Kyrealtorspring17

Kentucky ®

SPRING 2017

A publication of Kentucky REALTORS®

The ethical agent:

professional standards in everyday practice 13 commandments of successful real estate agents Being smart while being social Why you never close with an encroachment issue kyrealtors.com

LEADERSHIP TEAM

Michael Becker

Steve Cline

Rip Phillips

Lester Sanders

KENTUCKY REALTORS® President Northern Kentucky Association

KENTUCKY REALTORS® President-elect REALTOR® Association of SKY

KENTUCKY REALTORS® Treasurer Greater Louisville Association

KENTUCKY REALTORS® Treasurer-Elect Greater Louisville Association

Lamont Breland

Carl Tackett

Steve Stevens

KENTUCKY REALTORS® Immediate Past President Greater Louisville Association

KENTUCKY REALTORS® Past President Chair Lexington-Bluegrass Association

Kentucky REALTORS® CEO

DELEGATE BODY

REMAINING BOARD OF DIRECTORS

Not members of the Board

Earleene Woods Region 1 Director Murray Calloway County Board

Don Cecil

Region 2 Director Heart of Kentucky Association

Barbara Flannery At-Large-Director Lexington-Bluegrass Association

Gordon Barnett Allison Bartholomew Rick Baumgardner Kelly Beck Thomas Black William Bramble Jim Broadwater Tyrone Brown Linda Gibson Cecil Angela Clark Tony Clark Charles Collier Sue Ann Collins Matt Coomer

Elizabeth Monarch Region 3 Director Greater Louisville Association

Charles Hinckley At-Large-Director Heart of Kentucky Association

Crystal Corrigan Jayne Cox Linzie Craig Greg Crase Ronald Cummings John Davis Alfred Dent Laura Disney Camilla Diuguid David Alan Earls Helen Fardo Cindy Flynn Doug Gibson Brenda Gooslin

Barbara Curtis

Region 4 Director Lexington-Bluegrass Association

Brenda Loyal

At-Large-Director Greater Owensboro REALTOR® Association

Robin Roseberry Region 5 Director Northern Kentucky Association

AnnElizabeth Delahanty At-Large-Director Greater Louisville Association

Donna Gregorich John Groft Karen Gross Joe Guy Hagan Rick Hogue Alicia M Huff Ronald Hughes Todd Hyatt Michael T Inman Jerry Janes Cheryl Johnson Norman Jones Cheryl Lary Robert Massey

Marcie Estepp

Region 6 Director Eastern Kentucky Association

Mike Spicer

At-Large-Director Northern Kentucky Association

John May Ann McDonald Jean McKinley Cathy Miller Christie Moore Linda Moore Christine Morgan Becky Murphy Charlie Murphy Douglas Myers Randy Newsome Kelley Nisbet Rosemary Nobles Chris O’Bryan

Al Blevins

At-Large-Director Lexington-Bluegrass Association

Libbi Taylor

At-Large-Director Lexington-Bluegrass Association

Paul Ogden Dave Parks Nita Phillips-Allen Lisa Presley Arthur Reed Donnie Roberts Trish Segrest Jim Sewell Jeff Smith Jeffrey Smith John Smither Kathryn Sotelo Linda Sparrow Brian Stedelin

Pam Featherstone At-Large-Director Heart of Kentucky Association

Donna Gordon-Willoughby At-Large-Director Greater Louisville Association

Justin Suiter Greg Taylor Brien Terry Glenn Thomas Ronald VeLotta John Vince Ralph Waldrop Cheryl Watson Millie Weaver John Weikel Linda Wiley Robert Wyatt

CONTENTS Volume 10, Number 1, SPRING 2017

A publication of Kentucky REALTORS® President Mike Becker Northern KY Association President-elect Steve Cline REALTOR® Association of SKY Treasurer Rip Phillips Greater Louisville Association Treasurer-elect Lester Sanders Greater Louisville Association CEO Steve Stevens sstevens@kyrealtors.com Kentucky REALTORS® 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.

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

Reproduction prohibited without permission.

Copyright© 2017. Kentucky REALTORS®, Inc. All rights reserved.

Address letters and inquiries to: Kentucky REALTORS® 2708 Old Rosebud Road, Suite 200 Lexington, KY 40509 TF 800.264.2185 T 859.263.7377 F 859.263.7565 www.kyrealtors.com email: hcooper@kyrealtors.com

IN THIS ISSUE

0 The ethical agent 1 12 13 commandments of successful real estate agents

20 Being smart while being social

REGULAR FEATURES

4 REALTOR® News 5 6 8 14 19 22 24 25 29 30

President’s Message Tools You Can Use CEO Message Legislative Update Education Local Association News By the Numbers Housing Stats Up to Code A Day in the Life of...

ON THE COVER Cover photo submitted by Debbie Vier Poe with West Kentucky Realty Team in Hopkinsville. The shot was taken on highway 68/80 that crosses over the Tennessee River at Kentucky Lake. The bridge connects Trigg and Marshall counties and replaced the old bridge that was hit by a barge in January 2012. This new four lane span opened for traffic April of 2016. Go to the Kentucky REALTORS® Facebook page (facebook.com/kentuckyrealtors) – please like the page if you haven’t already – locate the cover photo and comment with the name of the bridge for a chance to win a free online course with Jason Vaughn, courtesy of the Kentucky REALTOR® Institute (KRI). If you would like to submit a photo for the magazine cover contest (Fall 2017 issue), send photographs to kar@kyrealtors.com. Photos must be high resolution and be Kentucky specific – landmark, destination, etc.

SPRING 2017 | Kentucky REALTORS® | 3

REALTOR® NEWS Nominate someone for recognition Kentucky REALTORS® invites nominations of members (and local associations through the CSA) for the 2017 awards. These awards have been created to recognize members, through their commitment to the industry, who consistently demonstrate the practices that define the very meaning of the term REALTOR®. To learn more about each award, download a form from the website at kyrealtors.com/awards.

REALTOR® of the Year Award Deadline: Thursday, June 1

2017 Class of LeadershipKAR This year’s class, the largest in the history of the program, includes 22 members who will join the ranks of some of the most successful REALTORS® from around the state. The program leads participants through several retreats and provides skill development in leadership along with teambuilding exercises, goal setting, personal profile analysis, network building and improving communication skills.

Members of this year’s class are: Rick Barker, Somerset Al Blevins, Mt Sterling Kim Bridges, Murray Crystal Cavanah, Russellville Kim Claytor, Berea Cathy Corbett, McDaniels Crystal Corrigan, Louisville Greg Crase, Florence Barbara Curtis, Georgetown Logan Germann, Danville Karen Gross, Owensboro

Good Neighbor Award Deadline: Thursday, June 1 Distinguished Service Award Deadline: Friday, June 16 Nat Sanders Education Award Deadline: Tuesday, August 15 REALTOR® Community Service Award Deadline: Tuesday, August 15

Ashlie Hogan, Leitchfield Alicia Huff, Lexington Cheryl Johnson, Louisville Drew Martin, Louisville Trey McCallie, Lexington Christie Moore, Henderson Joy Murphy, Lexington Isabella Paar, Hodgenville Sandra Schennberg, Richmond Brian Stedelin, Murray Angela Turner, Louisville

Step up and serve at the state level Are you interested in serving the real estate industry at the state level? Kentucky REALTORS® is seeking nominations for several leadership positions for 2018. The information regarding the openings, terms and voting information can be found on the website at kyrealtors.com/elections. The deadline for nominations is September 1 and elections will take place at the 2017 Annual Convention & Expo. If you need additional information or would like to discuss, please contact Julie Johnson, Director of Professional Standards and Governance, at 800.264.2185 or at jjohnson@kyrealtors.com.

Open Positions: President-Elect (1 position, 1-year term) Treasurer-Elect (1 position, 1-year term) At-Large Director (3 positions, 3-year term) Region Director for 1, 3 & 5 (3 positions, 2-year term) At-Large Delegate (3 positions, 3-year term)

Kentucky REALTORS® partners with the Boys & Girls Clubs of America

Kentucky REALTORS® and the Boys & Girls Clubs of America (BGCA) have partnered to help local chapters across the state.

In addition to volunteering and providing financial support throughout the year, Kentucky REALTORS® are hosting a Back to School Supply Drive and Day of Service for the 19 local chapters across the state. A list of local chapters, as well as information about the supply drive and service day in August, can be found on the Kentucky REALTORS® website at kyrealtors.com/bgca.

As the premier youth-serving organization in the U.S., BCGA has doors open to youth in communities across the country, serving as a “home away from home” for nearly 4 million kids each year during the critical time after school and in the summer.

OUR AFFINITY PARTNERS Through this special auto insurance program, you will save up to $500 with special rates on your auto policy even if you already have Nationwide as your carrier. In addition to auto insurance, Nationwide can also provide you with other products such as home/ renters, boat and RV insurance as well as identity theft protection.

Kentucky REALTORS® members can save up to 30 percent on UPS shipping.

Members currently enrolled in the UPS Savings Program must re-enroll to take advantage of this new exclusive offer.

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Kentucky REALTORS® members can now save over 40% on tickets to Kings Island, a 364-acre amusement park located 24 miles northeast of Cincinnati in Mason, Ohio that has won Amusement Today’s Golden Ticket Award for having the “Best Kids’ Area” in the world for fourteen consecutive years (2001–2014). The park features over 80 rides, including 14 roller coasters and a 33-acre water park.

Provided to you and your family & friends to help lower your prescription drug costs.

Your FREE Prescription Drug Card can save you up to 75 percent (discounts average roughly 30 percent) at more than 54,000 national and regional pharmacies.

Kentucky REALTORS® members can now join the UKFCU and enjoy all the benefits offered like free online banking and bill pay, great rates on mortgages and other savings and loans and over 30,000 free ATMs nationwide. With many different financial products and services, from checking and savings accounts to auto loans and money market accounts, UKFCU can meet your needs and serve you for life. And, you receive $50 just for joining.

PRESIDENT'S MESSAGE

Excellence. What is it?

M

uch is said about it. Sports. Music. Advertising.

Is it merely being the best at what you do?

Is it being a Super Bowl winner, Five Star Restaurant or an Oscar winner?

Well, yes and no. You can win the Super Bowl one year and crash the next. An old restaurant saying is “you are only as good as the last meal you served.” And the Oscars, well, very debatable.

Excellence is the perception of what you are and what you do... It is what you are to your customers, your peers, and your own associates. Excellence is what you become, what you are, what others strive to be.

Excellence is not something you have one day and the next day you don’t. It is reaching a very high level of what you do, then continuing to do it, improving day after day and year after year. It must be sustained. It is the culture that you create for what you do. It is Kentucky Bourbon. It is UK Basketball. It is the fabulous horse farms of Kentucky.

It is the result of planning, hard work, attention to detail, and most of all meeting and exceeding your clients’ expectations each and every time you have an encounter with them. It can be as small as answering the phone on the second ring instead of the third. Or as wonderful as finding them their dream home quickly, negotiating a sweet deal for them, and getting to closing with no bumps in the road.

Excellence and continuous improvement go hand in hand. We need to constantly evaluate what we do, and how we can improve.

Excellence has been described as a never ending journey.

I encourage you to focus on encounters. Many call them “Moments of Truth.” These occur when a customer has an exchange of any kind with you or a member of your organization that causes them to form an opinion about how you run your business and what you stand for.

We all have expectations about lots of things every day, without really thinking about them. With each expectation, one of three things can happen: • The expectation can be met • The expectation can be exceeded • he expectation can fail to be met

MIKE BECKER

2017 KENTUCKY REALTORS® PRESIDENT

Take a look at your operation. Identify each opportunity for a moment of truth. There will be more than you think. Make a list of them. Describe what action or behavior will meet, exceed or fail to meet the expectation that goes with it.

All of our advertising and marketing efforts create the expectation that our client has when they come to us. It can become a narrow path to follow. You have to say enough about what you do to attract business, but not so much that you are unable to achieve it.

Most of us receive some type of feedback from customers, be it the old reliable comment card or by some electronic method.

Create a database to track the feedback and learn where you are strong and where you need improvement.

The approach to working towards excellence will differ in real estate since there are a number of different business models.

There are large offices, teams and individuals. Use the approach as an ongoing office training program where teams can evaluate what they do and help one another develop performance methods and goals. Involve all of your team in creating your process. The individual business model will require a bit more discipline, but has the advantage of personalizing the process.

These thoughts only scratch the surface when it comes to achieving excellence and quality and there have been a multitude of books written about these subjects in recent years.

As your president, I will put some excellent book titles on our website for your reference.

Much of my earlier career was devoted to achieving excellence in the restaurant industry and now, I work to incorporate these principles and ideas into my real estate business. If you would like to do some hands-on work on excellence, please contact me at mikebeckerhomes@fuse. net or I can arrange a visit to a membership meeting. Look for a workshop on the subject at a future Kentucky REALTORS® meeting. Until then, commit to excellence in everything you do.

MIKE BECKER

2017 PRESIDENT KENTUCKY REALTORS®

SPRING 2017 | Kentucky REALTORS® | 5

TOOLS YOU CAN USE Ready, Set, Move (or Don’t) A new study from the U.S. Census Bureau shows Americans are not moving as much, as moves across the country declined to an all-time low in 2016, with the percentage of Americans migrating within the country falling to 11.2 percent. The most moves, according to the “Geographic Mobility: 2015 to 2016,” came from minority demographics. The African-American population made up 13.8 percent of those relocating, and the Asian population brought in another 13.4 percent. The Hispanic/Latino population comprised 12.6 percent of all moves, according to the report. The white population comprised only 10.3 percent of those settling elsewhere.

The non-Hispanic, white population brought up the rear with 9.8 percent. So why did people move? The majority of those who moved (42.2 percent) did so for a “housing-related reason,” such as the desire to snag a “better” spot. Approximately 27 percent of movers migrated for a “family-related reason” and 20.2 percent moved for an “employment-related reason.” While the most outbound moves (901,000) occurred in the South, those residents were replaced with even higher inbound moves (940,000), according to the report.

REALTORS® confident in market over the next six months NAR surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS® Confidence Index. In January, as part of this index, the buyer traffic index registered at 63 in January 2017 (57 in December 2016; 59 in January 2016), indicating that more respondents viewed buyer traffic conditions as “strong” rather than “weak.”

It stated “homebuying demand is likely being bolstered by sustained job growth, with 2.3 million jobs added in the last 12 months and 15.8 million jobs generated since February 2010.

Future interest rate increases may also be prompting first-time homebuyers to take advantage of the current mortgage rates. In the week of January 26, the 30-year fixed mortgage rate averaged 4.17 percent. Mortgage rates are likely to continue to rise modestly to an average of 4.4 percent in 2017 and 5.0 percent in 2018.

The seller traffic index registered at 41 in January 2017 (39 in December 2016; 40 in January 2016), indicating that more respondents viewed seller traffic conditions as “weak” rather than “strong.”

It stated “Supply conditions have remained largely tight in many areas, with the index registering below 50 since December 2008.”

In addition, the index for a six-month outlook for single-family homes, townhomes, and condominiums each registered above 50, indicating that more REALTOR® respondents expected market conditions to be “strong” than “weak” over the next six months.

The levels reached for each of the categories were the highest ever recorded since the index was generated in 2008.

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Boost a home’s value with these projects If you or your clients are thinking about putting a home on the market, the Remodeling Magazine’s Cost vs. Value Report offers the best projects for upping a home’s value before listing it on the market, ranked on the most value and cost recovery a homeowner can get. After surveying thousands of real estate agents, industry professionals and consumers on interior and exterior house remodeling projects, the results are in. The 29 projects found on this year’s report paid back an average of 64.3 cents on the dollar in resale value. Curb appeal projects like changes to doors, windows and siding garnered a higher ROI than work done inside the home.

Replacement projects, like doors or windows, scored higher among real estate pros than did remodels.

On a national scale, the top five projects with the greatest ROI in the report’s “midrange” cost category are: Attic Insulation (Fiberglass) (107.7% ROI) Average Cost: $1,343; Average Resale Value: $1,446 Entry Door Replacement (steel) (90.7% ROI) Average Cost: $1,413; Average Resale Value: $1,282 Manufactured Stone Veneer (89.4% ROI) Average Cost: $7,851; Average Resale Value: $7,019 Minor Kitchen Remodel (80.2% ROI) Average Cost: $20,830; Average Resale Value: $16,699 Garage Door Replacement (76.9% ROI) Average Cost: $1,749; Average Resale Value: $1,345 The top five projects with the greatest ROI in the report’s “upscale” cost category are: Garage Door Replacement (85.0% ROI) Average Cost: $3,304; Average Resale Value: $2,810 Entry Door Replacement (fiberglass) (77.8% ROI) Average Cost: $3,276; Average Resale Value: $2,550 Window Replacement (vinyl) (73.9% ROI) Average Cost: $15,282; Average Resale Value: $11,286 Window Replacement (wood) (73.0% ROI) Average Cost: $18,759; Average Resale Value: $13,691 Grand Entrance (fiberglass) (70.1% ROI) Average Cost: $8,358; Average Resale Value: $5,855 At the other end of the spectrum are projects with the lowest returns on investment - improvements generally not in demand by the market. On a national scale, the five projects with the lowest ROI in the “midrange” cost category are: Bathroom Remodel (64.8% ROI) Average Cost: $18,546; Average Resale Value: $12,024 Master Suite Addition (64.8% ROI) Average Cost: $119,533; Average Resale Value: $77,506

Backyard Patio (54.9% ROI) Average Cost: $51,985; Average Resale Value: $28,546 Backup Power Generator (54.0% ROI) Average Cost: $12,860; Average Resale Value: $6,940 Bathroom Addition (53.9% ROI) Average Cost: $43,232; Average Resale Value: $23,283 The five projects with the lowest ROI in the “upscale” cost category are: Major Kitchen Remodel (61.9% ROI) Average Cost: $122,991; Average Resale Value: $76,149 Master Suite Addition (59.9% ROI) Average Cost: $250,687; Average Resale Value: $150,140 Bathroom Remodel (59.1% ROI) Average Cost: $59,979; Average Resale Value: $35,456 Bathroom Addition (57.1% ROI) Average Cost: $81,515; Average Resale Value: $46,507 Deck Addition (composite) (56.4% ROI) Average Cost: $39,339; Average Resale Value: $22,171

Only 1 in 10 homes have smart gadgets Only about 10 percent of households have connected home solutions, a survey by Gartner Inc. of nearly 10,000 online respondents in the U.S., the U.K., and Australia found. The survey considered “connected home solutions” to be devices and services that are connected to one another and to the Internet that can automatically respond to preset rules, be remotely accessed and managed by mobile apps or a browser, and send alerts or messages to users.

Connected home solutions are still in the early adopter phase worldwide. By far the most popular devices are home security alarm systems, which have nearly double the adoption rates (18 percent) of newer connected home solutions, like home monitoring (11 percent), home automation or energy management (9 percent), and health and wellness management (11 percent). Researchers found that adoption rates were 5 to 6 percent higher in the U.S., where smart home devices were mostly first marketed.

In fact, according to the NAR “Smart Homes and REALTORS®” research, although most U.S. consumers (82 percent) don’t ask their real estate agent about smart home devices, they’re still interested and paying attention. Over half considered smart home security functions to be “very important,” while 42 percent of agents are interested in smart home certification. According to the report, REALTORS® said the top three most important smart home tools for clients are: Smart locks (37 percent) Lights (29 percent) Thermostats (26 percent)

Recent scam targeted REALTORS® The most recent, and widely publicized, scam against REALTORS® came by way of Florida. In March, Florida REALTORS® alerted its 164,000 members to a phishing scam after members received “invoices” from the “Florida Board of Realtors,” an organization that does not exist. In the scam, REALTORS® reported receiving a “final notice” bill from the fictitious entity seeking

payment of $225 and stating that their real estate licenses are in jeopardy for failure to comply.

This particular scam was not simple - high-tech criminals put a great deal of work and planning into this complete with letters that, on first glance, look to be legitimate. The notice includes a website, floridaboardofrealtors.org, that also looks credible and professional. However, most of the links don’t work. Blogs in their ‘archive’ appear to stretch back a few years, for example, but no content comes up when you click. The same is true for many other links found on the site.

So, how can avoid falling victim to a scam like this? First, make sure you know the basic information of the groups you belong to, especially your local REALTOR® Association – business name, contact information and web address. Also, know when (and how) you receive invoices for payment. Make sure you double check with the Association if you are unsure of the legitimacy of the information you received – don’t blindly pay just because something (or someone) tells you to. And, finally, if you do suspect something is amiss, report it through the appropriate channels. The above scam was realized quickly because the true Association received inquiries immediately after it happened and word was spread not only across the local area but throughout the state and country. Keep your guard up and don’t fall victim to these types of scams.

8 home design trends for the year With the start of each new year, certain trends go by the wayside and we bid farewell to tired, worn out ideas that were once all the rage. So what’s replacing the old fads with fun, new ideas?

According to realtor.com, these are the top 8 trends that are making a splash this year (to read more, go to bit.ly/8designtrends).

1. Geometric patterns 2. Jewel tones 3. Cork 4. Tropical influences 5. Rich blues 6. Wood accents 7. Black stainless steel 8. Bold front doors

Follow Kentucky REALTORS® on Facebook and Twitter Kentucky REALTORS® has posted its Twitter feed and Facebook page link on the home page of its website (kyrealtors.com) so members and consumers can follow all the things going on with the association. Keep up with all things KAR on a real time basis – legislative updates, industry news, business tips and much more! Or you can visit the pages directly: facebook.com/kentuckyrealtors or twitter.com/kyrealtors.

SPRING 2017 | Kentucky REALTORS® | 7

CEO'S MESSAGE

Next stop on the public policy trail – tax reform

STEVE STEVENS, CCE, IOM CHIEF EXECUTIVE OFFICER

A

top goal of Governor Bevin’s Administration is also one that has been at the highest level of priority on the agendas of most business organizations like the Kentucky REALTORS®. Tax Reform! Let’s finally do the required work to modernize and streamline Kentucky’s tax code. Our interest in tax reform stems from data and our long-held belief that a simpler tax code with lower rates is better for housing and the real estate industry than our current system offers today.

For years, the mortgage interest deduction (MID) has been an item on personal tax returns considered of high value and of such importance that it is believed to significantly affect buyer behavior. Importantly, its perceived value has led our members to fight for its preservation as a perennial issue and it has been used as a rallying cry of the National Association of REALTORS® (NAR) in almost every session of Congress in recent memory.

Kentucky REALTORS® has chosen to continue to take a strong stand in support of preserving the MID. In addition to defending mortgage interest and property tax deductions, we’ve long advocated for first-time homebuyer tax credits as a means of motivating people to get off the sidelines and move to buy or sell their homes.

Nearly 8 months ago, Kentucky REALTORS® commissioned Northern Kentucky University’s Center for Economic Analysis & Development (CEAD) to refresh a tax study the organization had commissioned just a few years prior. We wondered if anything had changed to affect the real estate sector since an earlier study we commissioned was performed and importantly, will any of these changes positively or negatively affect real estate activity? NKU compared the tax burdens of Kentucky to seven of its peer states and estimated the tax burdens of three different types of consumer units, the total of these three representing 91% of all U.S. consumer households, as well as contrasting

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tax competitiveness with our peers. This past December, NKU’s CEAD released its findings in two reports – the first on tax competitiveness and a second report entitled: “Literature Review: Aggregate and Distributional Effects of the Repeal or Modification of the Federal Mortgage Interest Deduction” that offered some interesting observations.

NKU’s study indicated that Kentuckians have the third lowest total tax burden (Tennessee is lowest), but pay more than most states relative to their incomes. As compared to our Indiana neighbors, Kentuckians tend to pay more of both total taxes and as a percentage of their incomes. These comparisons are important pieces of information for legislative members as they approach tax reform.

KAR leaders have been pondering these as well, as we start the dialogue with state lawmakers who may be considering a total restructuring of Kentucky’s tax system. Specifically, if there is movement by lawmakers toward creating a consumption-based tax system, whereby the service sector could see new taxes on their services in return for other tax reductions, lawmakers need to know this. There are many service providers involved in a real estate transaction and without proper equalization or lowering of other taxes, the cost of purchasing a home or building could be markedly increased if a change of this type is enacted.

In addition to defending mortgage interest and property tax deductions, we’ve long advocated for first-time homebuyer tax credits as a means of motivating people to get off the sidelines and move to buy or sell their homes.

NKU’s analysis in its “Literature Review” raised other interesting issues that are worthy of response: NKU: “On its face, the MID (Mortgage Interest Deduction) appears to be a logical tool for promoting homeownership and generating positive externalities.

However, an overwhelming body of empiricallybased economic literature contends that the MID is both costly and ineffective, pointing specifically to the following consequences of its implementation: • It has little or no positive effect on homeownership rates overall.

• It creates large welfare inequalities by disproportionately rewarding high income households and, in effect, penalizing lowerincome households.

“The popularity of the MID is somewhat surprising considering less than a quarter of tax filers (with or without a mortgage) in 2011 deducted any mortgage interest on their return, but it also provides a deterrent to lawmakers voting for its repeal.” The authors concluded by saying that “removing the MID would have little or no effect on homeownership rates.”

Contrary opinions are important and necessary in fair debate on big policy issues, but let’s remember to read between the lines. In this case however, perhaps it would be wise to note the size of the deduction has scaled back dramatically due to lower interest rates and even though the uptake among tax filers to take this deduction in any given year is small, the share of eligible beneficiaries is much higher. Roughly half of all homeowners and more than two-thirds of those with a mortgage take advantage of the MID. The MID’s value changes with one’s life-cycle a bit like the child tax credit.

Many tax filers will claim the child tax credit when

their children are young, but when the kids grow up, parents no longer claim the credit. They may still remember how beneficial it was when they did.

Mortgages are similar and are used to purchase a home and are paid off over time. At some point when the mortgage is paid off, the interest deduction is no longer available. When that time comes, it has lost some value to that consumer.

As consumers become more educated about the benefits of an MID, like when he or she buys a second home and has had the benefit of taking the MID on his/her tax return, the benefits generated from the deduction may certainly provide enough motivation to the buyer to jump to the next purchase.

Homeownership is critical to our communities and our overall economy in Kentucky. Keeping the American Dream of home ownership accessible and affordable for all Kentuckians is vital and practically a core principle of Kentucky REALTORS®.

The economy is growing and to limit or remove tax deductions and incentives would be risky. In today’s volatile times, my message to lawmakers is that it would be prudent to proceed with caution. Likewise, as a Special Session on Tax Reform materializes in the not-so-distant future, Kentucky REALTORS® will remain engaged in the conversation every step of the way. Our staff and lobbying team are vigilant and active at the Capitol. Our members, however, are the most important cog in the mechanism when it comes to advocating for these issues and opposing policies that will put homeownership out of reach.

I want to thank you for providing your voice to the conversation and engaging with our many friends in the General Assembly who understand the important role our industry plays in supporting and growing our Kentucky economy.

SPRING 2017 | Kentucky REALTORS® | 9

THE ETHICAL AGENT: professional standards in everyday practice

BY BRUCE H. AYDT, DSA, ABR, CRB, GRN, SRS

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W

hen new REALTORS® join the REALTOR® organization, they are introduced to the REALTOR® Code of Ethics. Many are, like I was, unaware of the rich tradition and heritage our Code has carried now for over 100 years.

What many REALTORS® don’t know about the Code, when first introduced to it, is the Code is much more than a bunch of rules put down on paper. It embodies not only our philosophical values as REALTORS®, but also the standards of conduct that we all strive to attain and by which we abide.

The history of the Code is at the core of the history of the organized real estate industry. When the Code was adopted in 1913, there were no real estate licensing laws. The Code was the only set of standards of conduct to which real estate practitioners could look to gauge their behavior. [The concepts of the original Code continue to be relevant and embodied in today’s Code, whether in the concepts of fiduciary duty or truth in advertising.]

More so, the core concepts of the Code are being applied by the National Association of REALTORS® Professional Standards Committee to the new business practices we all use today on the internet, social media and in short sales and affiliated businesses. Let’s sample how the Code applies in some of these new situations.

Many of the new questions about the Code that come up are in the area of advertising, whether in print, on the web or in social media contexts, as well as issues related to short sales.

Here are some tips to watch for in those key areas.

Disclose your state of licensure on your website On your website, you need to include some statement disclosing the state or states in which you hold a real estate license. The note could say something like “Licensed in Kentucky,” “Kentucky Licensee,” or “Kentucky Broker.”

Standard of Practice 12-9 requires all licensees to include this information on their websites.

“REALTOR® firm websites shall disclose the firm’s name and state(s) of licensure in a reasonable and readily apparent manner. Websites of REALTORS® and nonmember licensees affiliated with a REALTOR® firm shall disclose the firm’s name and that REALTOR®’s nonmember licensee’s state(s) of licensure in a reasonable and readily apparent manner.”

The public has a right to know where the person running the website is licensed when looking at a website with real estate information on it. Questions arise about whether your mailing address is sufficient. While the Code is silent on this particular point, I always recommend using one of the phrases “licensed in …” and not just a street address. Does your street address always reflect that you may also be licensed in multiple states – like Kentucky and Ohio or Kentucky and Indiana? While the disclosure of state of licensure only applies to websites, it’s good practice to include it in any other form of advertising you do.

Make sure your company name is readily apparent in any real estate advertising you do Standard of Practice 12-5 has the basic concept that the public is entitled to know, when looking at your advertising, that you are a REALTOR® or real estate licensee and to know the company with which you are licensed.

“REALTORS® shall not advertise nor permit any person employed by or affiliated with them to advertise real estate services or listed property in any medium (e.g., electronically, print, radio, television, etc.) without disclosing the name of that REALTOR®’s firm in a reasonable and readily apparent manner. …”

It’s easy to miss that the company name requirement applies in all advertising and marketing that you do, whether on the internet, in print or on giveaways like magnets and pens. Also, don’t forget this includes teams and other entities working under a brokerage company’s licensure. If you are the “Sam Jones Team,” your advertising also must include your company’s name (like “Sunset Realty”) somewhere in your advertising.

Using social media like Facebook, blogging or tweeting without making your company affiliation evident.

In any real estate related communications on Facebook, Twitter or other social media sites, you must include your company name in the posting or make it accessible via a link back to your company name (like your username’s link to a profile page). Standard of Practice 12-5 was recently amended to provide for the “link back” idea so a tweet of 140 characters wasn’t required to have your full company name under the Code.

“REALTORS® shall not advertise … without disclosing the name of that REALTORS®’ firm in a reasonable and readily apparent manner either in the advertisement or in electronic advertising via a link to a display with all required disclosures.”

SPRING 2017 | Kentucky REALTORS® | 11

The concepts of the original Code continue to be relevant and embodied in today’s Code, whether in the concepts of fiduciary duty or truth in advertising.

Registering or using domain names that don’t reflect a “true picture” Several Standards of Practice under Article 12 prohibit deceptive uses of domain names, whether registering them or using them. Specifically, REALTORS® should consult Standards of Practice 12-10 and 12-12 for registration and use of domain names. Standard of Practice 12-12 includes not only the use of a domain name that isn’t a true picture but the registration alone also violates the Code of Ethics. These deceptive uses and registrations include other persons’ names, competitors’ names and the term “MLS” when the URL directs the viewer to a REALTORS®’ site and not an MLS website.

Monitor your sites and don’t allow false or misleading comments You should monitor your blogs, Facebook wall and pages and other electronic media regularly for any false or misleading comments about others, and immediately remove any that you find. Standard of Practice 15-3 makes the following statement.

“The obligation to refrain from making false or misleading statements about competitors, competitors’ businesses, and competitors’ business practices includes the duty to publish a clarification about or to remove statements made by others on electronic media the REALTOR® controls once the REALTOR® knows the statement is false or misleading.”

In other words, if you find a statement about another REALTOR® on one of your sites, whether website, blog or Facebook wall, the Code requires that you publish a clarification or remove the statements you know are false.

Disclosing a short sale You have an obligation to know your MLS and state license law rules on short sales and to disclose a potential short sale when it’s required in those rules. Many MLS’s have a rule that requires the disclosure of a potential short sale in the MLS. Even if your MLS does not have this rule, consider that Article 2 of the Code requires that you avoid “concealment” of “pertinent facts” about the property or the transaction.

The fact that an owner cannot convey clear title without the lender reducing their outstanding balance(s) could certainly be considered a “pertinent fact” in a transaction. A buyer

will eventually know about the short sale because the sale contract will necessarily need to be contingent on the seller’s lender’s approval.

Flipping, flopping or ignoring conflicts of interest Flipping and flopping are sometimes associated with short sales and involve clients buying a property from the lender at a discount and then selling it at a premium shortly afterward - often as soon as the next day. The inherent conflict is in the price differential, since there’s no improvement to justify the difference in price. In particular, listing brokers can’t “double up” by trying to represent both the short sale seller and the short sale buyer who is attempting to flip a property. Conflicts like this also happen in other “distressed” sales whether they are short sales or not. These conflicts of interest are, at a minimum, a possible violation of the Article 1 requirement to protect and promote the interests of the client – the record title holder seller.

Giving unauthorized access to your listings You should make it clear to cooperating agents that they’re expected to accompany buyers to the house and aren’t permitted to provide the lockbox combination to buyers. It sounds surprising, but the NAR Professional Standards Committee receives feedback from all around the country that cooperating agents/brokers, as well as listing agents/brokers, are at times, extremely casual about access to listed property. Agents/brokers who do not personally accompany buyer prospects to listings or arrange for them to be accompanied by an agent, the seller or other authorized person violate the trust given to them by the seller/owner. Standards of Practice 1-16 and 3-9 makes it clear that unauthorized access is violation of the Code as well as the possibility that a lockbox rule violation may occur.

The Code and its Standards of Practice are updated virtually every year to keep pace with our constantly changing business.

While the principles of the Code are timeless, the details of how the Code applies are clarified and explained through the changes to the Code every year.

William D. North, former Executive Vice-President of the National Association of REALTORS®, elegantly described the Code as a “gift of vision” of the founders of the National Association. The Code has truly been that gift of vision – the conscience of the community of REALTORS® for the past 100 years. No doubt it will serve ably for the next 100 years.

Bruce Aydt is a REALTOR®, attorney and educator from St. Louis, Missouri. He will be a featured speaker at the upcoming Broker Summit in Louisville on April 26. As a second generation REALTOR®, Bruce grew up in the real estate business and has worked in virtually every aspect of real estate companies. Bruce has been in management, as well as in-house legal counsel to companies for over 30 years. Bruce has been involved in REALTOR® Association work for almost his entire career. He has served as President of both the Missouri Association of REALTORS® and the St. Louis Association of REALTORS®. Bruce has chaired the NAR Professional Standards Committee, Legal Action Committee and State Leadership Forum and received the National Association’s Distinguished Service Award. He is a nationally recognized educator on real estate issues and is the regular columnist on ethics issues for REALTOR® Magazine. He lives in St. Louis, Missouri with his wife, Lisa and has two grown children.

12 | kyrealtors.com

13 commandments of successful real estate agents

D

uring my twenty years in the real estate industry, I’ve witnessed and experienced a lot of changes — mostly for the good. Two things have remained the same: things in the industry are constantly changing, and the turnover rate in real estate is incredibly high.

People come and go as though there’s a revolving door that is spinning constantly. It can spin so fast that at times, it seems dizzying! This reality made me sit back and think about what causes so much change and why people so often get out of real estate. It’s my belief that it’s due to a lack of success. After all, who changes what’s working or quits a successful career?

After evaluating to what I mainly have attributed my success, it’s my belief that many people leave the business not knowing what they don’t know. You see, in real estate school, future real estate agents learn what’s needed to pass the state exam, but not what’s needed to run a successful business. Learning the number of square feet that are in an acre is important, but it’s not the same as learning how to set goals and how to develop a business plan. So, I compiled these Thirteen Commandments of Successful Real Estate Agents:

1. Thou shall correct thy mind-set

8. Thou shall learn the sales process

2. Thou shall commit to excellence

9. Thou shall follow up relentlessly

3. Thou shall set goals

10. Thou shall be trustworthy

4. Thou shall commit thy goals to paper

11. Thou shall never give up on tenacity

5. Thou shall develop a business plan 6. Thou shall lead generate regularly

12. Thou shall commit to good education

7. Thou shall create a touch plan and work thy touch plan relentlessly

13. Thou shall have work-rest balance in thy life

It’s my hope that if your business isn’t thriving, regardless of the length of time you’ve been in the industry - whether it’s been two months or twenty years - these commandments will help you determine how you can change your real estate business for the better to get you where you want to be.

I recommend that you post these commandments as a sort of to-do list. Check off each commandment as you achieve it to monitor your progress and use the list to remind you of the areas you need to be focused. You can do it!

Michelle Moore is a successful businesswoman who has earned over 40 sales, leadership, and literary awards throughout her career. She is a featured speaker at the upcoming Broker Summit in Louisville on April 26. Michelle travels the country as an award-winning author, inspirational and motivational speaker, leadership coach and sales trainer.

She enjoys coaching, motivating, and inspiring men and women looking to achieve the highest level of success both professionally and personally. As the owner of Real Estate Coaching Simplified, a current member of the Solomon’s Porch Society, a contributing author for Southern Guide to Life magazine, a speaker for God Crazy Freedom Women’s Conferences, and the host of The Power of Real Estate radio show, Michelle speaks truth, love, and empowerment into the lives of men and women throughout the world.

SPRING 2017 | Kentucky REALTORS® | 13

LEGISLATIVE UPDATE

Kentucky REALTORS® monitored over 45 pieces of real estate and small business legislative issues including condo associations, landlord/tenant relationship, title insurance, low income housing tax credits, homestead exemption, drones, roofing contracts and more. A final Legislative Update, including a complete list of the bills, can be found at kyrealtors.com> Advocacy > Legislative Updates.

Members of Kentucky REALTORS® attended the Rally in the Rotunda before meeting with legislators at the Capitol.

State Update: In January, the General Assembly convened for the 30-day Legislative Session. After the sweeping electoral victories in last November’s election, all eyes were on the upcoming Legislative Session with Republican majorities in the House, Senate and Governor. Legislative leaders stressed that economic issues were the primary focus of the upcoming session with the goal to make Kentucky more business friendly. Several significant bills were passed including right to work, repeal of prevailing wage laws and pension transparency.

Kentucky REALTORS® was very present in Frankfort working to advance our legislative agenda’s top priorities of protecting and advancing the real estate industry, protecting and growing small business and the overall economy, and creating safe and livable communities in Kentucky. The goal of our efforts was to make sure that policymakers in Frankfort continue to promote homeownership, private property rights, economic development and ease the burden of regulation and taxes on small businesses.

Testifying on behalf of HB443 is Barry Dunn, legal counsel for the PPC; Mike Becker, president of the Kentucky REALTORS; KY State Representative Robby Mills, bill sponsor; and Ken Warden, executive director of the Kentucky Real Estate Authority.

Kentucky REALTORS® Priority Bill HB 443, sponsored by Representative Mills, reorganizes the real estate related boards and commissions and creates the Kentucky Real Estate Authority. The Authority’s primary purpose is to house the staff of the Kentucky Real Estate Commission, Real Estate Appraisers Board, Board of Auctioneers and Kentucky Board of Home Inspectors.

The bill provides a “bottom up” regulatory approach in that the regulatory and judicial processes start at the board level before being sent to the Executive Director and Governor. Kentucky REALTORS® will continue the important role of recommending 14 | kyrealtors.com

to the Governor, a list of candidates to fill board vacancies. The organization undergoes an extensive and thorough process of reviewing and interviewing nominees so we may recommend the most highly qualified individuals to serve on the Commission.

The Executive Director of the Kentucky Real Estate Authority will oversee the four organizations ensuring that they provide excellent service to respective licensees and the public, have a minimum of 10 years of industry experience and will show that he/she has sufficient knowledge to effectively manage and lead the Boards and Commission - whether regulatory, judicial or administrative functions, the overall operations of the boards will remain 95% unchanged and continue their high level of service to licensees.

We greatly appreciate the efforts of Representative Robby Mills, Representative David Meade, Senator Albert Robinson and the Public Protection staff working with Kentucky REALTORS® and other impacted organizations on this important bill.

Kentucky REALTORS® Priority Bills HB 112, sponsored by Representative Lee, and SB 99, sponsored by Senator Alvarado, addressed the liability of the rental property owner when a tenant is a dog owner. The bill limits the landlord’s legal liability if the renter’s dog bites someone. HB 112 passed the House and Senate with significant bipartisan support and was signed by Governor Bevin. Kentucky REALTORS® greatly appreciates sponsor Representative Lee and Senate champion Senator Alvarado for their continued advocacy on this important bill.

Also, Kentucky REALTORS® supported HB 309, sponsored by Representative Melinda Prunty, which addressed landlord/tenant relationship when the tenant is a victim of domestic violence. The bill would require landlords to provide early termination of leases, with 30 days-notice, when the victim of violence has a court order of protection and needs to move to be safe. The bill allows landlords to bar an abuser from their property and formally evict the abuser based on the issuance of an order, enables landlords to recoup any losses they might incur from the one responsible for the loss (the perpetrator of the violence) and grants landlords immunity from liability if they act in good faith in the application of this law. HB 309 passed the House and Senate with strong bipartisan support.

Kentucky REALTORS® supported HB 72, sponsored by Representative Jerry Miller, regarding planning and zoning cases.

Currently, making changes to planning & zoning is a lengthy process involving multiple levels of review and approval, including staff level review, approval by local Planning & Zoning Board if one exists, and then City or Local Government Body approval. Any individual/party who opposes the planning and zoning change can then appeal the decision to local Circuit Court. If the Circuit Court affirms the planning and zoning decision, a party can appeal to the Court of Appeals, and then the Supreme Court. Many development projects across Kentucky are being held up in the court system for

30644 several years while developers are unable to make investments in the communities and future economic development opportunities are being delayed. HB 72 requires the posting of an appeals bond by the appellant (i.e. losing party) if the appellee (i.e. winning party) files a motion within 30 days of notice of appeal of a Circuit Court decision of a land use case. Within 30 days of a party requesting postage of the bond, the Circuit Court judge shall conduct a hearing and determines the amount of the bond (up to $250,000 if the appeal is deemed presumptively frivolous and up to $100,000 if not). HB 72 passed the House and Senate.

Is the number to text the word REALTOR to sign up for the REALTOR® Party Mobile Alerts. Signup by April 30 and you could win a $250 Amazon gift card. This texting platform, offers REALTORS® a way to stay connected directly from their cell phone or tablet.

Get information on finding your polling locations, election and primary voting day reminders and participate in calls for action. Of the 10,000 plus members of Kentucky REALTORS®, the goal is to hit 17% overall participation. Currently, Kentucky has 65% of the goal.

Tax reform in a special session

Representative David Osborne accepted the Jess and Carolyn Kinman Award during the Rally in the Rotunda event.

Representative Osborne receives the Jess and Carolyn Kinman Award The Kinman Award is named in honor of Jess, a Kentucky REALTORS® past president and REALTOR® of the Year who passed away in 2007 and his wife Carolyn, who worked for many years at the Legislative Research Commission and the General Assembly. The award is presented to an outstanding Kentuckian whose involvement in the legislative and political arenas have left an indelible mark on all those who have known or worked with him or her. In 2017, the award was given to State Representative David Osborne. Representative Osborne is a true champion of the real estate industry, lending his support to HB 149 in 2015 that increased education for new real estate licensees which promotes a higher level of professionalism in the industry. In the past, he co-sponsored HB 533 that prohibited private transfer fees in real estate transactions. In 2009, he supported the Small Business Tax Credit and New Home Tax Credit to help slow the decline of the housing market during the Great Recession.

Representative Osborne, serving District 59 which includes part of Oldham County, is a REALTOR® with Barry Smith Realty in Shelbyville and serves the House as Speaker Pro-Tempore.

His civic engagements include Oldham County Chamber of Commerce, Kentucky Equine Education Project (KEEP) and the Thoroughbred Club of America. He graduated from the University of Kentucky with a Bachelor’s of Science degree.

As part of the award, First Federal Savings Bank of Frankfort makes a charitable donation in the name of the award recipient.

This year, Representative Osborne selected the Hope Health Clinic in LaGrange, Kentucky.

The legislature did not address tax reform this session. Governor Bevin and legislative leaders have repeatedly said that everything is on the table and to expect a special session later this year.

Throughout the session, groups representing every aspect of our economy reached out to elected officials defending their preferred tax credit, deduction, and program. In the near future, Governor Bevin will produce his version of tax reform and promote it to the state legislature and the public in preparation for the special session. Kentucky REALTORS® will remain engaged in this important issue to defend homeownership and encourage economic growth.

RPAC becomes a two-time award winner Last year due to thousands of REALTORS® investing in RPAC, we achieved the Triple Crown Award for the 2nd time in Kentucky REALTORS® history. Goals were exceeded in the areas of our NAR goal, number of major investors, number of members who achieved President’s Circle and our participation rate.

Kentucky was among 29 other states and territories to achieve the Triple Crown Award in 2016. We are not resting on our recent successes, but pressing on to grow our fundraising and expand our impact in the political process.

By contributing to RPAC, members help raise and spend money to elect candidates who understand and support policies that promote home-ownership, private property rights, economic development, optimal land use, easing burdens caused by excessive taxation, energy conservation and more.

RPAC enables REALTORS® to support candidates that promote and protect the real estate profession and industry.

Triple Crown Progress: (as of Feb. 2017) National RPAC Fundraising Goal: $305,000; $118,747.43 (38.93%) Federal RPAC Disbursements Allocation: $60,732; $32,899 (54.17%) Major Investor Goal: 101; 13 (12.87%) President’s Circle Goal: 10; 6 (60%) Participation Rate Goal: 37%, 36%, (members: 10,165, participants 3,695) To achieve the President’s Cup, NAR’s highest RPAC honor for an association, additional benchmarks have been set and progress will be reported as progress is made.

SPRING 2017 | Kentucky REALTORS® | 15

LEGISLATIVE UPDATE National Update: Waters of the U.S. gets Executive Order from President Trump On Feb. 28, President Trump signed an Executive Order that begins to unwind the Obama administration’s controversial Clean Water Rule. Also known as the Waters of the U.S. rule, or WOTUS, the regulation was written by the U.S. EPA and the Army Corps of Engineers to clarify the reach of the federal government over wetlands and waterways under the Clean Water Act. Hopkinsville Christian & Todd County Association President Camilla Diuguid received two RPAC awards on behalf of the Association.

RPAC Awards 2016 Most Contributions Raised (Overall) Greater Louisville Association ($122,876) Highest Membership Participation Hopkinsville Christian & Todd County Association (105.56%) Pacesetter Award (First to Achieve Goal) Paducah Board of REALTORS® (February 2016) Largest Percentage Over Goal Small Board Division Hopkinsville Christian & Todd County Association (319.29%) Medium Board Division Somerset-Lake Cumberland Board (414.98%) Large Board Division Greater Louisville Association (208.18%)

2017 RPAC Major Investors (through March 31) Golden R Al Blevins* Charlie L Murphy**

Sterling R Nancy L Allison Michael H Becker Greggery W Buchanan Lois Ann Disponett* David Alan Earls* Brenda Gooslin Jeff Harrison

Michael T Inman* Connie C Lawson Amanda S Marcum Charlene F. Rabold Carl M Tackett** Harrell N Tague Janie Wilson

* President’s Circle ** President’s Circle and HOF

83.3%

While the executive order cannot repeal WOTUS, which was finalized in May 2015, the Executive Order will direct EPA and the Army Corps to begin a formal review of the regulation, an important first step to dismantling it. Withdrawing WOTUS will have a significant impact on the real estate sector, especially real estate development.

NAR has strongly opposed the rule to eliminate the need for costly and time-consuming permits on waters that were previously unregulated by the federal government. The rule has been stayed nationwide by the Sixth Circuit Court of Appeals pending additional litigation and technical procedures.

The Executive Order also directs the EPA to begin a rewrite of the regulation to adhere more closely to the definition of “waters of the U.S.” under the Clean Water Act and provide a streamlined permitting process to provide clarity and certainty to the private sector while protecting the integrity and quality of the country’s water resources.

NFIP gets hearing from the House In March, the House of Representatives held the first of several hearings on the National Flood Insurance Program (NFIP).

The Senate’s first hearing was on March 14. The NFIP must be reauthorized to continue its ability to sell flood insurance after September 30 of this year.

The purpose of these hearings is to solicit ideas for how to restructure the NFIP with the goal of developing comprehensive reform legislation this Spring. FEMA was the sole witness for the first two hearings.

NAR submitted two letters for the hearings, one laying out NAR member priorities for long-term NFIP reauthorization/ reform and one regarding the reintroduction of NAR-supported legislation to encourage the development of a private market in addition to NFIP.

Nationally, the number of REALTORS® currently registered to vote. Register to vote today or visit the REALTOR® Action Center’s Voter Registration Map to access voter registration information in your state. If you’re not registered to vote, you cannot vote for candidates who support REALTOR® issues or in favor of public policies that promote home ownership. In Kentucky, 88.63% of REALTORS® are currently registered to vote. If you know that you are not registered, and would like to register to vote, it has never been easier. Just go to www.RealtorVotes.com and register. It’s that simple.

16 | kyrealtors.com

Carson confirmed as HUD secretary; 2018 proposed budget cut by $6.2 billion Dr. Ben Carson was approved by the United States Senate by a vote of 58-41, and was sworn into office in March. NAR President Bill Brown said, “Dr. Carson should be proud of his achievement. The task at hand is a big one, and we applaud his commitment to the challenges that lie ahead. Homeownership helps build communities and build wealth for families. And we know that the policies set in Washington can make a real difference for Americans as they work to realize their dream of homeownership. We look forward to working with Secretary Carson to meet these challenges head on.”

Shortly after the confirmation, President Trump officially announced his budget proposal that would, if enacted, cut $6.2 billion from HUD’s funding come October 1. In a short statement issued by HUD, Carson said that the budget furthers the Trump administration’s view of how HUD should operate.

“The discretionary budget plan released today by President Trump aligns with Agency plans to provide rental assistance to low-income and vulnerable households and to help families achieve self-sufficiency. The budget also promotes fiscal responsibility at HUD by promoting better efficiencies and leveraging IT modernization,” Carson continued. “I look forward to working with the President and remain keenly focused on HUD’s mission and core values.”

Within the housing market, a few of the hardest hit programs are the Community Development Block Grants, the Choice Neighborhoods program, the HOME Investment Partnerships Program, the Self-Help Homeownership Opportunity Program (SHOP) as well as the NeighborWorks America organization that supports community development, provides access to homeownership and to safe and affordable rental housing.

G-fee bill prohibits use to pay for government spending In February, NAR, along with several housing and mortgage industry trade groups, sent a letter thanking Reps. Sanford (R-SC) and Sherman (D-CA) for reintroducing H.R. 916, the “Risk Management and Homeowner Stability Act.” The legislation would amend the Congressional Budget and Impoundment Control Act of 1974 to prohibit the use of Fannie Mae and Freddie Mac’s guarantee fees (g-fees) to pay for government spending. Moreover, the bipartisan bill recognizes that diverting revenue from these risk-based fees both places an additional burden on the backs of homeowners and is bad public policy.

The purpose of the G-fee is to prospectively guard against credit losses at Fannie Mae and Freddie Mac. G-fees should only be used to protect taxpayers from mortgage. Each time G-fees are extended, increased and diverted for unrelated spending, homeowners are charged more for their mortgages and taxpayers are exposed to additional risk for the long-term.

Sign up for the NAR Legislative Meetings & Trade Show on May 15-20 The REALTORS® Legislative Meetings & Trade Expo is where NAR members take an active role to advance the real estate industry, public policy and the association.

REALTORS® come to Washington, DC, for special issues forums, committee meetings, legislative activities and the industry trade show. Kentucky REALTORS® also have the opportunity to meet with their elected delegation at the Capitol to discuss important national issues concerning real estate. To register for the event, visit nar.realtor/midyear.

DID YOU KNOW?® KENTUCKY REALTORS members are eligible to join the

UK FEDERAL CREDIT UNION!

50

$

* in your NEW account!

SEG CODE: 135

Earn $50 by Joining UKFCU! www.ukfcu.org | 859.264.4200

*Offer expires 07/31/17. Membership eligibility required. Proof of direct deposit and e-statements required. Must be brand new checking account to qualify for $50. Funds will be deposited into a Prime Share account AFTER 30 days.

Restrictions may apply. See a representative for details. UKFCU is federally insured by the NCUA.

SPRING 2017 | Kentucky REALTORS® | 17

Kentucky Real Estate Authority to oversee real estate-related boards under reorganization

the fine for non-compliance is still $500. Six hours of continuing education is required annually with at least three of those hours in real estate law. Also, licensees are required to take the mandatory Core course once every four years. You can check your status on the KY Real Estate Commission website at www.krec.ky.gov.

Q: If I’ve just received my real estate license, do I have to take post-licensing education?

A: Yes, if you received (and activated) your license after January 1, 2016, you are required to complete 48 hours of postlicense education. To learn more about this requirement, check the KREC website at www.krec.ky.gov.

The 2017 General Assembly passed legislation that brought change to Kentucky’s real estate related boards and commissions. This was a surprise for many, since most real estate professionals agreed that the former Kentucky Real Estate Commission was one of Kentucky’s most well run boards. Upon closer review, change was necessary, as well as precautionary, in order to avoid potential problems in the future.

In the case North Carolina Board of Dental Examiners v. Federal Trade Commission, the U.S. Supreme Court held that if a board’s membership includes industry participants, such as real estate boards where market participants regulate other market participants, anti-trust liability may exist if there is inadequate state supervision of the board or commission.

Considering that decision, Governor Bevin began a review of all of Kentucky’s boards and commissions to determine vulnerability and, where unfavorable conditions were present, reorganize them.

The Administration also wanted to identify inefficiencies and streamline government operations where possible.

In December, Governor Bevin issued an Executive Order reorganizing the Kentucky Real Estate Commission, Real Estate Appraisers Board, Board of Auctioneers and Kentucky Board of Home Inspectors and creating the Kentucky Real Estate Authority. Kentucky REALTORS® thoroughly reviewed the Executive Order, evaluating its impact on real estate licensees and the marketplace and offering its input. In January, the General Assembly convened and took the reins to continue the process.

Representatives Robbie Mills and David Meade introduced HB 443 to create statutory language for a new configuration, regulatory and appeal processes for Kentucky’s real estate related groups.

Kentucky REALTORS® worked directly with these sponsors, and other supporters 18 | kyrealtors.com

of HB 443, to continue refining the bill.

Specifically, a “bottom up” regulatory process was incorporated, supporting Kentucky REALTORS®’ belief that those closest to the action are best positioned to make decisions and craft policies that will have a direct impact on the licensees and real estate market.

Additionally, Kentucky REALTORS® was supportive of the judicial procedure incorporated into the language, believing it provides appropriate due process to licensees and the public, starting at the Commission level and offering an appeal to the Executive Director of the Kentucky Real Estate Authority with a final opportunity to take an appeal to a Circuit Court in the appellant’s local jurisdiction.

Kentucky REALTORS® is granted authority to recommend to the Governor a list of candidates to fill board vacancies. Kentucky REALTORS® undergoes an extensive and thorough process of reviewing and interviewing nominees to recommend the most highly qualified individuals to serve on the Commission.

So, how will these changes affect real estate professionals in Kentucky on a day-today basis? Here are a few frequently asked questions and answers: Q: Are there any changes for licensees to complete their education requirements by December 31?

A: Currently, there are no changes to the deadline to complete required education.

The deadline remains December 31 and

Q: Did anything change with Kentucky’s license law and will my license renewal date change?

A: The license laws for Kentucky did not change. Everything that was required and enforceable remains in place. Also, the license renewal date did not change.

Q: If I need to get in contact with someone at the Kentucky Real Estate Commission (KREC), how can I do that?

A: You can look up staff contact information on the website at krec.ky.gov or call 888.373.3300. Office staff at the Kentucky Real Estate Commission has not changed under this restructuring.

Q: Will the KREC office move to a new location?

A: At present, plans to relocate the KREC office and other offices supporting the Board of Home Inspectors, Appraisers and Auctioneers are unknown. The KREC office will remain in Louisville at the Linn Station Road address for now. All real estate-related industry boards are expected to eventually relocate to one location.

Q: If I have a complaint filed against me, will that process change?

A: The process to file a complaint, or to have a complaint filed against a licensee, has not changed. You will need to contact KREC to file a complaint and start the process.

Ken Warden, a past president of Kentucky REALTORS® and recipient of the Distinguished Service Award, was named Executive Director of KREA in January. Board members of the Kentucky Real Estate Commission are Lois Ann Disponett (Chair), Tom Biederman and Kim Sickles.

EDUCATION

GRI schedule for 2017 To learn more about the program and to register for courses, visit kyrealtorinstitute.com.

GRI 400: Finance Richmond, April 20

GRI 100: Ethics & Law Louisville, April 24

GRI 100: Ethics & Law Lexington, May 5

GRI 400: Finance Florence, May 18

GRI 200 - Risk Reduction Bowling Green, May 25

GRI 500: Contracts

Bowling Green, June 8 KRI Trustees Randy Newsome and Laura Disney work to create new education programming with Nicole Knudtson, Kentucky REALTORS® Education Director.

KREEF: new name, expanded programming The Kentucky Real Estate Education Foundation (KREEF) is changing its name to the Kentucky REALTOR® Institute (KRI). Check out the website today to view the new logo and get more information about the name change. In addition to the name change, a fresh, new website is in the works to better serve real estate professionals and those interested in getting started in a real estate career.

KRI provides a comprehensive selection of education including classroom CE, online CE, designation and certification courses, pre- and post-licensing and GRI programming to meet the needs of every student. Call today to see what we have to offer or just check the website at kyrealtorinstitute.com.

GRI 200: Risk Reduction Florence, June 14

GRI 100: Ethics & Law Florence, July 11

GRI 500: Contracts

Lexington, July 13

GRI 300: Marketing Louisville, July 17

GRI 300: Marketing

Bowling Green, July 27

GRI 600: Business Systems & Tech Lexington, August 1

GRI 300: Marketing

Henderson, August 7

GRI 100: Ethics & Law

Bowling Green, August 10

The selection of online offerings has recently expanded to include video-based courses to cover both CE, post-licensing (PLE) and GRI credit. The Keynote Series of online courses feature top instructors from across the country at affordable rates.

Some courses also include ethics credit which is now required every two years (the current cycle is 2017–2018).

GRI 400: Finance

Lexington, August 15

GRI 200: Risk Reduction Louisville, August 21

GRI 300: Marketing

Florence, August 22

A big change going forward is that the GRI program (GRI 100–600) covers all the required PLE hours. To help new licensees gain these hours, KRI has expanded the number of GRI courses being offered and increased the number of locations where the courses are held. This year, the number of GRI courses being offered is the most in the history of the program. If you want to start the coursework to earn the most popular national designation in real estate, there has never been a better time than now. If you already have the GRI designation, but want to retake a course for all the updates and to earn CE credit, a discount is offered to allow you to audit the courses you want.

KRI makes available several scholarships to help assist with costs associated with education. There are three types – GRI, college/post-secondary education and pre-licensing. For more information and to apply, visit the website at kyrealtorinstitute.com and download the application.

GRI 500: Contracts

Florence, September 12

GRI 400: Finance

Bowling Green, September 14

GRI 100 - Ethics & Law Murray, September 18

GRI 200 - Risk Reduction Paducah, September 19

GRI 300: Marketing

Lexington, October 3

GRI 400: Finance

Louisville, October 16

GRI 500: Contracts

Owensboro, October 26

Know someone that wants to get a real estate license?

You can get a referral discount off upcoming classes! Want to know more, contact Nicole today at ndeboth@kar.com.

GRI 300: Marketing

Richmond, November 9

GRI 100: Ethics & Law

Hopkinsville, November 9

GRI 600: Business Systems & Tech Bowling Green, December 28

SPRING 2017 | Kentucky REALTORS® | 19

BEING SMART WHILE BEING

W

ith the deadline for submitting this article looming ahead of me, I did what most members of my generation do when faced with limited time and significant work ahead of them, I went online. I checked out Instagram, read some stories on Snapchat and browsed Facebook. During my hour of “socialization” I learned that a friend of mine completed her first triathlon, a work acquaintance was singing the praises of a title company that had closed a very complicated deal she put together and two people I follow were warning me not to open emails or accept new friend requests from them as they had been hacked. How appropriate that I would be writing an article on legal issues and risks arising from social media and technology when so many of those issues all exist in my social media feed.

Intellectual Property Infringement My friend who completed her first triathlon proudly posted pictures of herself taken along the race course. In each picture the grimacing face of my friend is visible behind the watermarked logo of the official race photographer. These pictures are no different than the ones that show up daily in our social media feeds, school pictures of our children, wedding photos of our friends, and if you’re involved in real estate, lots of pictures of properties for sale. The internet has made it easier and faster to document every aspect of our lives and the lives of those around us, and to do so in beautiful (if slightly filtered) pictures. The risk that exists with sharing those pictures is that we may be infringing on the intellectual property rights of another. Virtually every original work that is ultimately fixed in a tangible medium of expression is eligible for copyright protection. In most cases, copyright protection is instantaneous upon fixation. Everything from a novel to a text message can be subject to copyright protection.

Copyright vests in the author many rights including: Making and distributing copies Making derivative works Making public performances and display Licensing the use of the work by another The pictures taken by the photographer at the triathlon were subject to copyright protection with the photographer owning the rights. When my friend posted the pictures online, she was making and distributing copies without having obtained the proper license and was infringing on the rights of the photographer. While the photographer had taken the step of watermarking the picture and including a copyright mark, he wasn’t required to; registration 20 | kyrealtors.com

and marking of copyrighted materials is not required in the United States. Giving attribution to the author of the protected work does not relieve the person posting the material from liability for infringement; you may not be plagiarizing the work, but you are infringing on the copyright.

It is important that real estate brokerages and agents take steps to prevent intellectual property infringement in establishing their online presence. This means adopting policies and procedures addressing licensing materials obtained from a third party before posting them and clarifying who owns material created by an agent during their affiliation with a brokerage.

Endorsements, Testimonials and Online Reviews “Yes! Best closing ever at @DriverTitleCo! I wouldn’t trust anybody else for this complicated deal! #awesomeservice #blessed” My contact who took to Twitter to post how pleased she was with the service provided by a title company was providing what would most likely be viewed as a testimonial or endorsement. In fewer than 140 characters you can get in quite a bit of trouble.

The Federal Trade Commission regulates the use of testimonials and endorsements in advertising. The FTC guidelines on the use of testimonials and endorsements states that: “Endorsements must be truthful and not misleading. If the advertiser doesn’t have proof that the endorser’s experience represents what consumers will achieve by using the product, the ad must clearly and conspicuously disclose the generally expected results in the depicted circumstances, and if there’s a connection between the endorser and the marketer of the product that would affect how people evaluate the endorsement, it should be disclosed.”

If we focus on the second portion “connection between the endorser and the marketer” we need to look at the relationship between my contact and the title company that she’s endorsing.

If my contact owns part of the company, is related to an employee or received payment or a gift in exchange for her tweet, that connection could certainly change how most people would evaluate the endorsement. To disclose the relationship in such a limited space, the easiest approach is to add #ad or #sponsored to the tweet. We also must be aware of the potential for a RESPA violation if we are receiving “something of value” for the referral of a settlement service. If my friend was receiving payment for her positive tweets and those tweets included recommendations for use of the service and were read by her clients who are her followers, this could be a serious red flag for a potential violation.

“Groan…my fax machine just spit out a home inspection from Philip Driver. What kind of dinosaur still sends faxes? Reading this inspection, the old geezer must have his toupee on too tight and has limited the flow of blood to his brain” We’ve all read a post or tweet like this and we all recognize that not all comments about a company found online are positive and not all reviews are glowing. How we respond to negative reviews and negative comments varies. Article 15 of the NAR Code of Ethics states: “REALTORS® shall not knowingly or recklessly make false or misleading statements about other real estate professionals, their businesses, or their business practices.” If the person who wrote the post is a REALTOR® and the comment is about a real estate professional, then the Code of Ethics can come into play when determining potential action. Many people are turning to the legal system and claims of libel and defamation in response to negative online comments. Defamation is a false statement that is published or spoken, about an identifiable person or entity that causes harm.

A recent case out of New York involved a consumer frustrated with the service provided by a home improvement contractor. In Mr. Sandless v. Fanelli, Ms. Fanelli hired Mr. Sandless (Matt Gardiner) to refinish the floors in her living and dining room. Ms. Fanelli wasn’t pleased with the completed work or the corrective actions of the company after her complaints, and posted many on-line reviews on Yelp including the following: “this guy mat the owner is a scam do not use him you will regret doing business with this company I’m going to court he is a scam customers please beware he will destroy your floors he is nothing by a liar he robs customers, and promises you everything if you want s### then go with him if you like nice work find another he is A SCAM LIAR BULL###ER” Mr. Sandless filed a defamation suit against Ms. Fanelli and was awarded $1,000 in damages. In his ruling the judge said that this post crossed the line from opinion to libel. “Terms such as ‘scam’ ‘con artist’ and ‘robs’ imply actions approaching criminal wrongdoing rather than someone who failed to live up to the terms of a contract.” A representative from Yelp who commented on the outcome of the case said “We frequently find that a better course of action, rather than suing your customers, is publicly responding to a critical review in the same forum.”

Real estate brokerages need to identify in advance of any potential negative online comments who the spokesperson for the company will be in making any comments or responses. While your immediate response to reading a negative review may be anger, it’s important to take a step back before responding and

remember that frequently the best response to a negative comment is a positive comment from a pleased client. If you find yourself in the position where you want to turn to social media to vent about a negative encounter with a peer, conduct a conscientious review of what you’ve written and ask yourself “What do I want to accomplish with this?” “What are the potential ramifications of this post?” and my favorite “Would my mother approve?”

Social Engineering and Phishing “Heads up, my FB account was hacked. Ignore any pm’s from me” “Another doppelganger FB account is out there- if we’re already friends, don’t accept a new friend request from what looks like me- if we’re not already friends, then why are you reading this?”

I think most of us have seen a posting like this or experienced a situation where someone we’re already friends with on Facebook will appear to send us a new friend request. The concept of phishing is relatively simple; someone will “bait” us with a message, an email or a friend request and we (the target or the fish) will take the bait and open an attachment that contains malware or provide information that can be used to harm us. Social engineering is the addition of manipulation of the target into taking action. In the case of one of my friends who posted that she had been hacked, I had received a message from her account earlier in the day where she told me that she was traveling overseas and had lost her passport and wallet and desperately needed me to save her and wire her money.

Since I had waved to her in the carpool line that morning, I was fairly certain she didn’t need me to rescue her. However, not all of her friends who received that message would have seen her that morning and based on her social media activity and frequent overseas travel, her plea for help would not be so easily dismissed.

How to protect yourself? Pay attention to your passwords. This seems pretty basic and it is. Avoid the obvious “Password123” or your name and birthdate combination and don’t use the same password for multiple accounts. Install updates. This is also very basic but is often forgotten. Applications are updated to repair flaws that hackers have found in the system; Installing the update is how you fix the flaws and keep the application running smoothly and safely. Verify that your friend is actually sending you a request before acting on it and don’t open attachments or click on links that you weren’t expecting to receive.

IBM urges its employees to “Be Smart” in their social media usage and those words of guidance are very appropriate in their simplicity. Be Smart in what you post. Be Smart in what you share. Be Smart in how you interact with others.

Trista Curzydlo, JD, is a graduate of Washburn University, School of Law. Her extensive legal experience includes serving as Assistant Legal Counsel to a governor and as an Assistant District Attorney assigned to the Consumer Fraud division.

Trista is the former Government Affairs Director and Legal Counsel for the Wichita Area Association of REALTORS® and the South Central Kansas MLS. Trista now speaks nationally on topics related to real estate law and ethics. This article is reprinted by permission of Trista Curzydlo and C4 Consulting, LLC. SPRING 2017 | Kentucky REALTORS® | 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@kyrealtors.com.

Lexington Bluegrass Association receives NAR grant LBAR was awarded a $15,000 grant through NAR’s Housing Opportunity Program to support activities that create and expand affordable housing opportunities (LBAR donated $1,500 to the project). With the Rent & Deposit Assistant (RDA) Project, the grant is being used to pay deposit and first month’s rent for up to 15 households experiencing homelessness who have documented income to pay ongoing rent. LBAR is partnering with the Lexington Fayette Urban County Government Office of Homelessness Prevention and Intervention and the New Life Day Center to provide direct service to reduce homelessness. Reducing homelessness helps stabilize neighborhoods and improves the overall quality of the community helping REALTORS® promote and sell neighborhoods. NAR’s Housing Opportunity Grants were established in 2006. Individual grants are awarded ten times per year. The grants support a wide range of housing opportunity activitie, including: housing symposia, home buyer education or housing fairs, counseling and financial literacy efforts, down payment or closing cost financial assistance programs, housing needs studies and Realtor® affordability housing education. To learn more about the grant process, search www.realtoractioncenter.com under “For Associations” then “Housing Opportunity.”

Lexington needs 22,000 additional housing units to meet demand A report released by a consortium of Lexington stakeholders forecasts household demand for 22,780 new housing units by 2025. The Fayette County Housing Demand study cited statistics from the Kentucky State Data Center that suggest Lexington will continue to grow at a rate of 1.2% annually thru 2025, yielding a projected Fayette County population of 354,000. In order to meet the growing demand, the report suggests that Lexington will need approximately 15,160 new single family residential units, 6,275 units within multi-family structures, and 1,345 units classified as condominiums or “other” units by 2025. It also showed an unmet gap of 6,000 affordable rental units and further identified the likely loss of 4,000 currently affordable rental units due to rent acceleration over the next decade. To read the report, go to bit.ly/fhdstudy.

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Amazon plans worldwide hub at CVG – largest investment ever at airport "Amazon has committed to invest $1.49 billion and bring nearly 3,000 new jobs to the region with the largest one-time business deal ever executed in Northern Kentucky," said Dan Tobergte, president of the Northern Kentucky Economic Development Corp.

Amazon has not yet set a date for its groundbreaking or for adding the jobs, however, its air cargo carrier, Amazon Prime Air, plans to start operating some flights at CVG in April 2017. Kentucky, Boone County and CVG airport moved quickly to secure the Amazon deal by providing a $40 million state and local tax incentive and another $5 million from CVG. In addition to the jobs, Amazon will build several facilities on nearly 920 acres of land surrounding the airport, including a 3 million-square-foot sorting facility and a 350,000 square-foot loading dock. It also plans to build enough ramp space to house 100 cargo jets. Amazon already has a sorting facility near CVG.

Murray Calloway County Board The Board of Directors and committee chairs of the Murray Calloway County Board held a retreat in March at the Kenlake State Resort Park. The retreat focused on strategic planning, the core standards and reviewing the results of membership surveys.

In order to become more familiar with parliamentary procedures, the Board invited the Calloway County High School Future Farmers of America group to demonstrate the correct procedures in conducting a meeting using Robert’s Rules.

Greater Owensboro REALTOR® Association GORA will hold its second annual Home Ownership Matters Fair on May 6 at Towne Square Mall from 10am-2pm. The Association is inviting the entire Owensboro community to join them for a free, fun-filled day with entertainment and fun for all ages. Promotion of this event includes local radio stations, social and print media and more. Support offered through donations and sponsorships from local businesses will assist the Cliff Hagan Boys and Girls Club.

Last year, hundreds of people were impacted through this event. A total of $15,000 was raised, which allowed the Boys and Girls Club to purchase a van so thirty more kids could attend the club every week. If you want to be a part of the event or just stop in to see all the excitement, come on down.

Northern Kentucky Association NKAR selected the Boys and Girls Clubs of Greater Cincinnati, specifically the two Northern Kentucky Clubs (Covington and Newport) as one of their Community Service projects for 2016 and the Affiliate Council named the two clubs as the charity to receive any excess funds raised from their events throughout the year. NKAR did a landscaping beautification project in the spring of 2016 at the Covington location and in the fall of 2016, painted the Newport facility and cataloged thousands of books for their newly created library. The directors of NKAR and the Affiliate Council presented a check to the BCGA local chapters in the amount of $8,470 at the beginning of 2017 and will continue to provide service support to the clubs throughout the year.

Edgewood, Kentucky named top housing market Edgewood, in Kenton County in Northern Kentucky, took the number one spot in the SmartAsset 2017 Healthiest Housing Markets Study. Rankings are based on the average number of years residents spend in homes, home values, ease of sale and the costs associated with ownership. The study also ranked the healthiest housing markets in each state. On the list for Kentucky, and rounding out the top five, were Jeffersontown at number two, followed by Bellevue, Erlanger and Fort Thomas.

Kentucky cities ranked best for early retirement Louisville and Lexington are the top two places in the nation for early retirement, among the nation’s 80 largest cities, according to SmartAsset, a New York-based personal finance company. Louisville was ranked No. 1 and Lexington No. 2 in the findings. Both cities have much in common, like low costs of living and affordable healthcare. Also for 2016, Kentucky ranked a close second for the best states for an early retirement by Smart Asset, thanks to six metrics scoring in the top 20 and its tax-friendly environment.

Particularly attractive for prospective early retirees are the low costs of living. Kentucky ranks fourth in average housing costs per year at $8,600 and fifth in non-housing cost of living.

Lexington ranks high for home fire risk

Greater Louisville Association GLAR is holding a Boost Your Business Speaker Series in 2017 which is designed to assist members in growing their business with proven tips, techniques, strategies and best practices. National speakers featured in the series are Leigh Brown, Pat Zaby and David Knox.

GLAR also hosted their spring Week of Service in March. During this dedicated week, volunteer opportunities are listed on the website at www.WeekofService.com. Members use the site to search for opportunities and can then sign up and volunteer with local non-profits to give back to the community where they live and work. In addition to the Week of Service, GLAR also hosted its Charity Bowling Event in March. They had a sold-out event with 250 members bowling to raise over $4,200 for St. Athanasius Food Pantry, Forgotten Louisville, New Hope Pregnancy Resource Center and Catholic Charities Refugee Program.

A new index from The Hartford, a leader in property and casualty insurance, reveals that Lexington ranks 39th among the 100 U.S. cities with the highest home fire risk.

Findings from the survey reveal that many residents take fire safety seriously, and have fire safety devices like smoke detectors and fire extinguishers in their home. The findings also indicate that many people also engage in potentially risky fire safety behavior – some of which they may not even be aware.

For example, in Lexington: • 45 percent admitted they had charged a device (e.g., cell phone, tablet, laptop) in or on their bed overnight in the past year – compared to 34 percent nationally.

• 56 percent said that in the past year, they have left the kitchen while cooking something on a stove.

• 43 percent revealed that they have left a room with a candle lit at least once over the past year – compared to 37 percent nationally.

A home fire is reported in the U.S. every 86 seconds and 33 percent of home fires are started by children 6-9 years old. The top causes of fires according to the survey are electrical (26%), cooking/ their stove (25%) or a candle (12%).

SPRING 2017 | Kentucky REALTORS® | 23

BY THE NUMBERS

According to the American Moving & Storage Association, the average move in the U.S. costs a shocking $5,630. Costs will vary greatly upon family size, house size and location.

$5,630 50 year low

Though Americans recently surveyed by the Pew Research Center believe homeownership is out of reach for young adults in their 20s and 30s, 81 percent believe “strongly” that buying a home is the best long-term investment in the U.S.

81% $13.7 billion

According to NAR, the median tenure of a family in a home, over a 23-year span (1985-2008), averaged exactly six years. However, since 2008, that average is almost nine years – an increase of almost 50%.

Kentucky’s seasonally adjusted unemployment rate rose to 5 percent in January 2017 from a revised 4.8 percent in December 2016, but below the 5.3 percent rate recorded for the state in January 2016, according to the Office of Employment and Training (OET). In 2016, Kentucky’s annual unemployment rate dropped to 5 percent from 5.3 percent in 2015.

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6 years vs.

9 years

85% 5 percent 127, 137, 259

The homeownership rate spiraled to its lowest point in 50 years earlier this year, and while it picked up in the third quarter, it remains off its recent peak.

For low-income households - a term that assumes three-person households earning an annual income of $44,000 or less - the homeownership rate has fallen from 52.9 percent in 2005 to 41.7 percent today. The rate among middle- and high-income households ($44,000-$132,000 and $132,000 or more, in order), to compare, fell from 73.8 percent in 2004 to 68.3 percent today and 86.6 percent in 2004 to 80.3 percent today, respectively.

The tourism and travel industry contributed over $13.7 billion to Kentucky’s economy in 2015.

Direct expenditures by tourists accounted for over $8.7 billion of this total - an increase of 5 percent since 2014.

Millennial buyers, at 85 percent, were the most likely generation to view their home purchase as a good financial investment according to the 2017 Home Buyer and Seller Generational report. These strong feelings bode well for even greater housing demand in the future as more millennials settle down and begin raising families.

In Kentucky, the Red Tape Reduction Initiative has achieved progress since it was first introduced. There have been 127 regulations repealed, 137 regulations that have been amended and 259 targeted for repeal.

HOUSING STATS

Momentum continues for Kentucky real estate market Inventory shortage continues to hinder first-time buyers Coming off a strong 2016, Kentucky real estate continued its momentum in 2017 as January saw home sales break the 3,000unit mark, a new high for the month. The 16 percent gain (3,050 in 2017 versus 2,637 in 2016) follows the national trend where housing increased at its fastest pace in almost a decade. Year to date, home sales are up 3.8 percent even with a slower February where sales dropped 2 percent for the month.

The median price rose 2.5 percent in January ($116,946 in 2017 versus $114,123 in 2016) and increased 5.2 percent in February ($114,298 in 2017 versus $108,615 in 2016) even with a slight decrease in homes sold. In Kentucky, median home prices have increased monthly, year-over-year, in 55 of the previous 62 months. Nationally, prices rose considerably in January as it marked the 59th consecutive month of year-over-year gains.

“Kentucky is still seeing a shortage of inventory, and if the economy continues to improve, more buyers are going to be in the market as the spring selling season approaches,” stated Mike Becker, 2017 president of Kentucky REALTORS®. “Affordability in the state makes it easier to purchase a home, however, there just aren’t enough properties available to meet the current demand, especially for the first-time buyer.”

Inventory levels were down over 30 percent in January compared to the same period a year earlier and days on market were down 14 percent. The housing market continues to struggle with available homes even as consumer confidence soared to its highest level in the history of NAR’s quarterly Housing Opportunities and Market Experience (HOME) survey.

Lawrence Yun, chief economist for the National Association of REALTORS, said “the housing market is off to a prosperous start as homebuyers staved off inventory levels that are far from adequate.”

He continued by saying “competition is likely to heat up even more heading into the spring for house hunters looking for homes in the lower and mid-market price range.”

With the recent spike in consumer confidence and the number of households that believe now is a good time to buy a home, competition in the housing market may remain strong for several months. With the recent decision by the Federal Reserve to raise its key interest rate and the indication that two additional increases are likely to occur later in 2017, buyers may be even more eager to jump into the market before the spring season ends. Mortgage rates have inched up over the previous months in anticipation of the Fed increase, averaging over 4 percent in February from a near record low of under 3.5 percent last summer.

“Buyers who are qualified to purchase may want to consider getting into the market sooner rather than later as financing conditions may change going forward,” stated Becker. “Inventory shortages aren’t going to significantly improve which means buyers may also have to search longer than expected to find a home that suits their needs.”

To view housing statistics for the state, visit housingstats.kyrealtors.com.

YTD 2016 vs YTD 2017 Board/Association

# Sold 2016

# Sold 2017

Sold %

Median Price 2016

Median Price 2017 Median Price %

Region One Greater Owensboro Association 191 159 -17% 128475 128500 0% Henderson-Audubon Board 46 52 13% 104725 99475 -5% Hopkinsville-Christian Board 61 56 -8% 104200 106125 2% Kentucky-Barkley Lakes Board 49 58 18% 95300 119125 25% Madisonville-Hopkins Board 51 63 24% 89250 97225 9% Mayfield-Graves Board 30 40 33% 81600 48850 -40% Murray Calloway County Board 33 48 45% 115250 129500 12% Paducah Board 90 95 6% 102800 113375 10% Region Two Central Kentucky Association 71 67 -6% 98375 94275 -4% Heart of Kentucky Association 312 326 4% 130000 130450 0% Old Kentucky Home Board 84 81 -4% 121950 136750 12% REALTOR® Association of SKY 277 329 19% 126750 145975 15% South Central Kentucky Association 53 56 6% 110375 102500 -7% Region Three Greater Louisville Association 1977 2011 2% 147375 159225 8% Region Four Lexington Bluegrass Association 1413 1570 11% 143500 145500 1% Region Five Northern Kentucky Association 683 773 13% 137875 142250 3% Region Six Ashland Area Board 144 133 -8% 81875 98500 20% Eastern Kentucky Association 64 76 19% 103750 72250 -30% Madison County Board 150 68 -55% 134950 139125 3% Pennyrile Board 29 38 31% 100500 102088 2% Somerset-Lake Cumberland Board 92 142 54% 79875 117000 46%

Totals

5900 6241 5.8% 111369

115622 3.8% SPRING 2017 | Kentucky REALTORS® | 25

WIRE FRAUDSTERS

TARGETING REAL ESTATE TRANSACTIONS

BY JESSICA EDGERTON

NAR ASSOCIATE COUNSEL

I

n recent months, real estate professionals have reported an upswing in a particularly insidious wire scam. A hacker will break into a licensee’s email account to obtain information about upcoming real estate transactions. After monitoring the account to determine the likely timing of a close, the hacker will send an email to the buyer, posing either as the title company representative or as the licensee. The fraudulent email will contain new wiring instructions or routing information, and will request that the buyer send transaction-related funds accordingly. Unfortunately, some buyers have fallen for this scheme, and have lost money.

A possible red flag to be aware of, and to alert clients to, is any reference to a “SWIFT wire” transaction, a term that indicates an overseas destination for the funds. However, unlike many other email-based “phishing” schemes, this particular manifestation appears to be more sophisticated and less recognizable as fraud. The communications do not contain the typical grammatical or stylistic oddities that are often present in scam emails. In addition, because the perpetrator has been monitoring the licensee’s email account, the fraudulent communication may include detailed and accurate information pertaining to the real estate transaction, including existing wire and banking information, file numbers, and key dates, names, and addresses. Finally, the emails may come from what appears to be a legitimate email address, either because the thief has successfully created a sham account containing a legitimate business’s name, or because he or she is sending the email from a truly legitimate — albeit hacked — account.

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Be aware, also, that this particular scheme is only one of many forms of online fraud being perpetrated against real estate licensees and their clients. In protecting all parties to a real estate transaction from cybercrime, real estate professionals should consider the following guidance.

PREVENTION The best line of defense against fraudsters is to make sure that all parties involved in a real estate transaction implement security measures before a cyberattack occurs. These measures include the following: Never send wire transfer information via email. For that matter, never send any sensitive information via email, including banking information, routing numbers, PINS, or any other financial information.

Inform clients from day one about your email and communication practices, and alert them to the possibility of fraudulent activity. Explain that you will never send, or request that they send, sensitive information via email.

Prior to wiring any funds, the wirer should contact the intended recipient via a verified telephone number and confirm that the wiring information is accurate. Do not rely on telephone numbers or website addresses provided within an unverified email, as fraudsters often provide their own contact information and set up convincing fake websites in furtherance of their schemes.

If a situation arises in which you have no choice but to send information about a transaction via email, make sure to use encrypted email.

Security experts often recommend “going with your gut.” Tell clients that if an email or a telephone call ever seems suspicious or “off,” that they should refrain from taking any action until the communication has been independently verified as legitimate.

When it comes to safety and cybersecurity, always err on the side of being overly cautious.

If you receive a suspicious email, do not open it. If you have already opened it, do not click on any links contained in the email.

Do not open any attachments. Do not call any numbers listed in the email. Do not reply to the email.

Clean out your email account on a regular basis. Your emails may establish patterns in your business practice over time that hackers can use against you. In addition, a longstanding backlog of emails may contain sensitive information from months or years past. You can always save important emails in a secure location on your internal system or hard drive.

Change your usernames and passwords on a regular basis, and make sure your employees and licensees do the same.

Never use usernames or passwords that are easy to guess. Never, ever use the password “password.”

Make sure to implement the most up-to-date firewall and antivirus technologies in your business.

Wire Fraud Email Notice Template The following is an example of a notice you may wish to consider adding to your email signature line (or to give to your clients). This notice should not serve as a substitute for educating your clients and other participants in your real estate transactions about email wire fraud.

IMPORTANT NOTICE: Never trust wiring instructions sent via email. Cyber criminals are hacking email accounts and sending emails with fake wiring instructions. These emails are convincing and sophisticated. Always independently confirm wiring instructions in person or via a telephone call to a trusted and verified phone number. Never wire money without double-checking that the wiring instructions are correct.

DAMAGE CONTROL If you believe your email or any other account has been hacked, you should take the following steps: Immediately change all usernames and passwords associated with any account that you believe may have been compromised or otherwise made vulnerable by the attack.

Contact any clients or other parties who may have been exposed during the attack so that they take appropriate action. Remind them not to comply with any requests from an unverified source.

Report any fraudulent activity to the Federal Bureau of Investigations via their Internet Crime Complaint Center. More information can be found here: http://www.fbi.gov/scams-safety/e-scams.

Brokers should report any fraudulent activity to their state or local REALTOR® association so that the associations can send out alerts or take other appropriate action, including contacting NAR. This advice is not all-inclusive, and real estate practitioners should work with Information Technology and cybersecurity professionals to ensure that their email accounts, online systems, and business practices are as secure and up-to-date as possible.

For more information on this and other cyberscams, as well as further information on cybersecurity best practices, visit these resources: http://www.realtor.org/articles/request-to-redirect-funds-should-triggercaution http://www.realtor.org/topics/data-privacy-and-security http://www.realtor.org/topics/risk-management http://www.realtor.org/articles/internet-security-best-practices http://www.realtor.org/topics/realtor-safety/articles Copyright NATIONAL ASSOCIATION OF REALTORS®. Reprinted with permission.

Jessica Edgerton is associate counsel with the National Association of REALTORS®. She is a featured speaker at the upcoming Broker Summit in Louisville on April 26. Edgerton's work at NAR includes extensive membership education and outreach. She is a regular speaker on the subjects of cyber fraud and cybersecurity, and contributes to REALTOR® Magazine, AE Magazine, and RIS Media on a wide range of risk management topics. Edgerton has appeared on CBS Chicago, Univision, and national news radio as a cyber fraud and real estate risk management commentator. Prior to joining NAR, Edgerton served as General Counsel for a national appraisal management company.

SPRING 2017 | Kentucky REALTORS® | 27

Why you never close with an

I

ENCROACHMENT ISSUE

magine you are representing a buyer on the purchase of their new home. The home is in a nice new subdivision, and it has a spacious backyard. Your buyer has made an offer and the seller has accepted it.

However, during the walkthrough, a few hours before the scheduled closing, you and your buyer discover that a neighbor has erected a fence that significantly encroaches on the property your buyer intends to purchase.

Your buyer is panicking because his family is moving from out of state and the moving trucks are already here. You convince him to relax, while you call the listing agent. The listing agent calls his client who informs her that the neighbor made a mistake. He also sends her a recent survey, which she shares with you, that clearly shows the neighbor made a mistake.

The seller assures you that the neighbor is a wonderful man, and he is sure he will remedy the mistake. Your client is convinced and agrees to go ahead and close. Unfortunately, after the closing, the neighbor refuses to clear up the problem. Then your client goes to an attorney, with the survey in hand, in order to elicit his help in forcing the neighbor to remove the fence.

However, the attorney tells him that he can’t get him to remove the fence because of champerty.

KRS 372.070, the champerty statute, provides in pertinent part that any sale or conveyance of land, or the pretended right or title thereto, of which any other person has adverse possession at the time of the sale or conveyance is void. In essence, the statute operates to void the transfer of any portion of land by a grantor to a grantee when such area is being held adversely by a third party. Henninger v. Brewster, 357 S.W.3d 920, 925 (Ky.App. 2012).

Under the statute, the possession still must be actual, open and notorious, exclusive and hostile; however, it does not need to be for any specific length of time. Id. citing Cowherd v. Brooks, 456 S.W.2d 827, 830 (Ky. 1970).

Actual possession is evidenced by such use and occupation of the property as to establish dominion over it. Moore v. Stills, 307 S.W.3d 71 (Ky.Sup.Ct. 2010). Intent to exercise dominion may be evidenced by the erection of physical improvements on the property, such as the aforementioned fence.

The open and notorious element requires the possessor to openly evince a purpose to hold dominion over the property with such hostility that it will give the non-possessory owners notice of the adverse claim. Phillips v. Akers, 103 S.E.3d 705 (Ky.App. 2003).

Hostility means nothing more than that it is "without permission of the one legally empowered to give possession, usually the owner.” Henninger, 357 S.W.3d at 926. It is the legal owner’s knowledge, either actual or imputable, of another’s possession of 28 | kar.com

lands that effects ownership. Appalachian Regional Healthcare, Inc. v. Royal Crown Bottling Company, Inc., 824 S.W.2d 878 (Ky.Sup. Ct. 1992). Notoriety and exclusiveness are also often evidenced by the erection of improvements on property. Women’s Temperance Union v. Thomas, 412 S.W.2d 869, (Ky.App. 1967).

The policy behind this statute is to avoid the sale and purchase of lawsuits. In essence, when one purchases a property he should know what he is purchasing, know whether another is upon the area he is purchasing and have the seller deal with any such issue prior to purchase. The statute curbs excess litigation for the operation of an efficient judicial system, and places some accountability upon a purchaser to know what he is buying.

Based upon the foregoing, the neighbor exhibited all the elements of adverse possession by erecting a fence on property he did not own. This put the buyer on notice, prior to purchase and conveyance of the property, that the property behind the fence was being adversely held by a third party.

The moral of the story is simple: never close when there is evidence of an encroachment. Otherwise, you may not be able to clear up the problem afterward.

Jason Vaughn is a lawyer with Vaughn & Smith, PLLC in Louisville and serves as legal counsel to KAR. The attorneys at Vaughn & Smith, PLLC constantly monitor the real estate industry as a whole, as well as any and all changes in the law that may affect it. They have intimate knowledge of commercial and residential real estate transactions and can utilize this base knowledge when representing their client's interests. This discussion should not be viewed as legal advice. Please consult your attorney.

UP TO CODE

Ethics violations and how to handle a filed complaint

BY JULIE JOHNSON

DIRECTOR OF PROFESSIONAL STANDARDS & GOVERNANCE

O

ften times, difficulties between real estate professionals and consumers result from misunderstanding, miscommunication or a lack of adequate communication.

Consumers that contact the Kentucky REALTORS® office are encouraged to reach out to the REALTOR® or principal broker in that firm to have an open, constructive discussion in an attempt to resolve questions or differences.

If the consumer is still not satisfied, they may ask for information in order to file a complaint. In addition to processing formal ethics complaints against REALTOR® members, staff offers the assistance of an Ombudsman. Parties tend to be more satisfied with this informal dispute resolution process, which is quicker than filing an ethics complaint and often helps repair damaged relationships.

Despite your best effort for an amicable solution, an ethics complaint may be filed against you some day. Keep in mind that any person, whether a member or not, having reason to believe that a member is guilty of any conduct subject to disciplinary action, may file a complaint.

The procedures for processing ethics complaints are established by the National Association of REALTORS® but allows for some “customization” by the local or state association that administers the complaint.

After an ethics complaint is submitted to Kentucky REALTORS®, it is reviewed by the Grievance Committee. If the complaint is dismissed by the Grievance Committee, then the REALTOR® is not notified that a complaint was filed. However, if the Grievance Committee determines that,

based on the information in the complaint, a violation of the REALTOR® Code of Ethics could have occurred, then they send it forward for a response from the REALTOR® and an ethics hearing will be held. The Grievance Committee may also request additional information from the complainant if more information is necessary to determine whether a complaint will be referred for hearing.

If the REALTOR® named in the ethics complaint is not the principal broker, then the broker is copied on all correspondence sent to the respondent REALTOR® regarding the ethics complaint. The REALTOR® broker has the right to be present during the hearing and, in fact, may be required by the hearing panel to attend the hearing. The broker may consult with or testify on behalf of the respondent. If the respondent REALTOR® changes his or her firm affiliation either before or after a complaint is filed but before the Hearing Panel has reached its decision, both the former REALTOR® broker and the current REALTOR® broker may attend and participate in the ethics hearing.

If an ethics respondent resigns or otherwise causes REALTOR® membership to terminate after an ethics complaint is filed, but before final action is taken, staff is required to forward the complaint to any other Board in which the respondent continues to hold membership. If the respondent does not hold membership in another Board, or if staff is unable to determine if the respondent holds membership in another Board, the hearing will be held and the hearing panel will reach a decision regarding the possible ethics violation(s). If the respondent is found in violation, any discipline that was to be imposed will be held in abeyance until the respondent rejoins an association of REALTORS®.

Discipline that may be imposed for a violation of the Code of Ethics may include one or more of the following: letter of warning or reprimand, mandatory attendance at a relevant educational

program, probation, suspension or expulsion from the REALTOR® Association, or a fine not in excess of $15,000. Any discipline imposed that requires an action on the part of the disciplined member will also indicate any additional penalties that may be automatically invoked for failure to comply by the date specified by the ethics hearing panel.

REALTORS® who participate in MLS or otherwise access MLS information through any Board or Association in which they do not hold membership are subject to the Code of Ethics in that Board or Association on the same terms and conditions as Board members. Discipline imposed may be the same as, but may not exceed, the discipline that may be imposed on members. Boards entering into regional or reciprocal MLS agreements are encouraged to include provisions requiring signatory Boards to respect, to the extent feasible, decisions rendered by other Boards involving suspension or expulsion from membership or from MLS. Members may also be required to cease or refrain from continued conduct deemed to be in violation of the Code, or to take affirmative steps to ensure compliance with the Code, within a time period to be determined by the hearing panel. Where discipline is imposed in this circumstance, the decision of the ethics hearing panel should also include additional discipline (e.g., suspension or termination of membership) that will be imposed for failure to comply by the date specified, and to continue to comply for a specified period not to exceed three (3) years from the date of required compliance.

Boards and Associations may, as a matter of local discretion, “customize” procedures for processing ethics complaints. With regard to those procedures, Kentucky REALTORS® does not authorize the publication of the names of ethics violators and does not impose administrative processing fees against a respondent found in violation of the Code of Ethics or other membership duties.

SPRING 2017 | Kentucky REALTORS® | 29

A DAY IN THE LIFE OF...

the Region 4 Vice President with the National Association of REALTORS®

Ann McDonald, Winchester, Coldwell Banker McMahan connections and getting to know these people from all parts of the country is truly rewarding.

What’s your current role at the brokerage?

Managing broker/co-owner of the four central Kentucky offices of Coldwell Banker McMahan.

What has been the biggest highlight, to date, for you?

How many years have you been in real estate?

Getting to know so many wonderful people from around the country who, without volunteering to serve, I wouldn’t have the chance to meet. It’s insightful to sit and talk with others who are in the same profession but practice in other areas. You learn the differences and similarities to how things work. Another highlight is the wonderful training NAR gives you when you attend the meetings. Learning is always part of these meetings.

43 years.

How has real estate changed since you first became licensed?

The biggest change for listings has been technology. We used to call a hotline to see what properties had come on the market since the previous day and used large printed MLS books. Now, with technology making everything instant, we can access any listing at any time through any device to see what has been listed, what has been sold and any changes that have been made. All in real time. Now even our clients can do this. It’s quite spectacular to imagine.

What is the one goal you hope to accomplish before your term is over?

With all the changes occurring in real estate, my goal is to keep the leadership teams from all the states in my region - Kentucky, Tennessee, North Carolina and South Carolina - informed about what is happing around the country.

You have been a local president as well as a state president. What made you want to run for your current position as a region vice president with the National Association of REALTORS® (NAR)?

I was told I might be able to make a difference. That’s why I became involved at the local and state levels so it was the logical next step.

What are your main responsibilities as a region vice president?

NAR sends lots of information to me that covers a broad spectrum of issues. I am responsible for circulating, and reinforcing, these issues to all the states in my region – making sure these stay on the radar.

I also serve as a conduit between these states to relay issues back up to the leaders at the national level. Attendance at several NAR meetings is also required.

On the national level, what is the most enjoyable aspect of being involved?

It all comes back to the connections you make – getting to know the leadership of NAR on a personal level. This is the case at the local and state levels as well. Once you attend one of the meetings, you make connections and expand your network in many directions. It’s invaluable in life and business.

With volunteering in the real estate association world, why do you do it?

Real estate has been so good to me. It has allowed me to raise a family and educate them after their father died. I felt I needed to give something back to the industry.

What’s next for you?

REST! You are famous in Kentucky REALTOR® circles for your beer cheese.

How did that come about?

It is a family recipe that everyone seemed to like, so a few years back I started bringing it to state functions where everybody wanted to buy it. Instead, I started providing it to raise money for RPAC. Outside of business, what is your favorite pastime?

Watching old movies and reading.

Are there any perks to the position?

What is the best advice you have ever received?

Making great friends with the other 12 region vice presidents is the biggest benefit. Real estate, as well as life, is all about making

Do what you love and you will never work a day in your life. I have been so fortunate to do that.

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