KYREALTORFall11

Kentucky

REALTOR 速

A publication of the Kentucky Association of REALTORS 速

Fall 2011

So you want to start in commercial real estate?

Humanization, relationships and likeability 12 signs you might be a REALTOR速

www.kar.com

More Listings. More Leads.

More Closings. One System.

A Complete Mobile, Voice, Email and QR Code Marketing Communications Platform

For Sale

Get Instant Information on this property by TEXT or VOICE

865.312.8577 Msg:1234

www.RealFocus.com

Text Message from:

This gorgeous executive home boasts 5 bedrooms and 5 full bathrooms.

The media room is a must see and the master bedroom ...more

CONTACT

1-865-312-8577

Your own unique telephone number gives buyers listing information instantly on their mobile phone via:

NTACT

ONTACT

To:

Scan this code

Your voice...let your personality shine through as you tell the buyer all the great features of the listing Your text...some buyers just prefer a fast and efficient text Your mobile site...buyers scan the unique QR Code and are intstantly taken to your mobile site for the listing information

CONTACT

Com boo e see u s th KAR #12 at at the Con and vention Expo !

865.246.5500 info@RealFocus.com www.RealFocus.com

Contents

Volume 4, Number 4, FALL 2011

IN THIS ISSUE MARS rules...for now

8

Humanization, relationships and likeability

10

12 signs you might be a REALTOR®

12

Home affordability is driven by mortgage rates

13

Treasurer Ronald E. Hughes, ABR, CRS, GRI ® Paducah Board of REALTORS

KAR Convention & Expo

18

Treasurer-Elect Norman Jones, GRI Eastern Kentucky Association

So you want to start in commercial real estate?

20

A publication of the ® Kentucky Association of REALTORS President Tony Clark, ABR, CRB, CRS, GRI ® Greater Owensboro REALTOR Association President-Elect Ann McDonald Lexington-Bluegrass Association

Executive Vice President Susan W. Helm, RCE susiehelm@kar.com Communications/Education Director Hunt Cooper hcooper@kar.com Address letters and inquiries to: ® Kentucky REALTOR 161 Prosperous Place, Suite 100 Lexington, KY 40509 TF 800.264.2185 T 859.263.7377 F 859.263.7565 www.kar.com email: hcooper@kar.com KAR members should always send address changes to their local board/association first. Subscription rates: $10 per year (included in dues) for members, $25 per year for nonmembers.

REGULAR FEATURES President’s Message

5

Tools You Can Use

6

Legal Update

8

Legislative Update

14

Education

19

Local Association News

22

By the Numbers

24

Housing Stats

25

Community Profile

26

From the Helm

28

Code of Ethics

29

A Day in the Life of...

30

®

Kentucky REALTOR (USPS 024-933) is published quarterly (Fall, Winter, Spring, Summer) by ® the Kentucky Association of REALTORS , 161 Prosperous Place, Lexington, KY 40509.

Periodicals postage paid at Lexington, KY. POSTMASTER: Send address changes to Kentucky ® REALTOR , 161 Prosperous Place, Suite 100, Lexington, KY 40509.

All articles represent the opinions of the authors and do not necessarily represent the opinions ® of Kentucky REALTOR or KAR and should not be construed as a recommendation for any course of action regarding financial, legal or accounting ® matters by KAR or Kentucky REALTOR and its authors.

Reproduction prohibited without permission.

Copyright © 2011 ® Kentucky Association of REALTORS , Inc. All rights reserved.

FALL 2011 KENTUCKY REALTOR® 3

KAR News KAR blog

www.karblog.org KAR is pleased to bring to the membership a new communication tool – the KAR blog. After several long months of planning and hard work, the launch of the blog will provide KAR members, and others, timely information on real estate, both local and national, as well as updates to happenings at KAR through events, activities and education. Please take a minute to visit the site at www.karblog.org and enter your email to receive the latest daily updates (please make sure you click on the confirmation email that is sent to you after entering your email) or you can subscribe directly to the RSS feed. The goal is for this tool to be valuable to your business and career.

KAR bylaws changes The proposed Bylaws amendments below will be voted on by the general membership of KAR at the membership meeting to be held in Lexington, Kentucky on Thursday, September 29, 2011.

ARTICLE II: Mission Statement The Kentucky Association of REALTORS® exists to support and enhance the ability of local associations of REALTORS® and their REALTOR® members to succeed in businesses in an ethical and competent manner and, through a united voice, preserve and protect real property rights.

ARTICLE VII: Officers Section 2. Qualifications for officers (other than Executive Vice President) are as follows: Having a principal office in Kentucky; Having been a member of KAR for a minimum of seven (7) years immediately preceding election; (Section Revised 10-01-09)

NAR bus tour brings Home Ownership Matters to Louisville The Home Ownership Matters Bus Tour made a stop at the Greater Louisville Association of REALTORS® on Wednesday, July 27 as part of its journey across the country. Members of the association and general public were able to meet with NAR staff to discuss their concerns and learn more about the issues that may affect their ability to buy, sell or own a home in the future. Issues being discussed currently are FHA loan limits, the Qualified Residential Mortgage (QRM) rule, flood insurance and mortgage interest deduction. Ongoing news and information for the tour will be posted on HouseLogic at www.houselogic.com/bus. HouseLogic is a free source of information from NAR that helps home owners maintain and enhance the value of their homes and engage in issues that affect their local communities.

Having been a director for two (2) or more of the previous five (5) calendar years; (Revised 9/23/04) Having served as a member of no less than two of the following committees: Bylaws, Audit, Strategic Plan, Government Affairs, Legal Affairs/Risk Reduction, or KREEF Trustee within the previous seven (7) years; (Section Added 10-01-09) Having served as a member for at least one (1) year on the Finance Committee within the previous seven (7) years; and (Section Added 10-01-09) Not concurrently holding the office of president in any Member Board or Association.

Seeking a few good volunteers KAR is looking for members who would like to get involved at the state level of the REALTOR® organization. By serving on an Association committee, it allows members to be a part of the decision making process, it acquaints members with changes in Kentucky law and it involves members in the many educational and networking opportunities available.

Being involved also gives members input into the structure and future of the Association and gives members the privilege of working with other Association members from across the state. If you would like to serve on a KAR Committee, please complete and return the form found at www.kar.com > Members > Committees. For a list of KAR committees, download the form or contact the KAR office at 800.264.2185.

4 www.kar.com

President’s Message Home ownership is great all around Can you believe we are almost out of the third quarter of a very exciting and challenging year? First of all, I would like to thank my fellow REALTORS® for allowing me to serve the Kentucky Association of REALTORS® as the 83rd President. I appreciate your support and encourage you to get involved and continue your support for KAR and keep on striving for excellence.

Tony Clark, 2011 KAR President

This year I have had the pleasure of traveling and representing KAR and have found that things really do remain constant. Home ownership does matter. We all have to live somewhere and there is no better way to build our economy than through home ownership. Isn’t that what the media bases its hope around? The economy will get better when real estate picks up or vice versa.

Opportunities may change as well as the market, but our job never changes. It has been and continues to be our job and our duty to educate the public on the advantages of home ownership for them as well as for the communities they live in, and to assist those that may not think they can own, but would be surprised to find out that they can with your guidance.

Home ownership can be a challenge in today’s market for a lot of people and sometimes potential buyers –Marian Wright Edelman feel like it is not fair that for some reason they were put in a situation that won’t allow them to buy today. It is important that we look at this as an opportunity to create a potential lifetime customer and buyer by educating them on what they can do to improve their situation, so that they will be in a position to purchase a home in the not to distant future. It is my philosophy that by having a strong positive mental attitude, you help instill that same attitude for your buyers and sellers.

This can only create a “win/win” situation.

You really can change the world if you care enough.

We know that home owners are happier and healthier and enjoy a greater feeling of control over their lives. It is also the best way to build long-term wealth. Historically, a home owner’s net worth has ranged from 31 to 46 time that of a renter, even still today.

In addition, home owners are free to redecorate, renovate and modify their homes as they wish.

And most home owners enjoy stable housing costs with a fixed-rate mortgage payment that will not change for 15 to 30 years while rent typically increases 3% a year. Home owners also typically deduct mortgage interest and property taxes on their federal individual income tax return.

To that end, we were fortunate this year to also have been involved in the Home Ownership Matters bus tour in Louisville, KY. Potential home buyers were able to meet with the National REALTOR® leaders and local officials to discuss their concerns and learn more about the issues that affect their ability to buy, sell or own a home.

As the year progresses, it is important to not only look ahead, but to remember and take lessons from the past, and always remember that you have value and you provide a very valuable service to your customers, community as well as your country. For every buyer or seller you help, you help rebuild our economy and our way of life.

I look forward to seeing you at the Kentucky Association of REALTORS® Convention and Expo in Lexington, Kentucky on September 27-29. It’s a great way to network, learn more about real estate in Kentucky and increase your business potential through all the great education offerings on a variety of topics.

Tony Clark 2011 KAR President

FALL 2011 KENTUCKY REALTOR® 5

Tools You Can Use Marketing Minute Are you using Foursquare?

More than 3 million people check-in using FourSquare each day. FourSquare is among the many sites that have joined the growing trend of location-based social media. Long story short, it allows a person to “check-in” at just about any location that is frequented. Smart businesses are jumping on board with FourSquare check-ins from users, and are offering discounts for check-ins. After all, a Foursquare check-in is free advertising for that business.

Remember, though, with all social media, to keep security top of mind. Depending on where you are, it is sometimes better to check-in at the point of leaving a location before telling the world where you are at that moment.

Ponder and think about this for a moment: who might you be able to connect with if you check-in at places that are in the area that you sell real estate? Perhaps your local residents and hopefully the ones wanting to sell or looking to buy!

Simply by checking in frequently at, say, a local restaurant or grocery store over period of time, you will become “mayor” of that location (it’s part of the game) – so every time someone checks in at that location, they will see your profile.

Real estate agents have also been using Foursquare in conjunction with Open Houses. The promotion might include the phrase, “Check in on FourSquare while at the Open House and receive a gift card.” When they check in, others they are connected with will see the Open House, providing a boost for word-of-mouth marketing efforts. Trying these different ideas may generate more business or, at least, give you some name recognition among those you don’t know.

Using a “tip” at a location is another great way to keep your name in front of your local people, as well. The “tip” can be viewed by those checking in after you. Tips can be anything from a favorite menu item to a helpful employee.

Doxo is an online filing cabinet that people can use to store all kinds of digital files in the cloud. What separates Doxo from other online data storage systems like Dropbox and Evernote is the types of files it helps people store. The purpose of Doxo originally was to help people save their bills and statements in a secure environment online, while also helping them connect with select providers to receive bills automatically through the Doxo system. The method of organizing used by the program makes it easy when it comes time to reference a bill that’s been paid and archived, since finding a previous bill or statement involves nothing more than clicking on the name of the provider and finding the month in question. It works with a drag and drop uploading system and is free to use and can be accessed from an iPhone.

6 www.kar.com

Record your phone conversation www.recordableapp.com Ever need to refresh your memory after an important phone conversation? Or maybe show some lying rascal what was really said. This place gives you the tools to record any telephone conversation and save it in a secure on-line archive.

The only caveat they provide is that Federal and State Laws regarding recording phone calls vary by state. They warn that users are responsible, if the applicable law requires this, for informing their party that a call is being recorded.

With that said, it’s a pretty simple service to use. Just call the toll free number they provide, follow the prompts, place your call and on completion you will be given an access code so you can listen to your call from any phone at your convenience.

These folks provide this service without cost. You can also access your recording on-line including unlimited playback and MP3 downloads - for a modest fee.

Are people talking about you? www.socialmention.com To monitor your social media presence, check out Social Mention, the social media search and analysis platform that aggregates user generated content from across the universe into a single stream of information. It is like Google Alerts but for your social media presence. The program allows you to easily track and measure what people are saying about you, your company, a new product, or any topic across the web’s social media landscape in real-time. You can monitor anything, even your competitors or others you find interesting.

Social Mention monitors 100+ social media properties directly including Twitter, Facebook, FriendFeed, YouTube, Digg, Google etc. To use, enter your search phrase and email into the program and you will receive daily delivery of your alerts. It really is that easy – no contracts or registrations required.

Check your online influence www.klout.com Klout calls itself the “measurement for your overall online influence.” The scores range from 1 to 100 with higher scores representing a wider and stronger sphere of influence. Klout uses over 35 variables on several social sites to measure True Reach, Amplification Probability, and Network Score – all complicated metrics that don’t mean much to the end user.

What does matter, more importantly, is that these metrics basically rely on a user’s social networking presence across multiple sites to nail down a Klout personality and score. The overall effectiveness of Klout, especially for real estate, has been questioned, however, Klout continues to make head way in online discussions. Eventually, as with most things social media, this program, or a version of it, will probably gain strength and become something that people will monitor.

Do you Yelp? www.yelp.com Yelp a user review and local search site, allows for reviews of anything with an address and that means real estate brokerages are included. Even some individual real estate agents are getting into the mix. Earlier this year, Yelp hit some important milestones as it officially surpassed 20 million reviews but more importantly is attracting 53 million users per month. It seems everyone uses Yelp - it has been called the Google of review sites. Think of the impact this could have on real estate. Folks generally rely on input from a non-biased source and Yelp can give that. If you have honest reviews from past clients for you or your company, what is the impact that may have on someone looking for real estate help in your area? Yelp also provides customization of business and individual profiles by allowing logos, photos and other information. Maybe it’s time to search for what is being said about you.

Stop that spam www.mailexpire.com Imagine this: you are online, the website is asking for an email address before you can access the information you want and you are reluctant to enter you email address because you know it will end up being sold to hundreds of others for use as a spam machine. Enter mailexpire – an easy way to visit sites, log in and get the information you want - without leaving a trace back to you. Using the service, you won’t receive a bunch of unwanted e-mail from your site visit because you can turn them off anytime you wish. All you do is create a free email alias for yourself for any period you choose, from 12 hours to 3 months. Then anything sent to this address will be relayed to your actual email address. And using the unique control panel, you can extend use of the address or disable it immediately.

Photo editing a breeze with these tools www.kanubee.com www.aviary.com The web based app Kanubee is a photo editor and a dead simple one at that. It does the basics without having to learn all the bells and whistles found with similar programs. And it’s built with real estate in mind. It has pretty much everything someone editing property photos would need. The big hook, though, is that Kanubee offers one feature that is appealing to real estate users specifically: a way to drop your logo onto every photo as a watermark or badge. It’s not a knock-me-over-I’m thrilled feature, but it’s a nice touch when trying to brand your listing photos and even keeping others from taking (and using) them without permission.

Feather, a new HTML5 photo editing tool from Aviary, can be embedded directly into a site (but only with HTML5 compatible browsers). The process for some may be cumbersome and require some technical assistance, but once there, can work wonders.

This means, for example, that when an agent uploads a photo to say their broker’s site or into the MLS system, it can be “prettied up” instantly at the point of uploading. The free program features typical editing processes like brightness adjustments, removing smudges, cropping, adding effects and more.

Bits and Bytes Yes, your iPhone can do all of this… and more You may be surprised to find some hidden features and shortcuts with your iPhone. The iPhone’s latest operating system, iOS 4.3, which is available for the iPhone 3GS and AT&T’s iPhone 4, has several of these little-known features. The New York Times recently featured more than a dozen.

Here are a few: Screen grab: To take a picture of whatever is on your iPhone’s display, tap the home and sleep buttons at the same time. The screenshot will be saved and available in your camera roll library.

Voice control: In a rush and need to know what time it is?

You can program your phone so that by your voice prompt alone (e.g. “What time is it?”), your phone will tell you the time in response. You can also use your voice control setting to get your phone to dial a precise number or tell it to connect you with people or places already in your address book (e.g. “Dial the Office”). You can even use it to control music (e.g. “Play music”) or even get it to play a certain song, all by your voice.

Save images from the Web: You may be looking at Web pages in Safari and want to save a photo you see. To save it, tap and then hold any image, which will then bring up buttons that allow you to save the image to your camera library or copy it to your clipboard.

Search shortcut: With the first home screen open, swipe your finger to the right across the screen. A search window will appear, which you can use to bring up your contacts, apps, e-mails, calendar appointments, and media all via keyword search. You can also use it to quickly search Google or Wikipedia.

(Those are the final two options given on each search result, in case you want to open up your search to Google or Wikipedia and not just limit it to what’s on your phone.)

Give it a shake: Easily undo or erase what you just did. Shake the iPhone while you’re typing brings up the option to undo it.

Restart: If your phone is acting sluggish or buggy, do what the pros do: initiate a “hard reset” by holding down both the home and sleep buttons until the phone powers down completely and restarts with the mirrored Apple logo appearing on the display. Do not let go until you see this logo. Doing this will often solve a number of small to medium-size glitches; it’s a good idea to do it periodically if you do not regularly sync your phone. from REALTOR® Magazine Online

Fall 2011 KENTUCKY REALTOR® 7

Legal Update The FTC (sort of ) exempts real estate professionals from MARS rules ... for now In the last issue of the Kentucky REALTOR®, I discussed the new short sale regulations from the Federal Trade Commission (FTC) directed at “Mortgage Assistance Relief Services” (MARS).

The FTC’s MARS rules impose serious requirements on real estate professionals who deal in any way with short sales. There are substantial penalties for noncompliance.

In a recent policy statement issued in July 2011, after vigorous intervention by the National Association of REALTORS® (NAR), the FTC suspended “until further notice” the application of MARS rules to real estate professionals who negotiate short sales. The catch is that the FTC’s stay could only be temporary, and MARS rules that prohibit misrepresentations still apply to short sales transactions.

MARS & real estate professionals According to the FTC’s policy statement, except for prohibitions on misrepresentations, the FTC will no longer enforce MARS rules against real estate professionals engaged in negotiating, obtaining or arranging a short sale of a dwelling.

To qualify for the stay, real estate professionals must meet the following conditions: 1. Must be properly licensed and maintain good standing under any applicable state law requirements; 2. Must be in compliance with state laws governing the practices of real estate professionals; and 3. Must be assisting or attempting to assist a consumer in negotiating, obtaining or arranging a short sale of a dwelling in the course of securing the sale of the consumer’s home.

The stay applies to both brokers and associated sales agents. Thus, when a sales agent assists a broker with a client’s short sale and meets the FTC criteria listed above, the sales agent will also fall under the terms of the FTC’s enforcement stay.

Only short sales undertaken in connection with the licensed sale of residences are covered by the stay. Other types of mortgage assistance services provided by real estate licensees, such as a short sale negotiation service, will not be covered by the FTC’s stay.

8 www.kar.com

The MARS rules and the FTC’s new enforcement stay create increased risks for Kentucky licensees who fail to comply with Kentucky Real Estate Commission (KREC) requirements.

Violating state licensing requirements or engaging in prohibited activities will disqualify a REALTOR® from the FTC’s stay of the MARS rules. And if the transaction involves a short sale, the REALTOR® will also be subject to substantial penalties for failing to comply with MARS disclosure requirements. The result is to add an additional layer of federal penalties to ordinary real estate transactions where short sales are involved.

Misrepresentation rules still apply Notwithstanding its current stay, the FTC will continue to enforce prohibitions on misrepresentations against real estate professionals engaged in short sales.

The FTC considers a “misrepresentation” to be any misleading or deceptive act “in or affecting commerce.” Examples might include promises to a consumer that the real estate professional could obtain a certain price for a short sale; false statements about the types of services that the real estate professional provides, such as claiming an expertise in short sales when this is not true; and overstating the results that the real estate professional can obtain for the consumer, such as promising a consumer that they will not have any deficiencies from the short sale when there is no basis for such a statement.

Since real estate professionals who misrepresent material facts during a short sale will fall out of compliance with state license law requirements, they will also no longer qualify for the FTC’s enforcement stay and will find themselves in violation of the MARS rules.

Brokers and agents should always take care not to make misrepresentations to clients and third parties, but they should be especially careful not to make misrepresentations

Commercial Communications MARS Disclosure for General

IMPORTANT NOTICE: ______ ______________________________

(Name of Company) is not associated

or your lender. is not approved by the government MARS Disclosu with the government, and our service re for Offe r from Len n The disclosur der (Part unicatio may note agree to change I) use our service, your lender the time Brok below is required by ial Comm Even if you accept this offer and 16 C.F.R. § er furnishes Commerc 322. loan holder Seller with where the erloan. your r Specific Sell or a written agre 5(b). It is to be provided me serv to icer incorpor Consu ement betw a MARS to Seller at be provided een sure for ). It is to er or arranges for behalf of your home and damage your credit ating the offer of shor lose clo could .4(b you Dis 322 mortgage, your § t sale terms. Seller and Seller’s IMPORTANT s on stop paying If you MARS , tion C.F.R. alf of Sell NOTICE: er on beh short sale negotia lists the property ired by 16 lend requ a is rating. t Broker sale with conduc re below

the to if the losu short The disc w negotiates a Services) provider to Seller at the time, or at a later time be t Broker beloAssistance Relief must be provided need a short sale disclosure mus w event, the Seller will (Mortgage disclosure belo believe the needed, but in any Seller. The has reason to rt sale is the lender. ker if the Bro r determines a sho negotiations with any late Broker prior to to Seller provided

Before buy

ing this serv

ice, conside

r the following

This is an offer rmation: of mortgage may accept assistance or reject the we obtained accept the offer. If you offer reject the offer from your lender (or servicer). You same amount , you will have to pay , you do not offer of us have to pay reject the mortgage, you previously disclosed to ________________ E: ____________ us. If you offer, you accept or Seller) for our y TIC coul the ma NO d ct lose reje NT . You your home _ (insert ___ or oral statement, illustration, or depiction, and damage services. If you stop at any time (or servicer). If you ____________ IMPORTA Communication: means any written paying your your credit s with us create interest in purchasing er to pay us General Commercial rating. that is designed to effect a sale or g busines your lend will have s.whether in English or any other language, package, package insert, radio, stop doin we obtain from label, you a in vice y or on r, appears ser it ma offe our book or program, whether You any service, plan, y) pamphlet, leaflet, circular, mailer, is accept the ount) for assistance pantelevision, brochure, newspaper, magazine, cable mortgage e to pay us. If you calculating the am television, public transit card, point of purchase me of Com ________ nt letter, catalogue, poster, chart, billboard, (Nainsert, ernmeinsert, script, onhold standing free thod for telemarketing gov ______ ________ system,____ do not hav me the telephone a ___ or over t by transmitted ___ Prop ____ oun erty Add ___ slide, ________ roveddisplay, film, y notaudio program program firms, ma resslength commercial (insert am is not app _________ r lender training materials provided to telemarketing items and ________________ _________ nt, and our service our service, youscript, upsell script,Internet, cellular network, or any other medium. Promotional materials and ____________ ________ _________ (“infomercial”), the use _______ .” ernme ____________ offer and in the term “commercial communication _________ ted with the gov Web pages are included Brokerage ____________ accept this dit Name _________ not associader. Even if you your cre damage ____________ or your len nge your loan. r home and ____________ you ____ cha Date ____ lose ____ could agree to Name of Brok ____________________ if you rtgage, you so mo r do er _________ tinue to paying you ____________ also con If you stop ____________ you may ____________ Date r lender, ____ rating. of members of convenience with you ________ for the purposes Selle _ form is provided for informational r ________ This municating estate Legal _________ As always, real _________ ___Disclaimer: may be com Inc. and is not intended as legal advice. ____________ _________ the Kentucky Association of REALTORS® While we ____________ documents. legal creating ____ _________ Date ____ ___ should consult their attorney when ____ professionals ___ so desire. ____ ___ ____________ Seller _________ ____________ ______ _________ _ ________ _________ _________ ress ____________ _________ Add _____ Date ____ Property Date _________ ___ _________ Legal Discl _________ _________ aimer: This form is provi _________ the _________ Name ___ Kentu ded cky for information Association _____ of REALTORS al purposes professionals Brokerage Date _________ for ___ ® shou the Inc. conve ___ and ld ___ consult their is not inten nience of mem ___ ___ attorney when ded as legal bers of _________ _________ advice. As creating legal always, real _________ ker _________ documents. estate Bro _____ Name of Date _________ ___ _________ _________ _________ _________ _________ __ ___ ___ ___ ler ___ Sel Date of _________ ___ members of ___ e te ______ convenienc ys, real esta s for the _________ ice. As alwa al purpose legal adv information Seller nded as ided for

info

Protection Bureau (CFPB) effective July 2011. What road the CFPB will take regarding real estate professionals and short sales is still unknown.

This area of the law remains in flux, and so please visit KAR’s website for up to date information on how brokers and agents should comply with the MARS rules. You can find explanations of these issues from NAR and the FTC, as well as useful forms, information and updates, all at KAR’s MARS resource center, located at bit.ly/marskar or by scanning the QR code below.

inte nts.

Inc. and is not form is prov l docume laimer: This of REALTORS ting lega Legal Disc tion when crea y Associa r attorney the Kentuck should consult thei ls professiona

in the course of a short sale transaction. Otherwise, brokers and agents will be swept into the compliance and disclosure provisions of the MARS rules and become subject to substantial penalties.

Real estate professionals should take special care only to make realistic statements to clients and to market their services accurately. Failure to do either could be treated by the FTC as a misrepresentation, and subject the offending broker or agent to onerous requirements and penalties of the MARS rules.

Enforcement by other governmental agencies While the FTC has stayed enforcement of most of the MARS rules against real estate professionals, both the newly formed Consumer Financial Protection Bureau (CFPB) and state attorneys general also have the right to enforce MARS rules. The question is whether they will follow the FTC’s lead in staying enforcement of MARS rules against real estate professionals.

According to its analysis of the FTC’s recent stay, the National Association of REALTORS® (NAR) currently believes that the CFPB and state attorneys general will likely follow the FTC’s lead. The CFPB is a new agency, and NAR believes that the agency will likely defer to the previous policy positions taken by the FTC, which created the MARS rules. The CFPB’s official position states that the CFPB will continue to apply the FTC’s prior commentary, guidance and policy statements “until further action” by CFPB. As a practical matter, state attorneys general seeking to enforce the MARS rules must alert the FTC prior to filing any enforcement actions. If the FTC does not agree with a proposed state prosecution under MARS, the FTC can intervene in the state action and make its views about the action known to the court.

We do not yet know whether the FTC’s pull back will be a permanent or temporary stay of enforcement of the MARS rules. Rulemaking authority over MARS services was recently transferred from the FTC to the new Consumer Financial

Doug Martin is Legal Counsel for the Kentucky Association of REALTORS®, and maintains his private law practice in Lexington, Kentucky.

The previous discussion should not be viewed as legal advice.

Please consult your own attorney.

Statement of Ownership, Management and Circulation The Kentucky REALTOR® (USPS 024-933) is published two times a year (Spring and Fall) for $10.00 per year by the Kentucky Association of REALTORS®, the subscription fee is $25 per year for non-members. The offices of publication and the headquarters and general business offices of the publisher, Susan W. Helm, are located at 161 Prosperous Place, Suite 100, Lexington, KY 40509. The sole owner of the publication is the Kentucky Association of REALTORS® at the address listed above. There are no known bondholders, mortgage or other security holders.

Average # copies ea. issue during last 12 months

Actual # copies single issue nearest filing

Total # copies (net press run) Paid/requested subscriptions TOTAL PAID CIRCULATION Free Distribution by mail TOTAL DISTRIBUTION Copies not distributed

10,200 9,893 9,893 165 10,058 142

9,800 9,514 9,514 150 9,664 136

TOTAL

10,200

9,800

I certify that the information stated is true and complete: __________________, editor

FALL 2011 KENTUCKY REALTOR® 9

Feature Article

Humanization, relationships, and

likeability

by Gee Dunsten

We can trace word-of-mouth marketing all the way back to 2000 B.C. when Eve said to Adam, “You ought to try a bite of this apple.” The Garden of Eden scenario represents marketing in its purest form - after all, trusted friends always trust each other’s recommendations.

Since then, marketing has embarked on quite a journey, of course. The invention of the printing press opened the door to mass marketing, which eventually came to use newspapers and magazines as primary promotional vehicles. The subsequent creation of the radio and television opened up yet another world for marketers, now able to promote their messages to a vastly increased audience.

Over the years, marketing has centered around the idea of pushing people to do something - try a new brand of soda, shop at a particular store, see the blockbuster debuting in theaters this weekend. The element that has been left out of the marketing equation for years, however, is the “feeling” aspect…the relationship aspect.

In today’s information overloaded culture, people are frantically trying to get away from the traditional “noise” of marketing. Think DVRing your favorite television shows so that you can avoid the commercials. Think getting your news via CNN updates on your phone as opposed to reading the newspaper. We want what we want when we want it. We certainly don’t want Madison Avenue telling us what we want.

That’s why marketing in the new world must center on relationships. And it must involve relevant content in

10 www.kar.com

order to build those relationships. People with good information are recognized as trustworthy and credible.

As Gary Vanderchuk put it, “If content is king, context of relationship is a higher power still.” Context is about making sure we first care about our customers/clients, long before we ever try to sell them something.

Today, agents and companies in general need to be much more focused on the humanization of business. Ironically, our grandparents’ generation understood this. They knew their friends and neighbors, knew what they liked and didn’t like.

They took the time to develop relationships and applied this knowledge to their businesses.

In today’s information overloaded culture, people are frantically trying to get away from the traditional “noise” of marketing.

The Walt Disney Company is a wonderful example of a caring company. Disney does not have a customer service department; they have a “care and thank you” department.

Disney does not hire people based on their skills; they hire people because they have a caring attitude. The firm believes that they can teach any employee the skills to be successful… as long as they are caring people to begin with.

Last fall, I was booked on a flight from Chicago to Dallas, only to be told by the airline that the flight was going to be delayed and I should stay in the area. After a four-hour wait until after midnight, I was told the flight was cancelled and I would have to rebook a flight for the next day. With no explanation or apology given, the airline agent walked away and I was left to fend for myself, along with 100 other frustrated and angry passengers. As someone who has flown over a million miles with this particular airline, it would have been nice to receive an email the next morning with an apology for the inconvenience and an explanation for the delay, such as “concern for your safety,” etc. How much would it have cost the company to say “I’m sorry” and “I care” in an attempt to turn this lemon into lemonade? It’s quite obvious that a caring attitude was not the focus of the airline.

Compare that experience to the one my friend and colleague, Mark Given, had while visiting Disney World with his grandchildren. After watching his 4-year-old grandson drop his ice cream cone and begin to cry, Mark was amazed to see a very young Disney employee come up to his grandson, go down on one knee and tell him not to cry, that Disney World is the happiest place on earth. The employee then cleaned the boy up and presented him with a new cone. This 17-year-old employee, working a summer job, remedied the situation on the spot…without even asking his supervisor.

The above two examples of corporate caring are not simply feel-good (or, in my case, feel-bad) stories. These experiences are directly connected to business success…or the lack thereof.

Will my friend go back to Disney World and recommend it to countless others? Without a doubt. Will I - and my hundred other fellow passengers - fly that airline again? Maybe, but not nearly as often…or maybe not at all.

My perception is that caring is saleable. It is not a fad. People/ companies will soon start battling on the likeability/care front in a revolution. And where will the battle take place for the most part? On social media turf.

The stage is already set: Facebook has a Like button. YouTube, LinkedIn, and Foursquare have added functionality that allows users to express their approval of content. Twitter has a “favorite” button that allows users to approve different tweets.

Not to mention consumer critiquing sites, such as Yelp.

With so much competition today, companies that adapt and make sure their agents stay engaged and committed to giving their customers and clients the greatest possible real estate experience - the greatest possible overall care - will be the winners in the second half of this decade. So, it’s time to click your own “Like” button and start building caring and trust in the services you provide. As Dr. Seuss said, “Sometimes the questions are complicated and the answers are simple.”

Gee, president of Gee Dunsten Seminars, Inc., entered the real estate business in 1972.

He uses a hands-on approach to real estate training with leading edge ideas and systems which has made him a popular speaker at NAR conventions, and many state and company franchise conven­tions. His selling career has crossed the $200 million mark and he is currently owner/broker of Legacy Realty of Salisbury, Inc., and president of Legacy Development Corporation. Gee will be a featured speaker at the upcoming KAR Convention & Expo on September 27-29. Check www.kar.com for details.

FALL 2011 KENTUCKY REALTOR® 11

REALTOR® Humor 12 signs you might be a REALTOR®

by Mike Becker

1

2

You might be a REALTOR® If you have cups from at least ten different drivethrough restaurants in your car…

You might be a REALTOR® If you have discovered that a child seat is a great way to carry file folders in your car…

3

You might be a REALTOR® If your dashboard is covered with sun-bleached, illegible Post-It Notes…

4

5

You might be a REALTOR®

6

You might be a REALTOR®

If you write notes to yourself on the back of your hand…

If you’re favorite way to relax on a beautiful Sunday afternoon is to spend a couple of hours, by yourself, in someone else’s home…

You might be a REALTOR® If the first thing you do when setting your weekly calendar is to put in the events that have free food…

8

You might be a REALTOR® If you routinely have conversations on your cell phone, a regular phone and the person in front of you at the same time…

9

You might be a REALTOR® If students from the local college have asked to use your desk for their archeology project…

11

You might be a REALTOR®

12

You’d better be a REALTOR®!

If the back seat of your car has been designated an area of interest by the EPA…

If your Mother-in-law has observed you entering a strange house with a woman who is not her daughter…

You might be a REALTOR® If on your business card you have enough letters following your name that you can form a complete sentence…

7

10

You might be a REALTOR® If you have a Bluetooth earpiece for the sole purpose of being able to talk to yourself without arousing suspicion…

12 www.kar.com

Mike Becker, REALTOR® member, Northern Kentucky Association, as performed at the REALTOR® Talent Show at KAR’s Summer Business Meeting at Lake Barkley.

Business Tools Home affordability is driven by mortgage rates

by Dan Green

When you’re working with a buyer, it’s common to ask one of the following two questions: “Have you talked to a lender about how much home you can afford?”

“For how much home have you been pre-approved to buy?”

These questions are common because they serve an important purpose for REALTORS® and their buyers; putting boundaries on a home search, and helping to establish a price range in which homes are affordable.

Unfortunately, they’re the wrong questions to ask. When you ask your clients about their expected “purchase price,” you put undue focus on it. Purchase price has less to do with home affordability than you think.

The real key to home affordability is mortgage rates.

Mortgage rates have more influence on home affordability than home prices.

If that seems strange to you, think about Q1 2011. Home affordability made all-time records that quarter. But, it wasn’t because home prices were suddenly lower than ever before.

It’s because mortgage rates were. As mortgage rates ticked lower, purchasing power increased.

Of course, the math works in reverse, too. Rising mortgage rates harm affordability.

1% Rate Change = 10.75% Purchasing Power Change

Consider this example : • A buyer shops for homes, armed with a $600,000 preapproval.

• While he shops, mortgage rates rise by 1 percentage point.

• The buyer bids for a home for $600,000 and the bid is accepted.

Next, the buyer’s loan is denied by the bank. Rising mortgage rates had zapped his purchasing power. For each 0.125% increase to mortgage rates, his maximum allowable purchase price fell 1.35 percent.

“How much home can I afford?” he asks the bank. Not $600,000, comes the answer.

“Today, you can afford $535,000.”

It’s a 10.75% decrease in purchasing power.

Dan Green is an active loan officer with Waterstone Mortgage. His website, The Mortgage Reports, is widely-considered the most reliable and complete consumer mortgage blog in the nation. In 2006, Dan founded Bring the Blog, a blog publishing service for real estate agents and brokers. He will be a featured speaker at the upcoming KAR Convention & Expo on September 27-29. Check www.kar.com for details.

Help buyers stay preapproved while they shop Pre-approvals are helpful for buyers and their REALTORS®, but they’re only snapshots in time; findings based on the market conditions of “right now”. The real answer to the question “How much home can I afford?” is different every single day.

Educate your buyers about the nature of mortgage rates and how purchasing power changes with the market. In a rising interest rate environment, preapprovals can be nullified in a flash.

FALL 2011 KENTUCKY REALTOR® 13

Legislative Update 2011 Kentucky elections

KAR legislative & public policy

The Kentucky General Elections for statewide offices will take place on Tuesday, November 8, 2011 with polls open from 6am until 6pm local time. This election will feature a Governor/Lt. Governor, Attorney General, Secretary of State, State Treasurer, Commissioner of Agriculture and Auditor of Public Accounts on the ballot.

Having pledged to abide by the REALTORS® Code of Ethics, REALTORS® offer the benefits of their experience and technical expertise to the general public and government in community development discussions. As an organization and an industry, we are dedicated to working with elected officials to create better communities by supporting new economic growth opportunities and creating new housing opportunities, while vigorously protecting the rights of private property owners. And for this reason, KAR has created the Legislative & Public Policy as a tool to guide decisions and achieve positive outcomes related to the real estate industry and profession.

Register to vote by visiting www.elect.ky.gov. The last day to register to vote for the General Election is October 11, 2011.

Governor / Lt. Governor Steven L. Beshear (D) / Jerry E. Abramson (D) Gatewood Galbraith (I) / Dea Riley (I) David L. Williams (R) / Richie Farmer (R) Attorney General Jack Conway (D) Todd P’Pool (R) Secretary of State Allison Lundergan Grimes (D) Bill Johnson (R) State Treasurer L.J. “Todd” Hollenbach (D) Kenneth C. Moellman, Jr. (L) K.C. Crosbie (R) Commissioner of Agriculture Robert “Bob” Farmer (D) James R. Comer (R) Auditor of Public Accounts Adam H. Edelen (D) John T. Kemper III (R)

To read more about the KAR Legislative & Public Policy visit www.kar.com > Government Affairs > Issue Tracker.

Kentucky’s “Slayer Statute” and House Bill 52 KRS 381.280 is Kentucky’s “slayer statute.” It was enacted to prevent a killer, who is convicted of a felony, from benefiting from the death of the person that he or she killed. Under this law, “the person so convicted forfeits all interest in and to the property of the decedent, including any interest he would receive as [a] surviving joint tenant.” The statute further states that “the property interest so forfeited descends to the decedent’s other heirs-at-law, unless otherwise disposed of by the decedent.”

On March 16, 2011, Governor Beshear signed into law House Bill 52 (“HB 52”), which is described as: “An Act relating to elder and vulnerable adult abuse, neglect, and financial exploitation and making an appropriation therefor.” This bill included an amendment to KRS 209.990, the creation of a new section of KRS Chapter 41, and two (2) separate amendments to KRS 381.280. The first amendment to KRS 381.280 became effective on June 8, 2011; the second one will become effective on January 1, 2012.

To read more about the statute and bill and the requirements for real estate professionals, visit www.kar.com > Government Affairs > Issue Tracker.

New FTC rule may impact brokerages

Target: RPAC Event Held during the KAR Covention & Expo. Get your dart today for $50 or buy more than one. Someone will walk away with a $2,000 VISA gift card at the end of the night. Deadline to purchase dart is 1 p.m. on September 28.

14 www.kar.com

The Federal Trade Commission (FTC) recently published a Final Rule that outlines the prohibitions on misrepresentations in any commercial communication of any mortgage credit product by non-bank financial companies. Real estate professionals fall under the non-bank financial companies category and so will be covered by the Rule.

The Rule establishes clearer standards of what constitutes misrepresentation in mortgage advertising which is already prohibited by Section 5 of the FTC Act. The Rule also establishes recordkeeping requirements for commercial communication regarding mortgage credit products and went

into effect August 19, 2011. The NAR Legal Affairs department has released guidance and model disclaimer language and has made it available to members on Realtor.org. Visit www.realtor. org/letterlw.nsf/pages/0811maprule (log-in is required)

• NAR will provide direct funding and grants to help state and local associations: • Mobilize REALTORS® and property owners on key local, state, and national issues • Implement RPAC fundraising initiatives.

HUD issues technical corrections on RESPA In a final move before RESPA transitioned to the Consumer Financial Protection Bureau (CFPB), HUD issued technical corrections to the RESPA rule published on November 17, 2008. The corrections are largely minor and deal with making terminology consistent and other matter that have caused confusion since the rule was implemented. RESPA was handed over to CFPB on July 22, 2011 and many of the HUD staff that handle RESPA are also transferring over. CFPB is continuing its effort to combine the GFE and the Truth in Lending disclosure. Until that process is completed, existing rules issued by HUD will apply with regard to the GFE and HUD - 1 and existing rules issued by the Federal Reserve will govern Truth in Lending.

Advancing the REALTOR® party initiative: NAR Q&A 2012 dues increase NAR is engaged in an important and necessary expansion of existing advocacy efforts, and to fund this expansion, the Board of Directors passed a dues increase at the 2011 Midyear Legislative Meetings & Trade Expo. To understand why we’re stepping up our REALTOR® Party Initiative in such a dramatic fashion, please refer to the following questions and answers.

Why did my dues bill go up?

In May 2011, NAR Directors from around the country approved a bold new initiative to increase the advocacy power of our organization on the national, state, and local level.

The real estate industry is facing monumental issues—in Congress, in the regulatory agencies that govern mortgage financing, in the statehouses dealing with critical budget crises and declining property tax revenues, and in municipalities and counties. Each of these issues impact REALTORS®’ ability to do business and serve clients.

In partnership, NAR and your state and local associations will help REALTORS® be influential at all levels of government, sharing our collective expertise about the industry and advocating for the rights of the nation’s home owners.

Specifically, how will the funds be used?

The funds will allow REALTORS® to strengthen and leverage their collective voice in support of sound public policy on property rights and home owner issues in their communities, and create and sustain an environment in which their businesses can grow.

• Tap into advocacy campaign support services and tools, such as a national voter registration database to help target messages, and consulting services to help associations maximize their political impact.

• Make independent expenditures on behalf of candidates, at all levels of government, who support the REALTOR® Party agenda. Fellow members will decide how those funds are spent.

“My REALTOR® Party” is the gateway for each and every REALTOR® Association to design its own package of community involvement and political leadership programs. By accessing any number of the 60-plus services, Associations can choose from a menu of grants, campaign funding, tools, campaign expenditures, issue campaigns, consultant help and other resources. To see more about this service, visit www.myrealtorparty.com.

Will we give NAR dues money directly to candidates?

Candidates are the ones who vote on issues, and issues drive our industry. Decisions on which candidates we support are made not at the national level but at the state and local level. Also, none of your NAR dues money will be used for a direct contribution to a candidate, but the money may be used to independently support a candidate’s campaign. This is commonly referred to as an Independent Expenditure campaign. Again, members at the state and local level will determine which candidates receive Independent Expenditure funding.

Why are we doing this now?

Home ownership and private property rights are under attack.

Policies being proposed today threaten to transform, for generations, Americans’ ability to buy property.

Imagine a world without the mortgage interest deduction.

Imagine a world where the flow of mortgage capital is unsteady.

Imagine a world where buyers have to come up with a minimum 20% down payment or can no longer get a 30-year loan.

And this isn’t just about home ownership. Around the country, governments are seeking ways to close revenue shortfalls. We need the resources to fight proposals that would impose new taxes on our businesses and our customers and make it even harder for us to earn a living in real estate.

With the economy trying to bounce back from the hard knocks of the last few years, it’s more important than ever that REALTORS® speak up and ensure that public policies, and our elected and appointed officials, support the recovery of the housing market and the economy as a whole.

FALL 2011 KENTUCKY REALTOR® 15

Legislative Update cont.

What will this program do for me?

It will protect your profitability and your future. Every day, this organization is advocating for you on issues that impact your business, such as tax treatment of your income. We’re also fighting for policies that benefit your clients, such as preservation of the mortgage interest deduction.

national level. The funding, programs, and services that are part of this expanded effort will strengthen REALTORS®’ impact on the state and local levels. In recent years, requests to NAR’s Program for support for state and local issue campaigns have doubled, indicating a clear need for increased advocacy support at these levels.

You need to be able to run your business without excessive government intervention. Home ownership has to be a viable option for our children and their children. For investors, real estate has to be viewed as an advantageous place to put their money. Without those things, REALTORS® won’t be in business.

Even if I support the concepts you’re talking about, why couldn’t NAR make cuts to avoid a dues increase?

NAR has made significant budget and staff cuts. Every operating area of the organization has instituted austerity measures designed to trim almost 23 percent off the Association’s expenditures. This is resulting in an overall savings of $15 million a year for the next three years.

How is this different from RPAC? Why am I still being asked to donate to RPAC? RPAC is a voluntary program, and it’s still vitally important.

RPAC provides the personal, “hard” dollars we use to make direct contributions to national, state, and local candidates.

It will work in tandem with the new initiative, which includes more resources for state and local RPAC fundraising initiatives. Remember: the Federal Election Commission still requires that only “hard” dollars — that is, personal contributions — can be used for direct contributions to congressional candidates or federal parties, so your RPAC checks remain critical. We need our voice to remain strong.

Doesn’t NAR already advocate on behalf of REALTORS® and home owners? Yes, it does. However, much of NAR’s political advocacy work has been focused primarily on the

16 www.kar.com

It’s true that our members expressed opposition to the dues increase, and NAR heard you. But as we became more knowledgeable about the proposal and the circumstances around its introduction, three things became apparent: • Concerns that the bad economy made this a bad time for a dues increase were compelling. But those concerns could not outweigh the fact that the political landscape has changed and the REALTOR® organization is confronting serious challenges now. Unfortunately, we couldn’t wait for a better economy to step up our game.

• Talk that we’re making some fundamental shift as an organization is misleading. Yes, NAR will be putting a considerably greater percentage of its resources toward

advocacy. But NAR has been engaged in these activities — state and local mobilization efforts and independent expenditure campaigns—for many years. In recent years, as demand for these services has picked up, NAR has been funding some of this effort from reserves, and that couldn’t go on indefinitely — particularly given the need to amplify our voice today.

• RPAC alone isn’t enough. As successful as we’ve been at meeting NAR’s RPAC goals over the years, given the level of money we collect from voluntary contributions — and federal and state rules that limit how we can use those direct contributions —RPAC alone can’t put us on a level playing field with opponents who can tap corporate money for their political advocacy efforts.

Collectively, we’ve made every effort to be respectful of how to spend every dollar we ask from you. But we’re at a critical tipping point and need to act now. Just as we’re sure your business has had to change to adapt to market forces, we need to change to adapt to the new public policy arena. Think of the issues your agents are dealing with today. If we don’t adapt, we can’t play. And we need to win these issues.

Why is the association involved in politics?

As long as we’re regulated and taxed, we’re in politics. There’s no way around it.

Where can I learn more about the national, state and, local advocacy programs, specifically?

There is extensive information about NAR’s advocacy programs at RealtorActionCenter.com.

Where can I learn more about the Supreme Court ruling?

For more on the case, Citizens United v. The Federal Election

Commission, and on “hard” money vs. “soft” money, see “You May Not Like It, But Politics as Usual Have Changed”on REALTOR® Magazine’s Speaking of Real Estate blog.

Who made the decision to fund an expanded advocacy program through a dues increase?

Many groups of volunteer REALTORS® worked throughout 2010 on a plan to help the organization adapt to the new political realities. They recognized that significant resources would be needed to implement their recommendations.

After extensive communication and debate, the NAR Board of Directors voted that a dedicated dues increase was the approach to take. These funds will remain exclusively for advocacy efforts and cannot be redirected to general operational funds.

What if I don’t want to pay for this advocacy program?

We don’t want to lose you as a member, but the program is part of your dues and needs to be paid. If you choose not to pay, you lose out on the benefits of being a REALTOR®.

What benefits? The only reason I belong is to get MLS access.

Nationally, the association is focusing a majority of its resources in two critical areas: advocacy and technology to keep REALTORS® central to the transaction. But the collective power of NAR provides many other benefits as well, including educational programs and publications to help you stay up to date and increase your business success; discounts on business products and services; and direct communication with consumers about the value of working with a REALTOR®.

If you aren’t aware of all the ways this organization serves you and your industry, we encourage you to spend time at your state or local association’s web site and REALTOR.org.

FALL 2011 KENTUCKY REALTOR® 17

Convention Over 20 hours of CE available!

Speakers include Dave Mitchell (keynote), Gee Dunsten, Cindy Chandler, Dan Green, Stewart Prather, Cindy Bradley, Mike Parker and others. Topics will cover sales strategies, legal issues, mortgages/financing, commercial, E&O issues, personal safety, website building, social networking and more!

Check the website and schedule for a complete list of courses and CE approvals.

Day One will be offered on Tuesday, September 27. Registration is separate and attendance at Convention is not required. Group discounts are available for as low as $75 per person.

2011 KAR Annual Convention & Expo Marriott Grffin Gate Lexington, KY September 27 - 29

The theme is Surviving & Thriving with a luau twist.

Attendees and guests are encouraged to dress the part, especially on Wednesday night for the KAR Reception and RPAC event.

Register online at ims.kar.com Log-in to IMS and registration is located under Events > Register for Events. A registration form can be downloaded from the website.

Registration fees REALTOR® Member: $129 (includes walk-in) Non-member licensee: $149 (includes walk-in) Spouse/guest: $49

Room rates are $119/night. To make reservations

by phone, call toll free: 1-800-266-9432 or you can register online by visiting the KAR Convention webpage.

Mention Kentucky Association of REALTORS® to receive the group rate.

18 www.kar.com

New for this year, we will be holding an Unconference (dubbed Laptops and Flip flops) on Wednesday for top-of-mind topics that are most popular to those in attendance. Bring your ideas on topics and issues you want to hear about and the most popular will be chosen and discussed in an open, informal setting where attendees will drive the conversation. And don’t forget to bring your laptops (or other mobile device)!

Attend the Convention orientation for a chance to win an iPad2! Door prizes will include several great items including $500 cash, an Amazon Kindle, a variety of Apple products and more.

Education Don’t wait until the last minute All that is needed is a computer and internet access.

Register now - visit www.kreef.org > Online Education.

Environmental Issues in Real Estate 6 hours (3 hours law credit & 3 hours elective credit) Cost: $50 Real Estate Finance Today 3 hours (3 hours elective credit) Cost: $30 Fair Housing 3 hours (3 hours law credit) Cost: $30

Coming in September:

Live web cam classes – CE and CORE With these classes there are no final exams to pass and they are offered at times convenient for your schedule. To learn more about these classes and to see a complete schedule, visit www.kreef.org > Live Web Cam Classes.

Pre-licensing classroom schedule KREEF offers the 96 hour pre-license course with a mix of online and classroom hours – 60 online and 36 classroom.

Registration must be made prior to beginning the classroom hours, however, the online hours can be started and finished prior to, during or after the classroom portion. Find out more at www.kreef.org > Pre-licensing. The next class will be held: Lexington, KY | Date: October 1-2, 8-9, 15-16

Know the Code: Real Estate Ethics 6 hours Cost: $50 Foreclosures, Short Sales, REOs & Auctions 6 hours Cost: $50 Check the schedule for end of year classroom CE and CORE throughout the state.

Day One course will be offered on Tuesday,

September 27, Lexington, KY. Group discounts available.

Visit www.kreef.org > e-PRO to learn more and register.

KREEF College Scholarship Winner Kelsey Shannon, Prospect, KY Attending UK in the fall of 2011

KREEF GRI Scholarship Winner Kim Copeland, Benton, KY Kentucky-Barkley Lakes Board

FALL 2011 KENTUCKY REALTOR® 19

Commercial So you want to start in commercial real estate?

By Cindy Chandler

“Why do you want to be in commercial real estate?” That’s the first question I ask folks who call asking advice. Why do I ask this? Because the advice I give them is directly related to their answer to my “why” question.

Here are some of common answers I receive: • I want to make lots of money • My family has dabbled in it • I have some family money or land which I’d like to develop • I know so & so who is in the business • I heard about it in school and wanted to know more • I used to own a business and leased from a commercial broker • I was in banking/lending/architecture, etc.

So why do the resources seem so limited? I would say that there ARE vast resources, but they are industry specific, not marketed nor directed toward the general public or even the commercial real estate generalist. However, one must be aware of the numerous professional organizations in commercial real estate to know where to look. Also, many of the publications are somewhat technical, filled with industry jargon, again, meant for those in the business. Some information may be restricted to its members.

OK, getting started Let’s say that you are either a successful residential real estate agent or a business person looking to change careers. You are not sure which area of commercial real estate you’d do best.

You have business experience and you know people. (We’ll call these folks your “sphere of influence”). What should you do?

Here is the advice I give everyone: • List everyone you know in commercial real estate.

So you see, the motivations are quite different and in some of these cases, the person seeking information already has a leg up on the person off the street but doesn’t know what to do with it (or even that they have it!).

20 www.kar.com

• Call all of your relatives and closest friends and list everyone they know in commercial real estate.

• Start calling.

What you are going to do is what is known as “an informational interview.” You are NOT seeking a position, because you don’t know what you want yet or where you may fit in. Most of us are somewhat clueless at this stage and to ask for a position when we are clueless is a mistake and can perhaps make us look very stupid. Not the way to begin a new career which depends upon reputation and business savvy.

Here are the steps: • First, call those from your list you feel will give you some time. Ask for a 15-minute slot. Explain that you are gathering information only, not seeking a position at this time.

• During the interview, ask the real estate professional how he/she got started and what advice would they give a newcomer. Ask for a brief overview of their business and their industry. Before you leave, ask for 2 – 3 names of others you should talk to. Ask if you can say this person referred you. (This can really open doors for you). Thank the professional for his/her time. Send a thank you/follow up note a few days later. (Not an email, please).

• Continue to call those on your list for informational interviews. At some point you will begin to eliminate areas of commercial real estate and start honing in on those areas we are becoming interested.

• When you think you have narrowed it down, go to the industry specific web sites and do some research. What should you seek? Well, get to know the jargon, types of projects and key players. You can do this by reading their publications. (Oh, yes, do ask your helpful contacts if you can have or borrow some industry publications – usually found in the reception area or their library.) Visit company websites to learn more.

• Look at projects done by local companies or being brokered by the companies you are interested in. Create some questions about these projects.

• Attend as many commercial real estate classes as you can.

Not only will you learn stuff; you will probably make your BEST contacts there.

• Get an idea of compensation structure. Some are commission only, some may be draw against commission, some may be salary. Decide what you can live with and what you can’t. Unless you have something really swell to bring to the table (i.e. you are a Wal-Mart heir), you will not be in much position to negotiate. Feel free to try, there’s usually a little wiggle room, but if others are seeking the same opportunities as you, well then…

You are now ready for serious interviewing.

Most commercial firms are small, most offer little or no training and commercial agents are typically hesitant to share any information – you have to ask and then you still may not get what you need. We usually work alone, not in teams or groups, jealously guard our potential client list and don’t always use MLS. Many of us may not participate in regular meetings or commercial real estate

“group activities,” we don’t usually show property at night or on the weekends and we may not have our photo on our business cards. Now the exception to all of this is the practitioner whose market is smaller and does both residential and commercial. The pure commercial agent tends to more closely align with investment bankers.

A commercial practitioner becomes part of the community, knows what’s what and who’s on first. Commercial real estate involves so many other industries – banking, investment, construction, architecture, engineering, etc, that the active commercial broker quickly becomes a known figure in the area and may have an influence on the growth and development of the community. For those in development, driving by a building he/she created adds a certain continuity and permanence to life in our rather disjointed and disposable society.

Kentucky Commercial Real Estate Alliance (KCREA) Serving as the most complete resource for commercial real estate in Kentucky, KCREA is a state-wide, webbased Commercial Information Exchange (CIE) owned and maintained by the Greater Louisville Association of REALTORS® (GLAR), for the purpose of supporting and enhancing the commercial real estate market through a comprehensive listings database of commercial and industrial properties. The site enables the effective and efficient marketing of commercial properties for sale or lease. KCREA delivers a specialized level of service for commercial real estate that exceeds any residential MLS and gives commercial listings maximum exposure both locally and nationally. Also listed on the site are upcoming events, newsletters, membership roster and other resources.

Learn more by visiting www.kcrea.com.

Cindy Chandler, CCIM, CRE, is owner of The Chandler Group, located in Charlotte, North Carolina, which specializes in commercial real estate consulting and training services, and also offers workshops for non-real estate groups. She currently serves as the NAR Region IV Director, covering Kentucky, Tennessee, North Carolina and South Carolina. Cindy will be a featured instructor at the upcoming KAR Annual Convention & Expo in Lexington (September 27-29).

Check www.kar.com for details.

FALL 2011 KENTUCKY REALTOR® 21

Local Association News Local boards/associations are encouraged to submit information for this section. Pictures must be at least 300dpi. Send all association news to hcooper@kar.com.

Northern Kentucky Association In June, the Northern Kentucky Association of REALTORS presented a check to Healthy Kids For Tomorrow(HKFT) in the amount of $4,614. The donation was made with the proceeds from the spring golf outing. HKFT was founded in 2011 with a mission to combat childhood obesity among elementary school aged children. Using unconventional methods to relate to children today, HKFT will be donating Nintendo Wii game systems and implementing programs such as “Wii for Schools” where the purpose is to promote healthier alternatives in schools via physical activity using video games. HKFT will also be providing education opportunities to children and their parents promoting healthier lifestyles.

®

sponsorships, get golfer participation and organize the event.

The very first Charity Golf Outing and Family Event was a HUGE Success, raising over $9,000 from the event to be split between two local charities, St. John Center for the Homeless and Gilda’s Club of Louisville.

Congratulations to GLAR member Betty Schutte for making the NAR REALTOR® Political Action Committee (RPAC) Hall of Fame. The RPAC Hall of Fame recognizes dedicated members whose RPAC investments total an aggregate lifetime amount of at least $25,000.

Cumberland Valley Board The June membership meeting for CVBR was dubbed Family Night and part of the meeting was a talent show for members.

Over 70 people attended (both REALTORS® and family) and Board President Debbie Williams a.k.a. Patsy Cline, served as the host. A special thanks goes to the public relations committee for arranging the event and helping to raise $366, which will be given in December to a number of local charities such as the Homeless Shelter, Optimist Club and the Back Pack Club.

Murray Calloway County Board

Henderson Audubon Board In 2010, the Board mourned the passing of Richard Overby. As a member of the Board of Directors for many years, Richard always voted for and promoted educational expenditures and opportunities. To honor his dedication and expertise to the real estate community, the Board recently created an education scholarship, the Richard Overby Scholarship, for REALTORS® in the Board who would like to obtain the Graduate REALTOR® Institute (GRI).

The MCC Board recently took on two service projects to help support the local community. The Board collected $562 for the Calloway County Red Cross and also collected school supplies to be donated to both the Murray and Calloway County Schools.

Greater Louisville Association This year GLAR’s Community Relations Committee transformed the yearly member golf outing into a fundraiser for local charities. The Committee worked tirelessly to sell

Kentucky cities named to Forbes’ Best Places for Business and Careers Lexington ranked 4th in Forbes’ annual Best Places for Business list is up from 9th last year. Louisville is ranked 14th. Forbes said it arrived at its rankings by weighing such things as job and income growth, costs, quality of life and educational attainment.

22 www.kar.com

Louisville top place to raise a family Parenting.com crunched more than 8,000 bits of data in 84 categories to determine this year’s top places to raise kids.

Categories included great schools, affordable homes, low crime rates, plenty of jobs and lots of parkland. According to the list Louisville ranked number 10 overall (Lexington wasn’t too far behind as it came in at number 18 on the same list).

Here is what the site said about Louisville: Site of the Kentucky Derby, the famous thoroughbred horse race, Louisville offers both pasture-rich grasslands and Midwestern city culture. The affordable housing means you can live comfortably amid lots of parkland and top-notch schools.

Home to the Louisville Slugger Museum & Factory, the Kentucky State Fair, and Americana arts and crafts, Louisville is also known as the “City of Parks.” And it’s making a fourth appearance on the America’s Promise Alliance’s list of 100 Best Communities for Young People.

Lexington offers “best value” according to Kiplinger Kiplinger’s Personal Finance magazine recently ranked metro areas by best “value,” factoring in vibrant economies, reasonable living costs, and great amenities. The list also has several common themes: 1) partnerships that have been vital to nurturing business environments that attract employers and high-paying jobs, 2) low housing costs, and 3) quality of life. To identify the winners, Kiplinger’s teamed up with the Martin Prosperity Institute, a think tank that studies economic prosperity.

Lexington topped its list based on several factors including unemployment rate, median household income, and cost-ofliving index (the index is based on the national average of 100; cities with a score below 100 have a lower cost-of-living).

Lexington, Kentucky Unemployment rate: 7.8% Cost-of-living index: 89.1 Median household income: $48,158

Kentucky leads CNBC list for cost of living So where would a business find a state with a reasonable cost of living? The CNBC survey results show states with the best bang for your buck are in the South. Everyday expenses have a direct effect on the price of doing business, which is why we rank the Cost of Living for each state in CNBC’s Top States for Business. Kentucky tops the list with 50 out of the 50-point total for this category.

Moving up from 3rd place last year, the state boasts the lowest costs in the nation for groceries and healthcare, with extremely competitive costs for housing, transportation and utilities - all three parts of the basic criteria used for this ranking.

Louisville is “cool” according to GQ Louisville was named one of the coolest small cities in America by GQ. How does GQ describe a cool place?

Well, here is how they put it for the locations on the list: Want a real break? Forget the hassle of getting in and out of America’s metropolises - with their $400 hotel rooms and mobbed tourist attractions. Instead, hit these miniopolises, where top-notch food comes straight from the farm and your third round is on the house. Louisville’s local baseball club is described in the article: Here’s a pocket of our culture where where dirt-cheap fieldlevel tickets are available at the walk-up counter, where kids can run the bases after the game without getting tased. Enjoy the slightly absurd undercurrent. Free gas-card giveaways!

Win-or-lose fireworks! Appearances by semi-famous local animals! We’re fans of the Louisville Bats, a Triple A club that draws more than 8,000 fans per home game. That’s just enough to summon a genuine crowd roar, but never enough to jam up the line for the bathroom trough.

What home buyers want In a report of more than 1,000 homeowners and future home buyers by BHGRE, LLC and the Meredith Corp., the indication is that how satisfied these groups will be with the purchase of a new home may depend significantly on the home’s surrounding community. About 84 percent of those surveyed were homeowners and an additional 10 percent had plans to buy within three years. Here are some of the results.

The survey found the following lifestyle options are top priorities for buyers.

• Ease of commuting by car: 38% • Access to health and safety services: 34% • Family-friendly neighborhood: 33% • Availability of retail stores: 32% • Access to cultural activities: 21% • Public transportation access: 19% • Nightlife and restaurant access: 18% • Golf-friendly area–access to golf courses: 6%

FALL 2011 KENTUCKY REALTOR® 23

By The Numbers

46

Home buyers appear ill-prepared to take out a mortgage, answering basic questions about mortgage information wrong nearly half (46 percent) of the time, according to a Zillow® Mortgage Marketplace survey. In fact, 44 percent admitted they are not confident in their knowledge of mortgages or the mortgage process. More than half (57 percent) of prospective home buyers who were polled do not understand how adjustable rate mortgages (ARMs) work.

PERC ENT

16

95

%

The childhood population under the age of 18 has dropped in 95% of U.S. counties since 2000, according to an analysis by USA Today of 2010 Census data.

This trend in population is reshaping the look of suburbs, experts say. Despite a 9.7 percent growth in the overall population, the number of households with children under age 18 has remained at 38 million since 2000 — that’s fewer than the number of households with dogs (which stands at 43 million).

Kentucky saw a population increase of 7.4% since 2000.

seventy two percent

%

The percent of the nation’s population that lives in a rural area - the lowest on record, the Associated Press reports. The previous low of 20 percent was reached in 2000. The rural population has continued to drop over the years and is expected to fall even further as the U.S. population increases from 309 million to 400 million by mid-century and more people set up roots in cities and suburbs, bypassing rural areas, demographers say.

us 30vers49

The age of the first time buyer versus the repeat buyer, according to the 2010 NAR Profile of Buyers and Sellers. First timers average income is $59,900 compared to a repeat buyer income of $87,000. Twenty-three percent of first-time buyers are single females.

1in5

The number of U.S. homeowners who have either moved from their home or would like to move because their neighborhood or community isn’t ideal for their lifestyle, according to a recent survey by Better Homes and Gardens Real Estate in collaboration with Meredith Corporation.

77.4 million

The number of members in Generation Y, a large, diverse, well-educated generation that is said to be the driver of the housing market recovery over the next 10 years, according to economists with the University of Southern California Lusk Center for Real Estate. Gen Y (15-32 year olds) is about equal in size to the baby boomers (46-64 years old). Yet, Gen Y is much more diverse and educated (60 percent of Gen Y goes to college).

34

%

The percent of real estate professionals who say they have felt unsafe on the job “occasionally,” according to a survey conducted by Moby, a company that develops personal safety mobile applications.

Forty-two percent of women said they felt unsafe on the job at least occasionally compared with about 18 percent men.

24 www.kar.com

The percent of renters surveyed who said owning a home is a top priority for their future, up from 63 percent in 2010 according to the 2011 National Housing Pulse Survey released by NAR. The survey also found that 77 percent of renters said they would be less likely to buy a home if a 20 percent down payment was required.

35

%

The percent of home sellers who considered reputation the most important factor in choosing a sales associate, followed by trustworthiness at 23 percent, according to the 2010 NAR Profile of Buyers and Sellers.

Investors are expected to outnumber traditional home buyers three-to-one in the next two years, according to a recent national survey by Move Inc.

375 .

VS19

3to1

The age of the first time buyer versus the repeat buyer, according to the 2010 NAR Profile of Buyers and Sellers. First timers average income is $59,900 compared to a repeat buyer income of $87,000. Twenty-three percent of first-time buyers are single females.

750,000,000

The number of active Facebook users, up from 500 million last year (a 50% increase).

60percent

The percent of social networkers who say they are at least somewhat likely to take action when a friend posts something about a product/ service, company, or brand, according to a Performics report.

Slightly more than half agree that others can influence business decisions made by companies and brands by sharing their opinions on social networking sites. In addition, 53% frequently or occasionally use social networking sites to give feedback about a brand or business.

Housing Stats Kentucky home sales down but prices holding steady The first half of 2011 had home sales and prices competing against a 2010 that secured a federal home buyer tax credit – a move that helped support, according to many REALTORS®, the Kentucky housing market.

The first quarter of 2011 saw home sales lower than in 2010. Home sales were down 7.4 percent compared to the same period in 2010. The next three months saw a repeat of declines, ending down 16.8 percent in the second quarter compared to the second quarter of 2010.

On the flip side, the tax credit in 2010 seemed to draw out a significant amount of first time buyers that held the median home price to a level consistent with previous years. The median home price in Kentucky rose 1.7 percent for the first quarter of the year versus first quarter in 2010.

Over the following three months of the second quarter, prices in Kentucky dipped slightly in April and May but saw a rebound back to positive in June. The quarter ended down 3.4 percent compared to the second quarter of 2010.

Activity in Kentucky is currently following the national trends. Recent reports from NAR are showing that existing home sales in June declined 0.8 percent from May, and remain 8.8 percent below June 2010. The national median existing home price was up 0.8 percent in June 2011 from the previous June. NAR also reported that pending sales of existing homes rose 2.4% on a monthly basis to a reading of 90.9 in June while economists had forecasted a 2% drop.

“Until we can fix the stalled job market, increase consumer confidence in the economy’s direction and alleviate the significant number of people burdened with mortgage debt that exceeds the value of their homes, sales may remain weak not only throughout Kentucky, but the rest of the country as well,” said Tony Clark, president of the Kentucky Association of REALTORS®. “Another factor keeping housing weak is the high number of homes in foreclosure or headed into the foreclosure process. The government has plans to make some changes and introduce new programs, but until we get through this hurdle, recovery will be a slow process.”

New homes are seeing a small uptick in prices, up 7.2 percent in June compared to the same period the prior year, although sales fell slightly by 1 percent. This news along with news of a declining supply suggested the market for new houses was starting to stabilize, a government report showed. Another report, using HUD and Census data, revealed that if we continue in the second half of the year as we have in the first, sales of new homes in 2011 will be the lowest since the Commerce Department began keeping track in 1963.

1st Half 2011 vs 1st Half 2010 BOARD/ASSOCIATION

SOLD SOLD SOLD MEDIAN MEDIAN MEDIAN 2011 2010 % PRICE 2011 PRICE 2010 %

REGION ONE Henderson-Audubon Board of REALTORS® Hopkinsville-Christian Board of REALTORS®

138 169 -18.34%

99625

95000

4.87%

157 182 -13.74%

94725

106500

-11.06%

Kentucky-Barkley Lakes Board of REALTORS® 121 135 -10.37% 90350 Madisonville-Hopkins Board of REALTORS® 209 186 12.37% 74875 ® Mayfield-Graves Board of REALTORS 169 127 33.07% 73125 Murray Calloway County Board of REALTORS® 99 137 - 27.74% 125000 Greater Owensboro Board of REALTORS® 512 523 -2.10% 103050

91000

-0.71%

91675

-18.33%

70475

3.76%

121250

3.09%

Paducah Board of REALTORS® Pennyrile Board of REALTORS®

97825

5.34%

258 306 -15.69% 134725

114000

18.18%

151 167 -9.58% 108750

86350

25.94%

REGION TWO Central Kentucky Association of REALTORS® 271 238 13.87% 92300 98000

-5.82%

Heart of Kentucky Association of REALTORS® Old Kentucky Home Board of REALTORS®

765 1158 -33.94% 120000

135288

-11.30%

217 209 3.83%

100725

128000

-21.31%

REALTOR® Association of Southern Kentucky Russellville-Logan Board of REALTORS®

657 791 -16.94% 114975

114500

0.41%

83875

77100

8.79%

Shelbyville Board of REALTORS®

215 194 10.82% 132000

142800

-7.56%

100625

-11.93%

54

83 -34.94%

South Central Kentucky Association of REALTORS® 121 146 -17.12%

88625

REGION THREE Greater Louisville Association of REALTORS®

134750

-2.99%

REGION FOUR Lexington Bluegrass Association of REALTORS® 3163 3949 -19.90% 134875 137750

5207 6270 -16.95% 130725

-2.09%

REGION FIVE Northern Kentucky Association of REALTORS® 1929 2398 -19.56% 131000 125663

4.25%

REGION SIX Ashland Area Board of REALTORS® 299 349 -14.33% 85000 90500

-6.08%

Cave Run Association of REALTORS®

86625

9.38%

101000

-3.51%

82

79 3.80%

Cumberland Valley Board of REALTORS®

207

273 -24.18% 97450

Eastern Kentucky Association of REALTORS® Madison County Board of REALTORS®

176 217 -18.89% 120863

119183

1.41%

424 471 -9.98% 117375

128775

-8.85%

Pioneer Trace Board of REALTORS®

100

92 8.70%

68250

66950

1.94%

97000

113500

-14.54%

15935 19158 -16.82% 100175

103750

-3.45%

Somerset-Lake Cumberland Board of REALTORS® 234 309 -24.27% Grand Total

94750

* Statistics are unavailable for the following local associations: Cynthiana-Harrison Co. & Dix River **The statewide median price is derived from the total data submitted for the quarter by the local boards/associations

Foreclosure tracker RealtyTrac Inc. estimates that about 1.2 million homes will be foreclosed upon this year. An additional 1.7 million homes represent the nation’s “shadow inventory” of homes that are at risk of foreclosure, according to real estate data firm CoreLogic.

FALL 2011 KENTUCKY REALTOR® 25

Community Profile How some Kentucky towns got their names Author Unknown - 1924

The story of the naming of the towns, streams, and other physical features of Kentucky is full of romantic interest. Some of Kentucky’s most beautiful and distinctive place names have been given by the Indians, who have used phrases descriptive of the landscape or some event that took place in the vicinity. The early English settlers transferred to the new country the names of many of their towns and shores. Perhaps the greatest contributing influence has been the names of the pioneers themselves. A great many cities bear names identified with the history of the United States.

The origin of these place names has been traced by the United States Geological Survey, with the assistance of the Kentucky Historical Society.

The names of Kentucky is of Indian origin. The meaning being uncertain, it has been translated as the “dark and bloody ground.”

Louisville, Jefferson County, was named for Louis XVI, King of France.

There are similarly named towns in Illinois, Kansas, and Mississippi, but these were so-called in honor of residents families.

Paducah, McCracken County, was the name of a celebrated Indian chief, who formerly lived in the vicinity, and who was buried on the banks of the Tennessee River, now within the city limits.

Henderson, Henderson County, was named for Col. Richard Hender-son of Kentucky. A county and rivers in Illinois and a county and town in Tennessee bear the name of this Kentuckian.

Owensboro, Daviess County, was so-called in honor of Col. Abraham Owen of Kentucky, who was killed at Tippecanoe.

Owen County, Indiana, was named for him.

Louis XVI, King of France. (1554-1793)

Ashland, Boyd County, was so named, according to Henry Clay, whose home bore the same name from the ash timber which abounded in the vicinity.

Covington, Kenton County, honors the name of Gen. Leonard Cov-ington, distinguished at Fort Recovery in 1749.

Counties in Alabama and Mississippi and towns in Georgia and New York also bear his name.

Bowling Green, Warren County, is one of seven places in the country so-called. The word is said to be derived from a term denoting ornamental gardening or a plat of turf for bowling.

The name is found in Yorkshire, England.

Lexington, Fayette County, is one of 28 places in the United States named in commemoration of the Revolutionary battle.

Frankfort, Franklin County, was named for a band of pioneers who alone succeeded in fording the Kentucky River and was killed by Indians on reaching the opposite bank.

Hopkinsville, Christian County, bears the name of Gen. Samuel Hopkins, a Revolutionary officer.

Maysville, Mason County, owes its name to the original proprietor, John May. Catlettsburg, Boyd County, took the name of Horatio Catlett, one of the first settlers.

Georgetown, Scott County, was named for President George Washington.

Painting of George Washington (1732–99).

By Gilbert Stuart (1755–1828)

A stylized engraving that inaccurately depicts the Battle of Lexington, April 19, 1775

26 www.kar.com

Cynthiana, Harrison County, was named for two daughters of the original proprietors, Cynthia and Anna Harris.

Versailles, Woodford County, bears the name of the Royal Palace in Paris. Eight other towns in this country bear this name.

Danville, Boyle County, was so-called after its founder, Walker Daniel.

Adairville, Logan County, was named for Gen. John Adair, a former governor. Counties in Iowa and Missouri were named for General Adair.

Lebanon, Marion County, because of the abundance of cedar trees in the vicinity, was given the name of the mountain in Palestine where such trees grew. It is a Semitic word, meaning “whitish,” and is commonplace in the United States.

Mount Sterling, Montgomery County, took the name of the city of Scotland, with prefix “mount” because of the numerous mounds in the vicinity.

Paris, Bourbon County, is a transference from the city in France. Many other towns are similarly named.

Richmond, Madison County, was named from the Virginia City, which was so-called on account of the resemblance to Richmond, Surrey County, England.

Shelbyville, Shelby County, is a namesake of Gov. Isaac Shelby, the first Governor of Kentucky. Counties in nine states and cities in five of those states were named for Governor Shelby.

Isaac Shelby (1750–1826), the first and fifth Governor of the U.S. state of Kentucky

Carrolton, Carroll County, was named from the estate of Charles Carroll.

Elizabethtown was given the name of the wife (Elizabeth Warford Hynes) of Col. Andrew Hynes, a Revolutionary War soldier.

Bardstown, Nelson County, derived its name from David Baird, one of the original proprietors.

Berea, Madison County, is a transference from the ancient city in Macedonia. Towns in Iowa and Ohio are similarly named.

Campbellsville, Taylor County, owes its name to Adam Campbell, the town’s first settler.

Columbus, Hickman County, is one of the numerous monuments to the discoverer of America.

Cumberland Gap, Cumberland Mountain, and Cumberland River were named by members of an English exploring party, led by Dr. Thomas Walker, in 1750, in honor of the Duke of Cumberland, who was the Prime Minister of England at that time. Other points along the Cumberland Range, now known as Sharp’s Gap, Chumley’s Gap, Gibson’s Gap, Crank’s Gap, Chadwell’s Gap, and Pennington’s Gap received their names from the early pioneers bearing the same names, who settled near those points. Baptist Gap was named in memory of one Jean De Baptiste, a Frenchman, who was held a prisoner by the Indians at Old Town, ten miles southwest of Cumberland Gap, about 1789. He made his escape by crossing Cumberland Mountain at that point.

Powell’s Mountain, Powell’s River, and Powell’s Valley were named for Ambrose Powell. Wallin’s Ridge and Wallin’s Creek were named in honor of Elisha Wallin. Powell and Wallin were members of Dr. Walker’s party.

Franklin, Simpson County, is one of the numerous namesakes of Benjamin Franklin.

Fulton, Fulton County, bears the name of Robert Fulton, inventor of the steamboat.

Glasgow, Barren County, was named from the city of Scotland.

Harrodsburg, Mercer County, owes its name to Col. James Harrod who built the first cabin.

Ludlow, Kenton County, was named in honor of Israel Ludlow, a prominent settler.

Morganfield, Union County, bears the name of Gen. Daniel Morgan, an officer in the Revolution.

Nicholasville, Jessamine County, honors the name of another Revolutionary officer, Col. George Nicholas.

Princeton, Caldwell County, was named for William Prince, the first settler.

Daniel Boone Escorting Settlers through the Cumberland Gap, George Caleb Bingham, oil on canvas, 1851–52

This article is reprinted from the June 2011 issue of The Kentucky Explorer.

FALL 2011 KENTUCKY REALTOR® 27

From the Helm 80 Years and What Have We Learned? Lessons from The Great Depression Of course, we have all heard and read about “The Great Depression” in the 1930s - a terrible and tragic time in our nation’s and the world’s history. But, did anyone prosper and thrive in the time of economic misery? And, if so, how, and what did they do … and most importantly, what can be learned and applied today?

The Great Depression of the 1930s was different than the economy today, but there are similarities too. The greatest parallel I see is “the perception of the future ability to obtain economic stability.” I put this in quotes because I didn’t make it up; I read it somewhere and can’t attribute it to anyone other than someone who posted it on the internet. But, that is how I see the parallel of the Great Depression to today’s Not So Great Economy.

Who did prosper during the Great Depression? Many companies who are still recognizable names today grew, and maintained their top position, through and after the depression: Kellogg, Proctor & Gamble, Chevrolet, Camel Cigarettes, Macy’s and Levi Strauss & Co. And here is why they survived, and even thrived during the most difficult economic time in history: • They realized consumers didn’t stop spending, but consumers did look for better deals. Those companies who offered better deals improved their bottom lines because consumers, who were grateful, became (and remained) loyal to them.

• Companies acted as if there was nothing wrong and didn’t wait for the public demand for their product to rise, they created demand.

• They had liquidity and a strong balance sheet at the start and just before the depression.

• They were not heavily dependent on imports and exports.

• They supplied essential or growth goods.

But, the one unvarying factor in many of these companies that survived and grew was this: advertising.

One of the greatest advertising campaigns in our history was implemented by Proctor & Gamble, who used radio to advertise their products. Despite the desire of its stockholders to cut spending, P&G advertised Ivory and Lava soap on radio shows; thus creating what is now known as “soap operas.”

The radio advertising was so successful, P&G parlayed it into programming for specific products: Ma Perkins, sponsored by Oxydol, Vic and Sadie for Crisco, Forever Young for Camay, and so on. By the end of the decade, P&G had 21 radio programs. So P&G not only boosted its sales through radio advertising, but also helped promote the growth of radio, which was also a fast-growing industry during the depression.

Chevrolet took over the top position from Ford by expanding its advertising budget. Camel Cigarettes bested sales against Lucky Strike by maintaining its advertising campaign during

28 www.kar.com

the depression. These companies kept their name and their brand in front of the public during the depression, and the public continued to use the products after the depression.

Kellogg sold more cereal than C.W. Post because it aggressively advertised and marketed its product.

Innovation was also crucial to the growth and prosperity of two companies during the depression: Levi Strauss & Co. and Federated Department Stores, now known as Macy’s.

Jeans were primarily the dress of manual laborers during the depression. As unemployment rose, sales of jeans dropped substantially. Levi’s expanded its advertising message beyond durability to appeal to the masses that yearned for “western style” clothing and effectively broadened its marketing base. Then, Levi’s added a red tab with the Levi’s trademark to the back pocket of its jeans, essentially “advertising” its brand for all to see. An identification that endures today.

Federated Department stores implemented the first “pay when you can” credit policy for customers, which made their merchandise available to consumers at a time when incomes were declining, or even disappearing.

In one of the boldest and most remarkable marketing moves, Fred Lazarus, Jr., the founder of Federated, convinced then President Franklin Roosevelt to permanently establish Thanksgiving on the fourth Thursday in November, thereby creating the biggest shopping day of the year!

Surviving, and even thriving, in economic downturns requires a sustained relationship with the customer. It also requires innovation, creative thinking and enough owner confidence in the business or product to continue as if nothing is wrong.

With lessons from the past, today’s businesses can change the consumer’s perception of the future. Then the economic stability will take care of itself.

Susan W. Helm is the Executive Vice President of the Kentucky Association of REALTORS®

Code of Ethics Get offers in writing ‘whenever possible’ Do offers always have to be in writing? Is it unethical if they’re not?

By Bruce Aydt

Question: Why do some real estate practitioners and buyers insist on presenting offers verbally? Shouldn’t all offers and counter offers be in writing? Is presenting an oral offer a violation of the NATIONAL ASSOCIATION OF REALTORS® Code of Ethics?

Answer: Verbal offers may not be encouraged, but they’re also not a violation of the Code. Presenting an oral offer from a buyer is within the concepts of the Code. Standards of Practice 1-6 and 1-7 talk about “offers and counteroffers” yet don’t specify “written” offers or “written” counteroffers.

Standard of Practice 1-6 states, “REALTORS® shall submit offers and counteroffers objectively and as quickly as possible.” And when you’re acting as the listing broker, Standard of Practice 1-7 says you shall “continue to submit to the seller/landlord all offers and counter-offers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing.” Neither of these requires the offer to be in writing before the obligation to present the offer arises.

However, Article 9 states that an agent’s obligation is to have agreements in writing “whenever possible.” “REALTORS®, for the protection of all parties, shall assure whenever possible that all agreements related to real estate transactions including, but not limited to, listing and representation agreements, purchase contracts, and leases are in writing…”

Taking these three parts of the Code together, I think it’s safe to say that written offers are always preferable.

However, Article 9 is a flexible requirement because of the phrase “whenever possible.” And because Standards of Practice 1-6 and 1-7 do not limit presentation of offers to those in writing, my conclusion is that all offers must be submitted - whether in writing or in the spoken word - but the fact that an offer is done verbally is not a violation of the Code. While it is possible that your state license law may limit presentation of offers to written offers, the Code does not make that distinction.

Columnist Bruce Aydt, ABR®, CRB, is senior vice president and general counsel of Prudential Alliance, REALTORS®, in St. Louis and a former chair of NAR’s Professional Standards Committee. You can send him your ethics questions at ethics@realtors.org.

Y. Denise Payne Wade Acting General Counsel Kentucky Real Estate Commission Section 3:2 of the Commission’s textbook, entitled Kentucky Real Estate Professionals and the Law, states, in part, as follows: “In order to adequately protect their clients’ interests, the real estate licensees have an obligation to make sure that there is a signed, written document that contains the full agreement between the parties; verbal agreements that are not included in the written contract are not enforceable. Nevertheless, the Commission receives numerous contacts from agents or consumers who have engaged in verbal negotiations, extensions, acceptances or modifications of written contracts.

Consumers believe they may rely upon these verbal statements. Real estate professionals should take great care when they are negotiating agreements to make sure that all terms and conditions are in writing.”

FALL 2011 KENTUCKY REALTOR® 29

A Day in the Life of...

The president of the Home Builders Association of Kentucky Mike J. Kegley | Union, KY How many years have you been a builder?

This year marks the 25th year our building company has been constructing and renovating residential properties. Within the first 12 months in the industry, I also secured my Kentucky real estate license.

How many members does HBAK serve?

We serve 6,100 firms representing over 30,000 people working in the housing industry. These members represent every facet of our industry from builders to subcontractors, suppliers, bankers, REALTORS®, among others.

What is HBAK’s biggest service it provides to members?

The Home Builders Association of Kentucky, formed in 1957 by four of our local chapters in an effort to give the housing industry a voice in state government. After 54 years our Association has stayed true to that mission. That being said Advocacy in State government has to be our number one service to the members. Our government affairs staff has worked extremely hard and has been successful in making state government a partner and not a burden on the housing industry. For instance, in 2009, our staff worked to get a state tax credit for the sale of new homes passed into the law (KY was one of only three states to adopt such a tax credit). Over the years HBAK and KAR have fought side by side to insure Kentucky citizens have safe and affordable housing.

Recent reports say that, nationally, new home sales in 2011 could reach the lowest level since the Commerce Department began keeping track in 1963. What does this mean for Kentucky?

According to statistics from the National Association of Home Builders, housing starts in Kentucky are down 19% from this same time last year. In 2007, over 20,000 new homes were built in the state. By comparison, in 2010, we produced 6,900 new homes, so overall our housing starts have decreased by 70% from our all time high four years ago.

If there is a silver lining here it is that during the past four years, families continued to be formed, and young men and women continued to enter the workforce, which means that the overall demand for housing has been pent up. As the economy continues to improve and unemployment rates fall, we expect the consumer to come back to the housing market.

How do you see the overall housing market shaping up in the next 12 to 18 months?

Over 79% of those surveyed by NHAB, who did not own a home stated that their goal was to eventually become a homeowner. Couple that with the fact that affordability is at an all time high, according to the Wells Fargo Housing Opportunity Index, and you have the makings of a better road ahead for the housing industry. My belief is we will see a slow, steady recovery of the housing industry over the next 18 to 36 months.

30 www.kar.com

Has the quality of construction for new homes been affected with a decline in builders across the state?

I don’t believe there is a correlation between the number of builders and the quality of construction as we all build according to an international code. All residential construction within the Commonwealth is required to follow this code. Unfortunately, many areas (primarily rural) do not have inspections so it can be “buyer beware.” In those jurisdictions, it is prudent to use builders and remodelers that belong to the local HBA’s and participate in their Registered Builder programs.

What are some of the trends builders are seeing for new homes?

More efficient design and utilization of green products and processes, particularly energy efficiency. While there are ecological minded customers that push the envelope on green construction, in this economy most new home buyers are still looking at estimated costs and returns. The upfront investment needs to provide an economic return within the useful life of the product. As new technology makes our home more convenient, comfortable and healthy, the occupants are expecting extended warranties to reduce some of the risk of implementing new technology.

Reports are showing that people are moving toward homes with smaller square footage than in recent years. Is that holding true in Kentucky?

More efficient floor plans may be the better description.

Functionally, usability and traffic patterns around the home are analyzed more than ever before. Not having any unused space in the home, eliminating halls, opening up rooms and utilizing alcoves are today’s challenges. The result is a more livable home and less square footage.

What is one tip you would give to a REALTOR® who wants to form a relationship with a particular builder?

Our company has cooperated with REALTORS® on over 60% of the homes we have built. I am always encouraging builders to nurture REALTOR® relationships. REALTORS® and builders need to communicate with each other and set their expectations.

REALTORS® appreciate builders that work hard to satisfy their clients and the builders that do, appreciate REALTORS® that are loyal and continue to bring them customers.

Outside of your career, what is your favorite pastime?

I am afraid my wife and friends would say I have none. I have been fortunate enough to represent first the HBA of Northern Kentucky and now the HBA of Kentucky as a senior officer for over 10 years. I have represented our members at state and national meeting from Anchorage to Orlando and San Diego to Boston.

Since February, I have made three trips to Washington, DC. Most of my time out of the office has been taking care of member issues.

I am passionate about our industry and our members and hope I am doing my small part to help our members provide our residents safe and affordable housing at reasonable profit.

What is the best advice you have ever received?

Starting as a 10 year old, I was hired to mow the yard of a very tough neighbor whom seemed to spit fire far more often than he shared a smile. He had been stuck in a job he hated for all of his life and one day he let down has guard and told me to find something I enjoy and make it your vocation. Your passion for your work will carry you throughout the rest of life’s trials. I also remember being sternly told while mowing his grass, “If you do not have time to do it right the first time, make sure you have time to come back, as I WILL be calling!”

The NAR and RPAC Leadership would like to thank our Major Investors from Kentucky for their generous support of the REALTOR速 Party.

FZS`] Kag Golden R + Tony Clark + Guy Montgomery + Charlie Murphy + Betty Schutte + John Weikel

Sterling R Dennis Anderson James Bramblett Steve Cline Anthony de Movellan Patricia Edison Carolyn Edwards Susan Helm Brenda Loyal

Rue McFarland Jerry McMahan Lisa Presley-McGrew Joann Risner Joseph Simms Carl Tackett Harrell Tague

NATIONAL ASSOCIATION of REALTORS速

+ 1$5 3UHVLGHQW揃V &LUFOH PHPEHU +DOO RI )DPH PHPEHUV DUH LQ JROG 53$& 0DMRU ,QYHVWRUV DV RI

FALL 2011 KENTUCKY REALTOR速 31