Fourth quarter 2014 magazine final by Utah Association of REALTORS®

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REALTOR

OFFICIAL MAGAZINE OF THE UTAH ASSOCIATION OF REALTORS® • FOURTH QUARTER 2014

Get in their HEADS! How consumers really feel about their real estate experience PAGE 17

PLUS

SHORT-TERM LEASE-BACK PAGE 11

COMMON TENANT QUESTIONS PAGE 14

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Luxury Living in the Ideal Location

TABLE OF CONTENTS

PAGE

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FOURTH QUARTER 2014

DEPARTMENTS

5 6 8

*Wall Street Journal highlighted Heber as a “Best Value in Second Homes” *Forbes magazine ranked Heber #5 among “America’s Fastest-Growing Small Towns”

(877) 733-5334

Heber Valley, Utah

RedLedges.com

Exclusively Brokered by Red Ledges Realty, LLC . Obtain the Property Report required by federal law and read it before signing anything. No federal agency has judged the merits or value, if any, of this property. All descriptions, depictions, and renderings are provided solely for illustrative purposes and are subject to change. ©2014 Red Ledges Land Development, Inc.

11 14 22

What do you get for your membership? HAPPENINGS

REALTOR® charitable projects and award winners for 2014. ECONOMIC

Even with technology, a new study shows buyers still need real estate agents. Plus, Utah homeowners continue to regain equity. LEGAL

What to do when the seller wants to stay after closing. ETHICS/LEGAL

FEATURE

GET IN THEIR HEADS! How consumers really feel about their real estate experience.

How to handle common problems when tenants occupy the listing. QUIZ

Brush up on your safety skills.

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Red Ledges is a 2,000 acre, four-season community only minutes from Park City, Utah. Owners at Red Ledges enjoy: Jack Nicklaus Signature Golf Course Jim McLean Golf School Cliff Drysdale Tennis School Private Ski Lounge in Deer Valley Equestrian Center Swim & Fitness Club Dining

PRESIDENT’S MESSAGE

www.UtahRealtors.com • UTAH REALTOR® 3

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PRESIDENT’S MESSAGE

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Utah REALTOR® magazine is published by Bennett Communications, Inc., and is distributed to all members and affiliate members of the Utah Association of REALTORS®. The contents of this publication are copyrighted 2014, all rights reserved, and may not be reproduced in any manner without permission from the publisher and the Utah Association of REALTORS®. Articles in Utah REALTOR® do not necessarily reflect the views or policies of the Utah Association of REALTORS®. Address corrections for members of the Utah Association of REALTORS® should be sent to your local board of REALTORS®.

2014 UAR PRESIDENT Rick Southwick, CRS, SSS, RBA UAR CHIEF EXECUTIVE OFFICER Christopher J. Kyler, J.D. EXECUTIVE EDITOR Deanna Devey, deanna@utahrealtors.com UTAH ASSOCIATION OF REALTORS® 230 W. Towne Ridge Parkway, Suite 500 Sandy, UT 84070 (801) 676-5200 · (800) 594-8933 www.UtahRealtors.com

PUBLISHER Matt Bennett, matt@uvmag.com EDITORS Jeanette Bennett, jeanette@uvmag.com Greg Bennett, greg@uvmag.com ART DIRECTOR Leah Aldous, leah@uvmag.com ADVERTISING REPRESENTATIVE John Stemmons ADVERTISING INFORMATION (801) 802-0200 424 W. 800 North, Suite 201 Orem, UT 84057

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WHAT CLIENTS AND MEMBERS WANT BY RICK SOUTHWICK, CRS, SSS, RBA · 2014 UAR PRESIDENT

he Utah Association of REALTORS® surveyed more than 300 Utah buyers and sellers this summer to better understand their real estate experiences and identify opportunities for improvement. Topics included questions about use of an agent, overall satisfaction and the most valuable services received. The survey revealed clients were highly satisfied with their agents and wanted services the Internet couldn’t replicate such as negotiating, help with paperwork and coordinating the transaction. They continue to value REALTORS®’ expertise even though more than 80 percent of buyers used the Internet to search for properties on their own. Similarly, the Utah Association of REALTORS® aims to provide our clients — REALTOR® members — with services not found anywhere else. In fact, the UAR has been working on several initiatives, including the aforementioned survey, to help you conduct your business more smoothly and effectively.

ADVOCACY The UAR advocates on Capitol Hill to protect property rights and ensure lawmakers don’t hinder the ability to buy and sell homes. One recent example of this protection came from lobbying efforts at the national level. Government regulators proposed mandatory 20-30 percent down payments — a requirement that would have halted many sales. Fortunately, we had our trade association lobbying for us. Thanks to those efforts, regulators will not mandate these stringent down payments. You can learn more about that victory on page 10. Statewide, the UAR regularly protects REALTORS® from a sales tax on services, a transfer tax on real estate and numerous other issues, such as preventing REALTORS® from being held liable if a seller fails to disclose problems about the house. The UAR will be working on many other important real estate issues in January when the Utah Legislature reconvenes. As we review legislation and discuss proposals with lawmakers, our goal is always to protect your ability to make a living in real estate and to promote Utahns’ private property rights.

FORMS AND CONTRACTS You may already know about one of our most popular benefits: the Legal Hotline. What you might not know is our Legal Hotline attorneys provide you with the forms you use in your daily business. As our attorneys hear about the problems you encounter, they look for ways the UAR can address those challenges. One such situation is when a seller wants to stay in the property after closing. Prior to the UAR’s brand-new form, there was no easy way to set this up while protecting all parties. Identifying this need, the UAR created the Short-term Lease-back to help you handle this situation. Learn all about this form on page 11. There are many other benefits you receive as a UAR member that I don’t have space to discuss here. Suffice it to say I’m proud to have spent a year serving this wonderful organization. We are committed to providing REALTORS® with tools for success. Thank you for all your support this year. www.UtahRealtors.com • UTAH REALTOR® 5

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In September, hundreds of REALTORS® spent three days learning new skills and connecting with colleagues in picturesque Jackson, Wyo.

Administration designation. The UAR also recognizes Lerron Little, this year’s REALTOR® of the Year recipient, and Dave Robison, who received the President’s Award. The UAR also thanks the following sponsors for making the event possible: Presenting sponsors: UtahRealEstate.com, Property Pond Rentals, Edge Homes, Security National Mortgage and Salt Lake Board of REALTORS®; Gold sponsors: Academy Mortgage, Axiom Financial, Coldwell Banker Residential, Keller Williams, North-

ern Wasatch Association of REALTORS® and Utah County Association of REALTORS®; Crystal sponsors: Cutco Closing Gifts, Liberty Mutual, Praedo Institute, Park City Board of REALTORS®, Utah CRS and Washington County Board of REALTORS®; Sterling sponsors: Daybreak, Destination Homes, Holmes Homes, Huntsman Springs, HWA Home Warranty, Landmark Home Warranty and New Star Real Estate; Bronze sponsor: Cache/Rich Association of REALTORS®.

tah REALTORS® mourn the passing of Dan C. Simons Sr., past president of the Utah Association of REALTORS®, Distinguished Service Award recipient, Hall of Fame RPAC contributor and longtime volunteer to the real estate industry in Utah. Simons, who began his real estate career in 1959, died on Saturday, Nov. 22. Simons served in numerous REALTOR® leadership positions for more than 40 years, including personally guaranteeing the loan on the UAR building in Murray. He was also instrumental in the vision, planning and creation of the current REALTOR® campus building in Sandy. He was UAR

Chris Sloan, left, presents Lerron Little with the 2014 REALTOR® of the Year award. Little is a Utah real estate commissioner, trustee for Utah Housing Corporation, a member of the national REALTOR® Party Member Involvement Committee and a former president of the Utah Association of REALTORS®. The annual award is a tradition dating back to 1960.

ongratulations to the winners of the second annual Utah Association of REALTORS® RPAC Participation Challenge. This summer, the UAR asked brokers to join the challenge and compete with offices of similar size for the most RPAC participation among agents. The following offices took the challenge and won. Congratulations! 101-150 agents (95% participation): R&R Realty 76-100 agents (100% participation): Summit Sotheby’s International Realty and Keller Williams Success

2015 President Ryan Kirkham, right, gives a pin to 2014 President Rick Southwick to commemorate Southwick’s service as president.

he National Association of REALTORS® has selected two Utah REALTORS® for its prestigious Leadership Academy program. Christy Vail, with the Franklin Group in South Ogden, and Dave Robison, with goBE Realty in South Jordan, will participate in the Leadership Academy class of 2015. With two participants, Utah’s representation is particularly strong. Vail and Robison are two of only 18 REALTORS® selected for the program among

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UTAH REALTOR® • www.UtahRealtors.com

UAR President Rick Southwick, right, presents Dave Robison with the President’s Award at Convention in recognition of his exceptional service this year as the chair of the Convention Committee.

The 2014 UAR Leadership Academy participants receive their diplomas at a graduation ceremony at Convention. Leadership Academy prepares REALTORS® for service opportunities within the REALTOR® organization. From left: Dean Crandall (vice dean), Kiko Arvizu, Vern Fielding, Scott Lalli (dean), Adam Kirkham, Jayanne Ivins, Stephanie Summers, Carol Howell, Andrea Cahoon, Annie Lansing, Nancy Tallman, Randy Day and Bill Hobson. UTAH

Realty. 51-75 agents (96% participation): Equity Real Estate American Fork 21-50 agents (100% participation): Golden Spike Realty, ERA Brokers St. George, ERA Brokers Consolidated – Hurricane, Dwell Realty Group, Prudential Utah Elite – American Fork, Kirkham Real Estate, RE/MAX Unlimited, Vision Real Estate, Cannon & Company 5-20 agents (100% participation): Golden Spike Realty – Layton, New Star Real Estate

Dan C. Simons Sr. at the groundbreaking ceremony for the UAR’s Green Street building in Murray in 1987.

IRON COUNTY BOARD OF REALTORS®

REALTORS® donate school supplies Members of the Iron County Board of REALTORS® came together to assist the students of the Iron County School District by providing school supplies for those in need. Each year, brokerages and agents purchase backpacks and other items for the school district. On Aug. 13, ICBOR delivered more than 120 backpacks, school supplies and a $250 check for the School District Foundation. Along with the student backpack program, Iron County brokerages participate in many other charitable campaigns throughout the year.

UTAH REALTORS® SELECTED FOR NAR LEADERSHIP ACADEMY

Adam Kirkham takes a spin on the mechanical bull at the REALTOR® party in Jackson, Wyo.

Sally McKean, left, Sharon Spratley and Laura Fidler at the REALTOR® party at Convention.

president in 1979 and served on virtually every committee at the local, state and national level, including on a special committee that advised President Ronald Reagan on federal lands. Simons also participated on the state committee that eventually led to the creation of Utah Housing Corporation. Simons continued to serve Utah REALTORS® up to his death. In 2014, he was a member of the Legislative Committee and the UAR parliamentarian. He was also a 2014 Sterling R RPAC contributor, even though he had long ago reached Hall of Fame status. The Utah Association of REALTORS® pays tribute to him and honors his lifetime of service to Utah REALTORS®.

RPAC Participation Challenge winners

George Richards, left, installs the 2015 Executive Committee of the Utah Association of REALTORS®: Rick Southwick, past president; Chris Nichols, president-elect; DeAnna Dipo, vice president and Donna Smith, treasurer.

HAPPENINGS

UTAH REALTORS® REMEMBER DAN C. SIMONS SR.

CONVENTION 2014 RECAP undreds of REALTORS® gathered in Jackson, Wyo., to make new contacts, network and get the latest information on real estate business management at the Utah Association of REALTORS® convention. The event focused on helping attendees generate more leads, reduce legal problems, improve negotiation skills and better understand real estate financial opportunities. The UAR extends a special congratulations to the 72 REALTORS® who earned the new Realty Business

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HAPPENINGS

WASHINGTON COUNTY BOARD OF REALTORS®

WCBR installs 2014-2015 Leadership Team

Dave Robison

Christy Vail

a membership of 1 million, each having participated in a challenging selection process.

The Washington County Board of REALTORS® installed its 2014-2015 Leadership Team on Sept. 18 at the Dixie Convention Center. Kenny Parcell, far right, officiated at the installation banquet and installed the new officers. From left: Director JoAnn Geer, Director Jack Scott, Director Marlene Ritzman, Director Wes Davis, Director Terry Hickman, Treasurer Brittany Dell, Immediate Past President and UAR Treasurer Donna Smith, President Meri Crandall and President-elect Bill Hobson.

www.UtahRealtors.com • UTAH REALTOR® 7

economic

UTAH REALTOR® • www.UtahRealtors.com

ECONOMIC

OGDEN, SLC NAMED BEST MARKETS FOR MILLENNIAL BUYERS

ecent news reports have suggested first-time buyers are missing out on the housing recovery due to high student debt and limited job prospects. But that’s not the case in Utah where Ogden and Salt Lake were named as top cities for young adult home buyers. In July, the National Association of REALTORS® studied 100 metropolitan areas to determine the best purchase markets for aspiring Millennial home buyers. The report said Ogden and Salt Lake are two of the top 10 hot spots for buyers ages 18-33. The two cities received the distinction because of their large young adult populations, solid job growth rates and still affordable home prices. Unlike many areas with limited employment prospects and high student debt, Utah’s strong job growth and migration patterns, relatively affordable homes and inventory availability are positioning the state for a rise in first-time buyers. While 14 percent of the U.S. population is categorized as Millennials, this is increased to approximately 17 percent for Ogden and Salt Lake. Meanwhile, job creation rates are higher than the U.S. average in both cities.

STUDY:

BUYERS USE TECHNOLOGY FOR SHOPPING, AGENTS FOR BUYING

uyers are using technology during the home-search process but are using real estate agents when it comes to the buying stage. A new ERA survey found buyers and sellers are incorporating technology into the purchase, but it only goes so far. When consumers transition from the shopping to buying phase, they value personal advice and counsel, flexible scheduling and informal meetings — not just technology. “Once consumers enter the buying phase of the transaction, they realize the benefit of the personal face-to-face service a sales professional can provide to ensure a smooth transaction process,” said Charlie Young, president and CEO of ERA Real Estate.

FAST FACT

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of underwater mortgages declined to 6 percent from 8 percent in 2013. Even more dramatic is the comparison to previous years. In 2012, 18 percent of mortgages were underwater, and nearly a quarter of properties had no equity in 2011. That means roughly 70,000 Utah properties have gone from negative to positive equity since the worst days of the housing downturn. With its 6 percent share of underwater mortgages, Utah compares favorably to other states with the 15th-lowest negative equity. Across the U.S., 11 percent of owners have no equity.

Homes still affordable to grads with student loans

omeowners’ balance sheets are looking better. Over the past year, nearly 10,000 Utahns have gone from owing more than their homes were worth to having equity, according to CoreLogic data. In the second quarter, 28,822 Utah mortgages were “underwater” or in “negative equity.” This is a situation where a borrower owes more on a property than it’s worth at current market prices. This compares to 38,799 during the same April-to-June period last year. Over the past 12 months, Utah’s share

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10,000 Utahns no longer “underwater” on mortgages

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ECONOMIC

At the onset of the process, consumers report the highest level of confidence at 84 percent. After searching, 43 percent said they struggled with a lack of knowledge and not understanding the process. This was similar to findings from a Utah Association of REALTORS® survey. Eighty-five percent of Utah home buyers said they use the Internet to search for property. Once they decided to buy, however, the most common step taken was to contact a real estate agent. Similar to the ERA survey that pointed to the importance of experience and personal advice, Utah buyers said the most valuable services their real estate agent provided were help with paperwork and price negotiations.

tah is one of the best states for home buying among recent college graduates. That’s according to a report that analyzes housing affordability for those with student loans. In Utah, a graduate with a student loan needs to earn about one-fifth more than someone without school debt to buy the median-priced home, according to RealtyTrac. That was the sixth best among states. Across the country, a student with debt needs to earn about a third more ($8,969) annually than someone without debt. Analysts have feared rising student loan debt would make home buying more difficult for today’s young adults. “Contrary to much rampant speculation that student loan debt is holding back homeownership among recent graduates, we found that the vast majority of markets are affordable for recent graduates making the median household income — even many of those recent graduates with student loans,” said Daren Blomquist, vice president at RealtyTrac. RealtyTrac said Utahns need to make a minimum of $33,734 to afford the median-priced home without student loans and $40,299 with college debt. That means Utahns with loans need to earn $6,565 more than those who are debt-free. A separate study found Utah had the lowest student debt among states. WalletHub said the average Utah college student has about $12,500 in school-related debt. Half of Utah students had student debt versus 71 percent nationally.

35. The median age for first-time buyers was 29 versus 42 for

The median age of all Utah home buyers in 2013 was repeat buyers.

Source: National Association of REALTORS®

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“Furthermore, the job market has shown continued strength in the past six months. This bodes well for solid demand to close out the year and the likelihood of additional months of yearover-year sales increases.” Just as inventory levels decreased nationally, homes available for sale in Utah also declined. The number of properties for sale dropped nearly 6 percent from last year. Meanwhile, interest rates hit one of the lowest points of the year during October as investors expressed concerns about the economy. Mortgage rates tend to follow returns on 10-year Treasuries, which drop when investors put their money in government bonds instead of the stock market. “Economic instability overseas is leading to volatility in the stock market and is causing investors to seek safer bets, which will likely keep interest rates in upcoming weeks hovering near or below where they are now,” Yun said after September’s data release. “This is welcoming news for consumers looking to buy, although they could temporarily become more cautious by less certain economic conditions.”

Utah Key Housing Indicators Key Metric

October 2013

October 2014

Percent Change

New Listings

5,273

5,692

+7.9%

Pending Sales

3,051

3,815

+25.0%

Closed Sales

3,437

3,817

+11.1%

Days on Market

+8.6%

Median Sales Price

$206,000

$217,060

+5.4%

Average Sales Price

$255,408

$278,148

+8.9%

% of Original List Price Received

95.9%

95.6%

-0.4%

Housing Affordability Index

148

141

-5.0%

Inventory of Homes for Sale

21,656

20,450

-5.6%

Month’s Supply of Homes for Sale

6.3

5.9

-7.1%

Source: Utah Association of REALTORS® UTAH REALTOR® • www.UtahRealtors.com

LEGAL

Sellers often need to stay in a property after the transaction has closed. The UAR’s Short-term Lease-back Agreement helps accomplish this while addressing many of the potential pitfalls.

fter three years of debate, the Federal Deposit Insurance Corporation and five other government regulators announced finalization of a new rule dealing with standards for qualified residential mortgages (QRM). In a victory for REALTORS®, lenders will not have to require 20 or 30 percent down payments. Steve Brown, 2014 president of the National Association of REALTORS®, said the final rule will “… encourage sound and financially prudent mortgage financing by lenders while ensuring responsible home buyers have access to safe and affordable credit …” Regulators had previously proposed that borrowers would need to put down 20 or 30 percent; otherwise, the loans could not be securitized unless the lender retained 5 percent of the risk. Another credit limiting feature would have required strict debt-to-income ratios. Regulators ultimately rejected both ideas after fierce opposition from NAR. The new QRM standard now matches the requirements for qualified mortgages (QM), which deal with a borrower’s ability to repay a loan and are already in place. The alignment of both rules should reduce lenders’ compliance burden and provide greater access to the lowest cost and safest mortgages.

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SHORT-TERM LEASE-BACK AGREEMENT New form helps sellers rent back their recently sold house BY PETER J. CHRISTENSEN, J.D. · UAR LEGAL COUNSEL

he Utah Association of REALTORS® has created a valuable, new form for members. To illustrate the importance of this document, let’s start with a hypothetical scenario.

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tah home sales continued to rebound in October as buyers took advantage of low interest rates and still-affordable homes. The number of transactions increased 11 percent from last year as Utah REALTORS® sold 3,817 homes, townhomes and condominiums during the month, according to the Utah Association of REALTORS®. That’s an increase of nearly 400 sales from last year. This is the second consecutive month of home sales increasing from year-ago levels after declines during the summer months. National results followed a similar pattern. Sales in October and September rebounded after a dip in August, the National Association of REALTORS® reported. NAR Chief Economist Lawrence Yun said the housing market this year is a tale of two halves. “Sales activity in October reached its highest annual pace of the year as buyers continue to be encouraged by interest rates at lows not seen since last summer, improving levels of inventory and stabilizing price growth,” he said.

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New QRM standards don’t require 20 percent down payments

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Utah home sales rebound

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ECONOMIC

SELLER STAYING AFTER CLOSING Suppose you represent Frank Seller in the listing and sale of his home. Frank is in the process of building a new home. Construction has already started and is progressing nicely, but it is still a couple months from the completion date. Frank’s builder estimates the new home will be finished by Jan. 15. You receive an offer from Estelle Buyer. This offer has a Settlement Deadline of www.UtahRealtors.com • UTAH REALTOR® 11

Dec. 1. Frank asks you to check with Estelle’s agent to see if Estelle would be willing to extend the Settlement Deadline to Jan. 15 to match Frank’s projected construction completion date. Estelle is unwilling to do so. She needs to have her financing completed before that deadline. Nevertheless, because Estelle is buying the property for a vacation home, she is willing to let Frank stay until the construction on his new home is complete.

POTENTIAL PROBLEMS As an agent in this transaction, how should you handle this arrangement? What are potential problems and how can you protect your client from these dangers? If you have been doing real estate for any significant amount of time, you have likely run into a version of this situation. Some of the potential problems deal with the following questions: Who

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Now the UAR has a form that deals specifically with this situation: the Shortterm Lease-back Agreement (STLBA). Use this form when a seller would like to occupy the property for more than a couple of days after closing. is responsible for any damages to the property? Will Frank be paying any rent? Who will pay for the utilities? How is the home being insured while Frank still occupies the property? Are Frank’s belongings covered by insurance after the sale but before he moves? What if Frank causes damages when he moves out? Previously, agents had a few options: Use Section 4 of the REPC, work with a blank addendum or execute a full lease agreement. Unfortunately, none of these solutions neatly fit the situation, and each has its problems. Now the UAR has a form that deals specifically with this situation: the Short-term Lease-back Agreement (STLBA). Use this form when a seller would like to occupy the property for more than a couple of days after closing. Guidelines for using this much-needed form are listed in the box accompanying this article. Visit UtahRealtors.com/Forms and look for Form 50 to download this form.

LEGAL

RENT AND UTILITIES Section 3 of the STLBA deals with the rent. The idea behind this section, and this form in general, is the buyer shouldn’t have to track down the seller for any additional payments. It’s much harder to get money from the seller once closing has occurred. Therefore, the “Rent” payment in this form includes some of the utility charges: water, sewer, natural gas, garbage and electricity. All of these charges will be included in the rent. Because the buyer will be responsible for making monthly utility payments beginning after closing, the buyer needs to calculate those future amounts into the overall rent. How does a buyer know what the future utility charges will be? The buyer makes an educated guess. The buyer could ask the seller for past bills to help estimate the amounts, or the buyer can just decide on a reasonable amount. For example, let’s say Estelle is letting Frank stay in the property for 46 days. She decides a fair rent

amount would be $1,200 per month. Since Frank will be staying roughly a month-and-a-half, she calculates the rent payment to be $1,800 total. Further, she estimates the utilities will cost around $300 per month. She adds to the rent amount $450 for the month-and-a half of utilities. Thus, the total rent amount will be $2,250. This way, Estelle doesn’t have to follow up with Frank every time the utilities are due in order to get him to pay her. What if the utilities don’t reach $300 per month while Frank is there? Estelle keeps the difference. What if the utilities are more than $300 per month while Frank is there? Estelle pays the difference. There are a few bills the seller will need to continue paying while occupying the property: all lines of service for telephone, cable/satellite TV and Internet, and landscape maintenance and snow removal — unless any of these services are provided by a homeowners’ association.

SECURITY DEPOSIT The STLBA includes a security deposit. This is to cover any damage occurring during the lease period that the seller does not fix. Section 7 of the STLBA states the seller is responsible for any damages that occur during the lease period. Section 6 states the seller will deliver “… the property in substantially the same condition it was in on the date of Acceptance of

the REPC, ordinary wear and tear excepted.” Again, in an effort to prevent the buyer from having to track down the seller after the end of the lease period, there is a security deposit to protect the buyer from any damage occurring during the lease period. The buyer will need to observe Utah landlord/tenant law in handling the deposit.

SHORT-TERM LEASE-BACK AGREEMENT GUIDELINES

LEASE TERM Section 2 of the Short-term Lease-back Agreement asks for a specific term. In Frank’s situation, he doesn’t know when the builder will finish his new house. In this case, Frank will need to guess on the length, preferably giving himself a cushion. Does Frank get any money back if he moves out

early? No. Frank is paying for the right to stay in the house for a certain amount of time, and Estelle is receiving compensation for the inconvenience of allowing Frank to stay for that amount of time. If Frank doesn’t end up using all the time he paid for, that is his choice. Estelle is not required to return any prorated amount of the rental payment.

UTAH REALTOR® • www.UtahRealtors.com

INSURANCE The last item I will highlight is Section 8: Insurance. This section notifies the buyer and seller that they are responsible to make sure their individual insurance policies concerning the property are sufficient to protect each party. It states the agents in the transaction are not making

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Many underwriters allow a seller to stay up to 60 days when the property is being financed for the buyer’s primary residence. As always, check with your buyer’s underwriter to make sure this arrangement will not put the buyer’s financing in jeopardy.

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LEASE LENGTH First, it is not for rental terms longer than 60 days. If the buyer agrees to let the seller stay for more than 60 days, the buyer and seller should enter into a full residential lease.

any determination as to the adequacy of the buyer’s or seller’s current insurance policies. This is included in the form because each insurance policy and carrier could be different in handling this type of an arrangement. In fact, the lease-back could affect the coverage of the structure and belongings; therefore, each party needs to make sure their insurance is adequate. www.UtahRealtors.com • UTAH REALTOR® 13

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ETHICS/LEGAL

If a tenant is uncooperative with the showing process, it truly does hurt a seller’s bargaining position and creates further difficulties when selling the property. I can’t overemphasize this point: Clearly set expectations and communicate with the tenant before marketing the property for sale. can include a time period much shorter than 24 hours. However, this is the statutory default, and you and your seller need to be aware of this notice requirement. Believe it or not, I have had a handful of angry tenants call the Utah Association of REALTORS® because a REALTOR® showed up at the property, with potential buyers, and the only notice given to the tenants was a text message that said, “I am showing potential buyers your property in 15 minutes. Please make sure your home is cleaned up.” This should not happen and looks extremely unprofessional. These confrontational situations can absolutely be avoided in most instances by simply communicating and setting clear expectations.

TENANTS WHO REFUSE SHOWINGS

REALTORS® need to be aware of existing tenants’ rights, including requirements for showings and lease termination.

Along those same lines, what if the tenant refuses to allow any showings to take place? What can my seller do? First, a seller needs to look at the lease agreement to determine the scope of the right of entry provision. If the lease agreement is silent, then the 24 hours’ notice applies. If the tenant refuses to grant access, even after proper notice, then legally the seller can initiate the eviction process. However, this is often a last resort and can cause some delay to the selling process. As most REALTORS® recognize, if a tenant is uncooperative with the showing process, it truly does hurt a seller’s bargaining position and creates further difficulties when selling the property. That is why I can’t overemphasize this point: Clearly set expectations and communicate with the tenant before marketing the property for sale. There are various options a seller/landlord has to work with a current tenant. For example, the seller/landlord and the tenant can always negotiate and come to an agreement on the amount of notice needed before showings, times of the day for showings, compensation for cleanliness, etc. By addressing these points before marketing the property, the seller greatly increases the likelihood of tenant cooperation.

TENANTS, LANDLORDS ® AND REALTORS Common tenant/landlord questions that affect real estate purchases

TENANTS VACATING PROPERTY AFTER SALE

UTAH REALTOR® • www.UtahRealtors.com

NOTICE REQUIRED TO TENANTS FOR SHOWINGS

I represent a seller who has tenants in the property. How much notice do I need to give the tenants for potential showings? As with all my answers, I would first look to the lease agreement between the landlord and the tenant. If the lease agreement is silent as to notice, then the notice default under the Utah Code §57-22-4(2) states, “… an owner shall provide the renter at least 24 hours’ prior notice of the owner’s entry into the renter’s residential rental unit” (emphasis added). Certainly, a landlord and tenant can negotiate different terms and certainly that

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he purpose of this article is to address a few of the most frequent Legal Hotline questions I receive relating to tenants, landlords, and lease agreements and the potential impact on a real estate purchase.

I represent a buyer in a situation where the seller has promised the tenants will be out of the property upon closing. How can I make sure this happens? There is never a guarantee a tenant will actually leave according to the lease agreement. Buyers should always receive a copy of all lease agreements affecting the property as part of the required seller disclosures under Section 7 of the Real Estate Purchase Contract. Additionally, if the tenant is on a month-to-month contract, then at least 15 days’ notice is required to terminate the lease agreement (unless the lease provides for a longer notice period, e.g., 30 days). With a month-to-month contract, the 15 days’ notice must be served at least 15 calendar days before the end of the month. Otherwise, the tenant will have a legal right to remain in the property until the end of the following month. For example, let’s say the buyer and seller enter a purchase contract on Oct. 1

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UTAH

BY KREG E. WAGNER, J.D. · UAR ASSOCIATE LEGAL COUNSEL

ETHICS/LEGAL with a settlement deadline of Nov. 15. The seller discloses there is a tenant on a month-to-month lease agreement, and the buyer clearly indicates he wants to take possession upon closing. When does the seller need to give the tenant notice of lease termination to ensure the tenant is out by Nov. 15? Look to the lease agreement to see what type of notice is required. If it is 15 days’ notice, then the seller needs to serve notice by Oct. 16 to have the tenant move out of the property by the end of October. If notice is served on Oct. 17, the tenant can legally stay in the property until the end of November. The seller might be able to negotiate with the tenant to reach a resolution, but it is important your buyers understand the implications a lease agreement can have on a real estate purchase.

BUYERS, TENANTS AND FORECLOSURE

My buyers are purchasing a foreclosed property that has a tenant. Can my buyers force the tenants to move out once the sale is complete? The short answer is no. The Protecting Tenants at Foreclosure Act outlines specifically the rights and responsibilities the new property owner (i.e., the buyer) owes to existing tenants. Namely, buyers who are going to use the property as their principal place of residence may shorten the tenants’ long-term lease agreement by providing 90 days’ written notice to terminate and vacate. If the buyer is not going to use the property as a principal place of residence, the lease agreement is valid until it expires. All of the above information assumes the tenants are current on their lease payments and are bona fide tenants (unrelated to the previous owner of the property and paying fair market value in rent). In general, if you are representing a buyer making an offer on a foreclosed property, make sure you have copies of any lease agreements to help set the expectations of when your buyer can legally possess the property. If you have any legal questions, feel free to call the Legal Hotline at (801) 676-5211 on Monday, Wednesday or Friday from 8:30 a.m. to 4:30 p.m. www.UtahRealtors.com • UTAH REALTOR® 15

REALTOR

UTAH

SURVEY RESULTS

GET IN THEIR HEADS! BY DEANNA DEVEY, MBA · UAR DIRECTOR OF COMMUNICATIONS AND OPERATIONS

How consumers really feel about their real estate experience

tahns are confident in the state’s housing market and in real estate agents. That’s the consensus based on responses from buyers and sellers who participated in a Utah Association of REALTORS®-commissioned survey. The following article details the results of a poll that asked buyers and sellers their thoughts about the market, how they found real estate information and what they thought about agents. The UAR hired a third-party company to survey more than 300 Utahns who had either bought or sold real estate in the past 12 months.

CONFIDENCE IN MARKET More than 80 percent of survey respondents said now is a good time to either buy or sell a home. Specifically, half said it is a good time to buy or sell. A quarter said it is a good time to buy, and an eighth said it is a good time to sell. Based on a comparison to results from a 2010 survey, there is much more confidence today in the ability to sell. Four years ago, only 2 percent of respondents said it was a good time to sell and only 5 percent thought it was a good time to buy or sell. Today, buyers and sellers are most concerned about the economy, employment and high home prices. In contrast to 2010, they are the least concerned about falling prices and an oversupply of homes on the market.

USE OF AGENTS This year’s survey also found real estate agents continue to be a top source UTAH

REALTOR

Utahns are confident in the state’s housing market and have favorable opinions of real estate agents.

for housing information, even in the Internet age. When asked where they got information about Utah real estate, 52 percent said their real estate agent. Coming in at No. 2 was the Internet at 45 percent. The third source was friends/family/neighbors/co-workers at 26 percent. In fact, real estate agents are the most trusted source for accurate Utah real estate information. Nearly 80 percent of respondents said they trust real estate agents “a lot” or “some.” The No. 2 source was loan officers at 65 percent. No. 3 was the Utah Association of REALTORS® at 64 percent. The least trusted sources of real estate information were social media at 13 percent, the real estate website Trulia at 17 percent and radio news at 38 percent.

BUYER AGENTS Not only do Utahns trust real estate agents, but they also go to them first in the www.UtahRealtors.com • UTAH REALTOR® 17

For sellers, the most valuable services are selling the home within a specific timeframe, coordinating the entire transaction, negotiating and pricing the home competitively. When choosing an agent, Utah buyers and sellers are using low-tech methods. Nearly half of those surveyed found their real estate agent through a referral. The second-most-common method was selecting an agent they used before. Online sites and local advertising were the least common ways of finding an agent. Sellers’ satisfaction with their agent was slightly less than that of buyers but was still high at 86 percent.

MORE INFORMATION Overall, Utah home buyers and sellers are highly satisfied with real estate agents and consider them the best source for information on Utah’s housing market. Learn more about their responses and the demographic characteristics of those who took the survey by visiting UtahRealtors.com/ Survey.

UTAH

Buyers

UTAH REALTOR® • www.UtahRealtors.com

SURVEY RESULTS

Profile of a FSBO

Here’s a look at contrasting characteristics of those who used an agent to sell and those who represented themselves

20% Bought directly from previous owner

68%

Represented Seller

FSBO

Get real estate information online

46%

59%

Trust real estate agents some or a lot

78%

59%

Used a real estate agent to buy a home

73%

56%

Positive experience with agent when buying

93%

89%

Negative experience with agent when buying

11%

Would use the same agent they used for buying again

80%

54%

Value help with paperwork

51%

61%

Value help coordinating the entire transaction

22%

33%

Found agent because agent was selling home they wanted to purchase

12%

Fear future home price drops

20%

Contacted a real estate agent as first buying step

56%

22%

Used real estate agent

52% 45%

26% 16%

My real estate agent

Internet

11%

Friends/ Newspaper TV Family News

When you made the decision to buy a home, what were the first two or three things that you did?

Contacted a real estate agent 48% Looked online for properties for sale 42% Drove by homes/ neighborhoods 38% Looked online for information about the home-buying process 19% Contacted a bank or mortgage lender 19%

Radio

Loan Officer

Visited open houses 5% Contacted builder/visited builder models 5%

Rate how you trust the following sources for accurate real estate information in Utah

Helping with paperwork

54%

Helping with price negotiations

47%

Finding the right home to buy

37%

Determining what other comparable homes are selling for

29%

Helping find service providers for things like inspections, home warranties and title insurance

27%

Coordinating the entire transaction

23%

Helping learn about the neighborhood or area

14%

Finding and arranging financing

13%

Determining how much I can afford

Real Estate Agents

TV News

Radio News

Newspapers

Utah Real Estate. com

Realtor.com

Zillow

Trulia

Social Media

Utah Association of REALTORS®

Home Builders

Loan Officers

Trust a lot

34%

15%

32%

17%

15%

31%

30%

Trust some

43%

33%

30%

39%

23%

25%

26%

10%

11%

33%

34%

35%

No Trust

20%

22%

12%

10%

40%

13%

Was your experience with your REALTOR® very positive, somewhat positive, neither negative nor positive, somewhat negative, or very negative?

Very Negative

Was your experience with your real estate agent very positive, somewhat positive, neither positive nor negative, somewhat negative, or very negative?

Did you use a real estate agent to help you 24% 76% sell your home? No

Very Negative

Sellers

Somewhat Neither negative Negative nor positive

Talked with a friend/relative about the home-buying process 14% Looked up information about different neighborhoods or areas 9%

How much do you trust that source?

Most Valuable Real Estate Agent Services

65%

12%

Somewhat Positive

Very Positive

78% Very Positive

Bought directly from builder

Did you use a real estate agent to help you buy your home, did you buy directly from a builder or did you buy directly from the previous owner?

Where do you get most of your information about the real estate market in Utah?

REALTOR

UTAH

LISTING AGENTS

5% Other

UTAH

home-buying process. The UAR survey found most buyers contacted a real estate agent as the initial step after making the decision to buy a home. For those Utahns who use the Internet to search for available homes, the most commonly used site is UtahRealEstate.com (37%), followed by Zillow (35%), KSL.com (29%), Realtor.com (18%) and agent/broker sites (16%). Fifteen percent of respondents said they did not use the Internet to search for homes. After transitioning to the actual buying phase, consumers rely on their agent for information, services and expertise not available on the Internet. Utah consumers said the most valuable services their agent provides are helping with paperwork, negotiating the price, finding homes and determining the sales prices of similar homes. In fact, those services and the experience were so valuable that 90 percent of buyers who used a real estate agent said they had a positive experience.

UTAH

REALTOR

SURVEY RESULTS

Yes

21%

Somewhat Positive

Most Valuable Real Estate Agent Services Selling the home within a specific timeframe

43%

Coordinating the entire transaction

38%

Pricing the home competitively

36%

Helping with negotiating

36%

Marketing the home to potential buyers

30%

Creating marketing materials for the home (videos, flyers, etc.)

16%

Other

7% www.UtahRealtors.com • UTAH REALTOR® 19

REALTOR

UTAH

2014 RPAC HALL OF FAME

GREGORY FABIANO

KELLY FAVERO

AMILYN GARDNER

LINDA GEER

2014

MARK FEIGH 2005-07, 2014

2012-14

JIM BRINGHURST

GARY CANNON

BUTCH DAILEY

$25,000 in lifetime contributions Sterling R 2014

JOHN HARR JR.

$25,000 in lifetime contributions

CRAIG HAWKER

$25,000 in lifetime contributions

$25,000 in lifetime contributions Sterling R 2014

JEFF JONAS

LERRON LITTLE

$25,000 in lifetime contributions

CHARLOTTE THOMAS

MAX THOMPSON $25,000 in lifetime contributions

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STEFANIE TUGAW-MADSEN

H. BLAINE WALKER

THOMAS WRIGHT

$25,000 in lifetime contributions Golden R 2014

2014 PRESIDENT’S CIRCLE

$25,000 in lifetime contributions Sterling R 2014

AL MANSELL

$25,000 in lifetime contributions

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DAVID MANSELL $25,000 in lifetime contributions

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KENNY PARCELL

STEVEN RANDALL $25,000 in lifetime contributions

2014 PRESIDENT’S CIRCLE

CHRIS NICHOLS 2014 PRESIDENT’S CIRCLE

JOEL CARSON

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LORI CHAPMAN 2014 PRESIDENT’S CIRCLE

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TROY PETERSON 2013-14, Crystal R 2012, Sterling R 2010-11

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DINA SCHEIFL

RICK SOUTHWICK

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PATRICK GIBLIN 2014

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BOYD BROWN

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BECKY GRUBEL

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2013-14

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HOWARD FREISS

TIM FREISS 2014

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MICHAEL GABEL

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2006-14

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SUE WILKERSON

JUSTIN ALLEN

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MIKE OSTERMILLER

TIM PETERSON

DONNA POZZUOLI

2013-14

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2012-14, Sterling R 2006-08, 2010-11

2010-14

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DOUG RUSSELL 2012-14

2014

JOHN AMES

CHERYL ACKER

2009, 2011-14

2014

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2014, Sterling R 2010-13

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RON SNOW

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2011, 2014, Sterling R 2012-13

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LENÉ BALSTER 2007, 2009-14

LUKE BALSTER 2007, 2009-14

KENT BANKHEAD 2012-14

MICHAEL BASTIAN

2014 PRESIDENT’S CIRCLE

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LORI KHODADAD

STEVEN MADDOX

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2014

SHAREE KILLPACK

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2009, 2014

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PENNY STARK

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2012-14

2013-14

2014

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2011-14

2004, 2006, 2008-14

2012-14

2014

2012-14

2013-14

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2012-14, Sterling R 2008

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2013-14

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ROBERT BOLAR 2007, 2009-14

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2012, 2014

2014

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1996-98, 2000-03, 2007-14

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2012-14

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2010-14

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2014

2013-14

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2002-04, 2007-08, 2010, 2012-14

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2005-07, 2013-14

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NANCY TALLMAN

ALICIA TERRY

LISA WANLASS

LARRY WELSH

ROGER WELSH

2014

Sterling R 2014

2014

2012-14

2004, 2006-14

2010-12, 2014

2013-14

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2013-14

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2014

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2014

2009, 2014

2014

2007, 2014

2014

2012-14

2014

2011-14

2014

2007, 2014

2014

2004, 2006-08, 2010-14

2012-14

2004-14

2014

AMY ANN SPIERS 2013-14

2013-14

2004-14

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2008, 2011-14

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BRUCE TUCKER

MATTHEW ULRICH

MIKE ULRICH 2013-14

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DEREK WHETTEN

BRETT WILDE

MARK WILKINSON

PAUL WILLDEN

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Sterling R 2014

2013-14

2014

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2014

JIM CANNON 1996, 1999, 2002-07, 2009-14

MERI CRANDALL

2007-10, 2012-14

TROY THOMPSON

CAROL ANN DAVES

2008, 2013-14

SHAREE BIGLER

2006-07, 2009, 2011-14

2014

2004-05, 2007-09, 2014

JACK NIXON

2012-14, Crystal R 2007

NOT PICTURED

CORRY SUE CUTLER

2011-14

2013-14

1996, 2002-04, 2006-09, 2012-14, Crystal R 2010-11

2004-06, 2010-14

2014

2014, Sterling R 2013

2004-14

VICKIE BISCHOFF

2004-07, 2009-14

RODGER JESSOP

2014

LENORE BEESON

2006-08, 2013-14

2014, Sterling R 2006-13

2012-14, Sterling R 2011

SALLY BEAGLE

2010-14

2013-14

BROCK ANDERSEN

2014 PRESIDENT’S CIRCLE

STERLING R PAMELA ABBOTT

2014

2012-14, Sterling R 2008-11

2011-14

O. RANDALL WOODBURY

2014

SPENCER JANKE

2004-09, 2011-14

SCOTT JESSOP

2014

2007-14, Sterling R 2002-06

2014

2014, Sterling R 2007-08, 2010-13

2014

2012-14

2014 PRESIDENT’S CIRCLE

2013-14

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2014

CHRIS KYLER

2013-14, Crystal R 2012, Sterling R 2011

LIBBY IPSON

CARO NORTON

2011-14, Sterling R 2009-10

ANDREW FORD

2013-14

CRYSTAL R SCOTT LARSEN

2010-14, Sterling R 2006-09

2014

$25,000 in lifetime contributions Sterling R 2014

2014

TUIONO MALAKAI

2014 PRESIDENT’S CIRCLE

ROD FOLKERSEN

DAN C. SIMONS SR.

$25,000 in lifetime contributions Golden R 2014

GOLDEN R

PLATINUM R

$50,000 in lifetime contributions Golden R 2014

PATTI FLORENCE

2005-07, 2010-14, Crystal R 2004

JENNIFER YEO 2012, 2014

TRISTA YOST 2014

ROGER ZUNDEL

2004, 2006, 2008, 2014

2004-07, 2009, 2011-14

2014

2006-07, 2009, 2011, 2013-14

CHRISTY VAIL

2006-14

REALTOR

ANSWERS

Protect yourself from a potential attack by being aware of your surroundings and following your instincts.

1. FALSE: As a REALTOR®, you should separate your personal and business social media accounts. Only accept requests or invitations from strangers on your business accounts, and make sure you have strict privacy settings on your personal accounts. Never post anything on any account that you wouldn’t want a stranger to see. “Never post about going on vacation or large personal purchases,” said Nic Lindsey of Tactical Advantage Group, a self-defense training company. “Many people are excited to post pictures of their expensive purchases, and this alerts potential burglars that there are valuables in your home.”

SHOWING

REALTOR® SAFETY What you need to know before you show a listing

orking in real estate can be dangerous. Risky activities — like traveling to isolated locations, working odd hours and meeting strangers — are all a common part of a REALTOR®’s job. Even for the most experienced REALTOR®, it can be difficult to distinguish between prospect and predator. There were 25 homicides in the real estate, rental and leasing industry in 2013, according to the U.S. Bureau of Labor Statistics. With the recent death of Arkansas REALTOR® Beverly Carter, the National Association of REALTORS® and other associations across the country are emphasizing safety awareness and training more than ever. Take the quiz below, and see how much you already know about staying safe as a REALTOR®. 1. TRUE OR FALSE? Use a personal Facebook account to network and find prospects.

3. TRUE OR FALSE? It is impossible to reduce your risk of an attack at an open house.

2. TRUE OR FALSE? It’s OK to give out your personal address and home phone number to clients if you have worked with them before.

4. TRUE OR FALSE? Don’t ask potential clients for their personal information.

UTAH REALTOR® • www.UtahRealtors.com

5. TRUE OR FALSE? Lock the doors when showing a home to prevent intruders.

2. FALSE: Never use your home address or home phone number. In your marketing materials, only use your cell phone number and office address. Make sure nothing can be traced back to your home address and phone number. Don’t reveal personal information about your children, spouse or neighborhood. It is possible to build relationships with clients without revealing this information. “Stay on your guard about clients asking personal questions about your neighborhood or schedule,” Lindsey said. 3. FALSE: While open houses can be dangerous, you can better protect yourself by following a few tips, including having another person on site. “It’s a good idea to have someone with you in an open house,” said Detective Greg Wilking of the Salt Lake City Police Department. “You are less likely to be attacked if they know that they will be interrupted.” At the very least, make sure your partner or broker is aware whenever you are having an open house or showing a home. It’s also a good idea to have a code word among agents to use in case of emergencies. For example, if you say, “I need the paper out of the green file,” your coworkers will know you are in distress. Make sure everyone in your office knows the code and what to do when it is used. Finally, introduce yourself to the neighbors and ask them to keep an eye out for anything suspicious. 4. FALSE: The more information you know about a client, the better. When working with new clients, always meet for the first time at your office so your broker and associates can see them. At the very minimum, record their name, phone number and driver’s license number. The National Association of REALTORS® has developed a Prospect Identification Form available for download at UtahRealtors.com/ Safety. If the client refuses to provide this information, do not continue with the showing or relationship. You may have lost a sale, but you may have also saved yourself from a potentially dangerous situation. 5. FALSE: Leave the door unlocked so you can make a quick getaway if needed. You should always follow clients through the home. Not only does this prevent them from stealing belongings while your back is turned, it also gives you better access to the exits. Lock up your purse and laptop, but make sure you have your cell phone in hand at all times. Program emergency numbers as speed dials. Finally, make sure you park on the road so your car isn’t blocked.

REALTOR

UTAH

USE CAUTION WHEN

UTAH

QUIZ

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