Listed October 2017 by Richmond Association of REALTORS®

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LISTED RICHMOND REAL ESTATE TRENDS OCTOBER 24, 2017

+ CVR MLS 2017 New and Revised Forms Reference Guide + How To Work With Investor Clients + New Home Construction and Buyer Representation + Maggie Walker Community Land Trust

a magazine of the richmond association of REALTORSÂ® RARealtors.com

FROM THE PRESIDENT John O’Reilly

INVESTING IN OURSELVES, EACH OTHER AND OUR COMMUNITY Recently, it occurred to me that as Realtors, we are all about investing. Day in and day out, we help our clients make decisions about the most significant investment most of them will ever make. And to serve our clients well, we must take time to invest in our own professional development. Fortunately, as members of RAR and CVR MLS, we have a wide variety of timely educational classes and training sessions to ensure that we remain current with industry trends, the laws of Virginia and the latest technological applications. If you are looking to take your professional development to an even higher level, consider applying to RAR’s Leadership Development Academy (details on page 16). And, of course, plan to attend this year’s RE TRENDS event with keynote speaker Lawrence Yun, NAR’s Chief Economist. No one knows more about the economics of our industry than Dr. Yun; we’re extremely fortunate to have him with us in just a few weeks — October 24. The more we know, the more value we can provide our clients. But it’s not enough to invest in our own careers; we need to invest in our profession as well. As 2017 begins to wind down and we begin to look to 2018, I encourage each of you to consider volunteering with RAR and/or CVR

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MLS next year. Service on a committee is a great way to meet fellow Realtors, know what’s going on at the Association and give back to the profession. The staff at RAR and CVR MLS are always careful to use our volunteer time wisely; so it’s never a burden to serve. The final way we as Realtors invest is in our community. People don’t buy a house until they have first bought into a community’s quality of life. It should come as no surprise that RAR is constantly working to enhance our region — advocating for the expansion of public transportation; partnering with the amazing non-profit, Communities in Schools (both in Richmond and Chesterfield) to connect youth with the services they need to succeed; working to establish the area’s first community land trust to ensure that housing remains affordable in perpetuity; and the list goes on and on. Over the years, we as Realtors and members of the Richmond Association of REALTORS® have invested our time, talents and financial resources into the big back yard that is the Richmond region. We are better for our efforts; our community is far better and I’ve never been more proud to call myself a Richmond REALTOR®. Thank you for all the many ways each of you invest in our community day in and day out.

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LISTED m a g a z i n e

Association News Upcoming Events

Listed Magazine is published triannually by: Richmond Association of REALTORS® 8975 Three Chopt Road Richmond, VA 23229

Feature Richmond Real Estate Trends

Meet RAR’s Newest Staff Members

Editor-in-Chief John Le Marketing & Public Relations Coordinator

Biographies

Advertising & Sponsorship Kellie Whitlow 804-422-5009 kwhitlow@RARealtors.com

CVR MLS 2017 New and Revised Forms: A Reference Guide

Publication Design Punch Printing & Production Carter Printing Company Office: 804-422-5000 Fax: 804-422-5088 Web: RARealtors.com

New and Revised Forms 12

Professional Development Leadership Development Academy Real Estate Investing: How To Work With Investor Clients

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Community Development Maggie Walker Community Land Trust

Education New Home Construction and Buyer Representation

Copyright © 2017. Richmond Association of REALTORS®. All Rights Reserved. Articles of information from the magazine may not be reprinted without the permission of the Richmond Association of REALTORS®. The publisher does not endorse advertised products unless specifically stated, and reserves the right to reject any advertisements at any time.

REALTOR® members pay annual dues with a one-year subscription included within their dues. Sponsor and affiliate members receive a subscription to the magazine as part of their member dues. Annual subscription rate for non-members is $25. Postmaster: Please send change of address to: Listed Magazine Richmond Association of REALTORS® 8975 Three Chopt Road Richmond, VA 23229

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ASSOCIATION

NEWS Upcoming Events

SAVE THE DATE: INSTALLATION RECEPTION

RE TRENDS Conference

Save the Date

Tuesday | October 24, 2017 | 3 – 7 PM The Westin Richmond

Installation Reception

6631 West Broad Street Richmond, VA 23230

Monday | December 11, 2017 | 5:00 – 7:30 PM The Jefferson Hotel

101 West Franklin Street Richmond, VA 23220

2:30 – 3:00 PM Registration 3:00 – 4:00 PM Dr. Lawrence Yun, Chief Economist and Sr. VP of Research at NAR 4:00 – 5:00 PM Barbara Ballinger, Real Estate Blogger and Author on Design Trends 5:00 – 7:00 PM Reception CE: 2 hrs Real Estate Related Registration: $45 Reserved VIP seating for RPAC donors of $250 and above. Register online at RARealtors.com/TRENDS2017 or call 804.422.5000.

Join RAR and CVR MLS in welcoming incoming RAR President Susan Swink and all 2017 officers and directors. All 2016 committee volunteers will receive free admission. For complimentary registrations, please email kburke@RARealtors.com. For all other registrations, visit RARealtors.com or call 804.422.5000.

Upcoming RAR and CVR MLS Holiday Office Closings Thanksgiving

November 26-27

Christmas

December 24-25

Upcoming Dues Billing Dates Item

Billing Date

Due Date

Q1 2018 MLS Fees

December 1

before 5pm December 29

See pages 6-8 for more details.

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2017

RAR LEADERSHIP

2017

DIRECTORS Gail Ailor Bradley Boykin Don Carnesi Rodney Chenault Marianne Donahue Wayne Gauthier Carol Haley

John O’Reilly 2017 President

David Hamil Becky Hatch Mike Hogan Rhonda Howlett Karen Smith Keith Smith

Dawn Bradley 2017 Immediate Past President

USEFUL

URLS Susan Swink 2017 President-Elect

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Curt Reichstetter 2017 Vice President

RAR Website RARealtors.com

RAR Education RARealtors.com/education

Bill Pay Site IMS.CentralVARealtors.com

Virginia Real Estate Board DPOR.virginia.gov/Boards/Real-Estate

CVR MLS Rules & Regulations ResourceCenter.cvrmls.com

Virginia Association of REALTORS® VirginiaRealtors.org

RAR Government Affairs RARealtors.com/government-affairs

Consumer Campaign Website WeAreTheR.com

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FE ATURE

RICHMOND REAL ESTATE TRENDS by Peggy Lynch

The Richmond Association of REALTORS®’ RE TRENDS event will be held on Tuesday, October 24th at The Westin Richmond. This year RAR is pleased to welcome back Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research for the National Association of REALTORS®. He is widely regarded as one of the top economic forecasters in the country. Dr. Yun will share his insights into the current economic climate and his predictions regarding how these conditions will impact national and regional housing markets in 2018. Following Dr. Yun’s presentation, Barbara Ballinger, author, blogger and NAR’s REALTOR® Magazine contributor, will discuss what’s trending in housing design for new construction and resale homes, as well as emerging trends such as smart homes and net zero living. Find out what’s HOT and what’s NOT in color palettes, kitchens, baths, floor plans and garden rooms. Barbara’s presentation will include an interactive Q&A session where members will be able to ask questions related to these trends. 6

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This event is a unique opportunity to hear from and engage with nationally recognized industry experts.

WHEN WHERE TIME

TUESDAY

OCTOBER 24, 2017

THE WESTIN RICHMOND

6631 West Broad Street, RVA 23230

3:00 PM TO 7:00 PM*

SCHEDULE OF EVENTS 2:30PM 3:00PM – 4:00PM 4:00PM – 5:00PM 5:00PM – 7:00PM

Registration Opens

* Registration begins at 2:30 pm

Economic Outlook and Housing Industry Forecast

Registration Fee: $45

What’s Trending in Home Design

To register online, visit the RE TRENDS tab on RARealtors.com or call 804.422.5000.

Lawrence Yun, Chief Economist and Sr. VP of Research at NAR Barbara Ballinger; Author, Blogger, NAR REALTOR® Magazine contributor

Cocktail Reception

After October 13th, you will need to register for the event onsite.

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FE ATURE

SPEAKERS Dr. Lawrence Yun

National Association of REALTORS®, Chief Economist and Senior Vice President of Research Lawrence Yun is Chief Economist and Senior Vice President of Research at the NATIONAL ASSOCIATION OF REALTORS®. He oversees and is responsible for a wide range of research activity for the association including NAR’s Existing Home Sales statistics, Affordability Index, and Home Buyers and Sellers Profile Report. He regularly provides commentary on real estate market trends for its 1 million REALTOR® members. Dr. Yun creates NAR’s forecasts and participates in many economic forecasting panels, among them the Blue Chip Council and the Harvard University Industrial Economist Council. He appears regularly on financial news outlets, is a frequent speaker at real estate conferences throughout the United States, and has testified before Congress. Dr. Yun appears often as a guest on CSPAN’s Washington Journal and is a regular guest columnist on the Forbes website. Dr. Yun received his undergraduate degree from Purdue University and earned his Ph.D. from the University of Maryland at College Park.

Barbara Ballenger

Author, Blogger, National Association of REALTORS® Magazine contributor Barbara Ballenger is an author and co-author of 16 books, a design and architecture writer, a blogger, speaker and overall real estate multitasker! She has been writing about architecture, design and real estate since 1972 and continue to contribute her findings to NAR’s Realtor® Magazine. She will discuss what’s trending in housing design for new construction and resale homes, as well as emerging trends such as smart homes and net zero living that your buyers may soon be asking about!

MEET RAR’s

NEWEST STAFF MEMBERS Traci is a Member Services Specialist at RAR. As one of the first faces you see when you walk through the door, she thrives off of interacting with the membership, assisting with items like forms, supra keys, lockboxes and store purchases. Prior to joining RAR, Traci stayed at home and cared for her family. Her work history includes fundraising and regional management for a national non-profit. Traci grew up in Hanover County and has lived in Richmond most of her life. She values the location of our City and its proximity to the coast and the mountains. Traci loves Richmond’s history and its people.

Traci Craig

Random Facts About Traci:

» She can be spotted with Santa at Miller & Rhoads, the Watermelon Festival, and Arts in the Park » She also enjoys reading and time with friends and family

Kevin is responsible for maintaining the office’s technology as well as providing support and insight concerning computing for the RAR staff. Kevin grew up in St. Louis, MO, where he spent most of his life prior to relocating to Richmond, VA. He attended Virginia Union University. His fascination for electronics and computing began at an early age and is still a hobby of his today. That fascination birthed the focus of his professional career, beginning as an IT Technician for Richmond Public Schools, then Bon Secours Hospitals, University of Mary Washington, and CBRE. Outside of work, Kevin enjoys tinkering with electronic equipment, live jazz music indoors or outdoors, and on-the-road traveling to

Kevin Carter

Missouri for family visits.

Random Facts about Kevin:

» He is a Baltimore Ravens fan » He has a passion for ice-cream RAREALTORS.COM

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new and r evi sed f o r ms

CVR MLS 2017 NEW AND REVISED FORMS: A REFERENCE GUIDE On August 23, 2017, the CVR MLS Board of Directors approved four new forms and revisions to nine existing CVR MLS forms. The most significant revisions are to the Purchase Agreement, including the Appraisal, Home Inspection and Acceptance paragraphs. These revisions necessitated the re-numbering of the Purchase Agreement. All CVR MLS forms have been updated to reflect the new paragraph numbers. The Limited Service and Independent Contractor versions of the Listing Agreement and Buyer Brokerage Agreement have been conformed to reflect the changes to the Standard Agency versions of these forms. This reference guide provides a detailed outline of the significant form revisions and an overview of the new and revised forms. 1.

Residential Listing Agreement, Standard Agency: Revised*

Addendum to Residential Listing Agreement: New

Listing Agreement for Unimproved Property: New

Residential Purchase Agreement: Revised

Addendum to Purchase Agreement for Repairs and Credits: New

Exclusive Right to Represent Buyer Agreement â&#x20AC;&#x201C; Standard Agency: Revised

Release of Exclusive Right to Represent Buyer Agreement: New

1. Revisions to the CVR MLS Residential Listing Agreement Paragraph 16. RECORDINGS WITHIN THE PROPERTY. This new paragraph addresses the issue of onsite video and audio surveillance. The language cautions property owners about the potential liability associated with recording and transmission of audio or video recordings of prospective purchasers and/or their representatives. An Owner advisory has been added concerning interior and exterior photography and/or recording of the listed property by prospective purchasers, along with release of liability and indemnification language to protect RealtorsÂŽ. NOTE: Listing agents do not have a duty to disclose whether surveillance equipment is in use in a listed property.

Paragraph 21. ELECTRONIC SIGNATURES. The initialing requirement has been removed from this paragraph. Unless expressly stated otherwise, ratification of the Purchase Agreement is deemed to authorize the use of electronic signatures. *The CVR MLS Limited Service and Independent Contractor Listing Agreements have been similarly modified.

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2. NEW Addendum to Residential Listing Agreement This new form provides a means for listing firms to obtain and document the property owners’ consent to modify the terms of an existing listing agreement.

3. NEW Listing Agreement for Unimproved Property This new form is intended for use when listing vacant lots and unimproved land. The basic terms are similar to those found in the revised CVR MLS Residential Listing Agreement but any references to improvements were removed.

4. Revisions to CVR MLS Residential Purchase Agreement Paragraph 4. PURCHASE PRICE. The loan amount has been revised to delete the reference to “not less than” and simply state the “the principal amount of ______”. In the following paragraph, language has been added to acknowledge that the Purchaser may seek financing other than that which is specified in the Purchase Agreement provided that settlement is not delayed and there is no cost to the Seller. The appraisal paragraph has been moved to a new Paragraph 5.

NEW Paragraph 5. APPRAISAL. This paragraph is revised to

require that the property appraisal be ordered within fifteen (15) days of the Date of Ratification and that it shall be the responsibility of the Purchaser to advise their lender of this requirement. If the appraisal is not ordered within fifteen (15) days of the date of ratification, the Seller may terminate the Purchase Agreement. An additional revision addresses the rights and remedies of the parties, if they cannot agree upon a reduction of the purchase price if the appraisal is lower than the purchase price. If the parties are unable to agree in writing as to a purchase price reduction within five (5) days of receipt of the request for such reduction, either the Purchaser or the Seller may terminate the Purchase Agreement by written notice to the other party.

NEW Paragraph 7. WIRE FRAUD ALERT. This paragraph advises the parties to the Purchase Agreement of the risks associated with emailing wire instructions.

Paragraph 8. DEPOSIT. A new sentence has been added

acknowledging the disposition of the Purchaser’s deposit in the event the property is foreclosed upon prior to settlement. NOTE: Revisions have been made to all CVR MLS forms to reflect the change to the deposit paragraph number.

NEW Paragraph 15. OWNERS’ ASSOCIATION REPAIRS

In this new paragraph, if a disclosure packet, resale certificate, or POA or COA, inspection report indicates the property is not in compliance with the Associations governing documents, the Purchaser may request the repairs, maintenance or corrective action necessary to bring the property into compliance, at the Seller’s expense. If the Seller does not agree to bring the property into compliance or fails to do so prior to settlement, the Purchaser may terminate the Purchase Agreement. If the Purchaser does not request such repairs, maintenance or corrective action within five (5) days of receipt of the disclosure packet, certificate of resale or POA or COA inspection report, then Purchaser’s right to request such actions by the Seller and the right to terminate the Purchase Agreement is deemed waived.

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Paragraph 16. PROPERTY INSPECTION. The “Purchaser’s requested repairs and Seller paid closing cost credit” is now collectively referred to as the “Repair Request” throughout this paragraph.

Clarifying language has been added that the Purchaser may not request the Seller perform any inspections of the property as part of Purchaser’s request for repairs or closing cost credits. Clarifying language has also been added that once a party rejects or presents a counteroffer to the other party, all prior offers and counteroffers made by either party regarding the Repair Request are deemed rejected. NOTE: Revisions have been made to all CVR MLS forms to reflect the change to the Property Inspection paragraph number.

Paragraph 24. STANDARD PROVISIONS A. EXPENSE PRORATIONS – The notice language concerning title insurance has been removed. It was originally inserted to address new CFPB regulations in 2015, but it is no longer needed. F. WELL, SEPTIC OR MUNICIPAL SYSTEMS – The language in this paragraph has been updated to include municipal water and sewage systems. If one or more municipal systems is selected and it is determined that the Property is not served by such system(s), the Purchaser shall have the right to terminate the Purchase Agreement by written notice to the Seller. RELOCATED G. MECHANICS LIEN DISCLOSURE – This paragraph was simply moved to the Standard Provisions. It was originally numbered paragraph 13 in the prior version of the Purchase Agreement. L. MISCELLANEOUS – New language has been added to clarify that for purposes of computing time periods, the first day shall be the day following the commencement of a time period.

Paragraph 25. ELECTRONIC SIGNATURES. The initialing requirement has been removed from this paragraph. Unless expressly stated otherwise, acceptance of the Purchase Agreement is deemed to authorize the use of electronic signatures by either or both parties. Paragraph 27. ACCEPTANCE. Clarifying language has been added detailing the process that must be followed if a party desires to accept an offer that has expired.

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5. NEW Addendum to Purchase Agreement for Repairs and Credit to Purchaser This new form replaces CVR 130 Addendum to Purchase Agreement for Repairs and Credit to Purchaser. The new form contains language clarifying that the Purchaser will not request the Seller to perform any inspections of the property. Regarding the Closing Cost Credit to the Purchaser, the parties must agree to one of two options: (i) The Purchaser may waive their right to request a closing cost credit for repairs pursuant to the property inspection clause, with the understanding that doing so does not affect any Seller credit to Purchaser for closing costs, prepaids, discounted points and loan expenses provided in Paragraph 4 of the Purchase Agreement.

OR (ii) The Seller will agree to a closing cost credit of a specified amount. If the Purchaser is obtaining financing and the total closing cost credits pursuant to paragraph 4 and 16 exceed the maximum allowable amount of Seller concessions, the total Seller paid closing cost credit will be reduced to the maximum allowable amount and the purchase price of the property will be reduced by an amount equal to the disallowed portion of the closing cost credit, unless otherwise agreed to in writing by the parties.

6. Revisions to Exclusive Right to Represent Buyer Agreement Paragraph 1. An optional selection box has been added to this paragraph which allows the Buyer to specify if the Broker is being retained for a specific property or property type.

and indemnification language for the Broker, while in its agents and employees related to any recording that may occur while in the property has also been included.

Paragraph 5. COMPENSATION. The language in this

NOTE: Listing agents do not have a duty to disclose that surveillance equipment is in use in a listed property.

paragraph has been revised for ease of understanding by the Buyer, and to include an optional selection box for an additional fee payable to the Broker, if applicable.

Paragraph 6. RECORDING IN A PROPERTY. This new

paragraph addresses the issue of onsite video and audio surveillance. The language cautions the Buyer that an owner may utilize audio and/or video surveillance devices. Buyers are advised not to discuss negotiation strategies or other confidential information with a property. Release of liability

Paragraph 7. ELECTRONIC SIGNATURES. The initialing requirement has been removed from this paragraph. Unless expressly stated otherwise, ratification of the Purchase Agreement is deemed to authorize the use of electronic signatures. The CVR MLS Limited Service and Independent Contractor Exclusive Right to Represent Buyer Agreements have been similarly modified.

7. NEW Release of Buyer Brokerage Agreement This new form may be used to provide a conditional or unconditional release of an Exclusive Right to Represent Buyer Agreement.

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If you have questions concerning any new or revised forms in the CVR MLS forms library you may contact Peggy Lynch, Vice President of Professional Development and Compliance by phone 804-422-5006 or by email to plynch@RARealtors.com.

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P R OF E S S I O N A L DEV ELOPMENT

LEADERSHIP DEVELOPMENT ACADEMY NOW ACCEPTING APPLICATIONS John Quincy Adams wrote, “If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” The Richmond Association of REALTORS® enjoys a position of respect and influence in Central Virginia due in large part to the quality and dedication of its volunteer leaders. Recognizing the importance of leadership, RAR launched the Leadership Development Academy in 2009. The Leadership Development Academy is a six-month program designed to develop visionary, service oriented Realtor members for professional, civic and community leadership roles. The program which runs from December of 2017 through May of 2018, exposes a diverse group of participants to a variety of topics through seminars, events and experiential learning sessions. Working with professional leadership coaches, participants identify and develop their personal and professional leadership styles and communications skills. The program offers an overview of the significance of community and civic involvement as well as insight into the Realtor organization and the role of volunteer leaders. The Richmond Association of REALTORS® will accept applications for the 2018 Leadership Development Academy through October 20, 2017. All RAR Realtor members are eligible to apply for the program. The LDA application includes questions about professional career experience, civic involvement and leadership aspirations. Each Leadership Development Academy class is limited to 15 qualified participants chosen by the RAR Nominating Committee. Brokers are encouraged to nominate members of their firms who exhibit strong leadership potential. The participant fee is $375, which covers all registration fees, transportation and other expenses related to the program. The full program description and application is available on the RAR website, RARealtors.com.

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If you have questions about the Leadership Development Academy, you may contact Peggy Lynch by email at plynch@RARealtors.com or by calling 804.422.5006. LISTED MAGAZINE

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P R OF E S S I O N A L DEV ELOPMENT

Monday, October 9 | 9AM – 4PM Instructor: Josh Romano Real Estate Investing: Build Wealth Representing Investors and Becoming One Yourself CE: 6 hrs of Real Estate Related | PLE: 2 hrs of Current Industry Trends

REAL ESTATE INVESTING: HOW TO WORK WITH INVESTOR CLIENTS On Monday, October 9, Josh Romano returns to RAR to teach an encore session of “Real Estate Investing: Build Wealth Representing Investors and Becoming One Yourself.” This class explores the fundamentals of real estate investment that Realtors need to know to expand their business services. The one-day class outlines how Realtors can adapt their real estate skills and learn new skills to serve clients who want to invest in single family homes, condos, town homes and small multi-family properties. Students will learn how to work with investors as they set goals, plan, evaluate and acquire properties as well as manage them. Students will also learn how to take the plunge and become real estate investors themselves. The following article is a high-level guide for Realtors who wish to focus on developing relationships with investor clients.

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DOING BUSINESS WITH INVESTOR CLIENTS: 8 TIPS TO MAKE IT WORK 1. Understand your new client. While there is no “one-size-fits-all” definition for successful real estate investors, there are some common characteristics:

» Decisive: Investors who know what they

are looking for, act decisively on investment opportunities.

» Risk tolerant: Experienced investors accept the

4. Speed things up. Time is money. Investor

clients want answers quickly and they want their paperwork done quickly. Develop the bandwidth to get the paperwork done fast or have staff available to do a first-rate job.

5. Prequalify the investor. The challenge for

» Goal oriented: Successful investors have a clear

Realtors is how to identify true investors with the capital to spend on real estate. Where is the money coming from? Do they have their own money? Are they preapproved? Know what questions are appropriate.

» Teachable: The best investors are willing to learn

6. Ask, “How can I help?” An investor client may

cyclical ups and downs of real estate.

vision of what they want to accomplish in the future. They revisit and update goals annually.

more to make better deals or to better manage their properties.

2. Know where to find them. The investor market is smaller and more specialized. Prospecting for investor clients may take more time and effort than prospecting for home buyers and sellers. Potential clients are out there, Realtors just need to know where to look:

» Investment clubs and groups: Local groups that meet to network, discuss market trends and investment strategies.

» Financial Planners and Estate Attorneys:

Financial Planners specializing in retirement planning, may be looking for income-producing investments for their clients. Attorneys who specialize in estate planning can be a good connection for both clients and properties.

» Referrals: Other agents who don’t have the

expertise or desire to work with investors are a good source of referrals.

3. Learn the language. Investors speak a different

language than folks in the conventional residential real estate world. Realtors with investor clients need to understand terms like “hurdle rate,” “cap rate,” “internal rate of return” and “income vs. capital gains,” and have a solid understanding of how 1031 exchanges work.

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have some tasks in mind that are quite different than a Realtor’s traditional role. He may prefer to handle offers and run paperwork through a Realtor. He may need a consultant — especially if he’s a new investor. It’s much better to establish the scope of the engagement at the beginning of the process than at the end of it. Concentrate on finding sustainable, win-win solutions up front. The best investors appreciate finding a reliable partner in their real estate practice.

7. Help clarify goals. If a prospective investor

cannot state investment goals clearly, it may mean that his goals are not completely thought through.

8. Build a strong team. Real estate investing

is more complicated than home ownership and Realtors need a support team of knowledgeable professionals including: + Tax advisor + Financial planner + Lender/mortgage broker + Real estate attorney + Home warranty company + Insurance agent

+ Appraiser + Wholesaler + Inspector + Property manager + Contractor

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c o m m u ni t y d evelo pm ent

MAGGIE WALKER COMMUNITY LAND TRUST by Joh Gehlbach

In 2015, there were 8,500 tax delinquent properties within the City of Richmond. A single vacant property can have detrimental consequences on not only adjacent properties, but also the surrounding neighborhood. Often these properties are blighted: overgrown lawns, peeling paint, broken or boarded up windows. These eye sores and public health hazards that no one wants to buy a house next to. Yet simultaneously, Richmond has an affordable housing shortage. Across the Richmond Region, one out of every three households are cost burdened: meaning they pay over 30% of their gross income on housing. With the creation of the Maggie Walker Community Land Trust (MWCLT), a tool now exists to address both community challenges at once.

Laura Lafayette and Freda Green-Bolling

Groundbreaking ceremony

There are over 250 community land trusts across the United States. The details of them vary by locality and market, but their underlying mission remains the same: to create permanently affordable housing and eliminate blighted, vacant and tax delinquent properties. A community land trust is an independent non-profit organization that purchases vacant or blighted lots, builds a new home or rehabilitates the existing one. The trust retains ownership of the land underneath the improvement and then sells the home to a buyer at a price below market rate. The buyer owns the property and builds equity just like a traditional home owner; however, when the owner decides to sell, the equity is split between the trust and the individual.

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This allows the trust to stay solvent and invest in more properties, creating additional workforce housing that remains affordable forever. The client, who otherwise would not be able to purchase a market rate home, has now built equity and been provided the opportunity to buy a new home at market rate. Spearheaded by the Richmond Association of REALTORS®, The Maggie Walker Community Land Trust will be a tool for the City of Richmond (and eventually surrounding localities) to put vacant, tax delinquent properties back on the tax rolls; provide economically friendly housing for its firefighters, police and teachers; and allow those struggling to afford rapidly rising property taxes to stay in the neighborhoods they’ve lived in for generations. The MWCLT will serve individuals making between 50% and 115% of the area median income (AMI), which in the Richmond region AMI is about $60,000. For reference, the average Richmond Public School teacher salary is roughly $50,000 a year. If location is the first rule of real estate, then timing is the second. In June, the Trust broke ground on its first property, partnering with PROJECT: Homes to build a 3 bedroom, 1,680 square foot house in North Church Hill. The goal is to have a family in the house by the end of the year. This is the first of four houses in the Church Hill area, a historic area where home prices are rising rapidly and property is transferring hands quickly. This is exactly the moment to begin work on a land trust. The Maggie Walker Community Land Trust will measure its success in two ways: One, the number of individuals and families who are able to become homeowners because of the trust; and two, the quantifiable equity that is created with each CLT property. This equity is called Inclusive Community Wealth. It is money that otherwise would not be flowing through our communities whether in the pocket of a new home owner, the locality in the form of property taxes or the Realtor who just helped a CLT family upsize or a market rate buyer who now decided to move into North Church Hill, because there are no vacant properties adjacent to the home they fell in love with.

Model example: 1128 Catherine Street

Model example: 1107 W Leigh Street

While the Community Land Trust model is by no means a silver bullet to solve the Richmond region’s affordable housing crisis or completely eliminate blight, it is a valuable tool in the toolbox that has previously been inaccessible to Richmonders and our community. If you’re interested in learning more about the Maggie Walker CLT or would like to get involved, please visit MaggieWalkerCLT.org.

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e d u c ati o n

NEW HOME

CONSTRUCTION AND BUYER REPRESENTATION Current conditions in the real estate market may be leading many buyers down a different path. Buyers are coming to the market ready to spend their money, however, they are finding a short supply of homes for sale. Inventory is down 7% from this time last year, and low inventory leads to a competitive environment where resale homes often disappear as soon as they hit the market. On the other end of the spectrum, new home construction sales are on the rise. Building permits are trending upward and financing for buyers is becoming more available. Realtors that make new home construction part of their sales repertoire create more opportunities to close deals. Having enough knowledge to recommend new home construction to clients ensures that they have a better chance of finding exactly what they want. Additionally, when they understand the construction process and work well with builders, a Realtor can make the process smooth and enjoyable for their clients.

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New Homes Offer:

Establishing Relationships with Builders

» Energy efficiency: Innovations in design and building

For many Realtors, new home construction is a new frontier and many aspects of the new home transaction are different from the familiar processes of buying an existing home.

materials boost the energy efficiency of new homes and reduce utility bills.

» Warranty: New homes usually come with a builder’s warranty on the structure and manufacturer’s warranties on all appliances and mechanical systems.

» Maintenance and Repairs: In the initial years of ownership, buyers can avoid some of the maintenance and repair costs that come with resale homes.

» Flexibility: Depending on the degree of customization available, the site, home size, and floor plan can be matched to the buyer’s wants and needs.

» Relationships with lenders: Builders may have prearranged financing geared to the subdivision’s target market, which speeds up the application process.

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To succeed in this area, Realtors need to commit to learning new home market practices and establishing relationships with builders and sales representatives.

Most knowledgeable builders view real estate agents as part of an extended sales force. They have a common goal — to sell a new home to the buyer.

2017, ISSUE 2

LISTED MAGAZINE

THE PLAYERS IN A NEW HOME TRANSACTION The Builder: Many times, the buyer may never actually meet the builder; but for real estate agents, the builder is a very important part of the process. Forming a good relationship with the builder means referrals and in some cases, a future listing. It’s important for Realtors to understand that builders desire a fast, problem-free build and a quick sale. The Site Agent: Builders often hire sales representatives who “sit the model.” The sales representatives spend most of their time in a sales office or model home. They do follow-up on leads, but most of the time they are waiting for interested buyers to come to them. Throughout the transaction, construction and move-in process the sales representative acts as the “face” of the builder. The REALTOR’S® Role: It may seem that there is overlap in the roles of a Realtor and the site agent; but the distinct role of a Realtor is to protect the buyer’s interests, which can include:

Research and educate the buyer on developments, builders, subdivisions, construction and the new home purchase processes;

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Shape realistic expectations of markets and properties;

Accompany the buyer on initial visits to model homes and register them as clients;

Help the buyer evaluate houses, lots, subdivisions and locations;

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Prompt buyers to ask important questions;

Help the buyer define their needs and preferences; Schedule visits to model homes and appointments with sales representatives;

Advise on the cost-benefit and resale value of upgrades and options;

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Help the buyer negotiate various terms;

Accompany the buyer on the final walk-through and call attention to items for the builder’s punch list for completion or correction;

Remind the buyer to do a follow-up walk-through, before the warranty expires and inform the builder of needed touch ups.

Review and explain transaction documents; Monitor construction progress; Create and maintain a paper trail; Remind the buyer to schedule inspections at critical construction phases and provide a list of licensed inspectors;

What About Compensation? Getting a client on board with any transaction requires a large chunk of time. With so many players coming to the table, it is important for Realtors to understand how they will be compensated. The most important ways to ensure payment revolve around one key step: REGISTRATION. Realtors need to be meticulous in following the builders’ registration procedures. The best way to ensure problem-free registration is to accompany the buyer on the first visit. If that is not possible, the realtor needs to make sure that their buyers know what to do if they visit new home sites alone.

Give New Home Construction a Try New home sales are a different experience from marketing resale properties. For a Realtor to be successful, they must gain the product and transaction knowledge needed to guide buyer-clients through the steps and processes for purchase, construction and customization of a new home. Applying interpersonal skills to a different type of sales experience means learning how to interact with home builders and sales representatives to protect clients’ interests while developing productive business relationships.

LISTED MAGAZINE

2017, ISSUE 2

RAREALTORS.COM