30 40.0% 526,490 622,447 -15.4%
Washington 84
97 -13.4% 145,784 206,584 -29.4%
Wicomico 65
40 62.5% 181,397 173,205 4.7%
Worcester 132
106 24.5% 328,713 312,007 5.4%
Total 4,169 3,968
5.1% $290,121 $304,108 -4.6%
Figures reflect resales and new properties. Residential resales are reported by MRIS ® and local boards MLS systems.
Of course, interpreting these data is also complicated by previously
volumes in the presence of still favorable mortgage rates and an
available federal tax credits. The downward bias in price resulting from
improving economy.
the disproportionate number of first-time homebuyers was reflected in both the median and average sales price statistic in November 2009,
Among the jurisdictions that have emerged or are emerging from a
making November 2010 look artificially good by comparison.
deflationary psychology are Montgomery and Howard counties, where the supply-demand balance is more favorable and there is evidence of price
These effects were largely reversed in December. In 2009, the impact of
increase. Median sales price rose 10 percent on a year-over-year basis in
first-time homebuyers on December data was relatively less important
December 2010 in Howard County and 9 percent in Montgomery County
than in the previous month. Correspondingly, both median and average
over that period. This is a good basis for presuming that as the economic
sales prices were down by nearly 5 percent in December 2010.
recovery takes hold, more jobs will be created, more households will be formed, and the housing market recovery will spread to encompass a
This suggests that price stability remains elusive in much of Maryland in
greater fraction of Maryland.
the face of still high numbers of short sales, foreclosures and active inventory. In December, median sales price declined in 18 jurisdictions.
Anirban Basu, Sage Policy Group, Inc.
Average sales price also declined in 18 jurisdictions; 15 jurisdictions registered declines in both average and median sales prices.
Montgomery and Howard Counties Helping to Lead the Way Pending sales were slightly higher in November 2010 than in November 2009 (4,584 versus 4,548). The same was true for December, with pending units rising to 3,953 from 3,903 in December 2009. The optimistic interpretation is that the increase in pending sales is a reflection of broader improvement in the state’s economy. Whether one is optimistic or pessimistic, we should all agree that the inventory of unsold
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homes remains elevated. Over the past year, the inventory of unsold homes for sale through REALTORS® has increased by about 2,000 units over the past year, another indication that much of Maryland’s housing market has not yet achieved price stability. This ongoing deflation
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descriptions
30
M A R Y L A N D R E A L T O R ® February / March 2011
Snippets
President’s Perspective
Continued from page X
Play the Headline Analyzer game
Never e-mail a file again
Coming up with great headlines for your ads, marketing materials, blog and social media posts can be a pretty challenging business. The problem is that most agents have no way to evaluate the strength of their headline. Now there is a fun way to beat the problem with an online Headline Analyzer. This powerful tool will help you write more effective headlines for your print and Web marketing.
Are you tired of having picture or video files bounce because the file is too big? If so, there’s a simple solution: Dropbox.com. To share a file with a client (or anyone else for that matter), set up a private Dropbox file for each person. Then, merely drag and drop it into the appropriate Dropbox file. You can also use Dropbox to share files with multiple users.
Begin by entering your headline to see how it scores. Play with it until the score is 40 percent or more to help you design a better headline. (Some tips to score higher are to use the words “you,” “your,” “secrets” and “strategies,” and to use numbers.) This fun tool is free. Be forewarned, however, it’s also addictive. http://www.aminstitute.com/headline
Work less, post more For anyone who produces his or her own newsletter or blog posts, coming up with fresh content is a major challenge. The National Association of REALTORS® has just started a new REALTOR® partner program through HouseLogic.com that provides a whole host of consumer-related articles for REALTORS® to legally republish on their website or blog, or use in print advertising. There is no charge for this exclusive service for NAR members.
Dropbox is super simple and much faster than uploading and downloading files via e-mail. Moreover, Dropbox is an easy way to import and export data from your iPad. If you store less than two gigs of information, Dropbox is free. http://www.dropbox.com
Manage your money in one place You know you should be on a budget, but it’s a pain to use an Excel spreadsheet. Now there’s a terrific solution from Mint.com that enables you to manage your money from a single platform. Mint.com also generates charts based upon your current spending so you can quickly assess where you are in terms of your budget. Instead of waiting for your bookkeeper or accountant to run your numbers each month, Mint.com updates daily. Best of all, this tool is free. http://www.mint.com
Get rid of those pesky receipts Let’s face it, tracking all the receipts in our business is a nuisance. If you’re like most agents, you probably have your receipts stuffed in a drawer or a shoebox. What’s the solution? Check out Shoeboxed.com. All you do is send them your receipts, they scan them, organize them, and they’re ready to go to your account. They can also scan business cards. The basic service is about $10 per month.
Snippets provided by Ron Howard, Vice Chair 2011 MAR Communications/PR Committee M A R Y L A N D R E A L T O R ® February / March 2011
31
President’s Perspective
Continued from page X
Scan and find out how
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MARYLAND Annapolis Bethesda Canton Crofton Elkton Federal Hill Gaithersburg
OFFICES 410-266-0600 301-961-6000 443-769-1700 410-721-3711 410-398-2401 410-547-5700 301-948-4811
Harford County Howard County Ocean City Ocean City West Ocean Pines Olney Pikesville Roland Park
M A R Y L A N D R E A L T O R ® February / March 2011
410-515-5300 443-325-7890 410-524-7000 410-520-2600 410-208-3500 301-260-7700 410-484-8322 410-464-5500
Salisbury 410-912-4700 Severna Park 410-647-8000 Silver Spring 301-879-2600 Towson 410-828-4700 VIRGINIA OFFICES Alexandria 703-836-1464 Fairfax/Oakton 703-691-7653 Hamilton 540-338-4171
Lake Ridge 703-497-7788 Leesburg 703-777-1250 Manassas/Gainesville 703-396-6000 Vienna 703-281-8500 Winchester 540-722-9300 WASHINGTON D.C. OFFICES Capitol Hill 202-393-1111 Uptown 202-243-4200 An independently owned and operated member of The Prudential Real Estate Affiliates, Inc.
Commercial Connection Celeste B. Filoia, Esquire
Zoning:
The Change or Mistake Rule Zoning laws typically specify the areas in which residential, industrial,
The courts do not consider as mistakes a less-than-ideal decision, or a
recreational, or commercial activities may take place. Many people view
decision that does not reflect the best economic value. The courts also do
zoning as a restriction on private property rights. Indeed, history has
not consider a factual error a “mistake” if it was readily knowable.
shown repeatedly that “balancing property rights” is more difficult to achieve as the density of population increases, the average size of each
The Change or Mistake Rule is used most effectively when a neighborhood
property decreases, and society becomes more diverse and complex.
has substantially changed since the last comprehensive zoning. A
Higher densities of residential zoning can more easily become commercial
comparison of the land existing in a neighborhood at the time of the
areas than can low density residential areas through rezoning.
zoning and at the time of the application for rezoning must show a substantial change. However, realization of the comprehensive plan does
In Maryland, changes in zoning rules where there is no comprehensive
not constitute “change,” because this change was foreseen.
rezoning planned is governed by what is known as the “Change or Mistake Rule.” Under those circumstances, a zoning amendment, or spot zoning,
For example, neither population growth nor the extension of utilities,
may only be approved with a finding that either a substantial change has
sewers or water lines is sufficient alone to show substantial change, as
occurred in the neighborhood or the local government made a mistake in
each is normally just as compatible with the original zoning as with the
the original zoning of the property. Section 4.05 (a) (2) (ii) of Article 66-B
rezoning. Legal nonconforming uses in the neighborhood are just as
of the Maryland Annotated Code allows spot zoning if a mistake in the
compatible with the initial zoning as with a rezone. Instead, the
initial zoning ordinance or change in conditions in the neighborhood
applicants must show an array of changes that have changed the character
surrounding the rezoned area can be shown.
of the neighborhood.
The applicant seeking a zoning amendment bears a heavy burden to prove
The Change or Mistake Rule governs any application for a zoning
that either a change or mistake occurred. See Stratakis v. Beauchamp,
amendment when it is not part of a comprehensive rezoning undertaken
268 Md. 643, 652-53, 304 A.2d 244, 249 (1973). In the face of the strong
by the governing body. Rezoning can result in a change in land use, such
presumption that the original zoning was validly enacted, well planned,
as rezoning from residential to commercial development, or a change in
and designed to be permanent by the local government, it is difficult to
density, such as a rezoning from a classification allowing only low-density
show a legitimate mistake in the original zoning. Some examples might
single-family development to high density classification allowing
be failure to account for projects or trends probable of actualization,
apartment development. Regardless of the reason, Maryland law requires
decisions based on facts that later prove to be erroneous, or events that
that any rezoning be in the public interest to promote a safe and pleasant
have occurred since the current zoning.
environment.
Celeste B. Filoia, Esquire, Staff Attorney of Legal Affairs Maryland Association of REALTORS®
M A R Y L A N D R E A L T O R ® February / March 2011
33
From the Hotline Charles A. Kasky, Esquire
Power of Attorney Law Q.
A client needs to settle on a property using a power of attorney. I
Additionally, the statute includes an agent’s certification that title
read that Maryland recently changed its law regarding real estate closings
underwriters may require agents to sign, have notarized and record along
using a power of attorney. What are the changes?
with the original power of attorney prior to recording any documents they signed as agent. This requires the agent to certify that to his or her
A.
A power of attorney (POA) is a written document that grants
knowledge, the principal is alive and that the principal has not revoked the
authority to an agent to act in the place of a principal. POAs are useful in
power of attorney or the agent’s authority to act.
real estate transactions when one party is unable or unwilling to personally attend the closing or previously sign deeds, deeds of trust, promissory
A POA that does not conform to the statutory form will still be valid if it
notes and related documents required to buy, sell or refinance a home. In
is properly executed. But if the statutory form is used, a title company
those situations, a power of attorney is a useful and prudent means of
may not require an additional or different form of power of attorney. A
allowing the transaction to proceed in a timely manner.
person refusing to accept an acknowledged statutory POA form is subject to a court order mandating its acceptance and will be liable for attorney’s
Effective October 1, 2010, individuals in Maryland using a POA to
fees and costs.
complete a real estate transaction must use the new Maryland Statutory Form Limited Power of Attorney, or a form that substantially conforms to
Thus, non-statutory forms may continue to be accepted or rejected (as they
the statutory form. Prior to this change, an individual could use any
are under current practices), but a document that substantially conforms
specific power of attorney form that was acceptable to a title insurance
to one of the two statutory forms may not be rejected on the basis of the
underwriter. The new law makes it more difficult to delegate a power of
content of the form alone. A version of the form can be found at:
attorney, which makes it a less attractive last-minute alternative to
www.msba.org/sec_comm/sections/estate/docs/limitedpower.doc
attending a real estate closing. [WHY?] Power of attorney documents have become more complex. They create Maryland has adopted two statutory forms of power of attorney: a personal
enforceable, legal obligations for both the principal and the agent.
financial power of attorney and a limited power of attorney. For real estate
Although the POA may no longer be regarded as a last-minute alternative
purposes, the limited power of attorney will suffice. In fact, the first
to attending a closing, with careful attention to detail and advance
specific subject on the form is real property; initialing the appropriate
planning, it will continue to be a useful tool for home buyers and
authorities is sufficient to facilitate the transaction.
sellers.
The form must be signed by the principal (i.e., the person granting the
Charles A. Kasky, Esquire, Vice President of Legal Affairs Maryland Association of REALTORS®
authority), notarized and signed by two or more adult witnesses, one of whom may be the notary. The law expressly imposes a duty on the agent to act loyally, avoid conflicts of interest and keep a record of all receipts, disbursements and transactions made on behalf of the principal, unless otherwise provided for in the power of attorney.
FREE Legal Hotline 34
1-800-888-1272 • Monday, Wednesday and Friday • 10am – Noon and 2 pm – 4 pm www.mdrealtor.org • Complete an Online Form available in the Legal Hotline tab
M A R Y L A N D R E A L T O R ® February / March 2011
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