Agency: Confusion is not an option (p. 22) April/May 2012
A journal for real estate professionals published by the Virginia Association of REALTORS® • www.VARealtor.com
In this together Housing summit finds common ground among Virginia Realtors®
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PUBLISHED BY THE VIRGINIA ASSOCIATION OF REALTORS® The Business Advocate for Virginia Real Estate Professionals Trish Szego, CRB, CRS President Fairfax Mary Victoria Dykstra, ABR, CRS President-Elect Roanoke Bradley J. Boland Vice President Reston John Daly, SFR Treasurer Virginia Beach John Dickinson, CCIM, GRI Immediate Past President Union Hall R. Scott Brunner, CAE Chief Executive Officer scott@VARealtor.com Amanda Arwood Vice President of Marketing & Communications amanda@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.
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.
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In addition to the print version of Commonwealth, VAR publishes electronic newsletters at regular intervals, including...
...the online version of our print magazine, published twice each month.
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Now hear this SO I’LL BE playing a game on my computer and come to a puzzle or quest that I’m having trouble solving. I turn to the Internet for help. I always find my answer, but too often I have to wade through a lot of non-answers and other flotsam. My biggest peeve: The people who engage in long, useless discussions about the way things should be, rather than just answering the bleepin’ question. For example: Me: “On level 16, I can’t figure out how to get the yellow bird to hit the second tower. Has anyone solved it?” Useless person the first: “You know, they oughta have an orange bird you could click to make it fly in a circle. Then you could do it.” Useless person the second: “Yeah, I’d like to see that. Maybe you could right-click to make him spin the other way.” Useless person the third: “You should be able to trade in a yellow and a red bird for one orange bird.” Useless person the first: “They should totally do that.” Me: “So… no?” And yet, all that said, there’s a place for simply tossing out ideas, even if you think they’ll never amount to anything. Whether it’s discussing how they should have ended “The Sopranos” or what would make a really great spell for a level-20 sorcerer, or what really should have been included in that law — there’s a value to talking it out.
You could be surprised — you never know who’s listening and how he might help your idea bear fruit. Ideas (good ones, anyway) have a habit of being picked up and spread. Besides, sometimes venting your frustrations is all you need. (Juliet Funt explained at the 2011 REal Show how men relieve stress with, um, exercise, and women relieve it by talking.) Writing a diatribe about something that annoys you can be a great way to blow off steam. Why do you think everyone and his mother has a blog? And, of course, knowing you’re not alone can make the intolerable seem merely annoying. Would you rather be the one guy stuck behind a slow-moving car, or one of a long line of impatient drivers? That was one reason we convened our first ever Housing Policy Forum — to let Realtors® from across the state get together and share their biggest concerns, frustrations, and bugaboos with some of the most recognized housing experts in the country. If nothing else, it gave everyone a chance to be heard, and to realize that their problems are shared and they’ve got a lot of other Realtors® on their side. Check out the story starting on page 18. ● Andrew Kantor, Editor andrew@VARealtor.com APRIL/MAY 2012
1
april/may 2012 Volume 19 ● Issue 2
contents
departments 4 quickhits The latest news and announcements for Virginia’s Realtors®
9 statswatch Illustration by Charlie Powell
The numbers that shape your world
10 legallines Questions and answers about Virginia real estate law
14 lifelessons When real estate pros break the rules ... and get caught
16 formfactor Stay safe with our popular standard clauses package — revamped for 2012
26 accessibletech One simple way to help your clients save a bundle on energy
in every issue
features
18
In this together
22
Untangling agency
Four gurus and hundreds of Virginia Realtors® gather to talk about the housing economy. Our bet: You’ll be nodding your head.
You aren’t a salesperson, you’re an agent, and according to Virginia law the difference is critical — and often misunderstood. Here’s a primer.
1 firstword 28 rpacreport 33 contactvar 34 lastword APEX Award of Excellence winner 2
April/may 2012
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Nancy & Thomas Shaver, Regional Owners PRIME FRANCHISE TERRITORIES SELLING QUICKLY! 800-906-EXIT www. exitvirginia.com Brokerage, Independently Owned and Operated. Not intended to solicit individuals or property already under contract.
quickhits
ANDREW KANTOR
Housing funds
Virginia and the foreclosure settlement and penalties paid to the state government. About $479.6 million will be coming to Virginia. The bulk — almost $410 million — will be in the form of “mortgage relief,” meaning principal forgiveness and other reductions in the amounts people owe. The state itself will receive $69.7 million. Virginia’s General Assembly plans to use that money to plug various holes in the state’s budget. The money will help pay for a variety of initiatives including funding community health centers and free clinics, increasing Medicaid reimbursements for hospitals and nursing homes, paying for school
Foreclosures
Trends
Virginia ranks #8 (in a good way) in foreclosures
Home builders: New homes are larger, fancier
According to the Mortgage Bankers Association, Virginia has the eighth-lowest percentage of mortgages in foreclosure in the nation. Fewer than two percent of the state’s first-lien mortgages are in the foreclosure process. Wyoming has the lowest percentage in the country, and Florida, New Jersey, Illinois, and Nevada have the highest. (More than 14 percent of Florida’s mortgages are in foreclosure.) 4
maintenance, and reducing K-3 class size. The Department of Justice had said the banks’ payments to states were intended “to be used to repay public funds lost as a result of servicer misconduct and to fund housing counselors, legal aid and other similar public programs determined by the state attorneys general.”
The $25 billion mortgage-fraud settlement includes a nice chunk of change going to the states. So, we have to ask, how did Virginia do? First of all, the total amount the banks have to pay isn’t $25 billion, but closer to $40 billion, thanks to the odd way the government credits the spending. But much of that isn’t a cash payment, it’s refinances and write-downs of principal. The big “winner” is California — not surprising, as so many loans were written there. It’s getting about $18 billion; Florida is receiving about $8.4 billion. That includes benefits for homeowners and former homeowners in those states, penalties paid to individuals,
APRIL/MAY 2012
The trend in 2011 was for larger homes with more amenities — that’s what the National Association of Home Builders found when looking at data from the Census Bureau. Some points • The average size rose 6% from 2010 (from 2,381 to 2,522 sq. ft.) • Four-bedroom homes now comprise 42% of residential construction (up from 36%) • 30% of new construction includes a finished basement (up from 25%) • The average sales price of a newly constructed home is $274,400 (up from $264,900) NAHB asks the obvious question: How can the average home be getting bigger, more expensive, and have more amenities when the housing market remains weak and the overall economy is yet to see a robust recovery? The answer is simple: it comes down to who has been buying homes. In the last couple of years, a typical home buyer had a larger down payment, a high credit score, well-documented income, and stable employment history in order to qualify for a mortgage. Ergo, it was someone who would look for something a bit nicer than average. WWW.VAREALTOR.COM
Virginia housing
Fannie and Freddie
Pieces of Home: VAR’s 2011 Year-End Housing Report
FHFA head has his own plan for the secondary mortgage market
VAR’s 2011 housing report, “Pieces of Home,” is chock full of housing market data, trends, and comparisons, plus articles by real estate experts from across the state. Some highlights: • Virginia homes sales in 2011 exceeded home sales levels in 2010 despite the lack of a stimulus. • The Central Valley region experienced the greatest increase in sales and the Northern Virginia region experienced the only decline. • The median sales price in Virginia began the year at $205,000, peaked at $244,800 in June and closed the year out at $225,000. Year over year however, showed a 3.3% decline. • Home sales under $100,000 increased by 33% between 2010 and 2011. • Median home prices have declined in both Virginia and the U.S. over the past year, although Virginia’s median sales price remains above the country’s as a whole. There’s plenty more — an American housing timeline, what low mortgage rates mean for 2012, regional housing stats for the state, preparing for the coming age shift, and more. You can download the full report at VARealtor.com/homesales.
Federal Housing Finance Agency acting director Edward DeMarco has consistently blocked efforts to offer principal writedowns for holders of federally backed mortgages. Now he’s offering his own plan for fixing the mortgage finance market. The basic idea: Make Fannie/Freddie/FHA mortgages more expensive for borrowers by increasing fees, thus encouraging them to either go to private lenders or, if the private market won’t offer an affordable mortgage, not buy a home at all. He also recommends building a completely new infrastructure (taxpayer financed) for the secondary mortgage market, while winding down F&F. It’s part of a three-prong plan: Build (the new infrastructure), contract (Fannie and Freddie), and maintain (foreclosure prevention activities and credit availability). The problem is that the market hasn’t recovered, and DeMarco’s plan would shut many potential (and qualified) home buyers out of the market. Further, that implicit government guarantee helps keep rates down. In a totally market-based system, you can bet mortgage rates would shoot higher — and thus price a lot of people out of the market. Of course, any plan such as this would require Congressional approval — not likely in an election year. Further, even DeMarco admits that his plan only paints the broad strokes: FHFA’s ideas of the goals, not the means.
VOLUME 19 l ISSUE 2
Realtor® Rally
Thousands of Realtors® converge on D.C. — you should be there On May 17, thousands of Realtors from across the country will converge on Washington D.C., in front of the Capitol, sending a message no one can misunderstand: That Realtors are a powerful lobby, and we are here to protect the American Dream. We’ve had enough of political gridlock, attacks on housing, confusing bureaucracy, and skittish lenders. It’s time for Congress to step up to the plate and do its job — and that includes making a commitment to creating a stable housing market for the long term. It means ensuring that housing remains the fiber that binds together the fabric of America. Join us there. Heck, we’ll even bring you there and back and feed you. All we ask is that you show up, wearing your Realtor® pin on your lapel and your Realtor® pride on your sleeve. Visit NAR’s realtorrally.org to register. (It’s free of course, but we want to get a head count for food and buses.) APRIL/MAY 2012
5
quickhits NAR tools
RPR keeps rolling along NAR’s property information tool, the Realtors Property Resource, has been steadily expanding and improving since it debuted in 2010. Quick refresher: RPR is an NAR member benefit that provides data on every property in the United States. Every one. That includes information from public and private databases, all integrated into one neat package — tax and foreclosure information, valuations, demographic profiles of the neighborhood, structural information about the building, school scores, and more. Since its rollout, the RPR interface has gone through several upgrades designed to make it easier to use, including the addition of “mini property reports.”
More MLSs have signed on (most notably MRIS), and new data sources and tools have been integrated (e.g., for trend analysis and company-level information). If you haven’t started using RPR, you need to. It’s free. It’s easy (it may even be integrated into your MLS). And it’s one of the best tools NAR has to offer. Log in directly to RPR at narrpr.com, or read all about it in the March/April 2010 issue of Commonwealth at VARealtor.com/ commonwealth.)
Things to remember about RPR: 1. I t’s not an MLS; it’s a supplement to your existing MLS that includes tons of property and neighborhood data. 2. I t’s free and for Realtors® only; no civilian access is permitted. 3. Regardless of whether your MLS is a participant, you have access
to RPR; if your MLS has not signed on, you can still get RPR’s data — just not the stuff that’s MLS-only, such as pricing and compensation information.
Who’s online in Virginia? MRIS is live on RPR, and so are the following local Realtor associations: • Charlottesville Area • Eastern Shore • Greater Augusta • Harrisonburg Rockingham • South Central • Southern Piedmont Land and Lake • Southwest Virginia Coming online soon: Martinsville, Henry & Patrick Counties, Roanoke Valley, and Williamsburg associations of Realtors®.
Mortgages
Is 15 the new 30? Not long ago, about 90 percent of people who took out first mortgages opted for a 30-year, fixed-rate loan. But in the fourth quarter of 2011, that figure was down to 60 percent. Instead, it seems, more home buyers are opting for 15- or 20-year loans instead. (In fact, about a quarter of homeowners who are refinancing from 30-year loans choose to switch to a 15-year mortgage.) Maybe people are beginning to think longer-term, bigger-picture. While the typical payment on a 15-year loan is 50 percent higher than on a 30-year mortgage, the interest rate is significantly lower — 3.41% for a 15-year mortgage today, vs. 4.05% for a 30-year.
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April/may 2012
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WHAT MAKES A CENTURY 21 AGENT? HERE’S oNE WoRd: GUSTo. A fEW MoRE WoRdS: dEpENdAbiliTY, KNoW-HoW ANd dEfENdER of YoUR dREAMS. MAYbE THAT lAST oNE WAS ovER THE Top. bUT WE’RE oK WiTH THAT. CENTURY 21 AGENTS. SMARTER. boldER. fASTER. ®
C21.CoM © 2011 CENTURY 21 REAL ESTATE LLC. ALL RIGHTS RESERVED. CENTURY 21® IS A REGISTERED TRADEMARK OWNED BY CENTURY 21 REAL ESTATE LLC. AN EQUAL OPPORTUNITY COMPANY. EQUAL HOUSING OPPORTUNITY. EACH OFFICE IS INDEPENDENTLY OWNED AND OPERATED.
Love
Fannie and Freddie
Homeowners are more attractive than renters
Fannie Mae: Housing will add to GDP for the first time since ’05
In a CNN survey of 1,000 single people, more than a third of women said they would prefer to date a homeowner rather than a renter. About 18 percent of men said the same thing. In fact, only two percent of women and three percent of men said they preferred a renter. (Leaving about 64 percent who didn’t care.) Moving back with parents might make good financial sense, but it won’t help your love life. “That’s a real deal-breaker,” said Michael Corbett, a spokesman for Trulia. “If you’re still living with your folks, you’re dead-on-arrival for dating.”
According to Fannie Mae’s Economic & Strategic Research Group, in 2012 the U.S. housing market will add to the nation’s gross domestic product for the first time in seven years. Several consecutive months of rising home sales, combined with increased construction of apartment buildings and (to a lesser extent) single-family homes, means housing will add to GDP, if only by a little, for the first time since 2005. Sales and prices are still low, so it’s not going to make a tremendous difference, but it’s another sign of the improving market. We’re pulling out of the recession.
Interesting refinance stats from Freddie Freddie Mac released its quarterly report on refinancing activity — this was for Q4 2011 — and the results show that “homeowners who refinance continue to strengthen their fiscal house.” Some highlights: • Only 15% of borrowers increased their loan balance after refinancing at a lower rate — the lowest level in 26 years of “cash-out” refinancing. • Similarly, 37% kept about the same loan amount, and 49% reduced it. These “cash-in” borrowers are also at the lowest level in more than a quarter century. • The median refinancing for a 30-year mortgage dropped borrowers’ rate by about 1.4% — that’s a 26% drop — which saved a typical buyer about $2,700 in interest just in the first year.
Mortgage market Your business
8
CFPB looking at standard mortgage disclosures
What high-income agents are doing
Credit card offers come with a standard disclosure so banks can’t pull a fast one. The Consumer Financial Protection Bureau is now looking at a similar disclosure for mortgages. The goal is to make it easier for consumers to make informed decisions when comparing lenders’ rates. The agency has finished its first round of testing, and it’s put a prototype form up for public comment on its Web site, consumerfinance. gov. Check it out.
Inman News decided to learn what high-income Realtors® were doing to make their cash. (“Highincome” meaning they earn $100,000 or more a year on their real estate business.) What did its survey find? •T hey closed more transactions. Wait! Before you say “Duh,” the point of this is that they closed more, smaller transactions rather than a few really big deals. •N ow you can say “Duh”: They focused on the high-end market, like luxury homes, condos, and townhouses, and not REOs and first-time buyers. •M ore than 80 percent of them worked more than 40 hours a week, including 41 percent who work more than 50 hours a week. •A lmost two-thirds spend at least $5,000 a year on marketing. l
April/may 2012
www.VARealtor.com
statswatch Steady as she goes As the early 2012 numbers start to come in, “flat” seems to be the name of the game. Looking at January’s numbers compared to the year before, units sold, sales volume, and days on market are all up slightly, and median price is down — again, only slightly. Without a working crystal ball in hand, there’s no way to say for sure whether this signifies the bottom of the housing crash, but most economists seem to be (to use a tired and overused phrase) cautiously optimistic.
Residential sales volume
Median sales price
Units sold
01/2011 01/2012
01/2011 01/2012
01/2011 01/2012
102
100
$203,000
$205,000
$1.254 billion
$1.245 billion
4,839
4,711
Average days on market
01/2011 01/2012
New home sales report! Check out the new Virginia Home Sales Report — redesigned to include colorful graphs, regional breakdowns, and brief, easily understood commentary. How can you use it? Here are some ideas: • Send the market report to your clients and sphere of influence to give them a context for the housing market across the state. Ask them to contact you for updated market statistics for your local area. • Send the market report to local lenders, home builders, financial planners, attorneys, and bankers
Volume 19 ● Issue 2
to establish yourself as a source of reliable housing market data. • Post the market report to your Web site, Facebook, Google+, or Twitter to reinforce your credentials as a housing expert. • Print selected pages of the market report to take along to appointments with clients. While local market conditions will likely be more pertinent than statewide data, the information will still be helpful to and appreciated by your clients.
April/may 2012
9
legallines BlAKe HeGemAN
Gifts, secrets, logos, and more During the course of my day, I get legal Hotline questions on a variety of topics. In other words, I don’t receive only property management calls on monday and property disclosure questions on Wednesday. That is why this column will be a grab bag of legal issues on a variety of topics — there is no common theme. my lawyer brain may explode before the end because it craves organization.
Q:
A listing agent sold a listing through one of his company’s agents. several weeks after closing, the client, who was very pleased with the service he had received from the listing agent, came into the office, handed an envelope to the receptionist and asked her to give it to the listing agent with the client’s thanks. The envelope contained $3,000 in cash. The broker asks how this “gift” should be handled. A: In the absence of a company policy or contractual agreement to the
contrary, this should be considered additional compensation for the job performed, and should be paid to the agent through the broker, subject to the ordinary split.
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
Q:
If a buyer wants to keep his identity confidential, how might he craft the purchase contract?
A: He can do several things:
1. Set up an entity (LLC, corporation, trust, partnership) and purchase in that name. The person appointed and authorized to act for the company can then sign the contract for the purchasing entity. 2. Have a third party enter into the contract with a right to assign the contract to the ultimate purchaser. That signatory should be very careful since he will (or might) have contract liability. The assignment agreement should be carefully drafted to contain the appropriate indemnities to protect the purchaser. However you do this, the assistance of counsel is encouraged.
Q:
I had to deposit some of my own funds into my escrow account to meet the account minimum to open it. Is that legal?
A: You may keep enough of your own funds in an escrow account to
avoid bank charges, keep it active, meet minimums, etc., so long as you keep separate account of those funds (and make periodic withdrawals of any excess every six months).
10 AprIl/mAy 2012
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.
Q:
Can we sell mobile homes if we are selling the land beneath them? A: If the mobile home is no longer mobile, that is, it’s no longer a motor
Q:
I noticed that VAR forms contain the Equal Housing Opportunity logo; do I have to include it on all of my forms and advertisements? A: No, you are not required
by federal or state law to include the Equal Housing Opportunity logo on forms or advertisements — but you absolutely should! The Virginia Fair Housing Office provides helpful guidance about using the logo on its Web site. It advises that “[T]he Fair Housing Logo should appear in all advertisements. Using the logo creates a presumption that you’re trying to follow the fair housing law.” It goes on to list fair housing policies and practices that its investigators will consider as evidence of compliance with the prohibitions against discrimination in advertising under the fair housing law. The first factor listed is ‘use of an Equal Housing Opportunity logo, statement or slogan.’ Please note that if you elect to use the logo, it must be used consistently; selective use could be considered discriminatory.
Volume 19 ● Issue 2
vehicle but is affixed to the real estate and being taxed as real estate (not personal property), you can sell it with your license. However, if it’s still a vehicle (not affixed and not taxed as real estate), you must have a license from the Manufactured Housing Board to sell it, whether you’re selling the land it sits on or not. So the land doesn’t matter, although most of the time if it’s affixed and taxed as real estate, you are also selling the land. But selling the land is not enough to make legal the sale of a vehicle sitting on it.
April/may 2012 11
legallines Unlicensed but useful A common legal Hotline question concerns what an unlicensed assistant may do. VAr’s professionalism Working Group developed the list below to provide guidance to members. please note that this list has not been approved by the real estate Board and is not law.
Can
Cannot
• Perform general clerical duties, including answering the phones and reading information shown on the listing • Submit listings and changes to mls • Follow up on loan commitments after contracts have been negotiated • Have keys made for listings • Compute commission checks • Place signs on properties • Act as a courier service • Schedule appointments • Record and deposit earnest money, security deposits, and advance rents • Prepare contract forms for approval of the licensee and supervising broker • Prepare promotional materials and advertisements for approval of the licensee and supervising broker • Assemble closing documents. • Obtain required public information from governmental entities • Monitor license and personnel files • Order routine repairs as directed by licensee • Be compensated for their work at a predetermined rate that is not contingent upon the occurrence of a real estate transaction
• Show property • Give opinions or advice on a listing • Preview, inspect or determine the square footage of any property unless accompanied by a licensee • Answer questions on listings, titles, financing, or closings, unless to confirm that a property is listed, to identify the listing broker or sales agent, or to provide such information as would normally appear in a simple, classified newspaper advertisement (e.g., location and/or address) • Discuss or explain with anyone outside the firm a contract, listing, lease, agreement, or other real estate document • Attend pre-closing walkthrough or real estate closing unless accompanied by a licensee • Negotiate the amount of rent, security deposit, or other lease provisions in connection with a rental property • Represent themselves as being a licensee or as being engaged in the business of buying, selling, exchanging, renting, leasing, managing, auctioning, or dealing with options on any real estate or the improvement thereon for others • Compensate UPLs on the basis of real estate activity, such as percentage of commission, or any amount based on listings, sales, etc.
12 AprIl/mAy 2012
Q:
my seller is a convicted sex offender and is listed on the sex offender registry. After we sell his current home we will begin the search for a replacement home. Am I, as the buyer agent, required to inform anyone of the fact that my buyer is on the list? A: No law requires such dis-
closure. In fact, you should not disclose this to anyone without his consent, as to do so may jeopardize his ability to purchase a home, which is, after all, why he hired you. I’ll leave to you resolution of the moral dilemmas here. Suffice it to say that if you decide to take a job, you should do it professionally and competently, preserving your client’s confidences. If for any reason you cannot do this, you should decline the representation. ●
legal lines is written by VAr legal counsel Blake Hegeman. please note that answers to legal lines questions are informational only. Consult your own legal counsel for legal advice. you can find more Q&A from the archives of our legal Hotline in our legal resources Center at VArealtor.com/ legalresources. WWW.VAreAlTor.Com
Does Your Client Need Real Answers About Homeownership? Here’s The Starting Line.
Looking for a way to help new clients take that first step with confidence? Tell them about VHDA’s free First-Time Homebuyer Class. It’s a great way to learn the entire homebuying process from start to finish, and how to stay on track as a responsible homeowner. The class is offered in English or Spanish, in person or online. And it’s free, with no obligation. For information, visit vhda.com or call 877-VHDA-123. Virginia Housing Development Authority | 877-VHDA-123 | vhda.com
lifelessons Kathleen Toler
Finger pointing Licensees who run afoul of Virginia real estate regulations can find themselves in the crosshairs of the Virginia Real Estate Board, facing punishment ranging from a small fine 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; participants may disagree with VREB’s conclusions and version of events. They are provided solely as examples of Board actions. All of the names have been changed.
Like mother, like daughter
Although she acknowledged that she was principal broker, she said that she had no ownership interest in the firm, nor was she an officer or director — her daughter was the owner. She claimed she was completely unaware of the missing $90,000 from the Sator Square accounts until she cleaned out her daughter’s desk while “she went to the Peanut Festival for a week and … found the Sator Square bank books and statements which showed the money was not in the bank.” It wasn’t until April 2009 that Meade was authorized to manage A-One with full financial responsibility and learned that there was more missing than Sator Square’s money. Yet she didn’t notify the Board of the shortage in A-One’s escrow account, which by November 2009 had grown to a whopping $145,000. Her reason: She hoped that she could put the money back in over time. The Board wasn’t buying it. Meade’s license was revoked and clients’ claims against her were approved for $14,370.
In September 2009, complaints from five property owners about bounced checks, missing security deposits and delinquent owner’s payments flooded into the Compliance and Investigations Division of DPOR. All were disgruntled customers of A-One Property Management and Sales, operated by Madeline Meade and her daughter, Debbie O’Melia. The mother-daughter team opened A-One in 2002 with O’Melia as president and Meade as principal broker. Shortly thereafter, Meade moved to Costa Rica. She moved back to Virginia in 2006. Investigators discovered that, in one case, O’Melia transferred $90,000 from the operating account of a client, Sator Square Properties, to one of A-One’s accounts — without the client’s knowledge. O’Melia claimed she acted under her mother’s direction, using the money to pay for mortgage payments and living expenses for herself and her mother — even though she “knew it was not right.” Meade, in turn, blamed everything on her daughter. 14 April/may 2012
www.VARealtor.com
Out of commission
The check that didn’t check out
On May 21, Pamela Cutangle, an agent for Rockbrick Properties, accepted a $1,000 check as a deposit from a client to purchase a short sale property. However, Cutangle held the check until July 15 when she submitted the contract to her principal broker, Russell Robbins. When he discovered the violation, Robbins reported it to the Board. During the investigation, Cutangle said she held onto the check to avoid tying up her client’s money while waiting for a decision from the bank. “We were told there was more than one offer on the table, and we would hear something in a couple of months,” she said. “My client did not want to tie up her money for two months waiting to hear if she was even the one being considered.” Later, Cutangle argued that the contract had not been ratified, but when asked to examine it in detail, she eventually conceded that the contract had indeed been ratified, requiring her to deposit the check within five business days. Prior to the transaction, Cutangle had not worked for almost a year because of an injury that required her to be in a rehab center. She claimed that she didn’t have access to e-mail from her broker, including information about training sessions and business meetings, because she didn’t have access to a computer. Robbins, her broker, said, “I was not aware of the extent of how disengaged she was during this period.” Cutangle had never completed a short sale transaction before and relied upon Rockbrick’s contract templates. She thought the forms were self-explanatory and didn’t seek guidance from her broker “because I did not think I needed it.” During the investigation, Cutangle blamed her broker for not giving her special training on short sales and not mentioning any changes or new office policies while she was out. She even criticized the Board for not providing training on short sales. The Board, however, put the blame on Cutangle. She was fined $2,000 and her license was put on probation pending completion of 24 hours of continuing education.
Patricia Nobbs’s clients wanted to buy a home through the Department of Defense Home Assistance Program. They found one on April 27 and immediately gave Nobbs a $2,000 check as an earnest money deposit. Because the buyers were purchasing their home through the Department of Defense Home Assistance Program, the settlement date was up in the air. In mid-July, the buyers decided to drop out of the deal; the sellers would receive the earnest money. In the course of remitting the funds to the sellers, the principal broker for the listing firm, Fred Cuddy, wanted to be sure Nobbs had in fact made the deposit in accordance with the contract and with the Board’s regulations. He repeatedly e-mailed Nobbs (and his principal broker) to verify this, but he received no response. When Cuddy complained to the Board, he said, “We realized that something wasn’t right with the escrow deposit.” It turns out that the check wasn’t deposited into an escrow account until May 18, nearly three weeks after the contract was ratified. (According to the Board’s regulations, the check should be deposited in an escrow account within five days following ratification of the contract.) During the Board’s investigation, Nobbs had plenty of explanations. First, she claimed that she didn’t deposit the check because she lost it, and that the buyers had issued another check. Then he claimed the buyers took the original check out of his file without his knowledge. Later, he admitted he couldn’t recall what happened to the first check. There were other issues with his credibility. During his testimony with the Board, Nobbs stated that the listing agent completed the contract — even though it was clear that his writing was on it. Based on his responses during the Board’s investigation, he didn’t understand the regulations nor did he seem to care about following them. Nobbs was fined $1,500 and his license was placed on probation pending 16 hours of continuing education. l
Volume 19 ● Issue 2
It wasn’t me
April/may 2012 15
formfactor BLAKE HEGEMAN
Clause and effect When crafting a contract, one helpful tool is a list of standard clauses you can include. These are snippets of language that have been reviewed by real estate attorneys and VAR members from around the state that cover common changes. For example, escalation clause language or a home inspection “as-is” provision. Using these — rather than attempting to write something from scratch — can help reduce your risk of inadvertently including confusing or inappropriate text in a contract; a well-crafted library of standard clauses can save time, frustration and legal fees. VAR last updated its Standard Clauses Booklet in 2003; as you can imagine, a lot has changed since then. Our Standard Forms Working Group, working with the Richmond Association of Realtors®, developed an updated booklet reflecting current law. That booklet is posted on VAR’s Web site — VARealtor.com/standardforms — and contains the following clauses:
Standard Clause Topics
Subsections
Agency
• Acknowledgment of Licensure, Ownership • Agency Disclosure
Appraisal
• Reimbursement for Appraisal
Contingencies
• Backup offers – non contingent backup • Contingency upon sale of Real Property • Sale of Purchaser’s Property • Replace Home for Seller • Income and Expense Statement for 1-4 unit Leased Property • Proof of CO • Third Party Approval
Financing / Escrow
• Escalation Clause • Like-Kind Exchange Clause (1031 Exchange) • Seller Pays Closing Costs • Transfer of Deposit to New Purchase Contract (interoffice)
Home Inspection
• As-is • Radon Test Clause – Alternate Language • Radon Contingency Addendum • Simple Inspection and Right to Terminate
Property / Legal Description
• Legal Description • Parcel Size
Miscellaneous
• Home Warranty Contract • For Sale By Owner
Settlement / Possession
• Settlement to Coincide
Risk Management Acknowledgments: (not part of contract)
• EMD Not Held by Agent
16 APRIL/MAY 2012
WWW.VAREALTOR.COM
Don’t guess.
Lots of people try to predict the market, and it seems like everyone has an opinion about what’s happening. Stick with the facts: the monthly Virginia Home Sales Report. It’s got clear charts, insightful analysis — and it’s all in the numbers, not in the cards. Visit us at VARealtor.com/HomeSales
Another great member service brought to you by the Virginia Association of REALTORS®
“Shared joy is a double joy; shared sorrow is half a sorrow.” —Swedish proverb
In this together VAR’s housing policy forum finds similar tales from across Virginia By Andrew Kantor
Banks that can’t seem to get their acts together. Appraisal management companies sending out unqualified appraisers. Consumers who base their expectations on media sound bites, not reality. Government programs that confuse the market — and that may have a questionable future.
18 April/may 2012
www.VARealtor.com
Sound familiar? Those were the issues brought up by hundreds of Realtors® from across Virginia at VAR’s mid-February Housing Policy Forum. Splitting up by region into six caucuses, they developed their lists of what ails their markets. And across the board they discovered that the issues were roughly the same. (Well, with one exception: Northern Virginia’s concern about lack of inventory.) As they read off their lists, the echoes were clear. “I could probably say ‘ditto’ and sit down,” said Kemper Funkhouser of Coldwell Banker Commercial in Harrisonburg, spokesman for Realtors from the Shenandoah Valley area, at one point. They presented these issues to four housing experts brought in for the occasion: Ken Harney of the Washington Post; NAR immediate past president Ron Phipps; Anthony Sanders, professor of real estate finance at George Mason University; and David Stevens, president and CEO of the Mortgage Bankers Association. The discussion was open, frank, and pointed. So what ails the housing industry?
Lenders: Slow, confused, and scared Lenders got a fair share of the blame — not surprising, with their being at the root of the housing crisis. Karen Smith of Avery-Hess in Centreville, speaking for the Realtors from the south-central region of the state, summed up the issue as banks having “massive requirements on the borrowers” in the form of exhaustive credit checks and piles of paperwork. “There’s an overcorrection going on,” agreed Cindy Stackhouse of Volume 19 ● Issue 2
Century 21 Stackhouse & Associates in Prince William, speaking for the north-central Realtors’ group. Banks want too much information, or they ask for it too late. For example, she said, they discover liens — or demand an additional title search — three days before closing. So in some cases, in Stackhouse’s experience, “buyers [are] writing checks to pay for liens so they can get the house.” In other cases, it feels as if the banks’ left hands aren’t communicating with their right. They offer workout packages, for example, while trying to kick out homeowners. Lamented Smith, “They’re getting short sales on the table, but someone is cutting off the utilities.” Part of the issue is lender’s everchanging guidelines, according to Kit Hale of MKB in Roanoke, speaking for Realtors in the southwest, who said it felt that “there’s kind of a moving target with regulations.” Other times it feels like banks are deliberately throwing monkey wrenches into the works. For example, they’ll demand something they can’t have. In one instance, Stackhouse said, a seller’s bank wanted to see the buyer’s financial records. The buyer refused and the deal fell through. And, she learned, Bank of America will often refuse to pay transfer taxes, title fees, and other fees on short sales. The result of all this: “We’re having things fall out last minute with the banks.” NAR’s Phipps (who’s also a working broker in Rhode Island) said he’s shocked that, this far into the housing crisis, it takes so long for a bank to approve a mortgage. “That’s, to me, inconceivable,” he said, considering how much information is available on
They’re getting short sales on the table, but someone is cutting off the utilities.
April/may 2012 19
Common issues across Virginia • Last-minute lender demands • Slow response from banks, especially with short sales • Unqualified appraisers • Lack of buyer education • Hard-to-find financing for marginal buyers • And the good news: Low interest rates, plenty of inventory, general affordability, abundance of consumer information available, higher rents helping to drive home ownership
any borrower at the push of a button. Sanders agreed that financing remains the biggest hurdle. “Mortgage lending is not really growing,” he said. “We’ve swung to the part where it takes forever even to get a refi application processed.” For his part, Stevens thinks that too much weight is given to credit scores, which don’t — and can’t — reflect a borrower’s true financial situation, especially during a recession. That leads to people who are perfectly capable of paying a mortgage being declined because their FICO score reflects issues that no longer matter. “We have to find a way to lend to people who have been impacted by a recession,” he said, “and not think of them as criminals.” It’s all these things together that frustrate Realtors when trying to work with banks. “There are lots of issues,” Smith said, but when it comes to lenders “no sense of urgency.” If lenders top the list of targets of Realtor wrath, government is a close second — whether because of too much action, too little action, the wrong actions, or the typical partisan circus.
Government, here to help “There’s a real fear that folks in government… are just not able to get anything done,” Harney said. Take reforming the GSEs: Fannie Mae and Freddie Mac. Should it be done? Will it be done? Considering the influence they have on the market, inquiring minds really want to know. Although he admits “Given the tone in Washington — the inability to get anything done — is probably good for the GSEs,” Stevens doesn’t see much of a long-term future for them. “I think Freddie and Fannie will be put out of 20 April/may 2012
business,” he said. In fact, he elaborated, “I think by the end of the year, Wells Fargo will do more business than Freddie Mac.” Sanders also expects the GSEs to be replaced with something, although he couldn’t say what. “I understand that we will end up with something like Fannie and Freddie,” he said, “I think it’s a fait accompli — I think it’s going to happen. But I’m scared.” His concern is that, just as they did a few years ago, private lenders will push the GSEs into backing risky loans. So, he said, “if you figure out a way to put a chastity belt on [Fannie and Freddie’s replacement], then OK.” Stevens wasn’t quite as worried, pointing out that “it wasn’t Fannie and Freddie’s 30-year fixed rate that screwed up the market.” For his part, Phipps was concerned that there be something solid in place: “There is a very important role for government, and that is to make sure the capital it available,” he said. “I think the average consumer... really likes the idea of having a 30-year mortgage.” Stevens didn’t disagree with the idea of a government-backed segment of the market. “You need to have some sort of functioning system in place at all times,” he said. “Private capital is opportunistic. Government capital provides a continuous presence.” On the other hand, he said, government “can’t just rush in when things go bad.”
Information underload Buyer education is another issue that came up repeatedly. Too many house-shoppers have, in the words of Funkhouser, “Unrealistic goals and misinformation.” And they’re also www.VARealtor.com
quick to point the finger… at someone else. “When things go wrong, they turn to us,” he said, “and a lot of times we get blamed.” They hear it’s a buyers’ market and jump to conclusions, then grouse when their unrealistic expectations aren’t met. “Buyers can’t afford where they want to live, or feel entitled to get a home at a certain price, or feel their first home should be their dream home,” said Deborah Baisden of Prudential Towne Realty in Virginia Beach, speaking for Realtors from the eastern part of the state. Funkhouser agreed. “We as Realtors need to be able to control the expectations of our clients.” Or, as Stevens put it, “Having facts matters.” There’s another thorn in Realtors collective sides: appraisal management companies. “For most of us in the room,” Phipps said, “it’s our number one daily challenge.” That’s because of the Home Valuation Code of Conduct. The HVCC was supposed to insulate appraisers from those who would try to influence their valuations. But it’s resulted in appraisal management companies that assign appraisers who lack “geographical competence” for an area — and pay them a lot less. While Phipps said that “a good independent appraiser can appraise any property,” he added, though, that “the independence of the appraisal is gone.” (His wife, he pointed out, is an appraiser.) “We’ve got to get back to where a consumer gets a true independent appraisal from an expert,” Phipps said. “I’d like to get back to the part where we had experienced appraisers who knew their markets.” There were more issues brought Volume 19 ● Issue 2
up: condo associations that haven’t renewed their FHA approval, hard-tofind financing, the fate of the mortgage interest deduction, and unemployment to name a few. But if nothing else, the forum reminded Realtors across the state that their frustrations and fears are shared, and they aren’t in this alone.
So what? As cathartic as venting frustrations can be, and as good as it feels to know you’re not alone, the fact is that talking about the various problems of the housing market doesn’t change the fact that those problems exist, and that no individual in the room is in much of a position to change them. But here’s a shameless plug: The fact that no one can change these things is the reason for Realtor associations — local, state, and national. You’re part of one of the strongest, most influential groups in the state and in the country. When we speak as one we speak very, very loudly. And we’ve been doing just that, on the local, state, and national level. The concerns expressed at the forum aren’t just shared by Virginians; they’re nationwide, and Realtor® associations are engaged in discussions to change them. So keep that in mind when you read about a call to action, or when someone asks for your support, or when there’s a meeting or a march or a campaign. You’ve told us what ails you. When the time comes, help us fix it. l
Join the nationwide Realtor Rally in Washington, D.C., on May 17. www.RealtorRally.org
If you figure out a way to put a chastity belt on Fannie and Freddie’s replacement, then OK. —Anthony Sanders
April/may 2012 21
agency
In July, some important changes are coming to Virginia’s agency law — the law that governs how Realtors® work with their clients. Before that happens, here’s a brief primer on what “agency” is all about. By Blake Hegeman Agency: It’s a simple word that describes a complex set of relationships that Realtors® engage in every day. Its complexity is evidenced by the volumes of books written about it, the fact that it is taught as a semester course in law school and, most importantly, the way it is misunderstood in everyday real estate practice. With that fact in mind, here’s a quick refresher on existing agency laws, some common scenarios, and a preview of upcoming changes. In the next issue of Commonwealth, we’ll delve fully into the statutory changes set to take place this July 1.
What is agency? Agency means every relationship in which a real estate licensee acts for or represents a person by such person’s express authority in a real estate transaction, unless a different legal relationship is intended and is agreed to as part of a brokerage relationship, such as an independent contractor. The agency relationship commences at the time that a client engages a licensee and requires the mutual agreement of the firm and client. That is an important point to remember: agency relationships are consensual. A listing agent cannot deem someone that walks into her open house as her client. There
must be a meeting of the minds concerning the nature of the relationship. It is important to remember that agency relationships must have a definite termination date or 90 days is assumed.
What are the forms of agency? There are two basic forms of agency: standard and limited service agency. Note that under Virginia law you are not limited to an agency relationship when representing a client. You can also represent a client in a non-agency relationship (i.e., as an independent contractor). Independent contractors are discussed below.
www.VARealtor.com
A standard agent has numerous mandatory statutory duties outlined in the Virginia Code. A few familiar examples are: •R eceive and present in a timely manner written offers and counteroffers between the sellers and purchasers, even when the property is already subject to a contract of sale; • Maintain confidentiality of all personal and financial information received from the client during the brokerage relationship, and any other information the client requests be kept confidential during the brokerage relationship, unless otherwise provided by law or the client consents in writing to the release of such information; and • Account in a timely manner for all money and property received in which the seller has or may have an interest. A limited services representative performs limited services selected by the client. This can only be done pursuant to a written brokerage agreement in which the limited service representative: • Discloses that he is acting as a limited service representative; • Provides a list of the specific services that he will provide to the client; and • Provides a list of the specific duties of a standard agent that the limited service representative will not provide to the client. The law requires that the disclosure be “conspicuous and printed either in bold lettering or all capitals, and shall be underlined or in a separate box.” Here’s an example of language that meets the disclosure requirement: “By entering into this brokerage agreement, the undersigned do hereby acknowledge their informed consent Volume 19 ● Issue 2
to the limited service representation by the licensee and do further acknowledge that neither the other party to the transaction nor any real estate licensee representing the other party is under any legal obligation to assist the undersigned with the performance of any duties and responsibilities of the undersigned not performed by the limited service representative.” Another form of representation is that of an independent contractor or non-agent. This is created by a written brokerage agreement that specifically states that the real estate licensee is acting as an independent contractor and not as an agent. The agreement must also state that the only obligations the independent contractor has are those agreed to by the parties in the agreement.
When do you need to disclose your brokerage relationship? The law states that a licensee must disclose any brokerage relationship that she has with a party to the transaction as soon as she has a substantive discussion about a specific property or properties with an actual or prospective buyer, seller, landlord, or tenant who is not her client and who is not represented by another licensee. Unfortunately, the term “substantive” is relative, and can create confusion as to what exactly constitutes such a conversation. Good judgment on the agent’s part must be exercised, because the requirement is that the “disclosure must be made in writing at the earliest practical time, but in no event later than the time when specific real estate assistance is first provided.” That’s confusing, so here is an example of how it works: You’re a listing agent who has
Agency Best Practices • Visit VAR’s Agency Center – it contains the most frequently asked questions about agency: VARealtor.com/agency. • Article 16 of the Code of Ethics makes it clear that prior to entering into a representation agreement, an agent must make reasonable efforts to determine whether a prospect is exclusively represented in the same type of real estate service. Please don’t forget: Always ask the prospect! • Take the time to explain all agreements and contracts to your clients; many headaches can be prevented by doing this up front! • Make sure to have multiple copies of the brokerage relationship disclosure form on hand at open houses to avoid disclosure issues with prospective buyers.
April/may 2012 23
You should have arrived at the open house with completed copies of a disclosure of brokerage relationship, indicating clearly that you represent Mr. and Mrs. Seller.
entered into a brokerage relationship – a ratified listing agreement – with Mr. and Mrs. Seller. You hold an open house. Mr. and Mrs. Buyer attend and express that they are actively seeking to purchase a home. They begin discussing the paint color in the living room – not a substantive conversation that requires any disclosure – but then transition to asking whether the Sellers might agree to paint the walls or reduce the price. At this point, you ask the Buyers whether they’re represented by an agent. They are not. This is when you must stop the conversation and provide Mr. and Mrs. Buyer with written disclosure of your brokerage relationship with the sellers. In fact, you should have arrived at the open house with completed copies of a disclosure of brokerage relationship, indicating clearly that you represent Mr. and Mrs. Seller. The sales transaction disclosure may be given in combination with other disclosures or provided with other information, but if so, the disclosure must be conspicuous, printed in bold lettering, all capitals, underlined, or within a separate box. And please remember that Article 9 of the Code of Ethics makes it clear that all agreements should, if possible, be in writing.
If you’re thinking of working both sides When an unrepresented purchaser is interested in a property that you have listed on behalf of a seller, there is a temptation to persuade that purchaser to be your client so you can keep the entire transaction in the firm and
represent both sides. Of course you should first consider representing just the seller and allow the purchaser to remain unrepresented in the transaction. But if you are seeking to represent both the purchaser and the seller, the two common ways of doing this are Disclosed Designated Agency and Disclosed Dual Agency. In either case, the buyer and seller must both agree in writing to enter into the dual or designated relationship before commencement of such relationship. Designated agency occurs when a principal or supervising broker assigns different licensees within the firm to represent the seller and buyer exclusively. In that case, the principal or other broker is considered a dual agent, while the agents have duties to their respective clients. That means the agents may not disclose (except to the dual agent broker) any personal, financial, or other confidential information they receive from their client. In other words, designated agents act very much like an exclusive buyer or seller agent – they represent one party in the transaction. Dual agency involves a licensee who has a brokerage relationship with both the seller and buyer, or both the landlord and tenant, in the same real estate transaction. A dual agent represents both sides generally. Dual agency is always more controversial and can be problematic. Like designated agency, the parties must agree in writing to enter into a dual agency relationship. However, dual agents are much more limited in what they can do for sellers and buyers. A
few examples are below: • Licensees are prohibited from advising either party as to the terms, offers or counteroffers; • The licensee cannot advise the buyer client as to the suitability of the property, its condition (other than to make disclosures required by law for seller agents), and cannot advise either party as to the repairs to make or request; and • The licensee cannot advise either party in any dispute that might later
arise relating to the transaction. In short, both clients are getting much less service for usually the same fee. The aforementioned caveats should have been disclosed to clients before entering into the dual relationship. However, in actual practice, agents may not be disclosing these caveats as clearly and thoroughly as the current law requires. That fact alone was a spark behind clarifications to agency law set to take effect this July. l
As mentioned earlier, substantial changes to Virginia agency law take effect July 1, 2012. In the coming months, VAR will provide a variety of resources to help you adapt to the revisions including, videos, webcasts, articles, new forms, and classes. Below is a preview of the changes:
• All agents must have written brokerage agreements with consumers they represent. These agreements must, at a minimum: Provide a list of services that the agent will deliver; Provide a schedule of fees that will be associated with service, and when payable; and Provide a definite termination date. • Dual agents must now provide, and have signed by the clients, a new form expressly describing the limitations on what dual agents can and cannot do for parties to a transaction. These are called “enhanced disclosures.” (There are exceptions for situations where existing clients come together in a common transaction and commercial transactions.) • Agents must take a three–hour course on the provisions of the agency statute and the changes made in the legislation. This means that if your current license expires after July 1, 2012, you may take the 3-hour agency course at any time, beginning right now. In fact, if your license expires in July 2012, you will need the course very quickly. However, if your license expires in February through June of 2012, you should wait to take the course until after you have renewed your license. You may take the course now, but you will need to take it again (for credit) in your next license cycle. You can find more information about the new agency laws at VARealtor.com/agency.
accessibletech ANDREW KANTOR
In hot water Let’s say you’re in a small boat on the water. It springs a bunch of leaks — most small, but one that’s pretty big. Which do you try to fix first? The big one, of course. So let’s talk about one big way of saving energy in a home — good for your (and your clients’) wallet and good for the environment. Yes, there are a lot of little holes
you can plug: Switch to LED or CFL bulbs. Turn your computer off at night. Unplug appliances when you’re not using them, and so on. But those are the small leaks. A better use of your time is to attack what may be the single biggest energy waster in a house: the hot water heater.
Use it or lose it
American Pacific’s timer is the only one to work with natural gas-powered hot water heaters.
Unless a home has an on-demand hot water system (which is a great idea, by the way), it uses a traditional setup, where a 30 to 50 gallon tank of water is heated to about 120 degrees, then pumped to the shower, washing machine, or what have you. When the water in the tank gets below that 120 degrees, the heater
Four more tips eel your hot water heater. F If it’s warm, wrap it in an insulating blanket that’s made for that very purpose. Just ask your local hardware store for water heater blankets, and get one with an insulation rating of R-11 or higher. You can install it yourself. Yes, you. Check the water heater’s thermostat. It should be set at 120 degrees, but many manufacturers will set them for 140. Besides a risk of scalding at the higher temperature, it wastes energy and can speed mineral buildup. (Note: If you’re unsure about the safety of your water
26 April/may 2012
— maybe it’s direct from a well — you may want to keep your tank at 140 degrees to kill any bacteria that may have slipped through.) Your heater will have a drain connector. Once or twice a year, open the valve and pour out a gallon or two of water. That will help remove any sediment that’s collected, and will keep the unit running efficiently. Wash your clothes with cold water. Unless you’ve got something incredibly greasy, warm or hot water won’t make a difference.
kicks in. The temperature can drop for two reasons: 1) you use hot water and 2) the hot water in the tank cools off over time. So at 2:00 AM, while you’re (hopefully) fast asleep, the hot water tank may have cooled off enough that the heater kicks in. In fact, depending on how well insulated the tank is, it might have to reheat that tank of water several times during the night, just in case you use it. And that’s a huge waste of energy and cash. You might be able to knock a noticeable amount off your utility bill — we’re talking $30 or $40 a month — by making sure the water heater doesn’t go on when it’s not being used. If you keep typical hours, you can probably shut the hot water from about 10:00 PM till, say, 6:00 AM. (You’ll still have 30 to 50 gallons of hot water at 10:01, of course. It just won’t make any more till morning.) That way, you’ll have enough hot water for a bedtime shower, but the system won’t bother heating and reheating the water all night long. In fact, depending on your schedule, you might find other stretches of time when you won’t need hot water — and thus don’t need to pay for it. There are a few ways to do this, depending on what kind of water heater you have.
Shut your valve If your hot water heater is electric, it’s simplicity itself. All you need to do is replace the cut-off wall switch www.VARealtor.com
with a timer that turns it off and on automatically. Note that this cutoff switch is not one that’s on the actual water heater. Any switch on the water heater itself is probably a special, heavy-duty switch. The one on the wall, though, controls less current than a light bulb, which is why it’s so easy to replace. You can get a digital timer switch (they’re made by GE, Honeywell, and others) at most hardware stores for about $30 — you’ll want a digital, seven-day programmable unit. You or your local handyman can install it in place of the existing switch in about 15 minutes. Still too much? Lowe’s sells the $30 Utilitech Digital Timer and Home Depot (among others) has the similar AutoChron Wireless Programmable Wall Switch Timer. They’re battery-powered timers that simply fit over a standard wall switch. No messing with the wires; they just replace the plastic wall plate in about 30 seconds with a single screw. If you don’t have a wall cut-off switch, you’ll need to talk to a handyman or electrician who can install a timer directly into the water heater’s wiring. It’s actually a fairly simple job (I speak from experience) that takes maybe a couple of hours, and the timer itself will run about $60. It’ll pay for itself in a few months, tops. If your water heater is powered by propane or natural gas, your choice is limited. In fact, it’s apparently limited to a single product: The Volume 19 ● Issue 2
$100 Gas Water Heater Timer from American Pacific (gaswaterheatertimer.com). You’ll need a plumber to install it — you do not want to be messing with gas piping — but, again, it will pay for itself in less than a year. Whatever kind of timer you get, program it to turn the switch off at, say, 10:00 every weeknight, and turn it on about an hour before you wake up. You’ll always have hot water when you need it, but
your water heater won’t be wasting energy keeping the water hot all night long. l
Utilitech’s timer (left) fits over an existing switch; GE’s replaces it. Both let you program your water heater to shut overnight.
It’s not just a way to live. It’s a way to thrive. Expand your business with the newly revised NAR Green Designation
We’re excited to launch the new, completely residential-focused NAR Green Designation. The innovative program will get you up to speed on the latest advancements in the green industry and homes with green features, showing you how to leverage sustainable practices for your clients and your business. Green your practice, and your bottom line. Sign up for the new program today at GreenREsourceCouncil.org! EDUCATION PROVIDER NAR’s Green Designation courses are part of the USGBC Education Provider program and count as credit toward LEED® credential maintenance.
April/may 2012 27
rpacreport As of February 15, 2012, 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 Jay DeBoer at jay@VARealtor.com or (804) 264-5033. Or, if you want to get invested today, please visit www.realtorschoose.com/contribute.
Golden R Investors ($5,000)
Crystal R Investors ($2,500)
Charles Burnette Burnette Real Estate Sales, Blacksburg
Billy Chorey Chorey & Associates Realty, Suffolk
John Dickinson Hall Associates Inc., Union Hall
Joe Funkhouser Coldwell Banker Funkhouser, Harrisonburg
Dorcas HelfantBrowning, Coldwell Banker Professional, Virginia Beach
Forrest Odend’hal Long & Foster Real Estate, Gainesville
Jane Quill RE/MAX Presidential Fairfax
Thomas Jefferson, III Joyner Fine Properties Richmond
John McEnearney McEnearney Associates, Inc., Alexandria
John Powell Long & Foster Real Estate, Inc. Colonial Heights
Melanie Thompson Century 21 AdVenture Realty, Fredericksburg
Jack Torza Long & Foster, Realtors® Mechanicsville
Trish Szego ERA-Elite Group, Realtors®, Fairfax
Bill White Joyner Fine Properties Richmond
Katy AllenbaughRichards First American Home Buyers Protection, Midlothian
Betsy Atkinson ERA Atkinson Realty, Virginia Beach
Golden R Associations ($5,000)
Sterling R Investors ($1,000)
•N orthern Virginia Association of Realtors®, Fairfax • R ichmond Association of Realtors®, Richmond • R oanoke Valley Association of Realtors®, Roanoke • W illiamsburg Area Association of Realtors®, Williamsburg
See how your RPAC investment is paying off: Visit www.RealtorsChoose.com! 28 april/may 2012
Bob Adamson McEnearney Associates, Inc., Arlington
Guy Allen One Stop Realty, Woodbridge
www.VARealtor.com
WHY I INVEST
Sterling R Investors ($1,000)
Deborah Baisden Prudential Towne Realty Virginia Beach
Jim Barb Jim Barb Realty, Inc. Winchester
CC Bartholomew Long & Foster Real Estate, Inc., Manassas
Mary Bayat Bayat Realty, Inc. Alexandria
Mary Ann Bendinelli Weichert, Realtors® Manassas
Laura Benjamin Roanoke Valley Association of Realtors® Roanoke
Brad Boland Keller Williams Realty Reston
R. Scott Brunner Virginia Association of Realtors® Glen Allen
I invest in RPAC Pat Buck McEnearney Associates, Inc. McLean
Robyn Burdett RE/MAX Allegiance Fairfax
Peggy Burke Long & Foster Real Estate, Woodbridge
Joe Carney William E. Wood & Associates Virginia Beach
because I can count on it to stand up for my business and for the homeowners I represent.” — Scott Shaheen, Regional Vice President, Long & Foster Real Estate, Inc. Longtime Sterling R
Dale Chandler Greg Garrett Realty Newport News
David Charron MRIS Rockville, MD
Volume 19 ● Issue 2
Flo Chittenden Long & Foster Real Estate Inc., Manassas
Vic Coffey Re/Max All Stars Realty, LLC., Daleville
VAR’s lobbying can only be as effective as the REALTOR® support behind it. RPAC and VAR work everyday to ensure that your business, and your clients, are protected from laws that threaten the American dream of homeownership.
Visit RealtorsChoose. com/RPAC-101 to watch a video of Scott tell you what inspired him to become an RPAC investor.
april/may 2012 29
Sterling R Investors ($1,000)
Billy Coons Olde Virginia Realty Suffolk
Tracy Comstock Comstock Realty and Investment, Alexandria
Hugh Cross Cross Management Suffolk
Beth Dalton Long & Foster Real Estate, Inc., Blacksburg
John Daly Rose & Womble Realty Company Virginia Beach
Benton Downer Downer & Associates Charlottesville
Mary Dykstra MKB, Realtors速 Roanoke
Sandee Ferebee Prudential Towne Realty, Virginia Beach
Claire ForcierRowe Coldwell Banker Elite Fredericksburg
Virgil Frizzell Long & Foster Real Estate, Reston
Bev Frowen Long & Foster Real Estate, Inc. Manassas
Libby Gatewood ERA Realtors速 Napier Colonial Heights
Bill Gearhart Coldwell Banker Townside, Roanoke
Charlee Gowin Prudential Towne Realty, Virginia Beach
Art Grace Hunzeker & Lyon, PC, Manassas
Lynn Grimsley RE/MAX Peninsula Newport News
George Grundy George Grundy & Associates Realty Petersburg
Kit Hale MKB, Realtors速 Roanoke
Margaret Handley M.C. Handley, Ltd. Falls Church
Terrylynn Harrell Exit 1st Choice Realty Woodbridge
Bill Hernandez Keller Williams Realty Manassas
Liz Hernandez Keller Williams Realty Manassas
Jeanne Hockaday Virginia Country Real Estate, Ordinary
Nathan Hughes Bandazian & Holden Richmond
Rusty Hulett Keller Williams Realty Chesapeake
Phillip Innes RE/MAX Commonwealth, Richmond
Tom Innes RE/MAX Commonwealth, Richmond
Donn Irby Rose & Womble Realty Chesapeake
30 april/may 2012
www.VARealtor.com
Sterling R Investors ($1,000)
Tom Jewell Carter Braxton Preferred Properties Leesburg
Jo Anne Johnson Westgate Realty Group, Inc. Falls Church
Sita Kapur Arlington Premier Realty, Arlington
Kathleen Kennedy Long & Foster Real Estate, Vienna
Karen Kidwell Long & Foster Real Estate, Reston
Betty Kingery Mountain to Lake Realty, Rocky Mount
Pat Kline Avery Hess, Realtors® Springfield
Jody Korman RE/MAX Commonwealth, Richmond
Ed Krauze, Greater
Vonda Lacey Lacey Real Estate Group, Fishersville
Natalie Langford Realty Negotiations Winchester
George Lyons Long & Foster Real Estate, Woodbridge
Nakita Mattocks Vision Real Estate Services, Woodbridge
Keith May Kline May Realty Harrisonburg
Washington Commercial Association of Realtors®, Silver Spring, MD
Glenda McDaniel Long & Foster Hales Ford Bridge, Moneta
Susan Mekenney RE/MAX Allegiance Fairfax
Tom Meyer Condo 1, Inc. Arlington
Jay Mitchell William E. Wood & Associates Chesapeake
Percy Montague Montague Miller & Co., Charlottesville
Thomas Moore Olde Virginia Realty, Suffolk
Fred Morgan 1st Choice Real Estate Staunton
Roger Nakazawa Olympic Realty, Inc. Vienna
Gwen Pangle Pangle & Associates, Leesburg
Gail Penman William E. Wood & Associates, Virginia Beach
Fatima PereiraShepherd Long & Foster Real Estate, Inc., Manassas
Bobby Perkins Long & Foster Real Estate, Inc., Colonial Heights
Tracy Pless Long & Foster Real Estate, Reston
Anne Rector Long & Foster Real Estate, Alexandria
Volume 19 ● Issue 2
april/may 2012 31
Sterling R Investors ($1,000)
Zinta RodgersRickert, RE/MAX Allegiance, Fairfax
Mario Rubio Rubio Real Estate Annandale
Fetneh Schacht Long & Foster Real Estate, Vienna
Henry Scholz Hall Associates, Inc. Roanoke
Karen Smith RE/MAX Commonwealth, Richmond
Katrina Smith Long & Foster/Webber & Associates, Winchester
Trish Snyder Coldwell Banker Four Seasons, Mt. Jackson
Cindy Stackhouse Century 21 Stackhouse & Associates, Dumfries
Wes Stearns MO Wilson Properties, Inc., Woodbridge
Minnie Stevenson 1st Choice Real Estate Staunton
Suzy Stone Century 21 AdVenture Realty, Fredericksburg
Mack Strickland Strickland Realty Chester
Pat Sury Montague Miller & Co., Charlottesville
Christine Todd Northern Virginia Association of Realtors®, Fairfax
Karen Trainor Weichert Realtors®, Ashburn
Kevin Turner Century 21 All-Service, Bedford
David Wilkey William E. Wood & Associates, Chesapeake
John Wilson Coldwell Banker Traditions, Williamsburg
Shanna Wiseman Parr & Abernathy Hopewell
Jon Wolford Long & Foster Real Estate, Springfield
Sterling R Associations ($1,000) • G reater Augusta Association of Realtors®, Staunton • H arrisonburg-Rockingham Association of Realtors®, Harrisonburg
• L ynchburg Association of Realtors®,Lynchburg
32 april/may 2012
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.
www.VARealtor.com
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 8:30 a.m. to 5:00 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 Erika Almstead Professional Standards Administrator erica@VARealtor.com
If you’re interested in marketing or advertising opportunities Ask for Christine Hodges Marketing and Communications Mgr. christine@varealtor.com
To reach our Legal Hotline
If you’d like to have someone speak at your association or brokerage
To find out about conferences, seminars, and professional education
Ask for Lynne Wherry Director of Member Outreach lynne@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 and Information Manager andrew@varealtor.com
See your member discounts at www.VARealtor.com/ discounts
Liberty Mutual, home, auto, and renters insurance Pearl Insurance, E&O, medical, life, and dental insurance
* You must register first at
Phone Tag, voice to e-mail transcription Realtors Federal Credit Union T-Mobile, wireless service UPS, shipping and more
Our CEO is Scott Brunner (804) 249-5702 scott@varealtor.com
Volume 19 ● Issue 2
Ask for Jay DeBoer Vice President of Law and Policy jay@varealtor.com VAR 2012 Leadership Team
Trish Szego, CRB, CRS President ERA-Elite Group, Haymarket (703) 359-7800; trishszego@gmail.com
VAR Member Service Partners
Call (804) 622-7955* VARealtor.com/LegalHotline
For information about RPAC
Zipform, electronic forms solutions Roost, social media management platform
Mary Victoria Dykstra, ABR, CRS President-Elect MKB, Realtors®, Roanoke (540) 989-4555 mvdrltr@aol.com Bradley Boland Vice President Keller Williams Realty, Reston (703) 437-1717 bradleyboland@gmail.com John Daly, SFR Treasurer Rose & Womble, Virginia Beach (757) 486-8800 jdaly@roseandwomble.com John Dickinson, CCIM, GRI Immediate Past President Hall Associates, Union Hall (540) 982-0011; jrdickinson@cs.com R. Scott Brunner, CAE Chief Executive Officer (804) 264-5033; scott@varealtor.com
April/may 2012 33
lastword SCOTT BRUNNER
Collaborators driven to compete, and the Realtors® who want to love them My 16-year-old is learning to drive, but not from me. That’s because I — at least according to my nauseatingly law-abiding wife — am something of a highway menace. And I can live with that (the not-teaching-to-drive part, not the menace part) because frankly, I’m also the nervous type, at least where 16-year-olds steering heavy, expensive, rolling assets are involved, and no amount of auto insurance is enough to relieve me of those particular jitters. It’s not that the 16-year-old in question, my daughter Claire, is proving to be a bad driver. To the contrary, in fact. But when it comes to driving proficiency, I adhere to George Carlin’s (unfailingly subjective) code, to which only the most intrepid of drivers measure up. It goes something — and rather circuitously — like this: 1. I’m the role model for other drivers. 2. Those who drive more slowly than I do are (to put it kindly) simple-minded nitwits. Those who drive faster: Maniacs. 3. Those who daily commit a range of petty vehicular etiquette faux pas, from failing to signal a turn, to misunderstanding the concept of a four-way stop, to being overly permissive in giving pedestrians the right-of-way (I find they seem to move faster when you rev the gas), to doing any little thing that impedes my 34 April/may 2012
progress toward my destination: Idiots, all of them. 4. On the other hand, I am the apotheosis of behind-the-wheel temperance, efficiency, and safety. I am gridlock’s solution, not its cause. 5. Ergo … I’m the role model for other drivers. ••• I wonder if that same sort of circular, if-you’re-not-me-you’rea-moron mindset doesn’t at times characterize the relations between the sister tiers of the Realtor® organization — the local, state and national associations. Each level works so hard to deliver value to you and wants so badly to be valued by you that it’s easy sometimes for us to view your affections (as it were) as a zero sum game. If you really treasure your local association, that diminishes your appreciation for VAR or NAR, right? And vice-versa? “You should love us,” each level seems to say, “We’re better than those other bozos up or down the chain.” It’s sort of third-grade when you think about it. And yet your local, state, and national associations can risk duplicating services or bickering or just generally competing for what we misperceive as your limited attention, when what we should be doing is collaborating, delivering services to you that fit each level’s strategic role and geographic footprint — and realizing at
the end of the day, we sink or swim together. In truth, you thrive as a member based in part on the collective, collaborative efforts of all three sisters, not just one or the other. ••• Claire’s mother has handled the bulk of her driver’s education thus far, and as Claire improves, my comfort level in riding along with her grows. “You and Mom are in lock-step on that,” she sighs when I offer her a bit of unwelcomed navigational criticism. Which is fine. We role models need to stick together. l VAR CEO Scott Brunner calls himself an assertive driver… whatever that means. Reach him at scott@varealtor.com www.VARealtor.com
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