MDREALTOR Magazine December 2013/January 2014 by Jermaine Hawkins

VOLUME XLVIII Number 1

The Maryland Association of REALTORS速

DECEMBER 2013 / JANUARY 2014

www.mdrealtor.org

The Voice for Real Estate速 in Maryland

2014

Legislative Preview In the Shadow of the 2014 Elections

Consumer Website: www.marylandhomeownership.com

Economic Forecast

REALTOR速 Family Designations

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President’s Perspective

RUSS BOYCE

A New Year, a New Legislative Session and an Election Once again we will be focused on actions of the 2014 Maryland General Assembly, which convenes in January. As MAR Vice President Bill Castelli writes on page 5, an election year often means that legislators may avoid some major issues, if that’s possible. But that doesn’t mean that there won’t be issues of great concern to our industry. This could include Homeowners Association and Condo Disclosures and Fees, Eminent Domain, and Pit Bulls and Landlord Liability, among others.

urge you to respond to our Calls for Action (CFAs) on these and other issues, at the national as well as the state level. We’ve done remarkably well with our responses relative to other states, but nowhere near where we must be if we truly want our voice heard at the state house. Look for CFAs in your e-mail and posted to our website and social media outlets. And forward them to others. We must get the 85% of REALTORS® who have not responded to the most recent CFA on flood insurance to become more active if we hope to persuade elected officials that these issues are important to us. This year is an especially important election year, not only because of how many seats will be open across the state, including Governor, Lt. Governor and Attorney General, but also because the crowded candidate list means that it’s likely we will see a great many new faces in Annapolis

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next year. Now is the time to make current and potential legislators take notice of our interest, our strength and our concerns.

The 2014 Economic Outlook Don’t miss our semi-annual economic forecast, written by consulting economist Anirban Basu of Sage Policy Inc. Maryland gained jobs in spite of the Federal government shutdown in October, and our overall housing market performance remains strong, but there are still unknowns in the future for the strength and endurance of the recovery. See page 8 for the entire re-cap of 2013 and where we are headed in 2014.

Designations—Do You Have Yours? Designations are a “must” in REALTOR® education. MAR continue to offer Graduate REALTOR® Institute (GRI) classes 2014. Classes will not be canceled, regardless of size of

the class. We are also featuring NAR’s new Military Relocation Professional (MRP) certification, focusing on educating real estate professionals about working with current and former military service members. See all of the NAR Family designations on pages 16–19. Focus on the aspects in your life you would like see change and make it happen 1 degree at a time. It makes everything obtainable when you focus, raise your awareness and make change. I hope you are rejuvenated from the holidays and ready for an exciting new year. Looking forward to working with all of you in 2014! Thank you again for the opportunity to serve as your president. I am always available to answer your questions or hear your concerns. Please contact me at russboyce212@gmail.com.

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

TA B L E O F CO N T E N TS FEATURES

LEGISLATIVE PREVIEW In the Shadow of the 2014 Elections ECONOMIC FORECAST Economy, Markets Outperform Expectations Momentum as 2014 Approaches

REALTOR® FAMILY DESIGNATION PROGRAMS

LEGISLATIVE PREVIEW IN THE SHADOW OF THE 2014 ELECTIONS

ECONOMIC FORECAST REALTOR® FAMILY Economy, Markets DESIGNATION Outperform Expectations PROGRAMS Momentum as 2014 Approaches

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

A CREDIT UNION OR A BANK? WHICH SHOULD YOU CHOOSE?

8 16

DEPARTMENTS

PRESIDENT’S PERSPECTIVE

2013 MAR LEADERSHIP TEAM

MARYLAND REAL ESTATE COMMISSION NEWS Property Managers Remain on Commission’s Agenda

REGULATION NEWS New Lockbox Services Keep Pace with REALTORS® On the Go

A CREDIT UNION OR A BANK? WHICH SHOULD YOU CHOOSE?

FROM THE HOTLINE

COMMERCIAL CONNECTION

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2014 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

Executive Leadership Team

J Russell “Russ” Boyce

Janice R Kirkner

President RE/MAX 100 10665 Stanhaven Place White Plains, MD 20695-3062 301.843.5100 russboyce212@gmail.com

President Elect Long & Foster Real Estate, Inc. 1208 Nottingham Drive Westminister, MD 21157-8334 410.795.9600 janice.kirkner@longandfoster.com

Editor

Melissa Lutz | melissa.lutz@mdrealtor.org

Advisory Committee Jenn Klarman | Chair

Advertising

Arlene Braithwaite | 410.772.0820

Publication Design

HBP, Inc., 952 Frederick Street, Hagerstown, MD 21741 800.638.3508 | www.hbp.com

Carole A Maclure

Bonnie Casper

Treasurer RE/MAX Advantage Realty 17304 Evangeline Lane Olney, MD 20832-2928 240.295.6000 maclure7@aol.com

Secretary Long & Foster Real Estate, Inc. 4650 East-West Highway Bethesda, MD 20814-3419 301.907.7600 bonnie@lnf.com

Carlton J Boujai Jr

Mary C Antoun

Immediate Past President EXIT Realty Prosperity Group 5300 Westview Drive Suite 105 Frederick, MD 21703-8339 301.698.8700 carltonboujai@mris.com

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® DECEMBER 2013 / JANUARY 2014

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. Maryland REALTOR® (USPS 0016-017) is published bimonthly by the Maryland Association of REALTORS®, Suite 200, 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®, Suite 200, 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. ©2013 Maryland Association of REALTORS®, Inc.

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In the Shadow of the 2014 Elections This year’s Maryland Legislature will discuss many important issues, but make no mistake, with an election looming, electoral politics will predominate throughout session. And unlike other election years, the shadow cast by the 2014 elections will be much greater. The Maryland primary is now held in June rather than September, and this will be the first election held after state election districts were redrawn in 2010.

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MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

These electoral changes will likely mean that at least one third of the Legislature will be new in 2015, due to retirements, delegates running in new districts, and a flock of new challengers enticed by redrawn legislative districts. A new Governor and Attorney General will take office as well. Given these changes, those incumbents that plan to run again will be even more focused on the election. For the real estate industry, this could be good news. Given the ongoing fiscal deficit, it is unlikely new tax increases will be passed to fill the gap. However, there are a number of other real estate issues that will likely be debated, including the following:

Homeowners Association and Condo Disclosures and Fees Although the homeowner’s association (HOA) and condomimium (condo) laws have a similar purpose, the laws contain many differences that can be confusing for consumers and real estate practitioners. The Maryland Association of REALTORS® (MAR) and others would like to make the law more uniform in regard to rescission rights, disclosure content and timing. In addition, many real estate practitioners have complained about the expense of resale packets. Even title companies are now being charged fees to verify information in resale packets. Although these fees theoretically pay for the expense of compiling and distributing this information, they appear excessive. Some states have required that

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

the fees be commensurate to the cost of preparing this important information. We will be discussing this approach with legislators.

Eminent Domain This is the constitutional authority that gives government at all levels the right to take private property for public purposes, provided that just compensation is paid to the private property owner. Over the last two hundred years, the U.S. Supreme Court has debated and expanded what is considered public purpose. The discussion has been vigorous and controversial, but nothing compared to a new debate over eminent domain authority: whether the authority can now be used to condemn a private mortgage, thereby allowing a homeowner to refinance into a new mortgage product. A number of cities across the country, including Baltimore City, are considering using eminent domain in this way. While at first blush this approach might be viewed as an effective way to restore a declining community, MAR and many others in the real estate industry are strongly opposed to this approach. There are several reasons. Many legal experts believe this use of eminent domain authority is illegal, and places homeowners and those city governments condemning mortgages in a precarious legal position.

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Second, the few homeowners that are advantaged by such a program come at a high expense for the many others in the community. The federal government and private mortgage providers have already indicated the likelihood of increased costs or even a suspension of mortgage activity in cities where this practice takes place. Their concern is that future investment is likely to be threatened if a city can arbitrarily seize mortgages. MAR is encouraging legislators and local governments to oppose these efforts.

Pit Bulls and Landlord Liability Due to a Maryland Court of Appeals decision in 2012, landlords were held to a strict liability standard, the highest level of legal liability, when a tenant’s pit bull attacks a person. Under strict liability, a landlord has no real legal defense, not even lack of knowledge of a dangerous dog on the premises. In the 2013 Legislative Session, the Legislature failed to pass legislation that would have returned the law to its state before the Court of Appeals decision. While the House and Senate reached consensus that landlords should not be subject to the strict liability standard, they could not agree on how to handle liability for owners. Legislation will be reintroduced this year, and we are hopeful that both chambers will find a solution for owners as well as landlords.

Rental Security Deposits Rates MAR is asking the Legislature to approve legislation to reduce the 3% interest rate mandated for rental security deposits. It has been many years since any rental property owner received 3% interest on passbook saving and checking accounts, and there is no reason that rental property owners should have to come out of pocket to pay back a security deposit.

Accounting for Growth The Maryland Department of Environment (MDE) is considering a regulation that would require homebuilders to account for the pollution created

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by new development. There is significant anxiety over the regulations. A major concern is an extremely high fee-in-lieu being considered for properties that cannot meet on-site mitigation requirements. For some large lot properties on septic systems, the fee-in-lieu could amount to tens of thousands of dollars. With all of the other requirements recently placed on new construction in the last 5-7 years, the price of many new homes, particularly in rural areas, would be increased significantly. MAR is expressing its concern to legislators so that reasonable regulations can be passed that won’t undermine housing affordability in parts of our state where the economy has been slow to recover.

Rain Tax Given the national attention over Maryland’s rain tax, there will be a number of bills introduced to modify and repeal the rain tax legislation. The tax is the result of an EPA mandate, so even a repeal of the state legislation will not necessarily repeal any of the local fees that have been imposed by local governments, and certainly will not eliminate the billions of dollars of costs that county residents must pay. Given this circumstance, MAR will be focused on making sure whatever changes occur do not increase the burden on residential and commercial real estate. These are a few of the real estate issues that will be considered in the 2014 Legislature. As the largest professional trade association in Maryland, MAR’s political strength is our large and politically active membership. Your participation in Call-For-Action help make a difference for the real estate industry and the consumers we serve. Please visit our website mdrealtor.org for timely updates of legislative activity and actions that you can take to help strengthen the housing market. And feel free to email me at bill.castelli@mdrealtor.org with your questions, concerns or suggestions. William Castelli, Esquire, Vice President, Legislative Affairs , Maryland Association of REALTORS®

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

Economy, Markets Outperform Expectations M O M E N T U M A S 2 014 A P P R O A C H E S

Despite the first federal government shutdown in seventeen years and another near collision with debt default, the U.S. economy actually gained momentum during the third quarter of 2013. The latest budget crisis is now over with an agreement in place to keep the federal government open until January 15th and the debt ceiling raised until February 7th. While the deal hardly provides a level of budgetary transparency that would fuel a surge in confidence, the broader economy continues to perform largely due to ongoing growth in consumer outlays and associated investments in inventory accumulation. According to the preliminary estimates supplied by the Bureau of Economic Analysis (BEA), third quarter gross domestic product expanded 2.8 percent on an annualized basis, handily beating expectations that indicated 2 percent growth. Job growth has also been a pleasant surprise in recent months, with the nation adding another 204,000 positions in October according to the initial estimate from the Bureau of Labor Statistics (BLS).

MARYLAND REALTORÂŽâ&#x20AC;&#x192; DECEMBER 2013 / JANUARY 2014

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corporate profitability remains elevated and the Federal Reserve continues to support a range of policies consistent with healthy stock market performance. BEA reports that corporate profits rose to $2.087 trillion during the second quarter of 2013, an increase of 3.3 percent from the previous quarter and 4.5 percent compared to one year ago.

The performance of financial markets has also helped further growth prospects. A combination of improving corporate performance and liquidity injections by the Federal Reserve has led to a period of dynamic stock price gains in the U.S., with the largest increases concentrated in some of the riskiest categories (e.g., shares of smaller companies and corporations in the most cyclical industries). Of course, there are no guarantees that stocks will continue to perform. However,

In addition, higher stock prices working in conjunction with recent increases in home prices have allowed Americans to collectively recoup the roughly $16 trillion in wealth that was lost during the Great Recession and its aftermath.

Exhibit 1. Consumer Spending, January 2008 – September 2013 $Billions 12,000 11,500 11,000 10,500 10,000 9,500

Sep 13

May 13

Jan 13

Sep 12

May 12

Jan 12

Sep 11

May 11

Jan 11

Sep 10

May 10

Jan 10

Sep 09

May 09

Jan 09

8,500

Sep 08

9,000 May 08

Consumers appear to be benefiting from an array of factors that include ongoing job growth, associated income gains, falling gas prices and generally moderating inflation. The Job Openings and Labor Turnover Survey (JOLTS) indicated that the number of job openings in August expanded 2.8 percent, primarily attributable to openings in education and health services and trade, transportation and utilities. Consistent monthly employment gains have been apparent in professional and business services, trade, transportation and utilities, and leisure and hospitality—all key Maryland business segments. It is clear that job growth in Maryland and the U.S. will continue to be led by the service industry. Despite questionable job quality (many of the new positions are part-time and/or in low-wage segments), the growth in the total number of jobs

is likely to sustain ongoing housing market recovery. Both Maryland and the nation added 1.7 percent to job totals between August 2012 and August 2013.

Jan 08

Confidence appears to be high, as consumers seem poised for additional expansion in outlays. According to official data, monthly personal consumption grew 0.4 percent in August and 0.2 percent in September. National consumer credit surged $13.7 billion in September, mainly due to expanding student loans and auto sales. The expansion of consumer credit is both a function of rising consumer comfort as well as normalizing credit markets.

Source: U.S. Bureau of Economic Analysis

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MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

Exhibit 2: U.S. Retail and Food Service Sales, 12-month Percentage Change, Sept. 2001–Sept. 2013 Year to Year % Change 15% Sep. 13, 3.20%

10% 5% 0% -5% -10%

Sep 13

May 13

Jan 13

Sep 12

May 12

Jan 12

Sep 11

May 11

Jan 11

Sep 10

Jan 10

May 10

Sep 09

Jan 09

May 09

Sep 07

May 07

Jan 07

Sep 06

May 06

Jan 06

Sep 05

May 05

Jan 05

Sep 04

Jan 04

May 04

Sep 03

Jan 03

May 03

Sep 02

May 02

Jan 02

Sep 01

-15%

Source: U.S. Census Bureau

Exhibit 3: U.S. Nonfarm Employment Growth, SA, October 2012 v. October 2013 Professional & business activities

644

Trade, transportation & utilities

507

Leisure & hospitalities

444

Education & health services

325

Construction

185

Financial activities

Manufacturing

Mining & logging

Other services

Information Government -100

U.S. Total: +2,329 K; +1.7%

-26 0

100

200

300

400

500

600

700

12-Month Net Change (in thousands) Source: U.S. Bureau of Labor Statistics

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

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Maryland’s Economic Recovery Gains Momentum, Too During a recent 12-month period, Maryland added more than 43,000 jobs, a growth rate of 1.7 percent, equal to national performance. That Maryland could hold its own vis-à-vis the balance of the nation is somewhat surprising given the more concentrated impacts of sequestration. Among the leading job adding segments are professional services, education

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Quarterly Annualized % Change 6

2013Q3 +2.8%

4 2 0 -2 -4 -6

2013Q3

2013Q1

2012Q3

2012Q1

2011Q3

2011Q1

2010Q3

2010Q1

2009Q3

2009Q1

2008Q3

2008Q1

2007Q3

-10

2007Q1

-8 2006Q3

This is not to suggest that there hasn’t been economic turbulence in recent months. Prospective homebuyers have had to simultaneously contend with higher mortgage rates as well as economic uncertainties that accompanied the federal government shutdown and most recent debt ceiling debate. It also didn’t help that the IRS and Social Security Administration were unable for a period to provide proof of income statements. Not surprisingly, existing home sales declined in October, the month associated with the shutdown of the federal government.

Exhibit 4: Change in Real Gross Domestic Product, Q1 2006–Q3 2013

2006Q1

According to the Federal Reserve, net worth for U.S. households reached $74.8 trillion during the second quarter of this year, the highest level in five years and more than 98 percent of the pre-recession peak of $67.3 trillion achieved in Q3:2007.

Source: U.S. Bureau of Economic Analysis

services and health services, all segments associated with average wages consistent with homeownership. Data from the government’s household survey (Current Population Survey) are not nearly as benign. According to this survey, Maryland actually lost 10,580 jobs between August 2012 and August 2013. It is theoretically possible to reconcile the establishment survey and the household survey. For instance, if a Maryland resident were to lose a job he had held in Northern Virginia, that loss would be indicated in Virginia’s establishment data but in Maryland’s household

survey. Undoubtedly, there has been some level of dislocation among Marylanders working beyond state boundaries, but not nearly enough to fully reconcile two very different readings on employment performance statewide. Typically, when there are discrepancies between the establishment and household data, economists put more weight behind the establishment figures, as they are generally deemed to be more reliable. However, it still may be the case that the establishment survey’s estimate of 43,300 jobs added statewide over the recent 12-month period is slightly overstated.

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

Exhibit 5: State-by-State Job Growth, 12-month percent change, August 2013 v. August 2012 Rank

State

Rank

State

Rank

State

North Dakota

3.0

Michigan

1.7

Illinois

1.0

Idaho

2.8

New Jersey

1.7

Kansas

1.0

Utah

2.6

North Carolina

1.7

Nebraska

1.0

Colorado

2.5

Oregon

1.7

New York

1.0

Texas

2.5

Delaware

1.6

West Virginia

1.0

Georgia

2.3

California

1.5

Connecticut

0.9

Nevada

2.2

Vermont

1.5

Virginia

0.9

Washington

2.2

Massachusetts

1.4

New Hampshire

0.8

Minnesota

2.1

Missouri

1.4

Alabama

0.7

Arizona

2.0

South Dakota

1.4

Maine

0.7

Louisiana

2.0

Iowa

1.3

Pennsylvania

0.7

Mississippi

1.9

Wisconsin

1.3

Ohio

0.6

Montana

1.9

Kentucky

1.2

Oklahoma

0.6

South Carolina

1.9

Tennessee

1.2

Hawaii

0.4

Florida

1.8

New Mexico

1.1

Rhode Island

0.4

Indiana

1.7

Wyoming

1.1

District of Columbia

0.2

Maryland

1.7

Arkansas

1.0

Alaska

-0.5

Source: U.S. Bureau of Labor Statistics

During a recent 12-month period, Maryland added more than 43,000 jobs, a growth rate of 1.7 percent, equal to national performance.

MARYLAND REALTORÂŽâ&#x20AC;&#x192; DECEMBER 2013 / JANUARY 2014

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Exhibit 6: Maryland Unemployment Rates by County, August 2013 (NSA) Rank

Jurisdiction

Rank

Jurisdiction

Montgomery County

5.0

Prince George’s County

6.8

Howard County

5.2

Kent County

6.9

Frederick County

5.6

Baltimore County

6.9

Carroll County

5.9

Worcester County

7.2

Calvert County

6.0

Cecil County

7.4

Queen Anne’s County

6.1

Caroline County

7.7

Anne Arundel County

6.2

Wicomico County

7.7

St. Mary’s County

6.3

Washington County

7.9

Talbot County

6.4

Allegany County

8.1

Charles County

6.4

Dorchester County

9.4

Garrett County

6.6

Somerset County

10.0

Harford County

6.7

Baltimore City

10.3

Source: U.S. Bureau of Labor Statistics

The notion that Maryland is not adding jobs quite as rapidly as indicated by the establishment survey is consistent with other data, including office market data, which reveal slow rates of office space absorption. The Maryland Survey of Business Activity conducted by the Federal Reserve Bank of Richmond also indicates that growth in business activity in Maryland has been sporadic in recent months. The Business Activity measure, which reflects current business activity in terms of sales, inventories, investment in new equipment, labor market conditions and wages among other variables, was down in October to a reading

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of -4, a significant decrease of 6 points from the previous month. The index peaked at 28 in June and subsequently declined over the next four months to its first negative reading since January. Unemployment also continues to be problematic. Maryland’s rate has been rising for much of 2013. When the year started, the state’s unemployment rate was well below 7 percent. As of this writing, it stands at precisely 7 percent, with particularly elevated levels of unemployment still common in many of the state’s rural communities.

Nevertheless, there has been enough wealth accumulation and general economic progress to allow Maryland’s housing market dynamics to remain positive. Both unit sales and sales prices exhibited strong gains in October. The state’s overall unit sales are up 18.9 percent on a year-over-year basis and the average home sales price is up 6.7 percent. Months of inventory stood at 5.3 months in October, only a slight increase from September’s figure of 5.1 months, and inventory is still down from the year-ago level of 6.0 months. Lower inventory implies stable to rising prices, which in turn induces prospective buyers to remain interested in residential markets.

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

Exhibit 7: Average Home Prices, by Jurisdiction, October 2013 and 2012 Jurisdiction

2012

2011

% Chg.

Jurisdiction

2012

2011

% Chg.

Allegany

$120,501

$90,736

32.8%

Frederick

$289,457

$275,260

5.2%

Washington

$184,235

$151,973

21.2%

Baltimore

$245,477

$234,335

4.8%

Dorchester

$185,740

$157,113

18.2%

Carroll

$280,116

$273,396

2.5%

Kent

$343,795

$301,636

14.0%

Harford

$252,641

$253,143

-0.2%

Prince George’s

$215,849

$192,689

12.0%

Baltimore City

$144,308

$147,474

-2.1%

Cecil

$232,727

$208,879

11.4%

Calvert

$289,253

$309,265

-6.5%

Charles

$251,505

$230,254

9.2%

Garrett

$329,638

$365,084

-9.7%

Wicomico

$168,798

$155,279

8.7%

St. Mary’s

$275,882

$308,243

-10.5%

Montgomery

$481,710

$443,907

8.5%

Queen Anne’s

$341,209

$409,083

-16.6%

Howard

$406,470

$381,532

6.5%

Somerset

$113,664

$138,148

-17.7%

Anne Arundel

$384,177

$361,535

6.3%

Caroline

$146,590

$185,506

-21.0%

Worcester

$273,302

$259,642

5.3%

Talbot

$395,046

$538,935

-26.7%

Source: Maryland Association of REALTORS®

Looking Ahead If interest rates remain well behaved, which is probable given the likely actions of Janet Yellen, the next Federal Reserve Chair, housing market momentum should reaccelerate by spring 2014 if not sooner. There are a number of key factors involved in a still optimistic outlook, including solid levels of job creation both nationally and in Maryland. But there remain many other risks beyond rising interest rates. With all the concern and focus on healthcare exchanges recently, the politics of Washington, D.C. are as

acidic as ever. After the most recent budget deal, the conventional wisdom became that another federal government shutdown is unlikely since the forces that led the shutdown fared poorly politically. But with the health insurance exchanges that were spawned by the Affordable Care Act sputtering, political contentiousness is back on the rise. While the debt ceiling is raised until February 7, 2014, another budget agreement is needed—one that will need to be negotiated in the midst of healthcare reform turmoil and a congressional election year.

MAR Annual Conference & EXPO September 8–10, 2014

Other risks include stock market volatility, Iran, oil prices, cyber attacks and the unknown impacts of healthcare reform. That said, the U.S. economy has handled many threats in recent years and have proven remarkably resilient. Past years have been associated with avian flu, European financial crises and a debt downgrade. Despite those events, the U.S. economy has entered its fifth year of expansion. Many economists are forecasting 3 percent or better growth in the U.S. next year, which all things being equal would be terrific for the housing market. We may finally be entering a period during which the U.S. economy realizes a significant fraction of its growth potential. Layer in America’s solid demographics and the housing market appears positioned for ongoing improvement.

R o l a n d E P o w e l l C o n v e n t i o n C e n t er / O ce a n C i t y , MD

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

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EOE

Designation Programs REALTOR® FAMILY

The National Association of REALTORS® and its affiliated Institutes, Societies, and Councils provide a wide-range of programs and services that assist members in increasing skills, proficiency, and knowledge. Designations and certifications acknowledging experience and expertise in various real estate sectors are awarded by NAR and each affiliated group upon completion of required courses.

DESIGNATIONS AND CERTIFICATIONS Accredited Buyer’s Representative/ABR® The Accredited Buyer’s Representative (ABR®) designation is designed for real estate buyer agents who focus on working directly with buyer-clients at every stage of the home-buying process. Presented by REBAC (Real Estate Buyer’s Agent Council) Contact REBAC at rebac@realtors.org or 800-648-6224.

Accredited Land Consultant/ALCsm The esteemed Accredited Land Consultants (ALCs) are the most trusted, knowledgeable, experienced, and highest-producing experts in all segments of land. Conferred by the REALTORS® Land Institute, the designation requires successful completion of a rigorous LANDU education program, a specific, high-volume and experience level, and adherence to an honorable Code of Conduct. Presented by the REALTORS® Land Institute (RLI) Contact RLI at 800-441-5263 or rli@realtors.org.

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

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Certified Commercial Investment Member/CCIMsm

Certified Real Estate Brokerage Manager/CRBsm

The Certified Commercial Investment Member (CCIM) designation is commercial real estate’s global standard for professional achievement, earned through an extensive curriculum of 200 classroom hours and professional experiential requirements. CCIMs are active in 1,000 U.S. markets and 31 other countries and comprise a 13,000-member network that includes brokers, leasing professionals, asset managers, appraisers, corporate real estate executives, investors, lenders, and other allied professionals.

The Certified Real Estate Brokerage Manager (CRB) is one of the most respected and relevant designations offered in real estate business management and is awarded to REALTORS® who have completed advanced educational and professional requirements. CRB Designees are better positioned to streamline operations, integrate new technology and apply new trends and business strategies. Join today and discover a new approach to enhancing knowledge and leveraging opportunity.

Presented by the CCIM Institute Contact CCIM at 800-621-7027 or www.CCIM.com.

Visit www.CRB.com or contact the CRB Council at info@crb.com or 800-621-8738.

Certified International Property Specialist/CIPS® Instantly align yourself with the best in international real estate by earning the CIPS designation. The program includes five full days of study focusing on the critical aspects of international real estate transactions, and an influential network of 2,000 professionals who turn to each other first when looking for referral partners. Presented by the National Association of REALTORS® Contact Information Central at CIPS@realtors.org or 1-800-874-6500 ext. 8369.

Certified Residential Specialist®/CRS® The CRS designation is the highest credential awarded to residential sales agents, managers, and brokers. On average, CRS designees earn nearly three times more in income, transactions, and gross sales than non-designee REALTORS®. Presented by Council of Residential Specialists Contact CRS at https://www.crs.com/ about-us/contact-us or 800-462-8841.

Counselor of Real Estate/CRE®

CPM designees are recognized as experts in real estate management. Holding this designation demonstrates expertise and integrity to employers, owners, and investors.

The Counselors of Real Estate® is an international group of recognized professionals who provide seasoned, expert, objective advice on real property and land-related matters. Only 1,100 practitioners throughout the world carry the CRE® designation. Membership is by invitation only.

Presented by Institute of Real Estate Management (IREM) Contact IREM® at 800-837-0706, ext. 4650.

Presented by The Counselors of Real Estate Contact CRE® at 312-329-8427 or info@cre.org.

Certified Property Manager/CPM®

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MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

General Accredited Appraiser, GAAsm For general appraisers, this designation is awarded to those whose education and experience exceed state appraisal certification requirements and is supported by the National Association of REALTORS®. Presented by National Association of REALTORS® Contact GAA program staff at 800-874-6500 ext. 8238 or email appraisal@realtors.org.

NAR’s Green Designation/GREEN

RCE is the only professional designation designed specifically for REALTOR® association executives. RCE designees exemplify goal-oriented AEs with drive, experience and commitment to professional growth. Presented by National Association of REALTORS® Contact Renee Holland at 312-329-8545 or rholland@realtors.org.

Residential Accredited Appraiser/RAAsm

Through NAR’s Green Designation, the Green REsource Council provides ongoing education, resources and tools so that real estate practitioners can successfully seek out, understand, and market properties with green features.

For residential appraisers, this designation is awarded to those whose education and experience exceed state appraisal certification requirements and is supported by the National Association of REALTORS®.

Presented by The Green REsource Council Contact The Green REsource Council at greendesignation@realtors.org or 800-498-9422.

Presented by National Association of REALTORS® Contact RAA program staff at 312-329-8268 or email appraisal@realtors.org.

Graduate, REALTOR® Institute/GRIsm REALTORS® with the GRI designation have in-depth training in legal and regulatory issues, technology, professional standards, and the sales process. Earning the designation is a way to stand out to prospective buyers and sellers as a professional with expertise in these areas. Presented by National Association of REALTORS® Contact your State Association to get information on program requirements, course schedules, location, and tuition. Contact NAR at gri@realtors.org or (800) 874-6500 x 8264.

Performance Management Network/PMN This designation is unique to the REALTOR® family designations, emphasizing that in order to enhance your business, you must enhance yourself. It focuses on negotiating strategies and tactics, networking and referrals, business planning and systems, personal performance management and leadership development. Presented by Women’s Council of REALTORS® Contact the Women’s Council of REALTORS® at 800-245-8512.

REALTOR® Association Certified Executive/RCE

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

Society of Industrial and Office REALTORS®/SIOR® The SIOR designation is held by only the most knowledgeable, experienced, and successful commercial real estate brokerage specialists. To earn it, designees must meet standards of experience, production, education, ethics, and provide recommendations. Presented by Society of Industrial and Office REALTORS® Contact SIOR at 202-449-8200.

Seniors Real Estate Specialist®/SRES® The SRES® Designation program educates REALTORS® on how to profitably and ethically serve the real estate needs of the fastest growing market in real estate, clients age 50+. By earning the SRES® designation, you gain access to valuable member benefits, useful resources, and networking opportunities across the U.S. and Canada to help you in your business. Presented by SRES® Council Contact SRES Council at sres@realtors.org or 800-500-4564.

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NAR Family Certifications At Home With Diversity/AHWD® Learn to work effectively with—and within—today’s diverse real estate market. The At Home With Diversity certification teaches you how to conduct your business with sensitivity to all client profiles and build a business plan to successfully serve them. Presented by the National Association of REALTORS® For more information on this course and its business principles, please contact us at ahwd@realtors.org or 800-874-6500 ext. 8393.

Broker Price Opinion Resource (BPOR) The BPOR certification provides REALTORS® with knowledge and skills to perform accurate and professional broker price opinions (BPOs) and comparative market analyses (CMAs), while reducing risk and increasing opportunities. Presented by the National Association of REALTORS® Contact us at bpor@realtors.org.

Resort & Second-Home Property Specialist/RSPS This certification is designed for REALTORS® who facilitate the buying, selling, or management of properties for investment, development, retirement, or second homes in a resort, recreational and/or vacation destination are involved in this market niche. Presented by the National Association of REALTORS® Contact us at resort@realtors.org or 800-874-6500 ext. 8268.

Short Sales & Foreclosure Resource / SFR® The SFR® certification teaches real estate professionals to work with distressed sellers and the finance, tax, and legal professionals who can help them, qualify sellers for short sales, develop a short sale package, negotiate with lenders, safeguard your commission, limit risk, and protect buyers. Presented by the National Association of REALTORS® Contact us at sfr@realtors.org or 877-510-7855.

MAR Workforce Housing Designation

e-PRO® NAR’s e-PRO® certification teaches you to use cutting-edge technologies and digital initiatives to link up with today’s savvy real estate consumer. Presented by the National Association of REALTORS® Contact e-PRO® at epro@realtors.org or 877-397-3132.

Military Relocation Professional/MRP NAR’s Military Relocation Professional certification focuses on educating real estate professionals about working with current and former military service members to find housing solutions that best suit their needs and take full advantage of military benefits and support.

This certification program offers training to members who want to learn more about financing options for first-time homebuyers and critical workforce employees (police, firefighters, teachers and medical staff ) as well as programs targeted for special populations, such as disabled persons and aging citizens. Currently, this designation is for Maryland REALTORS® only and is not an NAR designation. Contact us: 800.638.6425 or visit, www.mdrealtor.org/Education/ WorkforceHousingCertification.aspx

Presented by REBAC (Real Estate Buyer’s Agent Council) Contact us at MRP@realtors.org or 888-648-8321.

www.mdrealtor.org

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

Maryland Real Estate Commission News

K AT H E R I N E C O N N E L LY

Property Managers Remain on Commission’s Agenda At the November meeting of the Maryland Real Estate Commission (MREC), Commissioner Marla Johnson led a discussion on property management legislation.

or more than three years, the Commission has discussed whether property managers who provide real estate brokerage services should be licensed by MREC. Under current law, a real estate license is not required to provide any type of property management. Court cases, Attorney General Opinions and legislation dating back to 1944 exempted property managers from the Commission’s licensing authority. Maryland property managers may choose to become real estate licensees, and if they do, their clients are entitled to file complaints and Guaranty Fund claims with the Commission. Unfortunately, a consumer who hires an unlicensed property manager has no right to recourse with the Commission, and there is no mandate to inform consumers of the differences between licensed and unlicensed property managers. The Commission’s interest in legislation is based on its recent experience with a large volume of consumer complaints against licensed property managers. Very often, the complaints against licensed property managers involve some misuse or embezzlement of client funds. Seventy-three cases against one licensee were completed earlier this year, with a total guaranty fund payout of $178,300. We have received a new batch of 81 complaints against another individual licensee, with guaranty fund claims totaling $449,600. Additional complaints against this licensee may still be filed or discovered. Not surprisingly, Commissioners are concerned that there may be consumers cheated by unscrupulous and unlicensed property managers.

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

Part of the discussion at the November MREC meeting concerned assessing the size of the licensed and unlicensed property management industry in Maryland. Commissioners suggested the possibility of proposing property manager registration legislation that would impose a nominal fee to become registered and thereby allow the Commission to count the number of property managers conducting business in Maryland. There was also consideration given to polling current real estate licensees as to whether they are engaged in property management. Property management questions could be added to the license renewal process and allow licensees to identify themselves as property managers. While the Commission did not seek approval for 2014 departmental legislation on property managers, privately sponsored bills were considered during the 2012 and 2013 General Assembly session to regulate companies that provide management services to homeowners and condominium associations. It’s not clear what course of action, if any, MREC will take on property manager regulation in 2015, but the growing complaint volume will continue to demand attention.

Should you have any question or comment concerning these issues, please feel free to contact me at kconnelly@dllr.state.md.us. Katherine Connelly is the Executive Director of the Maryland Real Estate Commission. If you have other questions regarding the digital CE record system or any other matter concerning your Maryland real estate license at contact her at kconnelly@dllr.state.md.us or visit http://www.dllr.state.md.us/license/mrec

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Ask us...

How our clients receive an average of $4,074 in savings* on their home purchase when they use a Prudential PenFed Realty agent and Prudential PenFed Realty’s affiliates. It didn’t come from the commission. Career@PenFedRealty.com

Ranked Highest Overall Satisfaction For First-Time and Repeat Home Buyers and First-Time Home Sellers among National Full Service Real Estate Firms. Regional Vice Presidents: Terri Bracciale, terri.bracciale@penfedrealty.com | Donna Buchman, donna.buchman@penfedrealty.com *Savings are based on the discounts received by PenFed Realty’s clients for using PenFed Realty’s mortgage and title affiliates as compared to purchasing the settlement services from PenFed Realty’s mortgage and title affiliates without retaining the services of PenFed Realty. Prudential Real Estate received the highest numerical score among full-service real estate firms for first-time and repeat home buyers and first-time home sellers in the proprietary J.D. Power 2013 Home Buyer/Seller Study. SM Study based on 4,371 total evaluations measuring 5 firms and measures opinions of individuals who have sold a home in the last 12 months. Proprietary study results are based on experiences and perceptions of consumers surveyed April-June 2013. Your experiences may vary. Visit jdpower.com. © 2013 BRER Affiliates, LLC. An independently owned and operated broker member of BRER Affiliates, LLC. Prudential,the Prudential logo and the Rock symbol are registered service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide. Used under license with no other affiliation with Prudential. Equal Housing Opportunity. Prudential-PenFed Realty is an independently owned and operated member of BRER Affiliates, LLC. PenFed Membership is not required to conduct business with Prudential-PenFed Realty. We are proud to be an equal employment opportunity employer: m/f/v/d.

Regulation News

MARK FEINROTH, ESQ.

New Lockbox Services Keep Pace with REALTORS® On the Go

s twenty one local REALTOR® associations from Maryland, Virginia, Pennsylvania and the District of Columbia consider vendor proposals from the two major national providers of lockbox equipment and service, both SentriLock and Supra have announced improvements to their product lines. For REALTORS® who use a smart phone, the new SentriLock mobile app will be a significant improvement. (A remote access device is available for those who prefer not to use a smart phone.) Supra also has submitted a bid for the new contract; its system is operated by smart phone access or an optional electronic key.

SentriLock’s Remote Access Device A new product from SentriLock® allows agents to update their SentriCards without a computer. The Remote Access Device (RAD) allows for wireless card renewal in any location with a cell signal. It also works with a “pin and you’re in” feature if the SentriCard is in the RAD and the RAD is within 100 feet of the lockbox. To use this feature, the lockbox must be wireless and updated with the latest operating system, available from SentriLock.

Mobile App SentriLock’s new mobile phone app will allow users with a valid SentriCard to open key compartments with their mobile smart phone. Users will have a mobile access code to unlock the key compartment. The lockbox owner will then receive an immediate showing notification. The app accesses all listings in a one-mile radius of the user’s smart phone and allows the agent to select from among the listing where he or she is currently located.

Agents can also manually type in the serial number of the lockbox they intend to open and receive a mobile access code. A pin number is still required, but the card may remain expired if only key compartments are being accessed. The mobile access codes will work with all generations of SentriLock® lockboxes. SentriLock provides lockbox equipment and service to Maryland REALTORS® under a master contract with the member associations of the Regional Lockbox Consortium, Inc. (RLC). The contract expires in the spring of 2015. The RLC asked for proposals from both SentriLock and Supra for a new multi-year contract so that service and equipment will continue to be available on the best possible terms to Maryland, Virginia, DC and Pennsylvania REALTORS®. Should SentriLock succeed in winning a new contract with the RLC, MAR will negotiate access to the mobile app and RAD. In the meantime, the mobile app is available on iTunes and Google play at a cost of $24 per year. MAR expects a much lower price under a new master contract.

Supra The Supra lockbox system uses a smart phone or optional key device to access its equipment. The service works on both Bluetooth and infrared technology and provides the user with multiple listing service and showing data delivered by email or text message. The RLC contract committee is in the process of evaluating the Supra bid. Please feel free to contact me if you have questions, comments or concerns regarding the future of lockbox services in our region. I can be reached at mark.feinroth@mdrealtor.org. Mark Feinroth, Esquire, MAR Director of Regulatory Affairs.

Portions of this article are reprinted with permission from the Northern Virginia Association of REALTORS® Re+View Magazine.

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

www.mdrealtor.org

VICTORIA GILLESPIE

A Credit Union or A Bank? Which Should you Choose? Victoria Gillespie, National Director of Business Development, REALTORS® Federal Credit Union, a division of Northwest Federal Credit Union

For more than 100 years, Credit Unions have been helping people achieve their dreams. Whether it is helping them buy a home or a car, or sending a child to college, credit unions return what they earn to their members in the form of lower rates on loans, higher rates on savings and fewer service fees.

embers of the National Association of REALTORS® (NAR) and their families have their own credit union. NAR founded the REALTORS® Federal Credit Union, a division of Northwest Federal Credit Union, to provide a benefit for REALTORS® by tailoring products and services to meet the unique needs of our REALTOR® members. NAR chose the credit union model for the same reason that consumers choose credit unions—because of their cooperative business model and philosophy. As member-owned not-for-profit cooperatives, credit unions exist to benefit members, not stockholders. That may be why credit unions are known for delivering warm “family-like” exceptional customer service to their member base. Credit unions differ from commercial banks in that they do not issue stock or pay dividends to outside stockholders. Earnings are returned directly to members in the form of lower loan rates, higher interest on deposits and fewer fees. Credit unions also typically have low or no minimum account balance requirements, making their accounts both more attractive and cost-effective than those offered by banks.

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Just as with commercial banks, funds on deposit at credit unions are federally insured. The Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Share Insurance Fund (NCUSIF) provide individual depositors with deposit insurance up to $250,000 backed by the full faith and credit of the United State Government. The National Credit Union Administration (NCUA), an independent federal agency, oversees credit unions and insures accounts in federal and most state-chartered credit unions across the country through NCUSIF.

Credit unions exist to benefit members, not stockholders.

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

™

Account accessibility can be an area where banks and credit unions differ. Because credit unions are often smaller in asset size than banks and have fewer locations, many consumers may be concerned that they will not have complete access to their credit union accounts or convenient banking options, such as fee-free ATMs for cash withdrawals when needed. That is not the case. Technological provides credit union members with ready access to all banking services. For example, at REALTORS® Federal Credit Union, our members have access to over 33,000 surcharge—free ATMs; 5,000 Shared Branch Service Centers nationwide; and six full service branches in Northern Virginia. Shared Branching is a network of credit unions that allows members to make deposits, withdrawals and loan payments at convenient locations near their homes or offices.

EDUCATION WORTH SMILING ABOUT LEARN YOUR WAY. WHEN YOU WANT IT. HOW YOU WANT IT. OPEN 24-7-365. SHARPEN YOUR SKILLS.

Our Credit Union also offers our REALTOR® members online banking and remote capture or scanned deposits. As a member, you can conduct your banking electronically, any time of the day or night, at their convenience. What makes credit unions unique is that we are chartered with serving a particular field of membership; we are not open to the general public. All REALTORS® and their immediate family members are eligible for lifetime membership with REALTORS® Federal Credit Union.

If you would like additional information on the full array of Credit Union financial products and services available for REALTORS® please contact Victoria Gillespie at VGillespie@RealtorsFCU.org or by phone at 703-251-2190.

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

www.mdrealtor.org

3 1 2 3

SERIES 100 MAR—Annapolis 800-638-6425 January 28, February 4, 11, 18, & 25

GREAT THINGS come in Earn the GRI:

GRI 2014 Schedule

Increase Income Potential

REALTORS® with designations are high earn more income than those without designations. The GRI is a way to set you apart from the competition.

Broker’s License Requirement

The full GRI classroom series (100, 200, 300, and 400) fulfills the educational requirements needed to take the Maryland broker’s exam (MAR coursework is specific for Maryland).

The Name Says it All

As a GRI (Graduate, REALTOR® Institute), you have accomplished a high level of achievement which indicates to your clients and colleagues an increased skill level, industry knowledge and dedication to your profession.

Prince George’s Association 301-306-7900 April 9, 11, 17, 23 & 25 Greater Baltimore Board 410-337-7200 October 1, 8, 15, 22 & 29

SERIES 200 MAR—Annapolis 800-638-6425 March 11, 13, 18, 25 & 27

SERIES 300 MAR—Annapolis 800-638-6425 April 8, 10, 22, 24 & 29 Greater Baltimore Board 410-337-7200 May 29, June 5, 12, 19 & 26 Pen Mar Regional Association 301-797-4480 May 29, June 5, 12, 19 & 26

SERIES 400 Greater Baltimore Board 410-337-7200 February 6, 13, 20, 27 & March 6 MAR—Annapolis 800-638-6425 May 13, 20, 27, June 3 & 10

GUARANTEED TO HOLD! Classes will not be cancelled due to low enrollment! Please visit MAR’s website, mdrealtor.org for the most current course schedules.

From the Hotline

C H A R L E S A . K A S K Y, E S Q U I R E

What Must You Disclose?

s you may know, there has been a lot of exposure and discussion lately on the issue of property condition disclosures and specifically the difference between a seller’s obligations and a real estate licensee’s legal obligations in a residential real estate transaction. I am departing from our usual Q & A format to address the differences and, more importantly, the best way to comply with my disclosure duties as a real estate licensee. We at MAR have been quite active in raising the profile of this important issue for our members. First, we participated in creating new continuing education classes that focus just on disclosure matters. Second, we hosted a webinar on the subject, which you can view by visiting our website—www.mdrealtor.org, and clicking “Free Thursday Webinar Series” on the right side of the homepage. We think you will find it informative and useful. As a matter of substance, the legal requirements placed on sellers and licensees in the residential real estate transaction are significantly different and simply must be understood. Let’s start with the seller’s obligations. Under Maryland law, unless exempt, the seller of residential real property is required to provide the buyer with the form entitled “Maryland Residential Property Disclosure and Disclaimer Form.” Note that some transactions are

exempt, meaning the seller is not required to provide the buyer with the form. Most notable are sellers who are personal representatives of decedent’s estates or foreclosure purchasers. The full list of exemptions appears on Page 1 of the form. The seller may choose to complete either the Disclosure Form or the Disclaimer Form (not both). Whether the seller Discloses or Disclaims, the seller must disclose to the buyer any latent defects of which the seller has actual knowledge. It is important that you understand this legal standard because later we will compare it to the standard that applies to licensees and you will see that the two are very different. A “latent defect” is a condition that: one, is not reasonably discoverable on careful visual inspection (latent); and two, would pose a direct threat to the health or safety of the purchaser or occupant (defect). “Actual knowledge” is defined as a direct and clear awareness of the condition. Therefore, if a condition is easily observable, it is not “latent” and the seller is under no obligation to disclose it. As a real estate licensee representing the seller, your responsibility is to inform the seller of the requirement to fill out the form and to ensure that every prospective buyer receives the form prior to submitting an offer to purchase the property. Failure to do this may result in the buyer rescinding the contract, to the detriment of the seller.

…the legal requirements placed on sellers and licensees in the residential real estate transaction are significantly different and simply must be understood. 28

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

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Now let’s define your obligations as a real estate licensee and see how they compare and contrast with the seller’s. Under Maryland law, a real estate licensee must disclose to all parties material facts the licensee knows or should know. In addition, the law requires you to make a reasonable effort to ascertain material facts concerning the property. A “material fact” is fact that affects the value of the property or that, if known, might cause a reasonable buyer to make a different decision regarding the price or conditions of a contract. The “know or should know” standard relates to your duty to make a reasonable inquiry. As I hope you can appreciate, the standard that applies to you as a licensee is very different than what applies to the seller. The most important distinction is in the set of facts that must be disclosed. Latent defects, which the seller must disclose are limited as described above, but material facts cover a much broader array of conditions. There are many property conditions that are material facts but not latent defects. As a result, you, the licensee are required to disclose their existence even though the seller is not. For purposes of compliance and risk management, you absolutely must understand this distinction. Please make it your practice to take time and care that these rules demand. Once you are possession of information concerning the condition of the property, ask yourself whether this condition is a material fact, using the definition above. If it is a material fact, disclose it to the buyer in writing, as soon as possible, but no later than when the buyer submits an offer to purchase. This article only scratches the surface of what is a complex and layered matter. Stay tuned for follow up . Charles A Kasky, Esquire, Senior Vice President, Maryland Association of REALTORS®.

www.mdrealtor.org

SELL THE LUXE LIFE

RCR-Baltimore.com

1 to 3 Bedroom Luxury, Resort-Style Condominiums in Baltimore’s Inner Harbor. Priced from $499,000 to over $3 Million. Immediate Occupancy | 866.922.1831 801 Key Highway, Baltimore, Maryland 21230 The Ritz-Carlton Residences, Inner Harbor, Baltimore are not owned, developed or sold by The Ritz-Carlton Hotel Company, L.L.C. An affiliate of RXR Realty LLC uses The Ritz-Carlton marks under license from The Ritz-Carlton Hotel Company L.L.C. This is neither an offer to sell nor a solicitation to buy to residents in states where registration requirements have not been fulfilled. MHBR No. 4096. An RXR Realty development. †Services provided by third-party companies are paid a la carte by the resident who requests the service.

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

Commercial Connection

JASON H. BRAND, ESQ.

Lead Renovation, Repair, and Painting Program for Public and Commercial Buildings? Time Will Tell Section 402(c)(3) of the Toxic Substances Control Act (“TSCA”) requires the Environmental Protection Agency (the “EPA”) to regulate renovation or remodeling activities that create lead-based paint hazards in target housing (most pre-1978 housing), pre-1978 public buildings, and commercial buildings.

n a 2008 Renovation, Repair, and Painting (“RRP”) rule, the EPA addressed lead-based paint hazards created by these activities in target housing and child-occupied facilities built before 1978. “Child-occupied facilities” are a subset of public and commercial buildings or facilities where children under age 6 spend a great deal of time. The RRP rule established requirements for training renovators, other renovation workers, and dust sampling technicians; for certifying renovators, dust sampling technicians, and renovation firms; for accrediting providers of renovation and dust sampling technician training; for renovation work practices; and for recordkeeping. Shortly after the RRP rule was published, several lawsuits were filed challenging the rule, asserting, among other things, that the EPA violated Section 402(c)(3) of the

TSCA by failing to address renovation activities in all public and commercial buildings, not just child occupied facilities. As a result of these lawsuits, the EPA entered into a settlement agreement in which it was agreed to commence rulemaking to address renovations in public and commercial buildings, other than child-occupied facilities, to the extent such renovations create lead-based paint hazards. Before the closing of the comment period for the propose rule, a public meeting was held on June 26, 2013. Harold H. Huggins, former MAR President, testified on behalf of NAR and its affiliates, the Institute for Real Estate Management and the Certified Commercial Investment Member Institute. His testimony focused on three specific points: 1) the EPA has not conclusively determined the degree to which lead hazards exist

As industry advocates, we support public policies that protect our clients, tenants, and building visitors from all hazards, including the harmful health consequences of lead-based paint. 30

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

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in public and commercial buildings; 2) residential buildings are definitively different from public and commercial buildings –in tenancy, construction, operation and maintenance; and 3) the EPA does not have sufficient research on lead hazards in public and commercial buildings, and has not conducted adequate outreach with governmental entities, who own and lease a significant proportion of commercial and public buildings. Huggins testified: “As industry advocates, we support public policies that protect our clients, tenants, and building visitors from all hazards, including the harmful health consequences of lead-based paint. We strongly support the existing “child-occupied facility” designation that protects children from

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lead hazards in commercial properties with on-site day care centers; however, without a proven harm to the typical adult users of commercial and public spaces, we do not see a need for EPA’s new RRP rulemaking. The EPA is required to regulate against hazards, and since none is proven, no regulation is warranted.” The terms of the settlement agreement require that the EPA either sign a proposed rule covering renovation, repair, and painting activities in public and commercial buildings, or determine that these activities do not create lead-based paint hazards by July 1, 2015. Time will tell whether the current RRP rule will be expanded to include renovations in public and commercial buildings, other than child-occupied facilities. Jason Brand, Esquire, Staff Attorney, Maryland Association of REALTORS®

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

Matrix is Changing, Sign Up for Training! Coming Soon: MRIS Matrix Navigation & Workflow Changes MRIS has some changes coming to Matrix in early 2014. MRIS Matrix users will experience navigation changes and a new workflow which provides dynamic and fully interactive capabilities without losing existing functionality. Some of the changes are as simple as cascading navigation that lets you get to your “Residential General Search” in one click. Others changes are as big as a new integrated mapping feature that allows users to quickly toggle between the search criteria, listing results and a fully interactive map view. The list below covers some of the key changes that MRIS customers should take a few minutes to learn: Navigation—This newer version of Matrix allows customers to navigate the system by “hovering” over the menus when performing searches. Customers also will have three tabs at the top right that explain where they are in the Matrix search process: • C riteria—This page/tab is where customers will input their criteria for a listing search. Putting in their criteria functions the same way as customers would expect. Note: As customers input more criteria, the number of results will change, giving customers a count of their results as they go also known as “count on the fly.” • M ap—On the “Map” page/tab, listings that match their criteria will appear on a map as customers search. On this map customers can draw a radius, rectangle or polygon, add layers such as parcels and school boundaries and re-center the map. • R esults—The “Results” page/tab will display their search results in a list, much the same way customers see them displayed today when they click “Search.” Printing Reports—With this release, HTML and PDF reports will be available for printing. Matrix will default to the HTML reports tab, but customers can select the PDF reports tab if they prefer.

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

Button Bar—All actions that can be performed with listing data are now available in one central location with the button bars at the bottom of their search results on either the Map or Results page/tab. Because there are so many actions, they are now split into four separate button bars organized by function and accessible through clickable subheadings above the button bars that change the visible buttons. The subheadings are Actions, Refine, Save and Carts. CMA Customization—Customers will now have the ability to upload custom pages to their CMA. There is also a new Map display that will show the subject property in relation to its Comparable listings. While no existing functionality is being lost, these changes may take some getting used to at first, especially to MRIS customers who do not use Matrix on a regular basis. We encourage MRIS customers to sign up for either the MRIS 301: What’s New and What’s Coming or MATRIX 101: The Need to Knows of Matrix classes that are scheduled for January. Visit MRIS.com/MatrixUpdates to watch the video overview, additional information and to register for these classes!

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SNIPPETS Eyejot.com

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PowToon is an online business presentation software tool that allows you to create free, cool, and awesome animated video explainers as an alternative to Power Point.

Animoto.com Animoto is a video creation service (online and mobile) that makes it easy and fun for anyone to create and share extraordinary videos using their own pictures, video clips, words and music. Simply upload your pictures and video clips, choose your style, add words and music, and click the "produce video" button. Then, Animoto’s cinematic technology does its magic and in minutes brings it all to life with a beautifully orchestrated production you can share with family and friends.

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If you have a ‘ridiculously useful website’ to share with fellow REALTORS®, email: jermaine.hawkins@ mdrealtor.org

The sites are presented for information only. MAR is not responsible for the content of external websites and does not endorse them or their functionality. Although we make every effort to ensure these links are accurate, up to date and relevant, MAR cannot take responsibility for pages maintained by external providers. Views expressed by individuals and organizations on their own websites are not necessarily those of the Maryland Association of REALTORS®.

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

Residential Sales

ANIRBAN BASU

Market Positioned for Big Spring Selling Season A Confluence of Factors

here is reason to be optimistic about the near-term prospects for Maryland’s housing market. The market softened a bit entering the fall for both seasonal and economic reasons. Prospective buyers have had to simultaneously contend with higher mortgage rates as well as the economic uncertainties that accompanied the federal government shutdown and most recent debt ceiling debate. Nationally, total existing home sales, which include completed transactions for single-family homes, townhomes, condominiums and co-ops, fell 3.2 percent in October to a seasonally adjusted annual rate of 5.12 million. That compares to an annual rate of 5.29 million in September. Naturally, Maryland’s housing market has also been impacted by a combination of financial (e.g., higher rates) and political turbulence (sequestration, shutdown, debt ceiling issues), though the impacts to date have not been particularly jarring.

…a number of tailwinds has emerged more recently, each positioning the Maryland housing market to accelerate next spring if not before.

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

Moreover, a number of tailwinds has emerged more recently, each positioning the Maryland housing market to accelerate next spring if not before. Home prices continue to rise, helping to create greater urgency among prospective buyers and to restore the investment motivation that generally supports home buying activity. Gas prices have fallen. Job growth has accelerated. Equity markets have achieved record highs; the Dow Jones Industrial Average recently touched 16,000 and the S&P 500 Index attained 1,800. The accompanying growth in wealth will permit a higher fraction of American households to cobble together 20 percent down payments while also boosting confidence. Perhaps most importantly, Janet Yellen will be our next Federal Reserve Chair. She appears ready to continue the policies of monetary accommodation pursued by her predecessor, Ben Bernanke. The implication is that interest rates are likely to remain supportive in 2014, though it is unlikely that mortgage rates will return to their pre-June 2013 lows. More good news: Maryland has survived sequestration thus far. Despite federal cuts to discretionary spending, Maryland’s economy managed to add 43,300 jobs, or 1.7 percent, between August 2012 and August 2013, according to the Bureau of Labor Statistic’s (BLS) Establishment Survey. That rate of job growth equaled the national average. The Free State ranked 16th in the nation in terms of percentage job growth during that 12-month period, up from a ranking of 22nd three months prior.

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Leading the way in terms statewide job growth over the past year are professional and business services (+16,300, or +4.0%); education and health services (+12,600, or +3.0%); government (+5,500, or +1.1%); and leisure and hospitality (+4,100; or +1.7%). These sectors represent a neat mix of high-, medium- and low-wage segments. Those segments that have registered job losses include manufacturing (-2,100; or -1.9%) and information (-600; or -1.5%). Job growth has also remained stable nationally. The nation added another 204,000 jobs in October, bringing the year-over-year total to 2.329 million nonfarm payroll jobs. Despite questionable job quality (many of the new positions are part-time and/or in low-wage segments), this number of jobs is likely to sustain ongoing housing market recovery. Despite the monthly sales blip in October, total existing home sales on a year-over-year basis were up 6.0 percent, and sales have remained above year-ago levels nationally for the past 28 months. Mimicking the nation, Maryland’s housing market dynamics have also remained positive. Both unit sales and sales prices exhibited strong gains in October. According to data supplied by MRIS and the Coastal Association of REALTORS®, home sales statewide rose 18.9 percent in October on a year-over-year basis. Nineteen of Maryland’s 24 jurisdictions experienced rising units sales volumes over that period. This performance is at least partially attributable to a race among prospective buyers to lock-in low interest rates during a period of generally rising mortgage rates. Communities with large unit sales increases in October on a year-over-year basis include Kent County (90.9%), Talbot County (80.8%), Queen Anne’s County (43.8%), Caroline County (38.9%), Washington County (35.6%) and Howard County (32.5%). One implication of these numbers is that the Eastern Shore’s housing market, one of the softest in the state in recent years in terms of the pace of recovery, is now beginning to rebound in earnest. Months of inventory stood at 5.3 months in October, a slight increase from September’s figure of 5.1 months. Inventory is still down from the year-ago level of 6.0 months. Lower inventory implies stable to rising prices, which in turn induces prospective buyers to remain www.mdrealtor.org

September 2013 vs. 2012 UNITS

AVERAGE PRICE

County

2013

2012

% Change

2013

2012

% Change

Allegany

-6.1%

$89,597

$99,578

-10.0%

Anne Arundel

582

473

23.0%

$366,339

$371,460

-1.4%

Baltimore City

466

426

9.4%

$168,240

$155,270

8.4%

Baltimore County

706

564

25.2%

$261,049

$255,090

2.3%

Calvert

21.1%

$335,836

$344,878

-2.6%

Caroline

-45.8%

$145,300

$149,496

-2.8%

Carroll

146

129

13.2%

$287,360

$256,262

12.1%

Cecil

43.3%

$193,889

$223,603

-13.3%

Charles

156

107

45.8%

$256,548

$226,865

13.1%

Dorchester

-37.0%

$172,318

$169,059

1.9%

Frederick

226

191

18.3%

$325,051

$274,931

18.2%

Garrett

19.4%

$333,637

$284,528

17.3%

Harford

235

191

23.0%

$254,595

$262,608

-3.1%

Howard

273

272

0.4%

$410,179

$409,935

0.1%

Kent

-40.9%

$176,185

$235,654

-25.2%

Montgomery

871

745

16.9%

$468,070

$460,654

1.6%

Prince George’s

683

594

15.0%

$215,287

$189,907

13.4%

Queen Anne’s

10.5%

$393,716

$355,099

10.9%

Somerset

160.0%

$126,838

$95,700

32.5%

St. Mary’s

103

106

-2.8%

$269,457

$315,434

-14.6%

Talbot

14.3%

$390,188

$601,277

-35.1%

Washington

121

53.2%

$179,914

$142,559

26.2%

Wicomico

13.4%

$148,430

$152,892

-2.9%

Worcester

176

144

22.2%

$266,814

$281,442

-5.2%

TOTAL 5,249

4,477

17.2%

$301,881

$295,446

2.2%

Figures reflect resales and new properties. Residential resales are reported by MRIS® and local boards MLS systems.

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

October 2013 vs. 2012 UNITS

AVERAGE PRICE

County

2013

2012

% Change

2013

2012

% Change

Allegany

0.0%

$120,501

$90,736

32.8%

Anne Arundel

528

467

13.1%

$384,177

$361,535

6.3%

Baltimore City

477

417

14.4%

$144,308

$147,474

-2.1%

Baltimore County

639

558

14.5%

$245,477

$234,335

4.8%

Calvert

13.5%

$289,253

$309,265

-6.5%

Caroline

38.9%

$146,590

$185,506

-21.0%

Carroll

123

135

-8.9%

$280,116

$273,396

2.5%

Cecil

-7.9%

$232,727

$208,879

11.4%

Charles

131

105

24.8%

$251,505

$230,254

9.2%

Dorchester

5.6%

$185,740

$157,113

18.2%

Frederick

240

208

15.4%

$289,457

$275,260

5.2%

Garrett

-3.7%

$329,638

$365,084

-9.7%

Harford

218

178

22.5%

$252,641

$253,143

-0.2%

Howard

281

212

32.5%

$406,470

$381,532

6.5%

Kent

90.9%

$343,795

$301,636

14.0%

Montgomery

915

726

26.0%

$481,710

$443,907

8.5%

Prince George’s

756

631

19.8%

$215,849

$192,689

12.0%

Queen Anne’s

43.8%

$341,209

$409,083

-16.6%

Somerset

0.0%

$113,664

$138,148

-17.7%

St. Mary’s

30.0%

$275,882

$308,243

-10.5%

Talbot

80.8%

$395,046

$538,935

-26.7%

Washington

122

35.6%

$184,235

$151,973

21.2%

Wicomico

11.5%

$168,798

$155,279

8.7%

Worcester

147

117

25.6%

$273,302

$259,642

5.3%

TOTAL 5,128

4,313

18.9%

$300,891

$282,040

6.7%

interested in residential markets. Average sales price expanded 6.7 percent in October on a year-over-year basis; 15 jurisdictions reported higher average prices and 17 reported higher median prices. Despite dislocations and difficulties associated with the federal government shutdown, statewide pending sales were actually up by nearly 5 percent in October 2013 compared to the same period one year prior.

Looking Ahead While the outlook for ongoing housing market recovery remains positive, there are certain scenarios under which recovery could stall. The experience of the past summer indicates that the Federal Reserve does not have as much control over long-term interest rates as it might like. Even the mere threat of tapering the Federal Reserve’s monthly asset purchases caused long-term interest rates to surge higher in May, June and August, diminishing housing affordability in the process. At the beginning of May, the 30-year fixed mortgage rate stood at roughly 3.3 percent. By the end of August, it stood at around 4.5 percent. Another such episode would likely cause the housing market’s recovery to shed much of its current momentum. But there are other risks. The most recent budget agreement keeps the federal government open only until January 15th, and raises the debt ceiling just until February 7, 2014. Moreover, rumblings in the Middle East continue to threaten the stability of oil prices. In other words, while many economists are forecasting 3 percent or better growth in the U.S. next year, which all things being equal would be terrific for the housing market, there are still significant sources of vulnerability. The most critical of these appear related to interest rate dynamics and oil prices. In recent weeks, stable interest rates and falling oil prices have helped to support the marketplace, but there is no guarantee that such elevated levels of support will persist through 2014. Anirban Basu, Chairman & CEO, Sage Policy Group, Inc.

Figures reflect resales and new properties. Residential resales are reported by MRIS® and local boards MLS systems.

MARYLAND REALTOR® DECEMBER 2013 / JANUARY 2014

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