COOL KNOWLEDGE TOOLS (PAGE 28) • WIN A GPS (PAGE 42) March/April 2010
A journal for real estate professionals published by the Virginia Association of REALTORS® • www.VARealtor.com
NAR’s new project is going to change everything. That’s good, right?
firstword ANDREW KANTOR
PUBLISHED BY THE VIRGINIA ASSOCIATION OF REALTORS® The Business Advocate for Virginia Real Estate Professionals Cindy Stackhouse, GRI President John Dickinson, CCIM, GRI President-Elect Trish Szego, CRB, CRS Vice President John Daly Treasurer John Powell, ABR, CRB, CRS, GRI Immediate Past President R. Scott Brunner, CAE Chief Executive Officer scott@VARealtor.com Ben Martin, CAE Vice President, Marketing & Communications ben@VARealtor.com Andrew Kantor Editor & Information Manager andrew@VARealtor.com For advertising information, Brittany Sullivan at (410) 584-1968 or e-mail var@networkmediapartners.com The mission of The Virginia Association of REALTORS® is to enhance its membership’s ability to achieve business success. Commonwealth magazine (ISSN#10888721) is published bi-monthly by the Virginia Association of REALTORS®, 10231 Telegraph Road, Glen Allen, VA 23059-4578; (804) 264-5033. Virginia Association of REALTORS® members pay annual dues with a one-year subscription included within their dues. Periodicals postage paid at the Glen Allen, VA post office and additional mailing offices. USPS Per. # 9604. Postmaster: Send address changes to: Commonwealth magazine, 10231 Telegraph Rd., Glen Allen, VA 23059-4578. Custom Publishing Services provided by Network Media Partners, Inc. Executive Plaza 1, Suite 900, 11350 McCormick Road Hunt Valley, MD 21031
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Small things SO I WENT into the hospital for some minor surgery. My first time at this particular beacon of modern medicine, and the first time I had been in one since my now-seven-year-old was born. Sam is named, in fact, after the OB/GYN who delivered him, which gives you an idea of how much we thought of the doctor. But the hospital… that’s another story. Let’s just say that, while the medical talents of Ohio State’s NICU staff may have been first rate, their patient-interaction skills weren’t up to snuff. Fast forward to 2010, and my trip to St. Mary’s Hospital here in Richmond. And color me impressed. From the time I walked in to set up my appointment, every interaction with the staff was smooth and friendly. Here’s the thing: I’m not just talking about the mechanics and procedures going well. I expect that at a modern hospital. The impression that stays with me was the simple and ubiquitous friendliness. It was the little things — how the woman who made a minor mistake in accounting came to fix that mistake and apologize, even though she could have simply corrected it and I never would have noticed. How the nurse who checked me into the surgical floor took a moment to reassure me, this being my first time facing anesthesia, and to talk to me about her son in Afghanistan. How the surgeon smiled and joked with me before I went in. How the nurse in the recovery room brought me a can of Diet Coke (aka, nectar of life). And so on. Little things can make a
tremendous, out-of-proportion difference. From the “broken windows” concept, to chaos theory (“a butterfly flapping its wings in China…”), to the snowball effect Malcom Gladwell writes about in Outliers, little things aren’t little. They’re certainly what I took home with me.
“
Remember to focus on the little things. The big things will take care of themselves.” Remember this. Remember that it isn’t only the big picture you need to worry about — the right price or a smooth closing or even a happy client. It’s easy to focus on that big picture because it’s big. But that doesn’t mean it’s memorable. Imagine a three-hour flight across the country. Halfway through, the plane hits sudden turbulence. It ends in a few moments, and the rest of the flight is uneventful. Even though you had two hours, 59 minutes, and 30 seconds of smooth flying, what’s the one thing you’re going to remember? So whether it’s dusting your car before taking a client on a drive, or making an extra phone call just in case, remember to focus on the little things. The big things will take care of themselves. ● Andrew Kantor, Editor andrew @VARealtor.com
MARCH/APRIL 2010
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MARCH/APRIL 2010 Volume 17 ● Issue 2
contents
departments 4 quickhits The latest news and announcements for Virginia’s Realtors®.
8 legallines Lem Marshall answers readers’ questions about real estate law.
14 formfactor The scoop on Form 610 (POAs) and Form 1350 (lead paint disclosure)
16 lifelessons Bad examples: The footsteps you shouldn’t follow in.
36 accessibletech New communications tools let you converse — not just talk.
in every issue 1 firstword 38 rpacreport
features
18 28 32
42 varbuzzcontest 43 contactvar
APEX Award of Excellence winner
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NAR’s upcoming Realtor® Property Resource — RPR — is the talk of the real estate town. It’s designed to make Realtors®’ lives easier, but some people are wary of all that power. Read what the fuss is all about.
Paradise by the dashboard light
Everyone wants to know what the real estate market is doing. A new tool for Realtor® associations is going to give them that info — in detail and in spades.
The knowledge web
Thanks to the Internet, your clients have access to a long list of tools to learn about properties and neighborhoods. Keep up (or even get ahead) with this selection of Realtor®-friendly research sites.
VAR's
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Goals 2010
Goal
44 lastword
Don’t fear the RPR
Better data
Look for this icon: It tells you when a story relates to one of VAR’s six goals for 2010. In this issue, “Paradise by the dashboard light” shows one way we’re reaching goal #6: Providing better housing-market data. VARealtor.com/6goals www.VARealtor.com
quickhits
ANDReW KANToR
legal update
New lead paint rules in effect April 22
out of Washington
Feds to push banks to accept short sales A new program from the Obama administration hopes to take a plunger to the short-sale process by incentivizing banks to accept less than the borrowed amount for a property. It will also pay those delinquent homeowners $1500 to help with relocation. The idea behind the “Foreclosure Alternatives Program” (part of the administration’s overall Making Home Affordable efforts), is that a short sale is better for everyone — banks, underwater owners, and communities. Banks will take a hit, but less of one than if the home went into foreclosure. Homeowners will take a credit hit, but, again, less than with a foreclosure. And communities would avoid having empty, foreclosed homes sitting around. This is economics on a grand scale, so — despite what various talking heads say — it’s really impossible to know if and how well this will work. But the Administration hopes it will be another foot helping to kick-start the economy. More information is at makinghomeaffordable.gov.
VREB’s Winter 2010 newsletter is out Get a copy at VARbuzz.com/go/vreb2010-1.
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out of Washington
New ePA rules about lead paint went into effect on April 22, 2010, and to help you comply, your friends at NAR have set up a lead Paint Renovation Rule Compliance Guide at Realtor.org. Quoth NAR: “The guide describes the new lead-based paint safety practices established by the rule, and what steps real estate agents, brokers, and property managers need to take to comply with the new procedures.” And watch for a legal update with VAR’s special counsel lem marshall coming to a town near you with an in-depth look at your (and your clients’) responsibilities under these new lead paint rules.
Federal refinancing program extended Homeowners who haven’t refinanced under the federal government’s Home Affordable Refinance Program, which was set to expire in June, will have another year to do so. The government extended the program because it has not had a chance to help as many homeowners as hoped. Owners who owe up to 25 percent more than their homes are worth can refinance their mortgages under the program, hopefully reducing their risk of foreclosure. More information from the at VARbuzz.com/go/ refinancing.
out of Washington
Obama administration pursuing HAMP cramdowns The Federal government is pursuing additional measures to compel mortgage lenders to provide principal forgiveness for underwater homeowners. If, after taking steps such as reducing the interest rate to as low as 2% and extending the loan term to 40 years, the homeowner still can’t handle the financial hardship, lenders would be encouraged to reduce the loan balance. The idea is that some owe so much on their homes, the owners feel it’s better to walk away than to meet their payment obligations. Treasury officials hope to encourage them to stay and pay.
WWW.VAReAlToR.Com
News from NAR
NAR President says another extension of the homebuyer tax credit is “unlikely”
Green Realty
NAR’s 2010 president, Vicki Cox Golder, told association leaders that the homebuyer tax credit will probably come to an end when the current deadline of April 30 rolls around. “As you know the deadline for the Homebuyer Tax Credit is fast approaching. Buyers must have a contract in place by April 30, 2010 with a closing date no later than June 30, 2010 to claim the credit. We expect that Realtors® will be asking you what NAR is doing to extend the tax credit. NAR has had extensive discussions with our congressional allies and concluded that an additional extension of the tax credit is unlikely. While lawmakers recognize that the tax credit helped stabilize the market, it appears that much of the benefit has been realized. NAR is now focused on working with our Realtor® Party champions to improve the availability of financing, which continues to be an issue. Specifically, we are working with Congress to strengthen FHA and to help develop a new business model for the secondary mortgage market giants Fannie Mae and Freddie Mac.”
Virginia Real Estate Board elects Chair and Vice Chair At its meeting this week, the members of the Virginia Real estate Board elected a new chair and vice chair. The results: Chair: Byrl Taylor, GRI, from long & Foster in White stone Vice Chair: Scott Gaeser, CCIM, from eagle Realty of Virginia in Glen Allen
2010 Property Management Coalition Conference mark your calendars: November 17-19, 2010 omni hotel, Charlottesville
Virginia offers rebates for energy-efficient upgrades $10 million is available to help Virginia homeowners and small businesses cut their energy costs and implement renewable-energy systems. The money can be used to offset the expense of energy-saving upgrades to heating and air conditioning, home insulation, windows, and the like. Funds are also available to encourage the purchase of wind and solar energy devices. Get details from the Virginia Division of Energy at VARbuzz.com/go/eerebates.
VAR’s new Web site connects, informs, and dazzles VAR’s new Web site launched last month, and hundreds of Realtors® have already customized the site and created the profiles that their colleagues and consumers will see. Besides giving you all the latest information up front — besides making it easy to find what you need — besides always being up to date — the new myVAR section lets you set your preferences, choose groups to join, and find and interact with your fellow real estate professionals across the state. But you have to log in. If you haven’t already, what are you waiting for? head to www.VARealtor.com, follow the instructions, and sign in. Volume 17 ● Issue 2
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quickhits Tax Tips
IRS stepping up audits on independent contractors Better cross those t’s, dot those i’s, and make sure you’ve got good documentation for all those write-offs on your tax returns… According to NAR, the IRs has announced an expansion of audits of small businesses during 2010 to assess compliance with employer payroll tax rules and rules that apply to independent contractors. The IRs is assessing compliance, and not targeting any particular industry. Read more about it at VARbuzz. com/go/audits.
VhDA News
VHDA increases income limits statewide Good news for first time homebuyers! Now, more homebuyers may qualify for a VHDA FHA Plus or Homebuyer Tax Credit Plus loan that offers an affordable fixed rate and help with the down payment. Income limits increased in all areas of the state and sales price/ loan limits increased in most areas. Visit VARbuzz.com/go/ loanlimits for a chart containing a summary of the new limits and VHDA.com/loanlimits for complete details.
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Tougher stormwater regulations postponed Stricter standards from the Virginia Soil and Water Conservation Board, to keep stormwater runoff under control — and out of the Chesapeake watershed — have been postponed until at least the end of 2010, and possibly as late as December 1, 2011. The tougher standards would control the way new homes, shopping centers, and other developments are built. Environmentalists maintain the new standards are necessary to protect the watershed for future generations, but opponents say the rules will increase sprawl, increase the cost of housing, and that consumers would ultimately bear the cost of stricter development rules that builders would have to comply with. Implementation of Virginia’s rules were delayed because they would have been subordinate to rules currently being drafted by the EPA.
REal Show keynotes announced Richard Bitner and Joe Theismann will be keynoting VAR’s REal Show 2010. Bitner is managing editor of Housing Wire and author of Confessions of a Subprime Lender: An Insider's Tale of Greed, Fraud & Ignorance. A former subprime lender, he has joined the forces of good — now he works to educate people about safe and smart borrowing. He’s the expert on the subject, for sure; he’s been featured in Newsweek and the Wall Street Journal, and on CNBC and the Daily Show. And you should know former Redskins star quarterback Joe Theismann. He’ll be talking about change — something many Realtors® are learning about for the first time these past few years.
VAR leadership
Nominations now being accepted for VLA some leaders are born, some are made. If you fit either category, you oughta get yourself onto VAR’s leadership track by applying for the Virginia Realtors® leadership Academy. Through the VlA, VAR identifies and trains 20 emerging Realtor® leaders from across the commonwealth each year. They builds their leadership skills through a series of retreats and a major class project. Graduates are groomed to take on leadership positions in their local associations, at VAR, or in other organizations. sound like it’s for you? head over to www.VARealtor.com/leadership academy where you can download an application.
WWW.VAReAlToR.Com
We know that every home you sell is perfectly normal: decorated tastefully and well staged for showing. Sadly, though, some people have, shall we say, different taste. Enter Lovely Listing (at lovelylisting.com, of course), where questionable real estate goes to die — or, rather, to live forever. With the kind permission of our friends there (who wrote the accompanying text), we present this issue’s beauties:
Code of Ethics
Selling raw land? Not so fast, says NAR.
lovely listing
Last fall, NAR amended Article 11 of the REALTOR® Code of Ethics to include land as a real estate discipline that requires specialized expertise. Article 11 explains that Realtors® should not provide specialized professional services outside their field of competence, unless they either engage the assistance of someone who is competent in a specific discipline or fully disclose to the client that they don’t possess expertise in a particular area. Bottom line: If you’re listing or helping buyers acquire undeveloped land, you need one of three things: 1) training in land brokerage, 2) assistance from a land expert, or 3) to disclose to your clients that you don’t possess expertise in land brokerage. So how can you become competent in the sale of undeveloped land? Try the Realtors® Land Institute on for size: Visit www.VirginiaRLI.com for information about online and in-person courses. l
Unicorn Room! Pink Room! I’m sure Sparkly Fairy Room is here somewhere. So all this time when I thought she was at preschool, it turns out my daughter had a career going as an interior decorator. I’m so proud. Oddly, the listing doesn’t show the Wiggles-themed room she includes in every house (it’s sort of her trademark). You’ll just have to trust me when I say it’s fabulous. Magic Eye Wallpaper “Property Type: One And Three Quarters – Single Family Dwelling,” says the listing; presumably the three-quarters is for the extra dimension you see if you stare long enough at the wallpaper. l
Volume 17 ● Issue 2 MARCh/APRIL 2010
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legallines
Lem Marshall, VAR Special Counsel
Let’s be clear about something As I write this, I’ve just returned from an early February trip to the Arctic. When people inevitably ask me why I would do such a thing, I explain that when I asked the travel agent to book me on a Caribbean trip, she misunderstood and thought I was asking for a Caribou-ing trip, so before I knew it, I was heading north to Alaska. The theme today is clarity.
Catch and release
Q.
Listing agent at Firm A secures a contract with a buyer represented by Firm B, contingent on sale of home. The listing expires before the buyer’s home is sold, and seller lists with Firm B at a price that is $50,000 less than the previous price. Buyer now offers to drop his contingency and close if seller will give him the new lower price. Seller agrees and a new non-contingent contract is entered into. By this time, the selling agent has left and gone to Firm C, whose broker now recommends that the contract be released and a new contract entered into showing Firm B as the listing firm and Firm C as the selling firm. This is done. Firm A does not join in the release. What rights does Firm A have here?
A. The facts here are about as confusing as Valentine’s Day at Tiger Woods’ house, but Firm A’s rights are pretty clear. I believe Firm A is entitled to a commission from the seller. After all, Firm A’s agent secured the deal that ultimately closed, although with a price adjustment, which, in itself, is not that unusual. I doubt that a court will see a substantive difference between the new contract that Firm B initially wrote and the replacement that it later wrote, on the one hand, and a simple amendment adjusting the price and dropping the contingency, on the other hand, which is how this could have been handled to start with. The point is that new contracts don’t necessarily disturb the legal rights of the firms involved, especially if that is all they are intended to do. Now, that is not necessarily what happened here, but I’m always suspicious when I hear about a broker urging his client to terminate a contract and enter into a new one naming his firm as the selling or listing firm. If I am correct, then Firm B would be owed the selling fee for procuring the deal that closed, and the buyer agent who went to Firm C would be owed his split from Firm B according to his deal with Firm B. On his way to his execution, Sir Thomas More is said to have told the hangman: “I pray you, Mr. Lieutenant, see me safe up, and for my coming down let me shift for myself.” Firm C might just have to shift for itself here.
“
The facts here are about as confusing as Valentine’s Day at Tiger Woods’ house, but Firm A’s rights are pretty clear. It’s entitled to a
Bad broker — no cookie
Q.
A local company will not show listings unless the listing firm offers at least 50% of the total commission received. The broker is just unyielding in his insistence that his firm receive half the commission. This means, of course, that he insists on knowing what his competitors charge their clients. How should we deal with folks like this?
A. This is distressingly commonplace. But how do we deal with folks who have gone six exits passed ethical? Because, make no mistake about it, this behavior is potentially unethical and almost certainly legally problematic. Article 1 of the Code of Ethics — the pillar of our profession — obligates us to put our clients’ interests above our own, and to inform our buyers of our policies regarding cooperation. If the buyer has not been told that otherwise suitable properties will be ignored unless the listing firm agrees to disclose what it is charging its clients and share half of it with the buyer’s agent, the broker his ignoring the clear duties he owes his client. And what of the potential antitrust implications of this behavior? Any practice by which competitors regularly are expected to share information about their fee structures with each other, and any insistence that all competitors compensate each other in exactly the same way, is more than questionable — it is dangerous.
commission from the seller.”
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www.VARealtor.com
Active tense
Q.
A multiple listing service has two interesting rules: If the seller makes an initial disclosure that the listing is a short sale, the listing agent may keep the listing active after a contract is ratified (showing that a contract is pending subject to lender approval, of course). The point is, the listing will continue to pop up in searches of active listings, and this will enhance the chance of better offers — something both the seller and the lender want. However, if the listing is not shown as a short sale, the listing agent must show the listing as pending and remove it from the active listings. What if the seller’s asking price would yield no short sale, but anything less would? If the seller discloses the potential short sale, he might chill interest in the property, virtually assuring it will be a short sale. But if he doesn’t make the short sale
disclosure, and he doesn’t get his price (a short sale results), he can’t keep it active, even though it would be very advantageous for him to be able to do so.
A. A Catch-22, isn’t it? I prefer the way some MLSs handle this problem, which is to allow any short sale to be kept active, with the appropriate disclosure of a contingent ratified contract. I also think there should be some good-faith exception to rules requiring disclosure of short sales, so that sellers with a good-faith belief that a non-short-sale deal might happen can avoid the punishing disclosure that can become self-fulfilling. Until then, certain MLS rules will require sellers to make a tough choice. Bombardier Yossarian had it right in Joseph Heller’s book Catch-22: “That’s some catch, that Catch-22.”
But wait, there’s more
Q. Separate but equal
Q.
An agent has an investor client who put offers on multiple properties every week, each with the same deposit amount. The investor has given the agent a single deposit check in the amount of one deposit that is used for every offer until an offer is accepted, at which point the check is deposited to cover the deposit for the property. For purposes of our inquiry, we can assume the buyer will never get more than one contract at a time from the multiple offers made this way. Does this practice meet the requirements of the Real Estate Board as to earnest money deposits?
A. My sixth sense tells me this is a potential problem, because the board might view the representation made in the contract as being that unencumbered money is being held. Of course, if only one offer at a time will ever ripen into a contract, this is unlikely to be a practical problem, but why take the chance? Why not ask the client to write a separate check for each? There shouldn’t be a problem with that if only one will ever have to be honored. If the answer is that more than one might have to be honored, well, you have a problem the other way as well, and using only one check is clearly impermissible. If only one will ever be honored, writing separate checks should be risk-free to the buyer. I don’t know why it should be up to the broker to determine whether each check is good or not (we never do that), as long as the broker has no reason to believe the check on any given offer will not be honored if the offer is accepted. Volume 17 ● Issue 2
Listing agent on a property received an offer on a property, but the MRIS regional contract form that constituted the offer lacked the Virginia jurisdictional addendum. Buyer signed it and the buyer’s agent informed the listing agent. Shortly thereafter, the listing agent received a much better offer that contained the addendum, and seller naturally wants to accept this better offer. But does the seller already have a contract?
A. The regional contract incorporates certain additions as listed in Section 32 if they are executed and attached. This includes the jurisdictional addendum and various contingency forms. According to what the parties signed, the jurisdictional addendum is not part of the contract. However, by law, several things in the jurisdictional addendum are required to be in Virginia purchase contracts, such as statutory provisions as to mechanics liens, CRESPA, and any condo and POA disclosures. It also contains agreements pertaining to the loan, septic systems, etc., that might not be required but were likely central to the deal. I suggest seller consult with counsel at once, but certainly before accepting the second offer. MARCh/APRIL 2010
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legallines
VAR Legal Hotline (800) 755-8271 Is it risky? Quick! To the Hotline… The VAR Legal Hotline is a free, members-only risk management tool that is among the top-rated services offered by the Virginia Association of REALTORS®. Through the Legal Hotline, you can receive timely legal information on the issues you confront day-in and day-out in your real estate practice. The VAR Legal Hotline has one major objective: to increase Realtor® professionalism and decrease professional liability. Before you call: Please note that many of the routine questions the Hotline receives — and we receive a lot of routine ones — have previously been answered in Commonwealth articles; check the indexed Hotline archives at VARealtor.com before calling.
Easement does it
Q.
Guidelines for Legal Hotline calls: All principal or supervising brokers are eligible to use the Hotline. In addition, one other designated person from each office (for example, an associate broker or office manager) may register as designees of the principal broker.
A. This is easy to miss. The title company has searched the title to the neighboring parcel and found the mortgage lien. Because the easement went on the property well after the mortgage lien, it is subordinate to it and would be wiped out by a foreclosure of the lien (in this regard it’s just like a second mortgage). The title company will not, therefore, insure access to the property by way of the deeded easement, because it could fall like a gunclub soufflé.
How to sign up: Registration is easy. Complete the form found under the Member Services tab at VARealtor.com. You must register before you call the Hotline.
A buyer agent obtains a contract for her client on a home with a large tract of land. An old farming road provides access from the public road across a neighboring tract, but there is no deeded easement. In connection with the transaction, the seller obtains an easement from the neighbor, but at settlement the title company refuses to give clear title to the easement because the property across which the easement runs is subject to a mortgage lien. what is going on here?
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Get the title searched early so these issues don’t crop up at the settlement table.”
What can the seller do? Well, he can seek a subordination of the first lien to the easement, but that could be hard to get if only because it might be hard to track down the owner of the mortgage. Even then there might be reluctance to subordinate. The seller might also try to convince the title company to insure the access by showing the seller obtained an easement by prescription by the continuous use of the roadway for the statutory period of at least 20 years. Good luck with that. No, I’m afraid the best you might do is just to flash the title company your best DMV smile and offer them an enhanced premium to take the risk. Money is better than kissing the ring in these cases. Lesson: Get the title searched early so these issues don’t crop up at the settlement table. Leave yourself time to deal with title issues by getting an early search.
10 MARCh/APRIL 2010
Hours of operation: Monday through Friday (except holidays) from 10 a.m. to 3:45 p.m. How to contact the Hotline: By phone: (800) 755-8271 or (804) 264-5033. By e-mail: hotline@VARealtor.com Call handling process: When you call, please have your NRDS number ready, and include it with any e-mailed questions. Questions? If you have questions about the Hotline, contact VAR at (800) 755-8271 or (804) 264-5033, or by e-mail at info@VARealtor.com The VAR Legal Hotline should not replace your own legal counsel. We will not answer questions on matters unrelated to real estate or real estate brokerage, nor can we help with pending arbitrations.
Risky business
And then there was one
While we’re on the subject of releases, consider this: How should the broker of the firm representing the buyer respond to a buyer’s request to prepare a release on a deal where the buyer has clearly breached the contract? Must the buyer’s broker cooperate with that request? What happens if the buyer’s broker does not join in?
Buyer and seller want to part ways and have sought a release of contract. The selling firm, however, believes the listing firm has acted improperly and does not want to join in the release of the listing firm. What is the effect of a release signed by buyer, seller and listing firm, but not by the selling firm? Is it operative as against the three signatories?
Q.
A. The broker may cooperate in different ways or may simply refer the buyer to an attorney. The broker can prepare a release between buyer and seller without including the brokers, or may simply decide life is too short, prepare a full release, and then go have a freshly squeezed Heineken.
“
The lesson? Release your client only after cool deliberation.”
Listing agents in this situation, however, have another imperative. The listing firm should never release the seller without securing the agreement of the selling firm to join in as well. Why? Because under NAR rules, the listing firm is excused from the obligation to pay the selling agent if the listing firm does not receive the fee, unless the listing firm is responsible for its not receiving the fee. Releasing the seller will fill that bill in Virginia, where our Supreme Court has ruled that such action by the listing firm does not result in the release of the listing firm from its obligations under the contract formed when the selling firm procured the buyer. The lesson? Release your client only after cool deliberation. Volume 17 ● Issue 2
Q.
A. This will depend on the wording of the release and the intent of the parties. Most standard form releases prepared by Realtors® contain releases of and by the brokers and firms as well as releases of and by the parties. If one or more of the four identified parties is not going to join, I believe all those parties who join must initial the strikeout of the party(ies) who are not joining. Otherwise those joining are entitled to assume all shown on the form will join, and this can be very important. For example, a seller might be willing to release the buyer only if the listing firm is joining in as well to release the seller. So, if only three are joining in, but the absence of the fourth party is not approved by the three joining in, I doubt if the release works for any. Strike out and initial, or you’ll have a document that’s as confusing as John Edward’s house on Father’s Day.
Hold on a bit longer
Q.
A contract fails because of financing despite the good faith efforts of the buyer to obtain a loan. Despite a clear financing contingency the seller refuses to permit the earnest money deposit to be returned to the buyer. The contract clearly states that the deposit shall be returned to the buyer in this event, so may the selling agent return it notwithstanding the seller’s objection?
A. No. The escrow agent may return the EMD only with the mutual consent of the parties or by order of the court. But here’s a strategy that almost always works when the seller is being a petulant brat about the deposit. Buyer can send the seller the following letter: Dear Petulant Brat: As you know, we have terminated the contract pursuant to rights granted us under the contract/statute. Under the terms of the agreement, we are entitled to the return of the earnest money deposit, but the escrow agent may not return it without your written authorization or a court order. We have repeatedly requested that you authorize the return, but we have been informed of your unwillingness to do so. This leaves us no choice but to bring action in the local courts to enforce our rights. This letter is to give notice that unless you have given written authorization to the escrow agent at _________ (insert contact information) by end of business _______, 2010, then on the following Monday morning our attorney will bring legal action to compel your cooperation. You should be aware that under the terms of the contract if one party is forced to bring legal action to enforce his rights, the non-prevailing party must pay the prevailing party’s legal fees and costs. Unless you plan to prevail in this action, you should plan to pay your attorney’s fees as well as our attorney’s fees and court costs beginning at close of business on the date set out above. It has been a true joy dealing with you, etc. Unless the seller is so dense light bends around him, this letter should do the trick. MARCh/APRIL 2010 11
legallines I don’t think so
Five-year rule
I have been alerted to the fact that quite a few instructors in the state are instructing agents that if a buyer — for whatever reason — does not wish to work with an agent as a buyer agent, that the agent is automatically a subagent of the listing firm.
A broker has received a subpoena duces tecum (in case you don’t speak fluent litigation, this requires the lucky recipient to produce the documents described in the subpoena) asking for documents on a deal that fell apart over almost five years ago. Must the broker comply, given that the regulations require that we keep files only three years?
Q.
A. Once again, and for the record, nobody is ever automatically somebody’s agent. Agency is contractual and consensual, and never results without the mutual consent of the agent and principal. This consent might come about in different ways — it might be explicit, it might be implied from the parties’ behavior — but it must result from agreement. No firm is ever obligated to extend an offer of subagency and no selling firm may create a subagency relationship without the knowledge and consent of the listing firm. This is based on the same principle that keeps you from informing a prospective client that you will be representing the client, without the client ever having agreed to it. Agency has very important consequences, chief among which is that the acts of the agent undertaken within the scope of the agent’s authority are binding on the principle. Nobody can have that thrust on them unwillingly. So the next time you ever hear the words “agent” or “agency” or any form of them used in the same sentence with the words “automatic”, you’ll know that the answer is always “NO!”
Q.
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A. That argument is as smooth we recommend firms as a gravy sandwich, but it won’t work. The fact that you don’t have to keep their records at have the documents is no excuse for delivering them if you do have them. least five years.” So do your civic duty, and give them up like a mob rat. Besides, we recommend firms keep their records at least five years because that is the statute of limitations for actions on written contracts. After five years you are probably safer discarding them than after three.
R-E-S-P-E-C-T, get it? Finally, on a serious note, I’d like to make an appeal to the guys out there who are members of the local and state associations and who interact with female association staff at all levels. Look, I know you think she’s a twelve-car-pileup luscious, but she doesn’t need to hear that you fantasize about her or have her pinned up on your refrigerator, or that you love how she looks in that outfit (okay, that last one sort of depends on the context, but you get the point). We need to remember that our women staffers — and our women members — are entitled to the same deference and professional treatment we would give our firm’s employees, and they are entitled to be free from inappropriate comments and behavior. Some of us might not understand that what we mean as a sincere compliment is not taken that way, but on the other hand, some of our women staffers are facing genuinely inappropriate come-ons and “compliments.” None of our staffers should have to deal with some of the comments I’ve heard, and that you wouldn’t want made to your wives, girlfriends or daughters. So, guys, let’s keep it professional. (Ladies, you are not immune from this stricture: keep it professional with the men on the staff as well.) ● My thanks to author and sportswriter Rick Reilly (five-time Sports Writer of the Year and one of the funniest guys ever to pick up a pen) from whom I borrowed in crafting this article. He’s practically related, since his wife’s sister married my wife’s brother. I figure that makes us brothers-in-law twice removed. He also loves a fresh squeezed Heineken. Legal Lines is written by VAR special Counsel Lem Marshall. Please note that answers to Legal hotline questions are informational only. Consult your own legal counsel for legal advice. More Legal hotline questions and answers are in the Legal Resources Center on VARealtor.com.
12 MARCh/APRIL 2010
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Get legal help 24/7
The VAR Legal Resources Center is online and open to all members. It includes: • Legal hotline answers archive • Articles on how new laws affect your business • Info on the Realtor® Code of Ethics • Legal webcasts (including Lem Marshall’s recent Short Sales Road show!) • Links to dozens of NAR legal resources
Visit the Legal Resources Center today for more information on: agency, earnest money, fraud, disclosure, tax regulations, and RespA
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formfactor BLAKE HEGEMAN
Forms — they’re the bread and butter of a deal. They’re full of fine print and legalese, and not everyone “gets” the details. And that often ends up as a call to our Legal Resources Center. (Shameless plug: (800) 755-8271.) So we asked our intrepid associate counsel (read: lawyer), Blake Hegeman, to take one of the forms the LRC gets the most questions about and illuminate it for us.
They’re all available, free for download, at www.VARealtor.com/ standardforms.
This issue: VAR Form 610 Request for Property Owners’ Association Packet At the request of VAR, the Virginia General Assembly enacted an extensive overhaul of the Property Owners’ Association Act in 2008. VAR has since amended its forms to comply with the numerous changes to the law. Form 610 is simply a notice to request the packet, tell the association/management company who is to get it and how and where delivery is to be made. It includes changes to the law concerning electronic delivery and the number of copies to be provided upon request. However, there is some confusion as to why Form 610 no longer contains the long list of items associations are required to include in the packet. The reason is that associations are statutorily required to provide the items anyway, and the Common Interest Community Board has a cover sheet that must be provided by the POA with a list of required items.
Form 610 now includes changes to the law concerning electronic delivery and the number of copies to be provided upon request.
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If the listing agent has not done her job, you had better see that it gets done, or the EPA will come down on you.
listing agent, consider contacting the seller yourself – there’s no ethical problem in compliance with the law), (ii) being sure the buyer has received the LBP pamphlet, (iii) being sure the contract contains LBP inspection rights for the buyer, and (iv) getting the listing agent’s initials on the disclosure after compliance has occurred. In short, if the listing agent has done her job, you need do nothing further. However, if she has not, you had better see that it gets done, or the EPA will come down on you. Always remember that if your buyer client is buying from a FSBO, you are primarily responsible for seeing to it that compliance occurs. ●
VAR Form 1350 Section h We get this question frequently: “I notice the VAR lead-based paint disclosure form has a space for the buyer agent to sign certifying that he has informed seller of the seller’s obligations under the federal lead-based paint (LBP) statute and has assured the seller’s compliance. If I never speak to the seller, how am I to do that?” The confusion comes from the Act. It provides that the seller’s agent must certify that he has informed the seller of the seller’s obligations under the Act and that the agent understands his responsibility to assure the seller’s compliance. So far, so good. The problem is that the Act defines the “seller’s agent” as anyone who receives compensation from the seller or the listing agent, and that includes most buyer agents, since very few buyer agents receive compensation solely from other sources. The good news is that the EPA has informed us that it does not expect buyer agents to replicate the listing agent’s actions. Buyer agents should still take the appropriate steps, however, to assure the seller’s compliance if the listing agent has not, by (i) seeing to it that the disclosure form has been filled out completely and signed by the seller (get on the listing agent if it hasn’t been done, or, if you can’t get cooperation from the VOLUME 17 ● ISSUE 2
MARCH/APRIL 2010 15
lifelessons Andrew Kantor
The good, the bad, and the punished Realtors who neglect the Code of Ethics or Virginia law can find themselves in the crosshairs of the Virginia Real Estate Board, facing punishment ranging from a small fine to loss of their license. They can be cited for small things or large, including the generic “Unworthiness & Incompetence.” Here are two examples taken from the recent actions of VREB. These narratives are based on the Board’s official findings and do not necessarily reflect reality; participants may disagree with VREB’s findings and version of events as well. All the names have been changed, natch.
Home sweet home sweet home Arthur, a Realtor®, bought a house in January. In the paperwork he provided the builders (and his lenders) he indicated it would be a second home. In April he bought another house, this time indicating it would be his primary residence. In October he bought a third house — across the street from the second — and said it would be his primary residence. In all three cases, he signed a Deed of Trust in which he agreed to move into the house within 60 days and occupy it for at least a year.
However, in April he signed a lease with a tenant for his first house. In May he signed a lease with a tenant for his second house, and in November he signed a lease with a tenant for his third house. On none of those leases did he indicate he owned the homes. (In at least one case, he identified the owner of the home in the MRIS listing as “Mrs. Homeowner.”) When asked by the Board to justify his actions, Arthur explained that he intended to move into the first house, but discovered it was too close to a highway. The second was too close to a commercial area. The third house was an investment property, despite the agreements he signed. The rent Arthur received from the properties was not, however, enough to cover the mortgage payments. One of his tenants had a two-year lease, which Arthur negotiated down to one year because foreclosure was on the horizon. Eventually it came; all three houses were foreclosed upon. Arthur had more than $2 million in mortgage debt, not counting the home he actually lives in. For violating Board regulations covering advertising, disclosure of interest, and for “engaging in improper, fraudulent, or dishonest conduct,” Arthur was fined $5,000 and lost his real estate license.
VREB’s top ten According to the winter edition of VREB’s “VREB Speaking” newsletter, here are the top 10 categories for disciplinary violations. “The Board considers many cases that show laziness, lack of judgment, lack of detail, ignorance of the Board’s laws and regulations, and what even appears to be the intentional violation of those rules,” wrote Board Chair Carol Clarke. Although the top two aren’t clearly defined, most of the others are pretty clear. So make sure you know the law; you can see VREB’s regulations on its Web site — go through www.VARbuzz.com/go/vreb. 1. Unworthiness and Incompetence: Failure to safeguard the interests of the public 2. Unworthiness and Incompetence: Engaging in improper, fraudulent or dishonest conduct 3. Unworthiness and Incompetence: Criminal conviction while licensed
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4. I mproper delivery of instruments: Failure to provide timely, written notice of any material changes to a transaction 5. Maintenance and management of escrow accounts: Failure to comply when disbursing funds from escrow accounts in purchase transactions 6. Unworthiness and incompetence: Failure to inform the Board within 30 days of a criminal conviction while licensed 7. F ailure to exercise ordinary care by a licensee engaged by a landlord to lease property 8 (tie). Unworthiness and incompetence: Obtaining a license by false or fraudulent representation 8 (tie). Failure to manage real estate in accordance with the property management agreement terms 10. Conflict of interest: Acting as a standard agent or independent contractor for any client outside the licensee’s brokerage firm or sole proprietor
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No good deed... Beth was a newly-minted broker who wanted to start her own firm but didn’t have the money. She met Chris, who owned a property management company. Chris made her a deal: Beth would become principal broker of the firm in exchange for office space to run her business. Beth was planning to sell residential property, so she determined there wasn’t a conflict of interest. She signed on with a one-year contact. Chris told her that she (Beth) would not be involved in the firm’s day-to-day activities; as owner and president that would be Chris’s responsibility.
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despite her coming to the Board immedi-
attempting to get out of her contract, cooperating with the investigation, and — according to the Board’s investigator — always acting in good faith, the Board determined that she should have quit the company as soon as she realized she could not do her duties as principal broker, rather than stay on to aid the investigators. For “failing to have authority over the firm’s day to day operations and financial dealings,” and thus failing “to act as a real estate broker or salesperson in such a manner as to safeguard the interests of the public” — and for not reporting to the Board within three business days that she reasonably believed there was improper conduct regarding the firm’s escrow accounts — Beth was fined $1000 and required to take 16 hours of continuing education. ●
ately, attempting to get out of her contract, cooperating with the investigation, and — according to the Board’s investigator — acting in good faith, the Board determined that she should have quit the company as soon as she realized she could not do her duties as principal broker, rather than stay on to aid the investigators.” Figuring she ought to be involved to at least some extent, Beth repeatedly asked to see the firm’s books and records, but she was given the runaround. Then, a few weeks after starting, she found that the Board had been investigating the company. She contacted the Board immediately and began cooperating and helping the Board with its (stalled) investigation. She attempted to resign, but Chris denied her request because she was under contact. So Beth kept her job and began helping the investigators, who praised her efforts. She told the Board that, as she was working closely with the Board and its investigators, she felt she was doing her best to protect the interests of the public. Had she quit, she said, “the investigators would have gotten nothing.” During this time she also did her other broker duties, including helping agents and signing off on new listings. She was not, however, ever able to get access to the company’s books, including the escrow accounts. Despite her coming to the Board immediately, VoLUMe 17 ● ISSUe 2
MARCh/APRIL 2010 17
NAR’s new tool rolls out later this year — after that, everything changes.
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www.VAReALtoR.CoM
LATER THIS YEAR, NAR will be rolling out the Realtors® Property Resource — potentially one of the most important and useful real estate resources to come along this decade. It might very well change your business. The RPR is a huge and growing set of public and private databases, combined in a clean, friendly interface. With a few mouse clicks (literally), it can tell Realtors® all that is knowable about any property in the United States. That’s any property — for sale or not. Tax records, neighborhood data, structural information, ownership information...the list goes on. For a profession
VoLuMe 17 ● Issue 2
whose bread and butter is property, it’s an incredible tool. But let’s get this up front: There is some controversy about RPR. While just about everyone agrees that it will be an amazing tool for Realtors®, there are concerns about how it will impact MLSs (and thus local Realtor® associations), about how the data will be used, and even about whether it’s too good a tool. We’ll get to that. But first, a look at RPR and what you’ll be able to do with it.
By Andrew Kantor
MARCh/APRIL 2010 19
Key Points
What it is
Gives Realtors® easy access to a huge amount of data about every property in the U.S., whether or not it’s for sale. Initial data includes tax, foreclosure, valuation, demographic, structural, school, neighborhood, and more information. That will expand as NAR works with other data providers. Designed to supplement and integrate with MLS systems. Only contains data about the property, not compensation or other MLS-specific information. Reaction from Realtors® and brokers who have beta-tested it (or seen demos) is almost invariably positive. But some MLSs want changes to the data-sharing agreement before they sign on. All NAR members will have access no matter what their MLSs decide. Expected to generate revenue from the sale of certain information to the tune of $40 million per year — eventually. Wholly owned by NAR, which says that will not change.
RPR is a national database of every property in these United States. Correction — RPR is a set of databases that NAR has spent $25 million to put together in a single beautiful package. Pick a property address — 123 Main Street or whatever. There are plenty of information sources (free or otherwise) that tell you about that property: tax records from the county, school reports from private services like GreatSchools, demographics from Nielsen, and so on. You could even look up maps of airport traffic patterns, or find out where the nearest grocery store is.
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That includes sales, mortgage, tax and assessment data, liens, and permits (courtesy of Fidelity’s LPS Real Estate Group, the data aggregator to which NAR is paying $11 million to license the core property information in RPR). It includes neighborhood information such as zoning, environmental issues, and community demographics — think Census data. It includes psychographic data — the kind of information that’s collected by people using those supermarket discount cards, like spending habits. It includes information about public and private elementary, middle, and high schools — hard data and even reviews from parents. It includes RPR takes all those data sources — public distressed-property or private — and combines them into a records. It can show a single product.” property’s sales and financing activity chart, so you can see Smart Realtors® have been doing that sort of thing for a while. They access free a property’s 10-year history at a glance public sources for some information, and — when it was put on the market, when it sold and for how much, when it was they (or their broker or firm) have paid refinanced. to use private databases for more. And that’s just for starters. RPR plans Now comes RPR, which simplifies to expand its repertoire of information, that entire process of data searching. It adding new databases as it assesses takes all those sources — public or primember needs and creates relationships vate — and combines them into a single with data providers. And the data potenproduct with a single access point. Then ® tial runs across the board. it lets every Realtor in the country use “A Chicago company has floor plans it, free, because it’s owned by Realtors®. As Jeff Young, RPR’s senior vice presi- of every condo in Chicago,” Young says, by way of example. “And there’s dent of operations puts it, RPR gives a company in Virginia that does vacant brokerages information that many conland feasibility reports.” Both could sumers already have. “Consumers have be integrated. Also being considered: tremendous access to data,” he said. ® homeowners association information “Realtors are limited by geography, and condo documents — and more. RPR MLS features, brokerage features — but is flexible. a consumer has access to everything.” It’s also more than just a data dump, The goal of RPR is “to put a resource although viewing details about a single in [NAR] members’ hands that’s equal or property will certainly be important. better than any in the world.” RPR goes further. It also includes tools that let you search a region of your Easy does it choice based on whichever criteria you Simplicity is the key. One click and you can know all that is knowable about any want — and then compare properties and markets. property in the U.S., for sale or not.
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www.VARealtor.com
And “region of your choice” means anything from an entire metropolitan area, to a specific ZIP code (or codes), to school districts, to an area you define by drawing on a map. After all, RPR may not know about unofficial neighborhoods like Raleigh Court in Roanoke or The Fan in Richmond. But your clients will. The data are presented as text, as tables, as charts, or on a map, depending on the kind of information you’re looking at. For example, one feature lets you create “heat maps” of an region based on the criteria you choose. Another lets you color it based on age distribution — pink and red for older residents, blues for younger. Ditto for income, housing density, and other factors. Warning: Be careful, and remember to keep fair housing law in mind when using these kinds of features, whether through RPR or another service. With great data access comes great responsibility. Getting the picture? RPR lets you view all this information in a clear and useful way. Even if you never dove into a public or commercial database to dig up information, RPR has enough data — and is easy enough to use — that you’ll be tempted, like the bear who went over the mountain, to see what there is to see. (Answer: mountains of data.)
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RPR is designed to integrate with your local MLS, where it can take that information and integrate it in amazing ways.” Think about what you can do with that information not only from a clientservice standpoint, but as a marketing tool. What’s selling where, and to whom? RPR can tell you. Volume 17 ● Issue 2
But wait. There’s more. RPR can integrate — in fact, is designed to integrate — with your local MLS, where it can take that information and integrate it in amazing ways.
All together now RPR is a national property information service, but it’s definitively not an MLS. It does not list prices and compensation offers for a property. That’s the job of your MLS, and RPR execs are clear that it will not offer that information. Instead, RPR wants to add value to the MLS by integrating its data. Although RPR has its own Web site where you can use it (narrpr.com), its preferred delivery method will be through your MLS. The plan basically, is this: Each of the 900 or so MLSs in the country can enter an agreement with RPR. Then the MLSs will give RPR access to their data, so RPR can A) integrate it into the various data views it offers Realtors®, and B) use it to calculate property values — more on that in a moment. This is important: MLSs can decide who (beyond their members) gets to see their information, and how much of it. By default, only an MLS’s members will have access, but each MLS can opt to share specific data with other groups. For example, one could opt to share everything with a neighboring MLS as part of a data-sharing agreement. Or it could opt to share Realtor® comments with everyone. In exchange, RPR will, for want of a better term, put that MLS on steroids. It will be seamlessly integrated with the MLS — no separate account or login required. Users will be able to view a property, and with one click see all the RPR information about it, including MLS off-market and active data from across the country, provided other MLSs have agreed to share it. Participating MLSs will also get their tax and foreclosure records free, thanks
RPR aims to take on AVMs like Zillow. “All these AVMs are based on public information. They come up with an estimate that could be terribly good or terribly bad.” —Mona Steen
to RPR’s purchase of current data as well as archives going back 10 years. And if an MLS declines to participate? No worries. Because RPR is an NAR product, it is free and available to NAR members. If an MLS doesn’t opt in, says Young, “Members in those markets will be able to access [RPR] through narrpr. com and get all the RPR data — except the MLS data.” NAR built the RPR database “to give its members access to integrated parcel-centric data,” Young says. Whether it does that through an MLS “is a secondary issue.” (For more on what happens if your MLS doesn’t participate in RPR, see the sidebar, “If your MLS says ‘No’”.) Mona Steen, RPR’s senior vice president for industry relations explained at VAR’s February Get Active conference that she expects most MLSs to join once all the details of the contract are worked out. “If the members want it, the MLSs will participate, because the members will drive it.” And, she says, the members will want it. Christine Todd, CEO of the Northern Virginia Association of REALTORS®, agrees. By giving Realtors® — and only Realtors® — this information, RPR will “make sure they are the single-source reference point for the transaction,” she says. “That will ultimately result in their being move valuable when they serve their customers.”
Realtor® value When you know a lot about a property and the neighborhood it’s in, and you know a lot about similar properties and neighborhoods, you can make a pretty good estimate about the value of that property. And the more (and more accurate) the data you have, the better that estimate will be. RPR has a lot of data. Good data. So meet the Realtor® Valuation Model. It’s RPR’s direct competitor to other automated valuation models (think 22 MARCh/APRIL 2010
Zillow’s Zestimates), but, say the RPR folks, it’s a lot better. For one, there’s more data. Most importantly, as RPR integrates with MLSs across the country, those data include real-time prices, making it a lot more up to date than other models. For two, RPR has the advantage of more than a million Realtors® and appraisers, whose input will, over time, help RPR adjust the algorithm it uses to calculate a property’s value. If you’re an appraiser, your first reaction might be, “Yikes! That’s gonna put me out of a job!” You won’t be the first to jump to that conclusion. But then you’ll stop and consider it for a moment. You’ll realize, as Steen put it, “No lender is going to make a loan on a property that someone hasn’t walked through.” Still, some appraisers, like Mack Strickland of Chester (who is also chair of NAR’s Appraisal Committee), are hesitant to give RPR their stamp of approval. For Strickland, the RVM is akin to a broker price opinion, and, he says, “Appraisers are concerned about BPOs. We feel that a BPO is an appraisal, and agents and brokers shouldn’t be doing that without an appraisal license.” But it’s not just Realtors® using the RVM as a substitute for a qualified, licensed appraiser. Strickland also worries that appraisers could abuse it by using the RVM to accept work outside their areas. “The biggest concern I have is that anyone who has a NRDS number can get hold of all this data,” he says. “If you think Realtors® are upset about geographic incompetence now, wait till this becomes available!” But Steen points out that, while the RVM is a better valuation model than most, it’s still a model and still an AVM, and AVMs have been around for a while. The RVM is just a better one, and an appraiser would be foolish to rely on it for more than background Whether coming from RPR, Zillow, www.VARealtor.com
or somewhere else, “all these AVMs are based on public information,” she says. “They come up with an estimate that could be terribly good or terribly bad.” The RVM is expected to make appraisers’ jobs easier, and make their
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worse) view than its neighbors. RPR will then deliver a new estimate based on what you’ve told it — and that estimate is only for you. (You’re not changing the official RVM figure, although the RVM may take your
Lenders buy valuation figures from whomever will sell them. The result is a vague estimate at best.” appraisals even more accurate by giving them a good starting point. But, as Steen puts it, “It’s a better starting place than any other place you could go.” (Will there be people who think the RVM is the end-all, be-all of valuations — who think they don’t need an appraiser? Of course. It can’t be helped; these are the same people who think that the “Zestimate” they got from Zillow is a realistic selling price.) Having a more-accurate estimation of property value is a powerful — and potentially profitable — tool. That’s important; see “Making Money,” below. Of course, the RVM is, like all AVMs, an estimate. But RPR has added a crucial feature: the ability for individual users to update RVM’s information about a property to generate a better estimate. Because, while Steen is confident saying RVM has a great algorithm, she concedes that “it doesn’t know the basement flooded.” That means that if you know the basement flooded, or that the property has a better view than the neighbors, or that it has more bedroom than the database says, RVM gives you the tools to use that expertise. In other words, you can see how the RVM estimate would change if it knew what you know. On a page that lists all the information the RVM has, you’re given the opportunity to change those assumptions or add new ones. Adjust the number of bedrooms, or the square footage, or indicate that the house has a better (or
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changes into account for the future.) So if you’re working with a client and realize the RVM figure is off for whatever reason, make your changes and show your client that revised estimate. Your knowledge and expertise makes for a better starting point when you’re talking about price… at least until a human appraiser gets there.
Making Money RPR is intended, first and foremost, to be a tool for Realtors®, and only Realtors® have access to it. But NAR also believes it can sell two very small pieces of information to other companies and eventually make a profit doing so: The value of a portfolio of properties (using the RVM), and whether or not individual properties are on the market (using MLS data). “These are the only data points we will ever sell,” Steen said. The customers of the RVM are lenders — banks and other institutions that own mortgages directly or through mortgage-backed securities. They want to know, obviously, how much those properties are worth. Unlike stocks, though, there’s no NASDAQ or NYSE to check. Nor can they send appraisers out regularly to each of those hundreds or thousands of properties. “There’s a huge need on the lending side of the marketplace to understand how much those mortgages are worth,” says Steen. Today, lenders buy those valuation figures from whomever will sell them. The result is what you might
If your MLS says No What if your MLS decides not to participate, or hasn’t yet? How much benefit will you get from RPR? Because RPR comes from NAR, every Realtor® has access to it, period. As RPR’s Mona Steen said, “RPR is your system. It’s dues dollars that have gone into this.” So you’ll have access — you just won’t have equal access, because of limitations in MLS licenses. And it won’t be quite as convenient, either. If your MLS doesn’t participate, what you’ll notice most of all is that you’ll have to log into RPR separately from your MLS; the RPR data won’t be built into your MLS screens. So if you’re looking at a listing for, say, 221B Baker Street and want to dig into the details of the property and neighborhood, you’ll need to open a separate browser window, log into narrpr.com, then enter “221B Baker Street, Wherever, VA” again. If you don’t have two monitors, you’ll find yourself toggling back and forth between the MLS and RPR windows. (If you don’t know about Alt-Tab and Ctrl-Tab, now’s the time to learn.) There’s some other information you won’t be able to get because it relies on MLS data — most notably the Realtor® Valuation Model (see the main story); ditto for RPR’s home remodeling depreciation calculator, and any other tool that relies on access to MLS information. Despite missing a few pieces, “all NAR members will still receive the benefit of NAR’s investment,” said RPR’s Jeff Young. “The RPR is a member benefit for all NAR members.”
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RPR Timeline Ongoing: Working with the 900-plus MLSs in the country to create datasharing agreements. March through May: Beta test of RPR begins in at least 20 markets, with MLSs across the country that have from 800 to 30,000 members. RPR’s Jeff Young goes to each market and works with 40-50 individual testers; he hopes to work with two markets a week. Late spring/summer: Beta testing concludes, any changes are implemented. All members of betatest MLSs get access to RPR. May and ongoing: As other MLSs come on board, their data will be integrated with the system; it will be made available to those members when that process is complete. Third quarter 2010: RPR’s standalone interface (i.e., the one not integrated with MLSs) will be rolled out region-by-region for members whose MLSs haven’t signed access agreements.
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imagine: a vague estimate at best, especially because the range of values of a property can vary wildly from one automated valuation model to another. RPR’s plan is to set the standard by leveraging a huge amount of data, including data that only Realtors® can provide: MLS listings. (It doesn’t even have to be the listing of a particular property. Having data about nearby or similar properties that are on the market is almost as good.) The plan is for lenders to contract with RPR, send a bulk list of the properties whose mortgages they own to the database, and get a monetary figure back. The lenders won’t, Steen stresses, get the value of each individual property in their portfolios, just the total. It’s still an estimate, of course, but it’s an estimate from what Young and Steen hope will be the most reliable source out there: Realtors®. “It’s not going to be perfect from day one,” Steen says, “but it will be better than what’s out there.” (A detailed study published in the Winter 2001 Appraisal Journal, for example, found that even in the market with its highest accuracy level, Zillow’s “Zestimates” were little or no better than homeowner estimates — and often worse.) The other profit center for RPR will be a simple yes/no it will provide to lenders: “Is this property for sale?” Lenders want to know how many and which mortgages they own are on the market. They use that for valuation and marketing, and RPR can make the process much easier — something they’re willing to pay for. How much? According to LPS, having a valuation model like the RVM — one that uses the MLS data — could result in $80 million in additional sales for LPS. And the contract calls for any sales increase to be split 50/50 with RPR. In short, RPR (and NAR) expects to eventually earn $40 million per year simply by selling portfolio valuations and
for-sale notifications to lenders. And, Steen told a group at VAR’s Get Active conference, “these are the only two data points we will ever sell.” But two’s enough to concern some MLSs. When RPR sent out the first version of the licensing agreement it hoped they would sign, the reception was cool, to say the least.
Now waaaaaait a minute On January 27, MRIS, the largest MLS in the country — and one that serves a significant number of Virginia Realtors® — announced that, for now, it was not going to participate in RPR. In an open letter, Realtor® Adam Cockey, chairman of the MRIS board of directors, explained that the MRIS board was concerned about two aspects of the proposed contract: How the data it provided would be used, and why there was no provision for sharing potential revenues with the MLSs. “RPR and LPS would not place limitations on the uses of the information collected and the types of products that would be developed,” Cockey pointed out, and while MRIS could simply “yank the feed and not renew the contract,” the MRIS board was not comfortable with that. “RPR says ‘give us your data, we’ll tell you what we’re going to do with it’,” said Jonathan Hill, MRIS’s vice president of business development. “That kind of leaves the brokers out in the cold.” He gave the example of RPR’s telling lenders whether a particular property was being sold by its owner: “That tells them there may be trouble, it certainly tells them that [the owner] is moving, and it gives them a marketing opportunity. And brokers are concerned that their customers may not be aware that his information is being shared this way.” MRIS — and, Hill said, other MLSs he’s spoken with — wants the contract to limit the use of that data. “The license agreement,” he said, “needs to have www.VARealtor.com
some work done on it.” Then there’s the issue of money. If MLSs give their data to RPR, and those data increase RPR’s value, they want a cut. As Hill put it, “Brokers are concerned — ‘Why did someone else take my content and monetized it, and I didn’t get any benefit from it?’” That doesn’t make sense to NVAR’s Todd, who points out that MLS members do get a benefit: valuable information that non-Realtors® don’t have, in an incredibly easy-to-use tool. More importantly, she says, “MLSs are created to help brokers and agents make money, not to help the MLS itself make money.” So while the brokers Todd knows “say this looks like a phenomenal tool,” she see the MLSs “coming up with artificial roadblocks.” And unnecessary ones. “They should be concerned about Zillow, they should be concerned about HouseValues,” she says, “not their own family member.” Still, NAR and RPR are sensitive to those complaints. So on February 22, it announced significant changes to the wording of the MLS contract. Among other things, version 2 of the contract limits adds some data safeguards, so only people who should be able to see listing data can see listing data — no consumer access, for example. The only way for someone else to get hold of the data in RPR would be to have a Realtor® or broker give it to them. But access is tracked, and anyone trying to grab huge chunks of data (the only kind that would be useful) would be discovered quickly. And, says Steen, “If we ever catch a Realtor® abusing the terms of use of the site, their access will be terminated and not restored.” The new contract also allows MLSs to restrict the use of their content, and it protects MLSs and Realtors® from ever having their own content sold back to them — or even being marketed to. (Not Volume 17 ● Issue 2
that every MLS will want to restrict their content. RPR is already working with some MLSs in New York that want to share their information — they plan to use RPR to facilitate data-sharing agreements with their neighbors.) But as for the issue of profit sharing, RPR’s Steen was clear: It’s too early to discuss it. “When we become profitable, we’ll be willing to sit down with the MLSs to talk about profit sharing.” And Todd, for one, thinks the MLSs are rushing. “To think that NAR is going to turn around an immediately give money back to the MLS,” she says, “is unrealistic.” NAR, RPR, and MRIS are continuing to talk, and although by press time there was no announcement, Hill points out that “no doesn’t mean ‘No forever.’ No means ‘No as presented.’”
“
MLSs are created to help brokers and agents make money, not to help the MLS itself make money.” —Christine Todd
RPR madness There are other concerns about RPR, of course — not surprising with a product this big and comprehensive. For example, some brokers aren’t concerned so much about the MLSs getting their fair share, but about what the brokerages do — or don’t — get. After all, one points out, the MLS is the medium, but it’s the brokers providing the message. And they don’t get paid for the information they provide. MRIS’s Hill expressed some unease about even the existence of the Realtor® Valuation Model. “To attach the word ‘Realtor®’ to any valuation model will not do our members any favors,” he said. “When a consumer sees that RVM MARCh/APRIL 2010 25
Remember: RPR is owned and run by your association. ”If NAR didn’t do it, Google or Zillow or someone else would. And I’d much rather have it under the golden R than anyplace else.” —Mack Strickland
26 MARCh/APRIL 2010
value on that property, and the agent has a different value, the consumer is going to say “But this is the Realtor® value. Why can’t you get that for my house?” And Rob Hahn, who writes about marketing, technology, and real estate — and whose consulting company has MRIS as a client — feels that RPR is a boon for smaller companies…at the expense of the larger. “The obvious impact is that the smaller, less established players gain an edge, while the larger, more established players lose competitive advantage,” he wrote. Large brokerages, who may have invested millions of dollars over the years into a proprietary toolset that provides their agents with data, tools, attractive reports, and analytic tools will find that the little mom-n-pop down the street can now compete pretty effectively with them on the technology front. RPR is a boon to the masses, and a curse to the classes. Aside from the fact that Hahn seems to be arguing against the technology because it’s good, RPR’s Young points out that the argument “It will hurt the good at the expense of the mediocre” is an old one. “I heard that with broker reciprocity and IDX,” he said, but it didn’t come to pass then. “It still comes down to service level and performance.” But Young says that Hahn’s argument is equivalent to believing that having a Blackberry makes you a great communicator. “It’s the brokers and the agents whose job it is to take the
tools and differentiate themselves in the marketplace.” And Christine Todd remembers a similar outcry when NAR announced Realtor.com. Realtors® were scared that once the listings went up on a national Web site, “buyers and sllers would never use a Realtor® again,” she recalls. That turned out not to be the case. And, she points out, “What the consumer wants, the consumer gets. So why shouldn’t they get it from a Realtor®?” NAR has given some demos of RPR and its capabilities and interface, and there have been plenty of discussions on blogs and message boards. But the system is still being developed, and a perfect picture of RPR — and its implications — isn’t out there. “For me the jury’s still out,” says Mack Strickland, but “if NAR didn’t do it, Google or Zillow or someone else would. And I’d much rather have it under the golden R than anyplace else.” Ditto, says Todd. “NAR is doing what any association should do: harnessing its power to collect data very efficiently, and turn that data into a valuable resource for Realtors®. How could anyone find anything wrong with that?” l
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VAR's
6
Goal
Goals 2010
Better data
Paradise by the dashboard light By Andrew Kantor
This ain’t your father’s housing market data. Meet the newest statistical tool in the Realtor® association arsenal.
28 MARCh/APRIL 2010
A powerful new tool soon will let VAR and local Realtor® associations provide valuable, detailed information about Virginia’s housing markets to local, state, and federal agencies; the media; and even economists and academics. So what? you may think. We have housing market data already. We can get the raw figures from the various MLSs, and VAR already gives us pretty quarterly reports broken down by region. You ain’t seen nothin’ yet. The Virginia Home Sales Dashboard will give us the best of both worlds: It will provide an unprecedented level of detail about Virginia’s housing markets (potentially down to individual ZIP codes and school districts). But it won’t just spit out columns of figures — instead, it will turn those raw data into something immediately usable: analytical charts and graphs. Not just data. Information and analysis. Let’s start with the data. The Dashboard will show more than just how many homes sold and for how
much. Because it has an MLS feed from each of Virginia’s local Realtor® associations, it will be able to break those numbers down in a myriad of ways: number of bedrooms, style of the home, square footage, heating method, listing and sales price, and more. Those data can be combined, mixed, and matched in almost an infinite number of ways. Not just data. Information and analysis. It delivers, as Rick Lugg, VAR’s vice president for finance & administration put it, “Pictures, charts, graphs — things you can look at.” “The product lends itself really well to PowerPoint presentations,” said Laura Lafayette, CEO of the Central Virginia MLS. “It’s got great graphics and a lot of options. If you’re a bar graphs person it can display them that way. If you like pie charts, it can do that. If you’re more a numbers person, you can get a spreadsheet.” And quarterly reports will only be the start. The Dashboard will update more www.VARealtor.com
frequently (at least monthly), and it will offer access to historical data as well. That means anecdotal trends become documented ones. “You can really drill down,” Lafayette said. “You can look at what a market is doing as a whole, or just one jurisdiction.” For example, “You can segment your market by price range in $25,000 increments [of home price],” she said. “Let’s take Henrico County. There’s going to be a green up arrow up until I hit $225,000 — for all those market segments we’re selling more. But once we hit over 225, there’s a red arrow. It very quickly shows you where the sweet spot in the market is.” Want to drill deeper? “[You can see] what are homes selling for that feed into this high school versus homes feeding into that high school,” Lafayette said. In short, not only will it give local Realtor® associations an incredible amount of information at their fingertips, it will firmly establish Virginia’s Realtors® as the most accurate, timely, and authoritative source for real estate market information and analysis. (That’s one reason it’s one of VAR’s six major goals for 2010.)
What’s the point? Housing market data are used by local, state, and federal agencies for a host of reasons, from zoning issues to urban planning to working on affordable housing — all things that affect Realtors®. That’s why it’s important for Realtor® associations to provide them with the best possible information. And Realtors® are in a unique position to do that, thanks to the local and regional MLSs. Not only do those MLSs contain the latest and most comprehensive information about homes on the market, but the Dashboard maintains a historical database as well. So not only does it provide granular data, it allows us to see granular trends Volume 17 ● Issue 2
— sales, prices, and calculations (e.g., sales-to-inventory ratios). It’s those trends that government, media, and academia are interested in. Are sales spiking in one school district? A local school board might need to know. Are Tudors being shunned by buyers? Home builders could use that information. Are homes with gas heat more in demand? Local utilities would care. How affordable is an area compared to its neighbors? Are smaller homes outselling larger ones in one ZIP code? Have prices been on a steady decline in another? The Dashboard takes out the guesswork. One immediate use: The Dashboard will enable VAR, in partnership with Housing Virginia (a statewide organization dedicated to affordable housing) to create the Housing Affordability Index — a standard measurement of a region’s, well, affordability for owners and renters. Most importantly, “It will give us a much more accurate picture of home sales in Virginia,” Lugg said. That’s in part because RE Stats, the Canadian firm working with VAR to create the Virginia-based version, does more than simply pull in and publish the MLSs’ RETS feeds. What RE Stats adds to the equation is human beings. Their job: Eliminate duplicate listings which can skew the results. A home in Waynesboro, for example, is likely to be listed in both the Staunton and Charlottesville MLSs. Statewide, Lugg estimates there are at least 1,000 homes that are counted as “for sale” twice because they’re listed in more than one local MLS. Take out the duplicates, and the end result is better, more accurate data. “It’s going to position VAR to be able to provide highest quality data reports on statewide [housing] trends,” Lugg said.
The Dashboard gives you a quick way to see how a market is doing at any given time.
Break down results by closed, listed, expired, or pending.
MARCh/APRIL 2010 29
The Dashboard excels at letting users visualize trends, not just the current market.
Local level VAR is planning to use the Virginia Home Sales Dashboard to provide governments and media better statistics about Virginia’s housing markets. But there’s nothing stopping local Realtor® associations from using it for their own, additional purposes. (In fact, VAR became aware of RE Stats thanks to the Central Virginia MLS, which had been working with it.) So, while VAR is making the Dashboard available to local associations, those local associations can then choose to buy access for their members. (If your association doesn’t do that, brokerages and individual Realtors® can also get subscriptions directly from RE Stats.) And why might a local association do that? Well, let’s put that another way: Why would Realtors® want detailed, local, timely housing trend data that’s customized and put into readable reports? Lots of reasons. For starters, Realtors® can use the information they get to demonstrate their market knowledge to clients and solidify their position as housing experts. And there are more specific uses. For example… With buyers. Help buyers pick a neighborhood based on their housing and pricing preferences. For example, if they’re looking for a Colonial, you can see in which neighborhoods the prices are dropping (or rising, if they’re looking for an investment). 30 MARCh/APRIL 2010
When it’s time to make an offer, you can use Dashboard data as a bargaining tool. If the home is in an area where prices are falling — or where that particular type of home (size, number of bedrooms, etc.) is selling poorly — let your client take advantage of that. With sellers. Because you can get information like, for example, how sales of three-bedroom Colonials are in the 24015 ZIP code, you can give sellers more realistic assessments of the pricing possibilities of their homes, e.g., “The trend for four-bedroom homes in this neighborhood has been down, so you may want to rethink that price.” As Kenneth Decena, president of RE Stats, put it, “As a Realtor®, you’re the expert and you want to be able to substantiate your recommendation.” Generating business. Instead of marketing yourself to any potential sellers in an area, focus your effort. Crisolito Atiga, senior accounts manager for RE Stats, suggested, “You can look at an area and see the best types [of homes] to sell.” Combined with your own local knowledge, you can choose the most efficient use of your time (i.e., avoid the neighborhoods or home types that are likely to be time sinks). Conversely, you can use the Dashboard to help pick the best areas to focus your efforts. “You can look at an area and see the best types [of homes] to sell, or pick a type of home and see the best area to work,” Atiga said. Lafayette’s Central Virginia MLS, which serves the Richmond and www.VARealtor.com
On the first day, the only inactivity was between two and four a.m.
Southside Virginia Realtor® associations, purchased the Dashboard for all its members. And, Lafayette says, it’s been a hit. “The members use it to get a good read in a very fast, efficient manner of what the markets doing,” she said. “Of all the products we’ve added to our MLS portfolio over the years, this has had the quickest adoption rate.”
Volume 17 ● Issue 2
One indicator tells the story best: When the Dashboard was first rolled out to CVMLS members, Decena and the other RE Stats employees watched the usage. “On the first day,” Decena recalled, “the only inactivity was between two and four a.m.” l
MARCh/APRIL 2010 31
KnowledgeWeb The
The Information Age has been kind to Realtors®. It’s chock full of useful data sources, services, and search engines. Use ’em and get smart.
n
ca
By
Jim
n Du
www.VARealtor.com
RPR may be just around the corner (see “Don’t Fear the RPR,” page 18), but when you’re researching a property — whether residential, land, or commercial, there are quite a few tools and resources that are already at your disposal. More than ever before, area matters. “What’s the area like?” is one of the most frequent questions my relocating clients ask. “What’s close? Where is the nearest grocery store/school/library?” The following are a few tools to help you help yourselves and your clients — and most of them are free. Some are new, some are old, and some are refreshed for the 21st Century. Most likely, your clients are using at least a few of these. So shouldn’t you? Google. Never underestimate the power of the Google. Duh. Its maps show property boundaries, topographical overlays, street views, and so much more. There are few better starting points when researching an area and property.
Bing. Striking back with a vengeance from irrelevance, Bing’s maps are outstanding — mind-blowing in many cases. If you haven’t seen Bing’s new maps, you’re really missing out. In many areas, they blow Google away. See what’s next door, what’s the view from the front porch, what do the neighbors’ properties look like? (If you want to see just how cool Bing Maps is, check out Bing Maps guru Blaise Aguera’s presentation at the TED conference: www.VARbuzz.com/ go/bing.)
Bing’s maps are outstanding — mind-blowing in many cases. If you haven’t seen Bing’s new maps, you’re really missing out. In many areas, they blow Google away.
At maps.bing.com; free.
Your local GIS site. Hopefully you have a GIS — geographic information system — available to you. There you can research property information, transfer history, geographical overlays such as school boundaries, topographical and zoning overlays, tax assessments and the assessment history and much, much more. Cost: free (really, your taxes).
Two quick tips: • Search the property address and the name of your town (e.g., “123 Main Street, Lynchburg”) — you never know what you’ll find. • Search the seller’s name (with and without middle initials) and his phone number to try to determine his motivation to sell. While doing his due diligence about a particular property that had piqued his curiosity, one recent client found (and e-mailed me), “I noticed in satellite photos of the area that there was an industrial area of some kind across the road, perhaps a quarry. Further investigation reveals it is an open-pit vermiculite mine and the subject of considerable debate … as the mine has been cited as for asbestos violations.” It’s amazing what one can find in the Google. At google.com; cost: free (really, your soul). Volume 17 ● Issue 2
PolicyMap and GeoCommons. These both offer comprehensive mapping and data-set capabilities. Spend some time here creating your own maps and overlays and learn more about your market than you may have ever wanted to know. See how many “Piggyback Loans” there are, or rate neighborhoods’ “Cultural Vitality” (e.g., how many “Independent or Self Employed Artists” there are, how many transit stops are within 1/4 mile) and much more. The level and depth of datasets are nearly unparalleled. At policymap.com and geocommons. com; cost: $200/month and up.
Oodle. Oodle scours classifieds, and better yet allows you to set up e-mail alerts for phrases such as “trustee sale” in your respective localities. This is a simple but very useful service. It does what it says and does it well. At oodle.com; cost: free. MARCh/APRIL 2010 33
Outside.in has long been aggregating local blog and news sources and has recently been reaching out to local bloggers to add more of a local touch to its service.
Picasa Web Albums and Flickr. — now with more geo-coding. Each of these services has fast been developing more and better geo-tagging and geo-coding features; searching on the map for photos near a property can lead to some interesting discoveries not featured on the MLS. At picasaweb.google.com and flickr. com; cost: Picasa, free; Flickr, free; Flickr Pro, $24.95/year.
RealtyTrac. Subscriptions vary by package, but RealtyTrac has become the de facto leader in foreclosure data. Search foreclosures by county, city, ZIP code, or set up a map search. While not 100 percent accurate (yet) it has created a very useful service for tracking foreclosure trends, pre-foreclosures, and comparing national with state and local trends. At realtytrac.com; cost: varies.
Oodle searches the classifieds; you search Oodle. Simple!
Outside.in. This is a free tool that allows both searching for hyperlocal information as well as embedding of news widgets and searches on your blog. Outside.in offers geographical news searching — by ZIP code, area, even latitude and longitude. It has long been aggregating local blog and news sources and has recently been reaching out to local bloggers to add more of a local touch to its service. As the site puts it, “This means that you give us a specific location and we give you back all of the recent news stories, blog posts, twitter Tweets and more happening around that point, for any distance from 1,000 feet all the way up to 2 miles.” Typically, I find Outside.in to be most useful in more urban areas. At outside.in; cost: free.
Virginia Homeowners Alliance. This site by your own VAR is becoming more useful with each week. Aggregating local development, growth and real estate political news in one place, VHA is generating more and more useful content. At vahomeownersalliance.com; cost: free (really, your VAR dues).
Estately. This is another real estate search site that has been innovating and improving rapidly over the years. They’re now in Virginia, and I recommend you use them if they are available to you — your clients will be using them, so you might as well be at least as informed as your clients. At estately.com/VA; cost: free.
Walk Score. If you have read any of the recent real estate trends, you will have picked up on the fact that “walkability to stuff” is important. Walk Score provides a reasonable guide to how walkable a house or neighborhood is. It’s not 100 percent accurate, but it does provide a good starting point for determining whether a house is walkable. At walkscore.com; cost: free.
VPAP. The Virginia Public Access Project is a remarkably valuable resource for transparency in Virginia politics. See who gave what to whom, who’s buying whose favor, what the political makeup of an area is. Combine VPAP with the Virginia State Board of Elections and you and your clients will be more knowledgeable about the political makeup of your region. Combine this with Richmond Sunlight’s information about laws and lawmakers, and you’ll be more politically informed than ever. At vpap.org, vote.virginia.gov, and richmondsunlight.com; free (but they accept donations, and are worthy).
34 MARCh/APRIL 2010
www.VARealtor.com
Your MLS. Don’t forget about the MLS. Research your competition’s transactional history. Is he productive? New? An experienced veteran? Will she be easy to work with or a bit more of a challenge? See property history, price reductions, nearby sales and more. If the previous listing agent was kind enough to leave her listing photos in the MLS, you might see whether the current seller has made any improvements over the years. Spend some time digging around in the MLS. You might be surprised with what you find. ●
Research your competition’s transactional history. Is he productive? will she be easy to work with?
walkability counts — know the score.
Bonus!
Earning your GRI designation satisfies the 30-hour post license requirement for new licensees
Volume 17 ● Issue 2
mARch/APRIl 2010 35
accessibletech ANDREW KANTOR
The power of online conversations Sharing isn’t just caring — it’s smart business Without some fresh ideas, you’re doomed. You can only do the same-old, same-old for so long before it just doesn’t work anymore. Smart Realtors® look for those ideas, even if it’s only to toss them out. Of course, unless you’re a world traveler there are only so many ways to expose yourself to those new ideas: Read a new author. See a documentary about something you’ve never heard of. Watch a different news channel. That’s why you hear a lot about social networ— WAIT. Do NOT stop reading because you’re sick of hearing about “social networking.” Hang on for at least another couple of paragraphs. This is not yet another story on how wonderful social networking is. Honest. This is the forget-the-hype piece. This is the dose-ofreality piece. In fact, this article is here because so many people are so fed up with hearing about the wonders of Facebook and the glories of Twitter. Because they’ve been overhyped and over-covered — including by us here at VAR. Here’s what’s in this article: • 60 seconds on why people get (overly) excited by social media. • 60 seconds with a few baby steps you can take to see if social networking is even vaguely interesting to you. • Nothing at all on “How to use Facebook to do this” or “How Twitter will do that for your business.” (Because, really, much of that is hokum. It’s like thinking that a new box of tools will help you build a better house. Sure, if your old tools aren’t working, if you know how to use the new ones, if your house needs improvements. Maybe. Otherwise you’ll just break the windows and scratch the floor.) The problem, of course, is that too many people are saying too many things — they’re telling you that this new toolbox will fatten your wallet, slim your waistline, win you the lottery, and make all your kids good-looking (not that they aren’t). Too much hype. But that doesn’t mean the tools aren’t worth looking at. So take two minutes or so out of your life. Listen, think, and then decide if maybe — just maybe — there’s a value in it.
36 MARCh/APRIL 2010
So what’s the big deal? People are excited about social networking tools because it gives them the first new kind of communications tool since…well, since ever. Printing, TV, and radio all let you send a message out, one way. The telephone is two-way, but it’s one on one (and it’s time sensitive; you have to be there to be in a conversation). Social networking gives the best of both worlds: You can use it to reach a lot of people (like TV, radio, and print), but it’s two-way (like the phone). That’s a potent recipe for collaboration and knowledge sharing.
“
If you jump in with only a vague idea of what’s what, it’ll be like trying to teach a pig to sing. ” There are plenty of people who don’t get it. They treat social networking tools like another broadcast medium — simply posting a bunch of new listings and hoping someone stumbles across them. But that’s akin to using a 30-second television ad to show a page of text. It works, but it doesn’t really take advantage of the communication possibilities. But Realtors® are nothing if not communicators, so when something appears that lets them do it better, you can bet they’ll be all over it. Hence, the hype. What’s got them excited is social networking’s ability to let you go from messages to conversations. Because when you converse, you can turn the engagement level up to 11. Engaged people are people who will seek you out; strangers become friends, and friends can become clients or collaborators. Social networking forges connections. Realtors® are darned good at conversations. Social networking lets them take this skill online in a way that e-mail and Web sites can’t. Why would you want to? To keep yourself in your clients’ headspace. To spot opportunities. To learn from your peers. Why wouldn’t you want to have a conversation? That’s it in a nutshell. Social networking is exciting www.VARealtor.com
because it’s a new way to communicate and a new way to engage, and smart Realtors® know they need to do both.
Baby steps The potential to have conversations with people — colleagues you can learn from, clients you can recruit, and so on — is the lure of social networking. But if you jump in with only a vague idea of what’s what, it’ll be like trying to teach a pig to sing. (You’ll just waste your time and annoy the pig.)
So what should you do? Wrong answer: Rush out and get accounts on lots of social networking sites, then post your listings to each one and hope people start following you. (And then get frustrated when they don’t.) Right answer: Shut up and listen. [Editor’s note: He means “Don’t talk at first. Just listen.”] Just like in a live conversation, you shouldn’t just start blabbing. You listen, get the lay of the land, and join in when it’s appropriate. go to At the moment, the www.facebook.com social networking bigwig is to get started. Facebook, so start with it — don’t worry about blogs or social media sites like YouTube or Flickr. These are baby steps, remember. Head there and create an account (if you haven’t already). Then find some people you know — colleagues, preferably, but civilians are fine — and connect with them using the “Add As Friend” button; they’ll have to confirm you.
Add connections to people, and when you’re ready, post your own message. Share a problem (“Getting tired of 4 a.m. calls from a panicky buyer”) or a solution (“Loving my Canon XYZ camera — the wide angle lens is perfect for interiors”). Maybe your “friends” will comment, maybe not. But keep doing that, because eventually they will, and eventually you’ll find yourself in conversations. And learning. At some point you can start thinking about “friending” your clients, joining other social networks, and maybe doing business, but there’s no rush. All you want to do is see how social networking works — how it enables public conversations and connections. Hopefully you’ll start forming (or reading) ideas for some practical uses, or maybe you’ll simply use it to read up on what others are doing. Or maybe you’ll decide it’s a waste of time. But there’s a reason for the hype, and you owe it to yourself to at least give it a try. ●
And that’s it. That’s it? Yes. That’s it. Visit your Facebook page a couple or a few times a day, whenever you have a moment. See what your ‘friends’ are saying and doing. If you feel like it, comment on something they say. Or don’t. The idea is to get a feel for how the conversation flows, without worrying about exactly how to use it for your business — that’ll come later. For the moment, just see what’s being said and how conversations develop. VoLUMe 17 ● ISSUe 2
MARCh/APRIL 2010 37
rpacreport GOLDEN R INVESTORS ($5,000)
As of March 1, 2010 the following REALTORS® and local associations have joined RPAC of Virginia as Major Investors. For more information on the value of RPAC and how your investment works to protect your business, contact Meredith Cox at mcox@VARealtor.com or (804) 264-5033. Or, if you want to get invested today, please visit rpacofva.com. GOLDEN R ASSOCIATION ($5,000) Northern Virginia Association of REALTORS®, Fairfax Roanoke Valley Area Association of REALTORS®, Roanoke Williamsburg Area Association of REALTORS®, Williamsburg * H all of Famers have contributed a cumulative amount of at least $25,000 to RPAC.
CRYSTAL R ($2,500–$4,999)
Mike Minnery Re/Max Allegiance Woodbridge
38 MARCh/APRIL 2010
Charles Burnette Burnette Real Estate Sales Blacksburg
Bill Chorey Chorey & Associates Realty Suffolk
Dennis Cronk* Poe & Cronk Real Estate Group Roanoke
John Dickinson Hall Associates, Inc. Union Hall
Joe Funkhouser Coldwell Banker Funkhouser Harrisonburg
Dorcas Helfant-Browning Coldwell Banker Professional Virginia Beach
Steve Hoover MKB, REALTORS® Roanoke
John McEnearney McEnearney Associates, Inc. Alexandria
Tom Stevens* Coldwell Banker Residential Vienna
Melanie Thompson* Century 21 AdVenture Realty Fredericksburg
Jack Torza Long & Foster Realtors® Mechanicsville
Deborah Baisden Prudential Towne Realty Virginia Beach
Bob Barton Barton Real Estate Services Richmond
STERLING R INVESTORS ($1,000–$2,499)
Bob Adamson McEnearney Associates, Inc. McLean
Julia Avent Re/Max Allegiance Arlington
Mary Bayat Bayat Realty Inc Alexandria
www.VARealtor.com
SteRLING R INVeStoRS ($1,000–$2,499)
Mary Ann Bendinelli Weichert Realtors® Manassas
Laura Benjamin Roanoke Valley Association of Realtors® Roanoke
Karen Bohlke-Enriquez Re/Max Select Hampton
Brad Boland Jobin Realty Reston
Candice Bower McEnearney Associates, Inc. McLean
R. Scott Brunner Virginia Association of Realtors® Glen Allen
Robyn Burdett Re/Max Allegiance Reston
Chris Call AREAS Appraisers, Inc. Springfield
Dale Chandler Greg Garrett Realty Newport News
David Charron MRIS Rockville, MD
Billy Coons Realty Executives Virginia Beach
Benton Downer Downer & Associates Charlottesville
Mary Dykstra RE/MAX Valley REALTORS® Roanoke
Sandee Ferebee Prudential Towne Realty Virginia Beach
Claire Forcier-Rowe Coldwell Banker Elite Fredericksburg
Virgil Frizzell Long & Foster Real Estate Herndon
Pam Frohman Keller Williams Realty Chesapeake
Karen Gaskins Rose & Womble Realty Chesapeake
Libby Gatewood Napier REALTORS® ERA Colonial Heights
Bill Gearhart Coldwell Banker Townside Roanoke
Lynn Grimsley Re/Max Peninsula Newport News
Kit Hale MKB, REALTORS® Roanoke
Margaret Handley M.C. Handley, Ltd. McLean
Tom Innes RE/MAX Commonwealth Richmond
VoLUMe 17 ● ISSUe 2
MARCh/APRIL 2010 39
rpacreport STERLING R INVESTORS ($1,000–$2,499)
Donn Irby Rose & Womble Realty Chesapeake
Margaret Ireland Weichert REALTORS® Gainsville
Jo Anne Johnson Westgate Realty Group, Inc. Falls Church
Sita Kapur Arlington Premier Realty LLC Arlington
Patricia Kline Avery Hess Realtors® Springfield
Barbara Jean LeFon Rivah Realty LLC Montross
Richard Limroth RE/MAX Valley REALTORS® Roanoke
Scott MacDonald Re/Max Gateway Chantilly
Andy Mason Weichert Realtors® Mason-Davis Onancock
Shane McCullar Keller Williams Realty Alexandria
Susan Mekenney Re/Max Allegiance Fairfax
Dee Meredith Coldwell Banker Forehand & Company Lynchburg
Tom Meyer Condo 1, Inc. Arlington
Jay Mitchell Prudential Towne Realty Virginia Beach
Vinh Nguyen Westgate Realty Group, Inc. Falls Church
Ann Palmateer Prudential Towne Realty Chesapeake
Gwen Pangle 1757 Real Estate Company LLC Leesburg
Gail Penman William E. Wood & Associates Virginia Beach
Tracy Pless Long & Foster Real Estate Reston
John Powell Long & Foster Real Estate, Inc. Colonial Heights
Jane Quill Re/Max Presidential Fairfax
Anne Rector Long & Foster Real Estate Alexandria
Peter Rickert Coldwell Banker Residential Brokerage Alexandria
Thomas Rickert Coldwell Banker Residential Brokerage Alexandria
Contributions are not deductible for income tax purposes. Contributions to RPAC are voluntary and are used for political purposes. The amount suggested is merely a guideline and you may contribute more or less than the suggested amount. You may refuse to contribute without reprisal and the National Association of Realtors® or any of its state associations or local boards will not favor or disfavor any member because of the amount contributed. 70% of each contribution is used by your state PAC to support state and local political candidates. Until your state PAC reaches its RPAC goal 30% is sent to National RPAC to support federal candidates and is charged against your limits.
40 MARCh/APRIL 2010
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SteRLING R INVeStoRS ($1,000–$2,499) SteRLING R ASSoCIAtIoN ($1,000–$2,499) Greater Augusta Association of Realtors® Lynchburg Association of Realtors® Lynchburg New River Valley Association of Realtors®, Christiansburg Virginia Peninsula Association of Realtors®, Hampton
Zinta Rodgers-Rickert Re/Max Allegiance Fairfax
Henry Scholz Hall Associates Inc. Roanoke
Trudy Severa Long & Foster Real Estate Reston
Jean Siebert Siebert Realty Virginia Beach
Kimber Smith Prudential Towne Realty Toano
Cindy Stackhouse Century 21 Stackhouse & Associates Dumfries
Suzy Stone Century 21 AdVenture Realty Fredericksburg
Thomas “Mack” Strickland, Jr. Strickland Realty Chester
Trish Szego ERA - Elite Group Realtors® Fairfax
Karen Trainor Weichert REALTORS® Fairfax
Kevin Turner Century 21 All Service Bedford
Sandra Wagner William E. Wood & Associates Poquoson
Barbara Wolcott Prudential Towne Realty Virginia Beach
Christine Todd Northern Virginia Association of Realtors® Fairfax
Richard “Dick” Thurmond William E. Wood & Associates Virginia Beach
When you’re good to RPAC...
RPAC’s good to you Get invested today at www.RPACofVirginia.com VoLUMe 17 ● ISSUe 2
MARCh/APRIL 2010 41
varbuzzcontest here’s your chance to win a cool Garmin nüvi 1300 GPs system for your car (Big! Color! touchscreen!) just for reading this magazine and VARbuzz, our official blog and ‘water cooler.’ It works like this: Answer the questions below by reading this issue of Commonwealth. on may 3, go to www.VARbuzz. com. there you’ll read simple instructions (e.g., “take the first letter of each word to spell out the answer” or “What’s the opposite of answer #3?”). that will give you the final answer and instructions for sending it in. there will be a deadline. We’ll take all the correct entries we receive by that deadline and draw one randomly. that winner gets the nüvi. simple, huh?
Here are the questions. Annnnnnnnd, go! 1. Go to page 4. Write down every number on the page (e.g., “22” in the first headline) except the page number. What do they add up to? 2. the Virginia home sales dashboard helps VAR achieve our 2010 goal number . 3. how many times does lem marshall use the phrase “Catch-22” in his legal lines column? 4. According to the ad, the lender locator is reason number Realtors® recommend VhdA financing. 5. What is the cost of flickr Pro, rounded to the nearest dollar?
Now that you’ve got your five numbers, hang onto this form until may 3 when you’ll get your final instructions at www.VARbuzz.com. ●
Notes: This contest is only open to current members of the virginia association of realtors®. Contest winners must skip two issues before they’re eligible to win again. all decisions about correct answers rest with var staff, and are final. Bribes are accepted but not acted upon.
Wallet Band-Aids
Three things you’ve paid for that you’re probably not using:
Guard dog for your car & bumper for your home
Or maybe the other way around. Get the best rates and service on protecting your home, automobiles, and more at www.VARealtor.com/Discounts
If you’re paying an annual fee on a credit card and don’t have a business-relevant rewards program you’re not making the most of your dues. For info on therapy for your bleeding wallet visit www.VARealtor.com/Discounts
Inner-Office-Peace
Is there an angry manager living in your office? Is it you? It can be a struggle balancing human resource management and actually doing business. Get experienced, costeffective help today with payroll, benefits, billing, and more at www.VARealtor.com/Discounts
www.VARealtor.com/Discounts 42 mARCh/APRIl 2010
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contactvar
We’d love to hear from you
We’re online at www.VARealtor.com Our official blog is VARbuzz, at www.VARbuzz.com If you have questions, we’re ready to help. During normal business days, we’re available from 9:30 a.m. to 3:45 p.m.
Our phone number is
(804) 264 -5033 For membership and dues questions Ask for Amy Hafer Membership Records Manager amy@varealtor.com
For questions about professional standards and the Code of Ethics Ask for Blake Hegeman, Associate Counsel blake@VARealtor.com
If you’re interested in marketing or advertising opportunities Ask for Amanda Rainsford, Marketing Manager amanda@varealtor.com
To reach our Legal Resources Center (formerly the Legal Hotline) Call (800) 755-8271* * You must register first at www.VARealtor.com — click Member Services
Our CEO is Scott Brunner (804) 249-5712 scott@varealtor.com
If you’d like to have someone speak at your association or brokerage
To find out about conferences, seminars, and professional education
Ask for Lisa Noon, Vice President of Member Outreach lisa@varealtor.com
Ask for Glenda Puryear, Conferences Specialist or Lili Paulk, Director of Education glenda or lili @varealtor.com
If you need to know about professional designations Ask for Kim Martin, Specialties and Chapter Manager kim@varealtor.com
If you have comments or questions about Commonwealth magazine or our Web sites Ask for Andrew Kantor, Editor & Information Manager andrew@varealtor.com
For information about RPAC Ask for Meredith Cox, Director of Political Communications meredith@varealtor.com VAR 2010 Leadership Team
Cindy Stackhouse, GRI President Century 21 Stackhouse and Associates Prince William (703) 580-0880 c21cindys@aol.com
VAR Member Service Partners
DNCSolution, Do-not-call solutions Security code SC1795VR Liberty Mutual Home, auto, and renters insurance LLE Language Services Telephone interpretation and document translation Promotion code VARM08 Outstaffing, Staffing and payroll Pearl Insurance E&O, medical, life, and dental insurance Phone Tag, Voice to e-mail transcription TASC/BizPlan, Medical expense tax benefits T-Mobile, Wireless service VAR Wireless Center Wireless plans and hardware Virginia Department of Motor Vehicles Realtor license plates Zipform, Electronic Forms Solutions
John Dickinson, CCIM, GRI President-Elect Hall Associates, Inc., Roanoke (540) 982-0011 jrdickinson@cs.com Trish Szego, CRB, CRS Vice President ERA-Elite Group, Haymarket (703) 359-7800 trishelite@aol.com John Daly, SFR Treasurer Prudential Towne Realty, Virginia Beach (757) 826-1930 jdaly@prudentialtownerealty.com John Powell, GRI, ABR, CRB, CRS Immediate Past President Long and Foster Real Estate, Colonial Heights (804) 520-5600 john.powell@longandfoster.com R. Scott Brunner, CAE Chief Executive Officer (804) 264-5033 scott@varealtor.com
Volume 17 ● Issue 2 MARCh/APRIL 2010 43
lastword SCOTT BRUNNER
What works for me
One doofus’ guide to road-warrior technology Where technology is concerned, I am a doofus. I stammer when asked what laptop I have. (Heck, I don’t know. It’s a Mac. Mid-sized. Silver.) I live and die by my cell phone but have no idea what to do when it acts up. I have a needful relationship with the in-house IT guy that borders on co-dependency. I am, in short, someone who simply wants his technology to do whatever it’s supposed to do, and do it quickly, conveniently and consistently … wherever I am. Happily, I’ve found a suite of interesting tech tools that work for me in-office or away. Maybe they’ll work for you, too. Glad to share.
On my laptop:
Readability If God had meant for us to read online, he’d not have invented newspapers. (Don’t try to parse that one, just go with it.) E-mail I can handle, but reading The Washington Post on a computer monitor seems rushed and unsatisfying; it lacks tactility, and the page-clutter — to wit, that groovin’ girl in those refinance ads — vies for my eyes’ attention. Solution: Readability, a free tool “that makes reading on the Web more enjoyable by removing the clutter around what you’re reading.” Just drag the Readability badge to your browser’s bookmark toolbar, click it, and the page you’re viewing reappears ad-free, ready to read (or print). At VARbuzz.com/go/readability.
44 MARCh/APRIL 2010
Trip-It Because I’m on the road a lot, I need a convenient way to access my travel plans — confirmation numbers, hotel addresses, reservations, and the like. Enter Trip-It, a free service that organizes all your travel plans (airlines, hotels, restaurants, etc.). Just forward confirmation e-mails to plans@tripit.com and you’ll be directed to your complete, detailed itinerary. For a small fee, you can get it for your mobile device — think text messages about flight changes, boarding times, etc. At TripIt.com. Forecastbar Enhanced The thing about weather is that it changes. I keep up with the forecast via a nifty Firefox browser plug-in called Forecastbar. Firefox users simply install the extension, enter your ZIP code, and voila! — your local weather appears in your status the bottom right corner of your browser frame. At VARbuzz.com/go/ forecastbar.
Smartphone apps: Urban Spoon Handy app when you’re on the prowl for a decent place to eat. Includes restaurants and reviews from critics, food bloggers and friends, and links to Google Maps for quick directions. If you’re feeling lucky, give the restaurant slot machine widget a spin. At UrbanSpoon.com.
Yelp! (or Around Me) Another tool for finding just what you’re looking for, Yelp! bills itself as an easy way to find, review and talk about what’s great – and not so great, in your area (wherever you are). From restaurants to ATMs to auto mechanics and more, Yelp! uses your phone’s internal GPS to find what’s near where you are. A similar app, AroundMe, is equally good. Free at yelp.com and tweakersoft.com (AroundMe is iPhone only). Bump Bump is to iPhones what beaming was to your old Treo. It makes swapping contact info as simple as touching two iPhones together. Think of it as a fist bump with dividends. At Android, Blackberry, and iPhone app stores. • • • • • Each of these applications is wonderfully simple to download, install and put right to work, no matter your tech-competency. After all, I figured ’em out, and I’m a doofus. l Scott Brunner is VAR’s chief executive doofus…er, officer. Share your favorite apps with him at Scott@ VARealtor.com.
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