July/August 2010
A journal for real estate professionals published by the Virginia Association of REALTORS®
• www.VARealtor.com
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, SFR 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
VARbuzz.com. Your virtual café for real estate news, views, and issues. Read the perspectives of your fellow Virginia REALTORS®. Join the conversation at VARbuzz.com today.
Get it? Got it? Good!
In addition to the print version of Commonwealth, VAR publishes electronic newsletters at regular intervals, including...
...the online version of our print magazine, published every month. If you’re not receiving newsletters via e-mail from time to time, it may be that we don’t have your correct email address. Contact your local association of REALTORS® to enter your address in the database. Also, check the spam filter on your computer and ● ISSUE 4 VOLUME authorize any17 email from VARealtor.com.
Is that a comic? EVOLUTION WORKS LIKE this: You’ve got something (a creature, a process, a style). Then it changes a little. If it’s a good change, it stays. If it’s a bad change, it doesn’t last. The key is that the change has to happen first. Take giraffes. They didn’t decide to have long necks. A few million years ago a bit of DNA changed and one proto-giraffe was able to reach slightly higher leaves — and eat some more, live a little longer, and have some more children.
There are many ways to tell a story. The default is your typical written piece: Straightforward and common, because it works pretty well. But resting on our laurels means ignoring those other storytelling methods. So we decided to try something different. Some of you may hate it (“A comic book! Are you patronizing me?”*) Others, we hope, will enjoy it (“What a cool change of pace. I actually read it!”). And
“
Change happens, and if it’s an improvement you keep it and pass it on. But sometimes you have to make change.”
Change happened. It was helpful, so it stayed around. In other words, you don’t know if something’s good until you try. Mix it up a little. Experiment, and don’t freak if you don’t like the result. Take a different route to work. Try a different brand of shampoo. Pick a random author to read. You might like what you find. All this is an explanation for our cover story. Since I took over Commonwealth with our May 2008 issue (with its upside-down cover) we’ve tried lots of different things. Some worked, some didn’t. But this issue is a lot different, as you can see starting on page 18.
I’m certain you’ll let us know either way. No, we’re not thinking of making every issue into a graphic novel. But it’s important to try new things, even outlandish things, because that’s the best way to generate new ideas — and maybe reach some higher leaves. ●
Andrew Kantor, Editor andrew @VARealtor.com * No, we’re not. We’re trying to attract your attention. JULY/AUGUST 2010
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July/august 2010 Volume 17 ● Issue 4
contents
departments 4 quickhits The latest news and announcements for Virginia’s Realtors®
11 legallines Questions and answers about Virginia real estate law
14 formfactor Yes, Virginia, Realtors® can add language to their contracts
16 lifelessons When real estate pros break the rules ... and get caught.
33 accessibletech “Cloud computing” — what it is, and why you may learn to love it
in every issue
features
18
1 firstword
36 rpacreport 42 varbuzzcontest 43 contactvar 44 lastword APEX Award of Excellence winner 2
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27
After the fall It’s a brave, new economic world out there. No more hand-holding from Uncle Sam. What will Our Hero find as he ventures forth? Not quite what he — or you — might expect.
Healthcare reform: Why it’s good for Realtors® Put aside the politics and look at the facts and figures. The Accessible Care Act (aka healthcare reform) is a good thing for Realtors® and other indpendent contractors.
Look for this icon; it tells you when a story relates to one of VAR’s six goals for 2010. In this issue, read about how the Virginia Homeowners Alliance has successfully connected Realtors® and homeowners. And visit www.VARealtor.com/6goals to learn about them all. www.VARealtor.com
quickhits
ANDREW KANTOR
Correction
Important correction to new laws article and poster in Commonwealth magazine
Keeping that R in Realtor® Educational videos aren’t always fun. (Yes, that’s an understatement.) But we found one that really is — it’s a lot more interesting than your run-of-the-mill presentations. It’s NAR’s “Make our Marks Remarkable,” and it’s a quick and (dare we say it?) enjoyable way to brush up on the correct use of the word “Realtor®” — Schoolhouse Rock for the real estate set. If you’re not quite sure whether calling yourself “Mary Jones, Realtor®” is kosher, check it out on Realtor.org by going to www.VARbuzz.com/go/ trademarkvideo. (Heck, even if you do know, it’s worth a watch.)
There’s an error in the materials about Virginia’s new real estate laws in the May/June 2010 Commonwealth magazine. It might seem like a minor mistake, but it’s important and you need to know about it. The article, “New Laws You Need to Know About for 2010” and the oversize poster that mailed in the last issue of Commonwealth magazine (shipped only to our broker members) incorrectly states that appraisal management companies will now be regulated by the Real Estate Appraiser Board. In fact, under this law, AMCs will be subject to new statutory requirements, but will not be regulated by the Real Estate Appraiser Board. We sincerely regret the error. Please visit www.VARealtor.com/ NewLaws to read or download updated versions of the article and poster.
Realtor® Benefits
Realtors® Dental Insurance Plan Protect that Realtor® smile: NAR has begun offering dental insurance to Realtors® and Realtor® association staff through Ameritas. Pricing varies with the specifics, of course, but the plans and rates are exclusive to NAR and provide affordable and valuable “large group” dental benefits to individual members and their families nationwide. The plan is comprehensive, covering procedures from basics such as routine exams, cleanings, X-rays, and sealants, to more complex
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JULY/AUGUST 2010
things: amalgam restoration, extractions, dentures, root canal, crowns, and more. The higher-level plans also include coverage for orthodontia and cosmetic dentistry. You can use any dentist, but you save more using one in the Ameritas network. And it’s not a discount card; it’s a full insurance package. Ameritas pays the dentist, you get an
explanation of benefits and a bill for your portion. There are plenty of details you’ll want to check out, including exactly what’s covered, differences between plans, receiving credit for existing dental coverage, and a lot more. You can find all the information at
RealtorsDentalInsurance.com.
www.VARealtor.com
The latest episode of The Lem & Blake Show is now available at www. VARealtor.com/lemblake5, where Blake and former VAR attorney Lem Marshall discuss the Residential Property Disclosure Act.
Foreclosures
Virginia commercial RE posts gains Virginia Business reports that commercial real estate in the Commonwealth may be headed back in a positive direction according to 2Q figures released by CoStar. All three of Virginia’s major metro areas (Hampton Roads, Richmond, and Washington DC) have vacancy rates below the national average of 17.4% and Northern Virginia has actually seen a drop in its vacancy rate in 2Q, from 16% to 15.6%. Northern Virginia especially has benefited from the expansion of federal agencies; office vacancy rates for the Washington, D.C., metro area dropped from 16 percent in the first quarter to 15.6 percent at the end of the second quarter.
Fannie may sue Virginia defaulters Got a client who’s thinking about ‘just walking away’ from an underwater mortgage? Bad idea. Not only does Virginia law allow lenders to go after “strategic defaulters,” but Fannie Mae says it’s going to do just that — if someone skips out on a mortgage, they’d better be prepared to be on the business end of a lawsuit. And worse for those defaulters: Fannie Mae will refuse to back mortgages for such buyers for at least seven years, especially if those buyers failed to seek alternatives through their lender. So, while “just walk away” might seem like a good idea to a troubled client, be sure they know the consequences.
VoLUME 17 l ISSUE 4
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quickhits EPA delays enforcement of lead paint renovation contractor training rule
News from washington
Flood insurance & tax credit closing deadline extended to Sept. 30 Two critical housing bills have been passed by Congress and signed by the President: one extends the National Flood Insurance Program (its suspension had held up closings on thousands of homes), and the other giving homebuyers more time to close on purchase agreements that qualify for the government tax credit. The flood insurance measure had been wrapped up in larger overall financial issues on Capitol Hill. However, the NFIP has only been extended to September 30. The tax credit bill allows homebuyers who signed contracts prior to the April 30 deadline to receive the credit, even though they may have been unable to close. Those deals must, however, be closed by September 30.
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The Environmental Protection Agency has said it will postpone enforcement of the Lead Renovation, Repair, and Painting (RRP) rule “because of concern that contractors in some areas may be having difficulty accessing training classes.” Those contractors now have until October 1, 2010 to be certified. That can be extended to December 31 if the contractor enrolls in a certified renovator class by September 30. Learn more about lead paint rules from EPA.gov and Realtor.org.
We’re (almost) number one! CNBC released its latest ranking of the best states for business, and this year Virginia placed second. (The Commonwealth topped the list 2009 and 2007, the first year of the network’s ranking. Virginia’s still first on Forbes magazine’s list of best states for business — and has been for the past four years. Virginia’s favorable business environment is paying dividends in this economy, to the benefit of its residents, as evidenced by Virginia’s low unemployment rate relative to the rest of the nation.
Four more Realtors® score free tix to the REal Show Robin Brinn from Chesapeake, Michelle Irby from Fredericksburg, and Gail Penman and Frank Tommaso from Virginia Beach became the latest Virginia Realtors® to win free tickets to the REal Show, VAR’s 2010 Convention & Expo. What’d they do? Simple: They told us about vendors they thought would be a good fit for the Expo part of the Convention & Expo — and those vendors signed up. (Neither company had ever worked with us before, of course.) So for connecting us with new exhibitors, each gets a free registration worth $289. Do you want in free? Head over to REalShow2010.com/SuggestExhibitor and tell us about a potential exhibitor we don’t know about. If it signs up, you’re in!
www.VAREALToR.CoM
VAR members save on auto insurance one of the many benefits of your VAR membership is the savings you get from our member service partners. Did you know that VAR members saved a total of more than $7500 in auto insurance premiums just in the first quarter by taking advantage of our partnership with Liberty Mutual? we didn’t think so. If nothing else, get a rate quote and see how much you can save at libertymutual.com/lm/ vaofrealtors.
Virginia ranks #20 nationwide for mortgage fraud The FBI reports that Virginia is among the top 20 states for mortgage fraud. To help get us off the list, the Virginia Bureau of Financial Institutions is licensing all mortgage originators through the National Mortgage License System. The license application process includes a criminal background check. What does that mean to you? Make sure your loan officers are licensed. Check out www. VARealtor.com/loanofficers for more information.
“The smallest patch of green to arrest the monotony of asphalt and concrete is as important to the value of real estate as streets, sewers and convenient shopping.” — James Felt
NAR offers free relo reports where are Americans moving? Are they coming to your neck of the woods, or are they leaving? wonder no more: NAR is offering a free relocation report covering all 3,000 counties in the U.S. It shows where relocation clients are coming from and going to, along with relative income information. And yes, you read that right: It’s free, thanks to NAR’s “Right Tools, Right Now” program. (Normally it would set you back $125!) Pop over to REALTOR.org and grab your copy today. (Member login required, natch.)
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quickhits Home Sales Report The home sales numbers are in for the second quarter of 2010 (April 1 through June 30), and the news is good — but the outlook may not be. Sales are up. Prices are up. Days on market are down. The unemployment rate is slowly going down. And there’s good news in the news: • Northrop Grumman selected Fairfax County for its new corporate headquarters. • MeadWestvaco is relocating its Center for Packaging Innovation from Raleigh, N.C., to Richmond, investing $10 million in the new facilities. • Pfizer Consumer Healthcare agreed to keep its R&D operations in the city of Richmond. • With help from the Virginia Beach Development Authority, South University will bring approximately 100 full-time positions to the area. • Evatran, a subsidiary of MTC Transformers, will invest $3.5 million in new manufacturing facilities in Wytheville, creating 84 jobs. • Thermo Fisher Scientific will invest $8.9 million to expand its Frederick County facility.
home sales
62.8%
June 2010 and June 2009 numbers were just about identical.
But there are clouds around those silver linings: Foreclosures are up in most of the state — 14% overall from the second quarter of 2009; only Northern Virginia saw a drop from year to year, while the Southwest and Central Valley regions were hit particularly hard. Unemployment seems to have leveled off, but it’s leveled off at close to 10 percent in the state. And the Consumer Confidence Index, which had risen for three consecutive months, declined sharply in June as consumers became less optimistic about the future job market. But the biggest cloud on the horizon is the end of the homebuyer tax credit. This past quarter was the last in which buyers could get up to $8,000 from the government for buying a home, which means that not only are this quarter’s numbers artificially high, but the drop from this quarter to the next is likely to be a sharp one. Here’s a brief look at the statewide numbers. You can download the complete and detailed Home Sales Report (which includes regional data) at www.VARealtor.com/homesales. l
days on market The average in May was 78 days — the fewest days on market in more than three years.
16% 9%
6.4% over 2Q 2009 8
JULY/AUGUST 2010
over 1Q 2010
over 2Q 2009
over 1Q 2010 www.VARealtor.com
Average days
on market during the
The last time Virginia’s
out of 7 areas of the state showed sales increases over the same quarter last year
Average monthly
median sales price was
as high as it is today.
2Q 2010
sales increase statewide since February
foreclosures
home prices
Southside was the only region to have a decline in the number of foreclosures — it was down 8% quarter to quarter.
The average price of a Virginia home was $249,900 in June, the highest figure since July 2008.
23% 14% 2.5% over 2Q 2009 Volume 17 ● Issue 4
over 1Q 2010
over 2Q 2009
7% over 1Q 2010 JULY/AUGUST 2010
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The Virginia Homeowners Alliance:
A VAR success
Measuring success The Virginia Homeowners Alliance had its public launch just a year and a half ago; VAR staff took over in July 2009. Since then, VAR volunteers and staff have enthusiastically run the program — and they’ve produced some remarkable results: 2000. Approximate number of homeowners who find the Virginia Homeowners Alliance website each month. 240. Percentage increase in Virginia Homeowners Alliance membership from July 2009 to May 2010. 1. Number of clicks it takes a visitor to see news about their city or county on the new site. 1.5 million. Number of e-mail newsletters delivered to Virginia homowners in five months. 67. Percentage VAR staff was able to cut from the program’s expenses by taking it over in July 2009.
10 JULY/AUGUST 2010
You get it. They don’t. Homeowners and Realtors® have a lot of common interests. But above all, there’s one issue we both care about most: Increases in property values. Sustainable increases. That’s what the Virginia Homeowners Alliance is all about: Creating an environment for rising home values by bringing homeowners together with Realtors® to create a coalition of Virginians advocating for homeowner-friendly laws in state and local government. The Virginia Homeowners Alliance is one of the most ambitious programs ever undertaken by VAR. It’s also unique among state Realtor® associations: We’re the only state creating a grassroots network of homeowners to stand with Realtors® on legislative issues before they’re needed. The reason is simple: If (or perhaps more accurately, when) the General Assembly seriously considers a law that threatens home values, we’ll be ready to activate thousands of homeowners and Realtors® to contact their legislators to urge them to vote against the measure. How are we building this network?
News. VAHomeownersAlliance.com offers about 60 news stories about real estate issues every month, and each story is linked to one or more localities in the Commonwealth. From the homepage, users can drill down to real estate-related news about their city or county with a single click. Custom news. Homeowners can customize the news on their home page to focus on stories about their county or city, and registering with their names, addresses, and e-mail addresses gives them access to members-only areas. News delivered. Between February and June 2010, we sent four e-mail newsletters keeping Virginia homeowners updated on bills considered by the General Assembly and later signed into law by Gov. McDonnell. Our June newsletter explained laws that went into effect on July 1, 2010 that impact homeowner rights and property values. The bottom line: If legislation threatens the value of Virginia’s real estate, homeowners and Realtors® will be well-positioned to oppose it together, thanks to the Virginia Homeowners Alliance. l www.VARealtor.com
legallines Lem Marshall
Summer grab bag Oh, you mean that contract
Q.
An agent with ABC Realty is asked by a FSBO (who is a personal friend) to assist in negotiations and settlement with a buyer secured by the owner. Seller asks buyer if the buyer is represented and is told the buyer is not. A contract is drafted with ABC Realty shown as the buyer agent. Shortly thereafter, ABC Realty learns that buyer had in fact signed a written exclusive with MNO Realty and is under contract to purchase a short sale property. Buyer says the brokerage agreement with MNO was “cancelled” and that he withdrew from the short sale deal. MNO Realty insists the agreement is still in place, and that the buyer is still bound to purchase the short sale property. ABC Realty agent then suggests that until the MNO Realty brokerage agreement terminates (one month) and the short sale deal can be straightened out, that the buyer and seller release the contract and await expiration and termination or release of the other deals. Buyer and seller could then enter into their contract free of these other…impediments. How would you advise the buyer agent?
“
To do anything else is to jeopardize the deal both buyer and seller want for a commission that might well belong to someone else. The idea that some agents so readily encourage clients to tear up their contracts to facilitate a commission for the agent makes me wonder.”
A. Every time I hear this fact situation, I just shake my head. So here’s
an agent encouraging his client to put his real estate deal in jeopardy so the client can gig his original broker. Did I get that right? And what about the seller? Has it occurred to the agent that the seller will be in jeopardy for the next month, with the buyer free to walk away at any time? Isn’t the agent involved in the first place because the seller asked for help? Isn’t the seller a personal friend? The agent should leave this deal alone, and let the buyer take the consequences of his deal with MNO Realty, one way or the other. To do anything else is to jeopardize the deal both buyer and seller want for a commission that might well belong to someone else. The idea that some agents so readily encourage clients to tear up their contracts to facilitate a commission for the agent makes me wonder. Volume 17 ● Issue 4
Warranty void
Q.
Buyer agent represents a buyer who is closing on the purchase of a new home. Word is out that the builder, after closing, will file bankruptcy. Will this affect the statutory new home warranty? A. Certainly. Before the
builder is discharged from bankruptcy, the owner will become just another unsecured creditor or claimant against the company. This is one of the reasons the Big Three auto manufacturers say they fear bankruptcy — that buyers will eschew the companies for fear their warranties won’t be honored. Buyer should inspect the property very carefully, and might consider alternative warranty plans. The buyer agent should be able to help. You can play this by ear, but keep your nose to the grindstone, your shoulder to the wheel, your eyes on the road, and all other body parts actively involved to accomplish your client’s objectives. JULY/AUGUST 2010 11
legallines “Errors in transmission”
Q.
Listing firm receives an offer on a listing. The listing agent presents it to seller, who signs the contract and initials all pages. Shortly thereafter, and before delivery back to the buyer agent, seller decides to counter on price, and does so on the form, initialing the change. The listing agent, by mistake, faxes the original signed contract — without the price counter — back to the buyer agent. Buyer initials all pages and returns it to the listing agent. On realizing his mistake, listing agent contacts buyer agent, informs him of the mistake, and asks him to change the price. Buyer agent insists there’s a fully ratified contract. Is there? A. I think the buyer has the
better argument here. A unilateral mistake will not typically prevent formation of a contract unless the non-mistaken party (here, the buyer) should have known of the error. There is also case law suggesting that errors in transmission of an offer will not prevent formation of a contract unless, again, the non-mistaken party should have known of the error. This result may seem harsh, but consider the
“
Just about any contract could be jeopardized by the claim, “I didn’t mean to do that,” or “What I sent you was a mistake.”
alternative. Just about any contract could be jeopardized by the claim, “I didn’t mean to do that,” or “What I sent you was a mistake.” Seller might be able to get some bargaining traction against buyer by arguing the listing agent had no authority to deliver the incorrect document, but I doubt it that will work. He certainly had the authority to deliver documents for the seller, and his actions are binding on his client. My gut reaction is that this approach will be unavailing to the seller and listing agent, but it might be worth having counsel do a bit of research, depending on how much is at stake. Remember, a man who represents himself has a fool for a client.
Duty calls
Q.
Listing firm takes a listing of commercial property. A buyer agent in the firm represents two buyers who decide to purchase the property jointly. Before an offer is prepared for both buyers, one buyer approaches the buyer agent and asks that an offer be presented for that buyer only. What duty does the buyer agent owe the second buyer? A. First, we start by acknowledg-
ing that Virginia law specifically states that a buyer agent does not breach any duty to a buyer client by representing another buyer interested in the same property. So it seems the agent is on firm ground, at least initially, in representing the first buyer. However, I think the agent should contact the second buyer and disclose the fact of the representation of the other. After gauging the reaction of the second buyer, the agent will have a better idea as to how to proceed. I would be wary of such a dual representation, especially when it appears there might have been either a falling out or a change in the plans of one buyer not anticipated by his (former) partner. The ill will that is likely here will complicate matters in the extreme. And let’s not forget that the firm’s representation of the seller here will surely complicate things further. Buyer agent should proceed very carefully, and I think it’s a good idea to secure different representation for the second buyer, perhaps even outside the firm.
12 JULY/AUGUST 2010 www.VARealtor.com
NEW NUMBER!
VAR Legal Hotline (804) 622-7955 Monday through Friday, 10 a.m. – 4 p.m. The VAR Legal Hotline is a free, members-only benefit for brokers. You can receive answers to questions about Virginia real estate law, and timely information on legal and regulatory issues concerning the real estate industry. The Legal Hotline provides legal information, not legal services. You should consult your attorney if you need representation or advice. You must register for the Hotline before you can call. Registration is free and quick. Go to www.VARealtor.com/legalhotline; you will need your NRDS ID number.
Who can use the Hotline? • You must be a principal or supervising broker.* • You must be a VAR member. • You must have registered for the Hotline (see above). • You must have your NRDS ID number available when you call. (* Each office can have one other person designated by the principal broker for Hotline access.)
E-mailing the Hotline You can e-mail your questions to hotline@ VARealtor.com. • Responses will be by phone; we no longer provide written answers to Hotline questions. • You must include your full name, phone number, and NRDS ID. We cannot respond to messages that do not include all three. • We will try to respond within 24 hours, but response time depends on Hotline activity.
Not a broker or member? If you aren’t eligible to use the Hotline, you can browse and search our Hotline archives at www.VARealtor.com/hotlinearchive and find more legal and risk management information in VAR’s Legal Resources Center at www. VARealtor.com/legalresources. You will need your NRDS ID number to log into the site.
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.
“Millions in escrow”
Q.
In light of the financial problems lenders are having, must brokers be concerned about escrow accounts? If the account is above the FDIC insured limit of $250,000, should the broker open new accounts so the amount never exceeds that amount? A. The $250,000 insured limit applies not to the total escrow
account, but to the amounts of individuals or companies that have placed money in escrow with you. So if a buyer has given you an earnest money deposit of, say, $10,000, that amount, and not the total amount in the escrow, is measured against the $250,000 limit. We have to remember, however, that the total is aggregated for all funds on deposit by that depositor with that lender. So if you hold $100,000 for a client in escrow in an account with Lender A, and that depositor has an additional $200,000 on deposit with Lender A, the depositor’s total deposits of $300,000 are insured only to the $250,000 limit. So your firm can have millions in escrow with Lender A, and there’s no problem as long as no single depositor to that escrow has aggregate deposits with that lender in excess of $250,000. You might want to consider, therefore, giving a written statement to your clients when you accept money to be held in escrow letting them know of the aggregation rule. In the rare situation where the amount being held for a single person or entity exceeds $250,000, you should use multiple accounts with different depository institutions, always remembering the aggregation rules for each depository. We should always remember, however, that the love of money will not buy happiness. ● This installment of legal lines was written by former VAR attorney 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. JulY/AuGuST 2010 13
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 Hotline. (Shameless plug: (804) 622-7955.) So we asked our intrepid associate counsel (read: lawyer), Blake Hegeman, to take one of the forms the Hotline gets the most questions about and illuminate it for us.
They’re all available, free for download, at www.VARealtor.com/ standardforms.
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__________ __________ __________ __________ __________ __________ _ __________ __________ __________ _ __________ __________ __________ __ __________ __________ __ __ __ __ __ __ __________ __________ __ __ __ __ __ _ __________ __________ __ __ __ __ ____ _ __________ __________ __ __ __ __ ____ __________ __________ __ __ __ __ ______ __________ __________ __ __ __ __ ______ _________ __________ __ __ __ __ ________ _________ __________ __ __ __ __ ________ ______ __________ __________ __________ ______ __________ __________ __ __ __ __ __ _______ __________ __________ __ __ __ __ __
uted. iginally exec d effect as or
Volume 17 ● Issue 4
When can Realtors® add to a contract? We are often asked if real estate licensees are permitted to draft contract language. Well, it depends. Drafting contracts for others is considered “the practice of law” in Virginia, and it is therefore generally restricted to licensed attorneys. However, real estate licensees may add language to a contract — for example, an addendum — if it’s incidental to a real estate transaction in which the licensee is involved, and the licensee does not receive a separate fee for it. Please keep in mind that it is always a good idea to have legal counsel review contract language. l
The Letter of the Law § 54.1-2101.1. Preparation of real estate contracts by real estate licensees. Notwithstanding any rule of court to the contrary, any person licensed under this chapter may prepare written contracts for the sale, purchase, option, exchange, or rental of real estate provided the preparation of such contracts is incidental to a real estate transaction in which the licensee (i) is involved and (ii) does not charge a separate fee for preparing the contracts.
JULY/AUGUST 2010 15
lifelessons Andrew Kantor
Appraisal blues Real estate professionals® who neglect Virginia law or real estate regulations can find themselves in the crosshairs of the Virginia Real Estate Board, facing punishment ranging from a small fine to continuing education requirements to loss of their license. Here are a few real-world 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. They are provided solely as examples of Board actions. All of the names have been changed.
Drive-by valuation Stephen, an appraiser, was preparing a report on a property for a mortgage company. He found a comparable home — a “comp” — nearby and pulled the MLS listing for it. That listing indicated that the comp included several outbuildings: a guest house, a barn, and a garage.
16 JULY/AUGUST 2010
Stephen drove by the comp, but couldn’t see much from the street. He didn’t go in. In his appraisal report, however, he used the comp — but he neglected to mention anything about the outbuildings. When the Real Estate Board began to investigate Stephen’s appraisal (after a complaint from the mortgage company), the investigator asked for a copy of the work file on the property. Stephen had since left the firm he worked for at that time, but promised to ask his former employer for it. That was in March. In April, the investigator contacted Stephen’s former employer and learned the Stephen had never requested the file. So it was sent directly to the investigator, who tried to get in touch with Stephen to discuss the matter. Stephen didn’t return the phone calls or e-mail messages. His address on file with the Board (which was also the return address from his March messages) was a post office box, which the investigator learned had been changed. For failing to produce a credible appraisal, for lying to the Board investigator and ignoring his attempts to get in touch, and for failing to report the change of address to the Board, Stephen was deemed to be a “danger to the public welfare,” fined $500, and had his license revoked. www.VARealtor.com
Carolyn didn’t make allowances for any of this because (in the case of the foreclosure sales) she didn’t realize they were foreclosure sales; and (in the case of the different neighborhood types) because “they were all suburban.” Further, a number of items on her report had missing or incorrect information. For failing to comply with the provisions of the Uniform Standards of Professional Appraisal Practice (USPAP) — especially for failing to “spend sufficient time to understand the nuances of the local market,” Carolyn’s appraisal license was revoked. l
Out of her league Carolyn, an appraiser in Charlottesville, couldn’t find enough work locally, so she began taking assignments in Richmond and Lynchburg. To become “geographically competent,” she read local newspapers and did Internet research. She rarely contacted a local real estate agent, although she would ask random people on the street for information.
“
She rarely contacted a local real estate agent, although she would ask random people on the street for information.” She prepared a report on a property in Henrico County, and listed five comps she used for a sales comparison. However, three of the five were foreclosure sales, another was “subject to third-party approval,” two were in higher-price subdivisions, two were near high-tension power lines, and one had a two-car garage (as opposed to the one-car garage of the subject property). Volume 17 ● Issue 4
JULY/AUGUST 2010 17
Bonus!
Earning your GRI designation satisfies the 30-hour post license requirement for new licensees
Healthcare reform ® is good for Realtors SPECIAL REPORT
Highlights
Healthcare reform is good for Realtors®. That sentence may raise some hackles. There are, after all, sound arguments for and against the Affordable Care Act. But put them aside. It’s the law of the land, and in fact it will offer some significant benefits for Virginia Realtors® between now and when it takes full effect in three years. That’s because of simple demographics and the realities of the profession. VoLUme 17 ● ISSUe 4
The Affordable Care Act means… • No one can be denied health coverage, period. • Health insurance premiums are capped for any individual earning less than about $44,000 a year (about $90,000 a year for families of four): about 10% of income at the high end; 2% at the low end. • Health insurance rates overall will drop, and will not be based on any medical condition — just age, family status, location, tobacco use, and the deductibles/out of pocket limits of the policy. • If you have coverage now that you like, you can keep it. JULY/AUGUST 2010 27
Highlights (cont’d) • If you don’t have coverage, starting in 2014 you’ll be required to get it (just like car insurance). • If you have a preexisting condition today and can’t get coverage through a private insurer, you’ll be able to join a Federal program that will cap your premiums (unless Virginia starts its own); you’ll be able to shop for insurance like everyone else. • If you own a business with more than 50 employees (not independent contractors), you’ll be required to provide them with affordable health coverage.
NAR has the stats: • The big one: Only 6% of Realtors® get health insurance through their firms. Thus, unless they get coverage through a spouse’s policy, veterans benefits, or a retirement plan, they have to buy it on the open market or take their chances that they stay healthy and accident-free. • In fact, 28% of NAR members go that route and have no health insurance at all. They could be a car accident away from bankruptcy. • 81% of Realtors® are independent contractors and thus don’t have an employer to provide health coverage. • Realtors®’ individual average income (in 2009) was about $36,000, and their typical household income was about $89,000. The importance of this will become clear later. •T he average Realtor® is 54 years old and female.
Health insurance premiums jumped an average of 20 percent at renewal, according to a survey by the Kaiser Family Foundation Independent contractor status and average income are the two biggest reasons Realtors® in particular have a lot to gain from the ACA. Not every Realtor®, of course. If you already have health insurance that someone else pays for (say, your spouse’s employer), you probably won’t see much change. But if you pay for your health coverage, big changes are afoot. Good ones. Health insurance options are fairly 28 JULY/AUGUST 2010
straightforward: Get coverage through an employer, go without coverage, or buy private insurance. The first route has the advantage of simplicity and cost, obviously, but it’s not available to everyone. If you’ve chosen to go without coverage, beginning in 2014 that won’t be an option; the ACA requires you to get it. This brings us to the third option: buying private insurance, something about 344,000 Virginians do. That’s where you’ll see the biggest change. Buying health insurance is going to be more straightforward and affordable.
Today: Unhealthy options Today you can get a decent individual health insurance policy for about $400 or $500 a month — at least, if you’re young and in good health. But if you’re over 40, have asthma, a heart condition, if you smoke or take an anti-depressant, now you’re talking hundreds more. Got children? That might double it. Heart condition, cancer, or diabetes? Good luck even getting insurance. And even if you’re in good shape, you’re in for some nasty surprises. Health insurance premiums jumped an average of 20 percent at renewal, according to an April survey by the Kaiser Family Foundation, a nonprofit health policy research group. The average individual policy costs about $4,800 per year according to the KFF, but that’s based on what businesses pay with their hefty group discounts. All this means that trying to budget for health insurance can be a nightmare. Your mortgage payment you know. Food and utilities you can usually calculate. But today, private health insurance is a big question www.VARealtor.com
Today, private health insurance is a big
NAR sez
question mark, which is one reason so
NAR did not take an official position in favor or against the healthcare reform bill. However, Marcia Salkin, NAR’s managing director of legislative policy, said that the ACA’s insurance reform provisions do conform with the health policy principles approved by the NAR Board of Directors. (The small business SHOP Exchanges were, in fact, modeled on legislation that NAR helped draft.) NAR sees the ACA as helping self-employed Realtors® and small brokerages get, afford, and keep healthcare coverage. The insurance underwriting reforms contained in the final health bill — guaranteed issue, the ban on pre-existing conditions, limited age rating, etc. — “are in line with NAR’s advocacy efforts,” she said, “and will give self-employed individuals access to the type of group coverage that the great majority of the American workforce have long enjoyed and our members have indicated they want.” She also noted that other provisions will help many real estate professionals afford coverage. Affordability credits for individuals and small business tax credits made available by the bill would provide the overwhelming majority of NAR’s self-employed agents and small employer members with the financial assistance needed to make health insurance more affordable.
many Realtors® don’t carry it. But 45,000 Americans die every year for want of coverage. mark, which is one reason so many Realtors® don’t carry it. (Not good. A 2009 Harvard/Cambridge study found that 45,000 Americans die every year for want of health insurance.) But as the ACA kicks in between now and 2014, that’s going to change.
Tomorrow: Lower prices, better coverage First, you’ll be able to get coverage — which is far from a guarantee today. The ACA requires insurers to offer and renew policies without regard to health status, how you’ve used it, or pre-existing conditions. In short, by 2014, no one can be denied coverage for any reason. So if you or someone in your family has a pre-existing condition — from asthma to heart disease to a host of congenital conditions — you’ll be able to get coverage and treatment. But that’s a few years away, so until the full ACA is rolled out, the Federal government has offered states money to implement an insurance pool for people who can’t get coverage because of pre-existing conditions (and who have been uninsured for at least six months). Virginia has turned down those funds and declined to provide the program, so Commonwealth residents will have to wait for the federal version, which should roll out sometime this summer. Volume 17 ● Issue 4
If you’re in this pool, you’ll be able to get the same coverage as anyone else, and your annual costs will be capped by law at $5,950 for individuals and $11,900 for families. Not great, but better than what many people had, which in most cases was nothing. And, thanks to the ACA, health insurance is going to be affordable for everyone else, too. If your family’s income is less than about $90,000 (or $44,000 if you’re single), the ACA provides for a subsidy that caps your premium cost at between 2.1 and 10.2 percent of your income, and limits out-of-pocket expenses. It’s on a sliding scale; see the chart on page 30. Bottom line: No one has to do without health coverage or healthcare. (That family of four? Children up to age 26 can stay on their parents’ policy unless they have job-based coverage.) But what if you don’t qualify for a subsidy? Realtors® take home an average of $36,000, putting many at the top of, or above, the subsidy ladder. Good news there, too. Health insurance costs should go down. Because everyone will be required to have coverage, insurance companies expect to see a big improvement to their bottom line. Economics 101: More policy holders means greater economies of scale, and that means lower prices; increased consumer
JULY/AUGUST 2010 29
The small business end
INDIVIDUAL
How will the ACA affect small businesses? Here’s the scoop. First, this is important: “Employees” does not refer to independent contractors. For brokers, that means the receptionist who’s on salary counts, but your agents probably don’t. Businesses with more than 50 employees will be required to provide health coverage (i.e., pay at least 60% of the premium) or pay a penalty of $2,000 a year per full-time worker. Luckily, 96% of those businesses already do. Smaller businesses are exempt. If your company has more than 50 employees and provides insurance, it needs to be affordable (costing less than 9.5% of employees’ household incomes); you can be fined $3,000 for each one who can’t afford the plan you pick and turns to an insurance exchange. (The first 30 employees don’t count when calculating the amount of any employer penalty.) Businesses with 25 or fewer employees that do offer coverage are eligible for a tax credit of up to 35% of the premiums. In 2014 the credit will be up to 50%. Companies with 50 or fewer employees will be able to pool together to shop for policies in state-run Small Business Health Options Programs, or “SHOP Exchanges,” much as individuals will. And insurers will be required to follow the same consumer-friendly rules that apply to individuals, e.g., they won’t be allowed to base pricing on the health or past claims of their workers.
Annual income*
Premium cap**
Approx. out-of-pocket premium***
$11,000 - $16,500
2.1 - 4.7% of income
$231 - $776 ($19 - $65 per month)
$16,500 - $22,000
4.7 - 6.5% of income
$776 - $1,430 ($65 - $119 per month)
$22,000 - $27,500
6.5 - 8.4% of income
$1,430 - $2,310 ($119 - $193 per month)
$27,500 - $33,000
8.4 - 10.2% of income
$2,310 - $3,366 ($193 - $281 per month)
$33,000 - $44,000
10.2% of income
$3,366 - $4,488 ($281- $374 per month)
Annual income*
Premium cap**
Approx. out-of-pocket premium***
$22,500 - $33,750
2.1 - 4.7% of income
$473 - $1,586 ($39 - $132 per month)
$33,750 - $45,000
4.7 - 6.5% of income
$1,586 - $2,925 ($132 - $244 per month)
$45,000 - $56,250
6.5 - 8.4% of income
$2,925 - $4,725 ($244 - $394 per month)
$56,250 - $67,500
8.4 - 10.2% of income
$4,725 - $6,885 ($394 - $574 per month)
$67,500 - $90,000
10.2% of income
$6,885 - $9,180 ($574 - $765 per month)
30 JULY/AUGUST 2010
FAMILY OF FOUR
* These are rounded and approximate numbers; they’re based on the Federal Poverty Level, which is adjusted annually.
** These are based on 2014 estimates; the initial cap will be slightly lower. *** We’re just doing the math for you.
protections will also help. And those companies will be competing for your business on equal terms, because they won’t be able to deny anyone coverage. They’ll all have to offer policies that meet minimum standards, which means competition to offer the best price and service. And competition is good for consumers. That’s all consumers. No more detailed health questionnaires and crazy-high rates because, say, you’re a diabetic. The ACA prohibits pricing based on anything other than, essentially, where you live, the value of the policy, your family structure (single, married, etc.), whether you use tobacco, and to a certain extent your age. For the 7,000 or so Virginia Realtors® who don’t have health insurance, health reform could literally be
the difference between life and death. Whether you love or hate the political side of it, the fact is that the Affordable Care Act is law, and it’s going to have a profound effect on many people, Realtors® among them. It will almost certainly mean better coverage, fatter wallets, and, of course, better health. ●
www.VAReALToR.com
Wallet Band-Aids
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
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
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
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Get legal help 24/7
s episode on new to p w u o h h c Cat lake s B & s m e al issue of the L out leg b a ll a t find ou siness. your bu g in t c e f af m/
.co Realtor w A V . w w o w Blakesh d n a m e L
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
www.VARealtor.com/LegalResources
accessibletech ANDRew KANToR
Cloud mine YOU PROBABLY KNOW someone who has said, “My computer’s three years old. I’m gonna need a new one.” Funny thing, though: Unless you’re doing video editing or high-end gaming (I’m looking at you, Halo), you don’t need a new machine. Sure, you may want to get a bigger hard drive, but if the biggest thing you’re running is Microsoft Office and a Web browser, with a few bits and pieces on the side, your three-, four-, and even five-year-old machine will be more than enough. What’s extending your computer’s life even more these days is the rise of cloud computing. But giving you an excuse to keep that PC (or donate it without thinking you’re giving away junk) is only a small part of what cloud computing offers. For mobile professionals especially, it can be exceptionally useful.
What it means “Cloud computing” (in its most basic sense) means using tools on the Internet (the “cloud”) to do your work, rather than software on your computer. It can also mean storing your documents, photos, etc. there as well. In other words, all your computer has to do is access the Internet. Once you’re online, all your stuff is waiting for you. There’s a good chance you do some cloud computing already, even if you don’t think of it that way; “cloud computing” is just the hot phrase of the moment. Do you use Web-based e-mail, like Hotmail? That’s cloud computing. Ever put a video on YouTube or your photos in an online photo gallery? Ditto. Those are the more common cloud computing applications, but there are a lot more. In fact, except for any specialty software your office uses, it’s almost a given that you’ll be able to find an online version of the software you need. Take office applications — probably the most-used software you have. Out in the cloud you have a lot of options; I’ll mention three: Microsoft Office Live (office.live.com), Zoho Office (zoho.com), and Google Docs (google.com/docs). VoLUme 17 ● ISSUe 4
“cloud computing” means using tools on the Internet to do your work, rather than software on your computer.
In most ways they’re identical. The differences are largely in the look and feel; I think Zoho’s interface is a lot better than Google’s, but you might disagree. (Sadly, Microsoft uses the new “Ribbon” toolbar, which is great for making party invitations, but annoying for business writing.) microsoft’s office Live is almost identical to its office 2010 suite. Same tools, same power, (same annoying Ribbon).
• They’re all free. • They all read and write both Microsoft Office files (Word, Excel, etc.) and international standard OpenDocument (ODF) files. • You can access them with any modern Web browser (see Accessible Tech in our May/June issue). • They offer a substantial amount of online storage space. JULY/AUGUST 2010 33
accessibletech Got mail? Did you know? The most popular Web-based e-mail service by far is Yahoo Mail, followed by Windows Live Mail. Gmail is a distant third; AOL Mail is slightly behind. (Source: Experian Hitwise)
• They all integrate with the desktop version of Microsoft Office, so you can save your local files to your online space, open your Web-created files locally, and so on. • They all allow collaboration — you can allow others to view or edit your documents, making it easy to work together on a project. But Web-based e-mail and office applications are only the tip of the large and growing iceberg made possible by fast connections, cheap processor power, and modern Web browsers. Need to tweak the photos you take? You don’t need Photoshop, or even the free (and frankly very good) Picasa. You can do it online with any of a number of image editors. Two excellent ones in terms of features and ease of use are Picnik (picnic.com) and Pixlr (pixlr.com). As with the office applications, they’re both free (you can pay to upgrade for more features), and all they require is a Web browser and a decently fast connection. Photoshop, schmotoshop. Online tools like Pixlr give you every tool you’ll need (and then some), no purchase required.
You can upload images from your computer, edit them to your heart’s content (keeping in mind the regulations regarding presenting a true and accurate picture of a property), and grab the edited version for your MLS or your printer. Want something even more powerful (but still free and Web based)? Check out the cloud version of Adobe Photoshop at photoshop.com/tools/ria. It has even 34 JULY/AUGUST 2010
JayCut lets you edit video using just your Web browser, and sports features that rival most consumer software.
Advantages of cloud applications • Access your tools and documents anywhere — multiple computers, smart phones, etc. • PC? Mac? Linux? It doesn’t matter. • Don’t worry about backups — the cloud does it for you. • Share documents easily and collaborate with anyone
Disadvantages • Interfaces are not always as good as desktop software • Some features may be lacking • Lose your Internet connection, lose access to your stuff • Sensitive documents or picture? They should be safe, but… • You’re relying on a third party — if the company goes out of business, you’ll need to move all your documents, photos, and whatever else.
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more editing tools, and gives 2 GB of storage (you can buy more pretty cheap, too). Photos are great, but more and more listings are featuring videos. And yes, you can turn to the cloud to edit them. While Web-based video editing is still in its infancy, there are already some good choices. Notable are Pixorial (pixorial.com) and JayCut (jaycut.com). Yes, yes, they’re both free, and they let you do similar things: Add videos from your hard drive, trim them, connect them, add titles and transitions — all the basic stuff a video editor needs to do. Pixorial leans towards beginners, while JayCut has more sophisticated tools. Either way, you can’t go wrong. And if you want something really simple, head over to YouTube, which offers a very basic video editor (youtube.com/editor). Office suites. E-mail. Photo and video editing. All available free, and all available in the cloud. If your computer can run a Web browser, that might be the only thing you need, because no matter where you go, there you are. ●
Why “cloud”? when the Internet first hit the big time, people drawing network diagrams would usually indicate the Internet as a cloud — big, amorphus, and floating out there. The image stuck, so Internet-based software was tagged “cloud computing.”
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JULY/AUGUST 2010 35
rpacreport GOLDEN R INVESTORS ($5,000)
As of July 10, 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.
* H all of Famers have contributed a cumulative amount of at least $25,000 to RPAC.
John McEnearney McEnearney Associates, Inc. Alexandria
GOLDEN R ASSOCIATION ($5,000) Dulles Area Association of Realtors®, Leesburg Fredericksburg Area Association of Realtors®, Fredericksburg Northern Virginia Association of REALTORS®, Fairfax Richmond Association of Realtors®, Richmond Roanoke Valley Area Association of REALTORS®, Roanoke Williamsburg Area Association of REALTORS®, Williamsburg
36 JULY/AUGUST 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
Thomas Jefferson, III* Joyner Fine Properties Richmond
John Powell Long & Foster Real Estate, Inc. Colonial Heights
Tom Stevens* Coldwell Banker Residential Vienna
Melanie Thompson* Century 21 AdVenture Realty Fredericksburg
Jack Torza Long & Foster Realtors® Mechanicsville
CRYSTAL R ($2,500–$4,999)
Mike Minnery Re/Max Allegiance Woodbridge
Jane Quill Re/Max Presidential Fairfax
STERLING R INVESTORS ($1,000–$2,499)
Bob Adamson McEnearney Associates, Inc. McLean
Julia Avent Re/Max Allegiance Arlington
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STeRLING R INVeSToRS ($1,000–$2,499)
Deborah Baisden Prudential Towne Realty Virginia Beach
Bob Barton Barton Real Estate Services Richmond
Mary Bayat Bayat Realty Inc Alexandria
Gail Belt Keller Williams Realty McLean
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
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
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
Dale Chandler Greg Garrett Realty Newport News
Claire Forcier-Rowe Coldwell Banker Elite Fredericksburg
VoLUme 17 ● ISSUe 4
David Charron MRIS Rockville, MD
Virgil Frizzell Long & Foster Real Estate Herndon
JULY/AUGUST 2010 37
rpacreport STERLING R INVESTORS ($1,000–$2,499)
Charlee Gowin Prudential Towne Realty Virginia Beach
Lynn Grimsley Re/Max Peninsula Newport News
Kit Hale MKB, REALTORS® Roanoke
Margaret Handley M.C. Handley, Ltd. McLean
Lizzie Hernandez Re/Max Regency Manassas
Tom Innes RE/MAX Commonwealth Richmond
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
Kathleen Kennedy Re/Max Regency Manassas
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
John Meyer Re/Max Allegiance Alexandria
Tom Meyer Condo 1, Inc. Arlington
Jay Mitchell Prudential Towne Realty Virginia Beach
Vinh Nguyen Westgate Realty Group, Inc. Falls Church
Boofie O’Gorman Long & Foster Real Estate Reston
38 JULY/AUGUST 2010
www.VARealtor.com
STERLING R INVESTORS ($1,000–$2,499)
Greater Augusta Association of Realtors®, Staunton Lynchburg Association of Realtors®, Lynchburg New River Valley Association of Realtors®, Christiansburg Southside Virginia Association of Realtors®, Colonial Heights Virginia Peninsula Association of Realtors®, Hampton
Forrest Odend’hal Long & Foster Real Estate Manassas
Susan Oh New Star Realty & Investment McLean
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
Anne Rector Long & Foster Real Estate Alexandria
Peter Rickert Coldwell Banker Residential Brokerage Alexandria
Thomas Rickert Coldwell Banker Residential Brokerage Alexandria
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
Wes Stearns MO Wilson Properties Inc. Woodbridge
Suzy Stone Century 21 AdVenture Realty Fredericksburg
Thomas “Mack” Strickland, Jr. Strickland Realty Chester
Crystal Sullivan Re/Max Peninsula Newport News
Trish Szego ERA - Elite Group Realtors® Fairfax
Richard “Dick” Thurmond William E. Wood & Associates Virginia Beach
Christine Todd Northern Virginia Association of Realtors® Fairfax
Volume 17 ● Issue 4
STERLING R ASSOCIATION ($1,000–$2,499)
JULY/AUGUST 2010 39
rpacreport STERLING R INVESTORS ($1,000–$2,499)
Karen Trainor Weichert REALTORS® Fairfax
Kevin Turner Century 21 All Service Bedford
Sandra Wagner William E. Wood & Associates Poquoson
Todd Wampler Wampler Realty, Inc. Daleville
Barbara Wolcott Prudential Towne Realty Virginia Beach
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 JULY/AUGUST 2010
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A flat-screen could keep your clients from closing. Here’s how…
The market’s still changing. Fannie Mae’s new policies require a second credit report pulled for closing day and a credit score change (like a financed TV) could potentially keep your clients from closing. And that’s just the beginning…
Get up-to-speed on new financing terms, options and ways to save your next closing at the Register now for REal education without the fluff, just the info you need to do business… Critical Rules, Reforms, and New Realities Chandra Hall Saturday, October 2 10:45 a.m. – 12:30 p.m. Approved for 1 Hour Legal Updates; 1 Hour Real Estate Related CE; 2 Hours Elective PL.
Top Legal Issues Facing Real Estate Agents Dale Carlton Saturday, October 2 1:30 – 3:30 p.m. Pending 2 Hours Legal Updates CE; 2 Hours Elective PL.
Commercial Financial Literacy Ralph Spencer, CCIM Saturday, October 2 1:30 – 4:30 p.m. To be submitted for 3 Hours Real Estate Related CE; 3 Hours Elective PL.
Find out More about the REal Show 2010: VAR’s Convention & Expo October 1-3, 2010 • Virginia Beach Convention Center • www.REalShow2010.com
varbuzzcontest Here’s your chance to win a cool Creative Vado HD camcorder 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 September 15, 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 Vado. Simple, huh? 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.
Every answer is a name. 1. Identify the fictional speaker who’s the source of the last phrase in Accessible Tech. 2. Who is the only man to “score free tix to the REal Show” so far? (See Quick Hits.) 3. Of the three people you might meet in booth 214 at the show, who has the shortest name? 4. NAR doesn’t have an official position on healthcare reform, according to its managing director of legislative policy. What’s her name? 5. Who should you call for information about advertising in this magazine?
Last Month’s Answers Questions in the magazine 1. W hat three-letter certification does VAR treasurer John Daly hold? Answer: SFR 2. Keynote speaker Richard Binter is president of Housing Wire and __ Insider. Answer: REO 3. VAR form 600E is the Agreed Repairs Addendum, but form 600__ is the actual home inspection addendum. Answer: D 4. In what city is Conrad Koneczny based? Answer: Winchester 5. One person’s surname is spelled incorrectly in these questions. What is the correct spelling? Answer: Bitner
Then on VARbuzz (The answers to the five questions were all words or letters.) 1. Ignore the answer with the fewest letters. Answer: D 2. Of the other answers, there is one letter that appears in all of them. Figure it out. Answer: R 3. Using ye olde method of A=1, B=2, and so on, turn that letter into a number. Answer: 18 4. Turn to that page in the magazine. 5. Assuming he was born on January 1 (and is still alive), how old is Tom today? Page 18 includes an anecdote that began “In 2002, at the age of 55, Tom began…”. That would make him 63 today. More than 30 people sent in that correct answer — 63 — and were entered in the drawing. Our
winner: Buzz Needham of Virginia Beach. Congrats, Buzz! 42 JULY/AUGUST 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, our receptionist is 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 Hotline Call (804) 622-7955* *You must register first at www.VARealtor.com/LegalHotline
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
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 Realtors Federal Credit Union T-Mobile, Wireless service UPS
(804) 249-5712 scott@VARealtor.com
VAR Wireless Center Wireless plans and hardware Virginia Department of Motor Vehicles Realtor license plates Zipform, Electronic Forms Solutions
VOLUME 17 ● ISSUE 4
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
TASC/BizPlan, Medical expense tax benefits
Our CEO is Scott Brunner
For information about RPAC
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 Rose & Womble, Virginia Beach (757) 486-8800 jdaly@roseandwomble.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
JULY/AUGUST 2010 43
lastword SCOTT BRUNNER
In praise of good regulation
Why protecting consumers is good for your business We interrupt this typically lighthearted column to contemplate briefly a public policy concept called “regulatory capture”: It’s what happens when regulators capitulate to the demands of the regulated, to the point that they default on their duty to protect the public — and what on earth that might have to do with VAR and your real estate business. Just look at the past 24 months: A tragic mining accident in West Virginia. The oil spill in the Gulf. And the mother of all messes: the nationwide mortgage meltdown and resulting financial crisis that continue to bedevil the economy. Point fault-finding fingers where you will: BP, Goldman Sachs, Countrywide, Fannie Mae, et al. The _____ Administration. Congress. Democrats. Republicans. Consumers themselves. But on one point, most informed commentators, from the left-leaning New York Times to the rightleaning Wall Street Journal, agree: These crises were exacerbated by lax regulatory enforcement. While policy makers often go overboard in fettering free markets, most would agree that there’s a proper role for reasonable regulation in protecting lives and property. But when reasonable regulation is not adequately enforced, bad things happen. Here’s what the WSJ’s Thomas Frank said of the financial crisis*, in particular:
44 JULY/AUGUST 2010
We have just come through the most wrenching financial disaster in decades, brought about in no small part by either the absence of federal regulation or the amazing indifference of the regulators.
In other words, while slack regulatory enforcement can’t be pegged as the singular reason for the aforementioned debacle, it’s certainly a significant contributor to it. But Frank goes further in postulating why this may be the case: There are powerful institutions that don’t like being regulated. Regulation sometimes cuts into their profits and interferes with their business. So they have used the political process to sabotage, redirect, defund, undo or hijack the regulatory state since the regulatory state was first invented. The result of that hijacking — of the knuckling under of regulator to regulated — he adds, is “regulatory capture.” That perspective makes me ponder VAR’s leadership in protecting the interests of Virginia real estate consumers. VAR has a remarkable history of legislative and regulatory advocacy that has strengthened licensee competency standards and protections for home buyers and sellers. Even now, VAR is developing possible legislative proposals to: • s trengthen and clarify agency relationship disclosures to clients,
particularly in dual agency situations; • transition seller property-condition disclosures from paper to an REB-managed website where buyers can investigate all mandatory disclosures in one easy place; • increase the quality and effectiveness of pre-license education; • enhance standards for broker supervision of agents. These are just ideas at this point, and you’ll have opportunities to ask questions and offer input. Truly, VAR’s leadership is the antithesis of “regulatory capture”: instead, it’s leadership predicated on the idea that when Virginia consumers are well served, Virginia Realtors® make money. That’s not to say that government regulation is the answer for all that ails professionalism in real estate. Professionalism begins, of course, with ethics and common sense, and those — ahem — are up to you. l Contact VAR’s chief executive officer, Scott Brunner, at Scott@VARealtor. com.
* Obama and ‘Regulatory Capture’, Wall Street Journal, June 24, 2009 www.VARealtor.com