2013-02-Commonwealth by Virginia REALTORS®

the fights on capitol square (P. 28) • Don’t be that guy (p. 30) February/March 2013

A journal for real estate professionals published by the Virginia Association of REALTORS® • www.VARealtor.com

The Real Estate Numbers Game: What Matters, What Doesn’t

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PUBLISHED BY THE VIRGINIA ASSOCIATION OF REALTORS® The Business Advocate for Virginia Real Estate Professionals Mary Dykstra, ABR, CRS President Roanoke Bradley Boland President-Elect Reston Deborah Baisden, GRI Vice President Virginia Beach Bill White Treasurer Richmond Trish Szego, CRB, CRS Immediate Past President Haymarket 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 supplement to our print magazine, published twice each month.

Follow and friend us! VARealtor.com/twitter VARealtor.com/facebook VARealtor.com/linkedin the fights on capitol square (p. 28) • Don’t be that guy (p. 30) February/March 2013

A journal for real estate professionals published by the Virginia Association of REALTORS® • www.VARealtor.com

The Real Estate Numbers Game: What Matters, What Doesn’t

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VOLUME 20 ISSUE 1 VARealtor.com/Commonwealth

Trust ... but verify Once upon a time, I was a mildmannered business reporter for a great metropolitan newspaper. My beat was technology, but we all took turns writing up the small, general stories that came through. One of those was the monthly unemployment report. About reporters: A good one will always look for a different angle to write about, especially in the Internet age when so many people can see the same stories. Typically I would simply write a short piece based on the Bureau of Labor Statistics numbers and that was that. But at one point — sometime in 2007 — I pulled up the BLS’s actual numbers to see if there was a more-interesting angle. Maybe I could write about 20-something Laotian men doing particularly well or something. When I ran the numbers I found that the overall unemployment rate in the data didn’t jibe with the press release. The number everyone was reporting (at the time I think it was something like 5.1 percent) was significantly lower than the “real” number. The culprit was a BLS practice going back years: The bureau didn’t count as “unemployed” any jobless people who had used up their benefits. So a significant number of people who had been out of work a long time weren’t being figured into the equation. Naturally, I reported the real number. No more reprinting press releases.

From then on, I trusted no one until I checked out the numbers. “The largest family-owned business in the area,” you say? What “area” do you mean? You’re bringing 250 jobs to the region? Great. What’s the median salary*? Are they full-time? Are they permanent? (Quite often the answer to the last two was “Um… not at first.” That’s rather important.) I continue to carry that cynicism whether the source is the government, NAR, a private company, or wherever. It doesn’t serve my ‘customers’ — Virginia Realtors — to report less than as accurately as possible. That’s why this year’s numbers issue is focused not on what all the data are, but on how to get more out of them — how to have a healthy dose of cynicism without becoming a cynic. Real estate numbers come from all quarters. It’s easy to be overwhelmed, or to simply take them at face value. Don’t. Read inside for a quick lesson on what to look for — and how many grains of salt to add. ●

Andrew Kantor, Editor andrew@VARealtor.com *Not average, where one high-paid exec would skew things, especially if the rest were minimum-wage positions.

FEBRUARY/MARCH 2013

10231 Telegraph Road, Glen Allen, VA 23059-4578

FEBRUARY/MARCH 2013 VOLUME 20 ● ISSUE 1

contents

departments 4 quickhits The latest news and announcements for Virginia’s Realtors®

8 statswatch The numbers that shape your world

10 legallines Questions and answers about Virginia real estate law

14 lifelessons When real estate pros break the law ... and get caught

18 formfactor DPOR’s new paperwork and forms for real estate agents and brokers

features

Don’t be fooled by numbers — check out our guide to real estate statistics. Know which ones matter, and which to take with a grain of salt.

30 accessibletech Do your messages annoy the people who get them? You might be surprised

in every issue 1 firstword 32 rpacreport

How to pick and understand the real estate numbers that matter most

VAR’s 2013 Legislative Agenda The 2013 General Assembly is now in session. Read the bills we’ve introduced — and why they’re critical for your business.

35 contactvar 36 VARworks APEX Award of Excellence winner 2

FEBRUARY/MARCH 2013

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implement versus trying to build my own from scratch. all ll of those things came "in the box" with my EXIT Realty franchise. I have experienced phENOmENaL gROwTh wTh with my agency and I was the 3rd fastest growing brokerage in Chicago in 2011. we have training, TEChNOLOgy, and transaction management all from EXIT Realty Corp. International and my job is to implement and promote the systems rather than invent them all together. It's been fantastic working in a collective

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quickhits

ANDREW KANTOR

Mortgages

New mortgage rules from CFPB aim to protect consumers, reassure lenders The Consumer Financial Protection Bureau has released its Qualified Mortgage (QM) rules. They take effect in January 2014 and set minimum qualifications for borrowers — at least if lenders want government backing and protection from consumer lawsuits. Put another way: For the vast majority of loans, this will be the standard for borrowers to meet. There are two levels to the rules: Ability to Pay and Qualified Mortgages.

tl;dr — Too long, didn’t read? Here’s the absolute minimum you need to know for your clients. •N ew qualified mortgage (QM) rules from the CFPB will be the standard for most mortgages. They take effect next January. • S maller lenders will likely have more leeway with approving loans. • L enders will continue to make detailed examinations of borrowers’ income, credit, and expenses. •A borrower’s debt-to-income ratio must be 43% or lower (although rural areas may have some flexibility). •N o more loans more than 30 years, or points/fees of more than 3%. •T he new standards allow for both prime loans (lower cost, more bank protections) and sub-prime loans (higher cost, more consumer protections).

Ability to Pay Ability to Pay is the standard that all new mortgages must meet. As the CFPB explained, “[L]enders too often offered mortgages to consumers who could not afford them.” There are eight things a lender must consider by looking at consumers’ financial records and verifying them: • Current income or assets; • Employment status; • Credit history; • The monthly payment for the mortgage; • Monthly payments on any other loans associated with the property; • The monthly payment for other mortgage related obligations (such as property taxes); • Other debt obligations; and • The monthly debt-to-income ratio the borrower would be taking on. 4

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Further, lenders have to consider the borrowers’ ability to pay over the longer term — five years — not just during a teaser-rate period.

Qualified Mortgages OK, those rules apply for every loan. But if a lender wants a mortgage to be “eligible to be purchased, guaranteed, or insured by” the Federal government (e.g., Fannie, Freddie, HUD, VA, etc.), that loan must also meet the CFPB’s Qualified Mortgage standards. The important ones: No excess upfront points and fees: Points and fees are fine, as long as they are for the loan itself, not “to compensate loan originators, such as loan officers and brokers.” And they cannot exceed three percent of the total loan amount in most cases.

No “toxic” features: Terms can’t exceed 30 years; interest-only and negative-amortization payments (where the principal amount increases) are banned. Debt-to-income limit: A borrower’s debt-to-income ratio must be less than or equal to 43 percent. (But also see “When less is more.”)

Diff’rent strokes Keeping those rules in mind, the CFPB created two types of QMs: prime and sub-prime. Why? Consumer groups wanted borrowers to be able to challenge a lender that didn’t underwrite properly, while lenders wanted a “safe harbor” from lawsuits if it followed the rules. So the CFPB did something for everyone. Sub-prime QMs: higher priced, but borrowers can challenge. www.VARealtor.com

These loans are for folks with lower credit ratings. They still meet all the standards, but if the borrower ends up defaulting, he can can attempt to prove that the lender shouldn’t have qualified him. This is known as “rebuttable presumption,” meaning the lender is presumed to have complied; the borrower must prove otherwise. If he does, the government can require the lender to buy back the loan. Prime QMs: lower priced, with safe harbor for the lender. These are for your less-risky consumers. With these loans, if the lender meets the QM underwriting criteria it has “safe harbor” — the government can’t force the lender to buy back the loan if the borrower defaults. Finally, there’s a temporary exception to that 43-percent rule. CFPB was concerned that there are loans that might not meet the specific QM requirements, but still qualify for government backing. “[S]uch loans are better evaluated on an individual basis under the ability-to-repay criteria,” it wrote. So the bureau created a

temporary category of loans “that have more flexible underwriting requirements” but still satisfy the general QM rules; this will be in effect for the next seven years (or less, if Federal agencies issue their own guidelines) and the details will be available soon.

Higher cost, tighter restrictions On the heels of its definition of qualified mortgages, the CFPB also released its new rules for high-cost mortgages, defined thusly: • A first mortgage with an APR more than 6.5 percentage points higher than the average prime offer rate. • A second mortgage with an APR more than 8.5 percentage points higher than the average prime offer rate for a similar mortgage. • A mortgage for less than $50,000 for a personal property dwelling (e.g., a mobile home) with an APR more than 8.5 percentage points higher than the average rate for a similar mortgage. • A loan for less than $20,000

where the points and fees are more than either eight percent of the loan or $1,000. • A loan for $20,000 or more where points and fees are more than five percent of the loan. And here are some of the notable new rules that apply: • Consumers must obtain housing counseling before they can take out a high-cost mortgage. • Balloon payments are banned. • Borrowers cannot be penalized for paying off these loans early. • Late fees are capped at four percent of the past-due payment. • Lenders cannot charge fees for modifying the loans. • Closing costs cannot be rolled into the loan amount. • Lenders can only charge limited fees to provide consumers with payoff statements. • Certain high-priced loans will require the lender to establish a five-year escrow account (instead of one year, which is required today).

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When less is more: benefits for small lenders Within the new rules released by the CFPB — and in its proposed amendments to those rules — are some key benefits for smaller lenders such as community banks and credit unions. When it comes to high-cost loans, especially those with balloon payments, lenders that make at least half their mortgages in rural counties are exempt from the new rules. So, too, are those in areas with two or fewer major mortgage lenders. And the CFPB has proposed that, for banks with less than $2 billion in assets — and that keep the loans on their books — be exempt from that 43 percent debt-to-income ratio requirement. (Ditto for “certain nonprofit creditors that work with low- and moderate-income consumers” and “certain homeownership stabilization programs.”) Pointing out that “Community banks and credit unions did not cause the financial crisis,” the CFPB is hoping the exemptions not only help those smaller lenders, but also ensure that residents of low- and moderate-income communities are able to get home loans. Volume 20 ● Issue 1

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quickhits Government in action

What the “fiscal cliff” deal means for real estate So Congress sorta kinda reached a deal to avert the “fiscal cliff” — well, at least for a year. Pick your favorite reliable news source to read how it affects most things; we’re just going to look at real estate issues here. There are some provisions of the bill that affect real estate specifically, and others that affect tax deductions in general (including the mortgage interest deduction). Here are the most notable.

Real-estate specific things: Someone who has had part of his mortgage principal reduced — e.g., by a short sale or loan modification — will not have to pay taxes on that reduction… at least if it happens before January 1, 2014, when that provision will expire. Homeowners who earn less than

$110,000 annually can continue to deduct any mortgage insurance premiums through 2013; it was also made retroactive for 2012.

General things that may affect real estate for the very wealthy: If you earn more than $250,000 ($300,000 for couples), you have a limit on the total value of your tax deductions — that includes the mortgage interest deduction. The more you earn over $250,000, the less you can take in itemized deductions. • I f you earned $251,000, for example, you would reduce your itemization by $30. • I f you earned $300,000, you would reduce your itemization by $1,500. • I f you earned $500,000, you

would reduce your itemization by $7,500. So it’s noticeable for the very wealthy, but not earth shaking. (These limits aren’t actually new. They were originally put into place during the first Bush administration back in 1990, but were phased out starting in 2001.) Capital gains that put you above $400,000 in income will now be taxed at 20% instead of just 15%, except for the sale of your principal residence. That’s still exempt — at least up to $250,000 in profit ($500,000 for couples). You can leave your estate of up to $5 million ($10 million for families) to your kids, and they won’t pay any tax. Anything you leave above that $5/$10 million, though, will be taxed at 40%.

Personal finance

Zillow: Almost 30% of homeowners are mortgage free When the folks at Zillow did their analysis, they found that “Almost 21 million Americans, or 29.3 percent of homeowners, own their homes outright.” Unfortunately, only one Virginia-area city was mentioned specifically in the report, and that was for having a low number of mortgage-free homeowners: Washington, D.C., with the lowest percentage in the country at 15.5 percent.

“ 6

A number of elements influence the percentage of free-and-clear homeowners in a given area, including median home values. Zillow found that areas with lower home values generally have higher outright homeownership rates, as smaller loan amounts are easier to pay back more quickly.”

february/march 2013

www.VARealtor.com

Economic effects

Distressed sales having less of an effect Some good sales news courtesy of economics blog Calculated Risk. Specifically, it shows that not only are sales increasing (as we already knew), but much of that increase is coming from conventional sales as opposed to distressed sales. For example, as economist Bill McBride put it, while NAR reported that sales in general were up 14.5% in November (year over year), conventional sales were actually up almost 21%. Further, he explained, “the percent of distressed sales over the last 6 months is at the lowest level since mid-2008, but still very high. This is the lowest percent of distressed sales for November since 2007.” Related to that, McBride also looked at the ratio of

sales of new homes compared to used existing homes over the past 18 years or so. Before the market collapse — going back at least to 1994 — for every new home sold there were about six existing-home sales. I.e., there was a 6:1 ratio of existing to new homes. Thanks to all the distressed homes hitting the market starting in 2008-ish though, that ratio shot up as new homes took a hit. From late 2009 until mid 2011, more than 14 existing homes sold for every new home. Eventually we’ll (probably) get back to that 6:1 ratio of existing to new homes, and — coincidentally — to a lower percentage of distressed sales. But that’s going to take time. The recovery is still a work in progress.

Eminent domain

Demographics

Henrico loses eminent domain case

Migration to Virginia slowing, but DC remains popular

Henrico County has lost an eminent domain case brought by a developer who had a chunk of her land acquired/seized by the county. A jury unanimously awarded the the (former) property owner an additional $236,750 for the land, which had been taken as part of a road-extension project. Quickly put: • Emily Sterling owned a half-acre plot — acquired by her father in 1997 — at what is now a rapidly growing section of western Henrico. • The county offered Sterling $126,000 for the 1/5th of an acre it needed for the project. • Sterling declined, but offered the full half acre to Henrico for $253,000. • The county said no and took its 1/5th acre via eminent domain. • Sterling sued, contending that not only was the price too low, but by taking only part of the parcel what’s left couldn’t be developed. • The jury agreed, awarding her $236,750. So Henrico ended up paying $362,750, not counting legal fees. And another, similar case is pending against the county. Volume 20 ● Issue 1

Moving giant Atlas Van Lines keeps track of which states have people moving in and which have people moving out. It found that Virginia, which had been an “inbound” state in 2011 became “balanced” in 2012. (That is, about the same number of households moved in as moved out.) This is despite the fact that mid-Atlantic coastal states like ours are, along with the Southwest, the most popular place to move. Well, maybe the other mid-Atlantic coastal states are; North and South Carolina were both in the top five. Meanwhile, both Atlas and United Van Lines found Washington, D.C., as the most popular destination — in Atlas’s case for the seventh consecutive year — with 63 percent of moves being inbound. l

february/march 2013

statswatch

ANDREW KANTOR

Virginia housing 2012: the year in review Our end-of-year data for 2012 is in, and it tells many stories — all of them showing a housing market that continues to recover steadily. Here are a couple of charts we wanted to feature, but we have lots more data and analysis in our annual report, “Pieces of Home.” It includes details charts on a wide variety of Virginia housing stats from 2012, with expert commentary from across the Commonwealth. Grab your copy at VARealtor.com/homesales.

What’s selling Here’s a telling trend: Sales were up almost across the board in 2012 compared to 2011, with one notable exception. Homes priced at less than $100,000 saw sales drop in 2012, and sales of homes between $100,000 and $200,000 were virtually unchanged. What does that mean? It means that we’re seeing

distressed sales drop (they tend to be at the lower end of the market) while traditional sales continue to climb. Big jumps in the sales of mid- and higher-priced homes are good news for the long term — they allow people in moderately-priced homes to move up, and thus keep the market moving.

Change in sales by price, 2011 to 2012

$2M+ $1.5M-$2M $1M-$1.5M $750K-$1M $500K-$750K $400K-$500K $300K-$400K $200K-$300K $100K-$200K

2012

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0 ,00 25

0 ,00 20

0 ,00 15

0 ,00 10

5,0 00

0-$100K

2011

www.VARealtor.com

The trend in month-to-month numbers In general it’s better to watch year-to-year numbers to get the bigger picture. But here’s a case where 12 monthly ﬁgures give a clear indication of an improving economy. If you look at the graph showing 2011 vs. 2012 sales, it doesn’t look like much at ﬁrst; there’s barely a gap between the two years. But there is a gap, and that’s the point. Except for March (which was about equal year to year), every month in 2012 saw an increase over 2011. The message we can take is that the recovery isn’t a sporadic thing — it’s solid and it’s continuing. ●

Change in Home sales 2011 vs 2012 12,000 10,000 8,000 6,000 4,000 2,000

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Keep up (and impress your clients) with the Virginia Home Sales Report from VAR. Find the latest monthly and quarterly report data in a colorful, printable format, at VARealtor.com/homesales.

VOLUME 20 ● ISSUE 1

FEBRUARY/MARCH 2013

legallines BLAKE HEGEMAN

Disclosures make the Realtor Virginia Realtors’ disclosure obligations are governed by state law and the Realtor Code of Ethics (not to mention the simple idea of doing the right thing). The Legal Hotline gets plenty of questions about what needs to be disclosed and when; here are some common ones.

Listing agents must disclose material adverse facts pertaining to the physical condition of the property of which they have actual knowledge to the buyer. Do I, as the listing agent, have a duty to discover these facts? For example, am I required to investigate whether a house has defective piping? A: No, you have a duty to disclose material adverse facts of which you

have actual knowledge – not to discover the adverse facts. If the seller doesn’t tell you about the problem, or it’s not obvious, you have no way of knowing about the condition and do not have a disclosure obligation. This is not to suggest you should ever discourage your client from telling you of adverse facts. Oftentimes, problems may be corrected up front instead of days before closing. Article 2 of the Realtor Code of Ethics provides further guidance on your discovery obligations. Realtors shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction. Realtors shall not, however, be obligated to discover latent defects in the property, to advise on matters outside the scope of their real estate license, or to disclose facts which are confidential under the scope of agency or nonagency relationships as defined by state law. (Amended 1/00) And Standard of Practice 2-1 clarifies: Realtors shall only be obligated to discover and disclose adverse factors reasonably apparent to someone with expertise in those areas required by their real estate licensing authority. 10 february/march 2013

I am the listing agent and my client told me the house was connected to the public sewer system. I included that information in the MLS. Several months after closing the buyer contacted my firm with the news that the house was not on public sewer and the septic system just drenched his front yard. Do I face any liability? A: No. In 2011 VAR supported

legislation to limit your liability in such cases, specifically, section 54.1-2142.1 of the Virginia Code, “Liability for false information”: …[A] licensee shall not be liable for providing false information if the information was (i) provided to the licensee by the licensee’s client; (ii) obtained from a governmental entity; (iii) obtained from a nongovernmental person or entity that obtained the information from a governmental entity; or (iv) obtained from a person licensed, certified, or registered to provide professional services in the Commonwealth, upon which the licensee relies, and the licensee did not (a) have actual knowledge that the information was false or (b) act in reckless disregard of the truth.

www.VARealtor.com

When does the Virginia Residential Disclosure Statement have to be provided? A: The law requires the disclosure

to be given to the buyer before contract ratification. Virginia law says, “The owner … shall deliver to the purchaser the written disclosure statement required by this chapter prior to the acceptance of a real estate purchase contract ….” If this is not done, and the seller delivers the disclosure after the execution of a contract, the purchaser has three days after receipt of the disclosure (or, if it was mailed, five days after the postmark) to rescind — but not later than settlement. Thus the statute affords buyers the opportunity to know of issues (e.g., sex offenders) and to check things out before being bound by the contract.

I am a buyer’s agent on a foreclosed property owned by a bank. Before it will sign an offer to purchase, the seller is requiring the buyer to sign a lead-based paint form that has not been filled out or signed by seller; likewise the disclosure form. How do I handle this? A: The seller wants your buyer to make the seller’s disclosures to him-

self? This is not good, and your buyer should not do it. How on earth will your buyer fill out the lead paint disclosure, for example? When it asks whether the seller is aware of any lead paint hazards, or has copies of reports, how will the buyer fill that in? Furthermore, when the buyer signs, he’s signing that he has received the disclosure required by law. He has not received it, of course, and to say that he has might work a forfeiture of his right to allege later that he did not get what the law required. Requiring the buyer to fill out the seller disclosures or to sign the blank lead paint and disclosure forms before the seller fills them out is dangerous for the buyer, and, frankly, ridiculous for the seller to require.

What is the purpose of VAR’s “Summary of Rights and Obligations of Sellers and Purchasers Under the Residential Property Disclosure Act” form? A: It’s a form we at VAR have prepared to assist agents

There was a mold problem that was remediated by a qualified professional; do I as the listing agent have to disclose that? A: The listing agent must disclose problems that

in complying with the act’s requirement that all agents inform the parties they work with of those parties’ rights and obligations under the act. The act does not require this form to be used, and doesn’t even require that the agent inform the parties in writing, but we think this form is a prudent way to proceed. We strongly suggest you use it, but if you have another way to inform the parties you works with, you can use that. Also note that your forms provider may have a similar form.

exist, and not repair or remediation history, unless that history itself suggests an ongoing problem. (For example, 10 roof patches in the past year would likely suggest that a bigger problem still exists.) It is not always easy to know whether a problem has been fixed; but if it has been, you need not disclose it. The key with mold is to understand that the underlying moisture problem must be addressed successfully. If it has not, no amount of remediation of the mold itself will matter. If it has, and the mold has been removed, there is nothing to disclose.

Volume 20 ● Issue 1

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legallines

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.

An agent in my office is selling his own home, and he has heard that he doesn’t have to use the Owner/Agent sign any more. Are Owner/ Agent signs still required? A: The policy of the REB on this issue is that the public has a right to be

informed if they are dealing with a real estate professional on the other side of the deal. So let’s assume a licensee is selling his own property. Suppose he has listed his property with a licensed real estate brokerage firm. If so, then all firm ads will have the firm’s name displayed, and the public will know a real estate professional is on the seller’s side. In these cases, the firm signs do not need to say “Owner/Agent” or the equivalent. Suppose the owner is not listing the property with a firm. Now all signs will be the equivalent of FSBO signs, and unless the signs and ads give the appropriate notice, the public will not know they are dealing with a professional. Thus, the signs/ads must so state. This would also be true of the agent’s individual advertising/signs done outside the firm even if it is listed. So in the usual situation, if it’s listed, the firm signs do not have to say “Owner/Agent.” However if not listed, all signs/ads do have to have this disclosure. Also please remember that in all cases, the contract must contain the disclosure. Good luck out there. ● 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.

12 FEBRUARY/MARCH 2013

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 WWW.VAREALTOR.COM unrelated to real estate or real estate brokerage, nor can we help with pending arbitrations.

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

The tangled webs we weave 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 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.

Helping yourself When crime increased in their neighborhood, John and Mary Wright became desperate to move to a safer place — not to mention that John was facing deployment overseas and Mary was pregnant. A Gulf War veteran herself, Realtor Marcy Sweeney was eager to help the Wrights find a new place to live. Sweeney already had another client, Kurt Blake, who owned a house that the Wrights wanted to buy, so she acted as dual agent between them. The Wrights signed a contract to buy Blake’s home, and they agreed to take possession in early January with closing scheduled for the end of February. In order to obtain financing, the Wrights needed to sell their current home. Unfortunately, Sweeney didn’t stipulate this in the contract, so Blake was unaware that the sale of his property to the Wrights hinged upon their ability to sell their home and thus obtain a loan. About that…

Before putting their home on the market, Sweeney had insisted that the Wrights needed to renovate it. Conveniently, she hired her husband to do the work, but never put anything in writing. Sweeney had also promised the Wrights she would buy their home if she couldn’t sell it. The house of cards fell apart when Sweeney couldn’t sell it. Then she couldn’t get a loan to buy it as promised. That left the Wrights with no choice but to void their contract with Blake and move back into their old house… where they had a $21,000 bill for the renovations Sweeney’s husband had made. To add insult to injury, Sweeney’s husband was licensed as a Class C contractor, which limits the amount of work his company can to do $7,500 per job. He only had an Electrical Contractor classification and not the Home Improvement Contracting specialty necessary to perform the work. Meanwhile, Blake had wasted several month while dealing with Sweeney and the Wrights, and now had to find another buyer. Needless to say, he wasn’t happy; he filed a complaint with the Board. In her efforts to help the Wrights, it seems Sweeney set herself up to reap the most reward: She stood to profit from the commission of two deals, as well as her husband’s renovation work (that he wasn’t even qualified to do). Her excuse? “I just screwed up.” She was fined $2,100 and her license was put on probation pending continuing education.

14 february/march 2013

www.VARealtor.com

Coverage and protection.

Some things you shouldn’t take chances with — and your real estate license is one of them. VAR helps protect you from being put in the penalty box by a lawsuit with our Legal Resources Center. Search legal columns from our extensive library, read articles, and watch videos that can help you know what’s a safe move — and what’s likely to hurt. Visit us at VARealtor.com/LegalResources

Another great member service brought to you by the Virginia Association of REALTORS®

lifelessons

Bleeding to death Ana and Martin Rivera trusted Dolores Villano, an agent with Ocean Breeze Realty, to help them buy a home — not only because they knew her from church, but also because she spoke Spanish, their native language. When the Riveras found a home they wanted to buy, Villano accepted their $500 earnest money deposit, but she never actually wrote the offer. Another couple ended up purchasing the home. When the Riveras found another home they liked, Villano refused to write the offer because she claimed she wouldn’t make any commission on the transaction. Villano finally wrote an offer for a third property that her clients wanted to purchase, but she wouldn’t give them a copy of the contract. She was, however, more than willing to take their money: $250 for the home inspection and an additional $500 for the EMD, both in the form of money orders. Villano also told the Riveras that she would need money for closing costs. When she came to the Rivera’s home to collect those funds, Martin Rivera was still bleeding from a work-related injury. His worried wife told Villano that she needed to take care of him, but Villano refused to leave without the funds for closing in cash. When Villano wouldn’t relent, Ana Rivera went with her to the bank and gave her several money orders totaling $2,000. The mortgage company denied financing for the Riveras. Then Martin Rivera became gravely ill and was hospitalized. For a month, Ana Rivera called Villano daily to ask to be released from the contract and for Villano to return their money. When Villano finally responded, she gave a string of excuses: The check was in the mail, she would drop it off at their house, or there was a clerical error in getting the check 16 february/march 2013

from her company. As it turns out, she had left Ocean Breeze Realty after working there for only six months. Then Martin Rivera died. Ana Rivera filed a report with the police department in an attempt to get her money back from Villano. The police also contacted the Board. When interrogated by the Board, Villano was full of excuses and lies about what happened to the money. She claimed that all of the money orders that Ana Rivera had given her were a repayment for cash loans that she had given to the Riveras to help pay their electric bill and buy groceries. When the Board’s investigators asked Villano why she would think that the Riveras could afford to purchase a home if they couldn’t even pay their bills, she said that perhaps she had misunderstood their Spanish and she thought that Martin Rivera’s disability income was $6,000 per month when it was actually only $600. Villano was convicted of obtaining money by false pretense — a felony. She was also fined $7,500 by the Board and her license was revoked. l

www.VARealtor.com

formfactor ANDREW KANTOR

DPOR launches new VREB forms DPOR has released new versions of all its real estate-related applications (and other such forms), from “Salesperson License Application” to “Settlement Agent Registration Application” to “Firm Name/Address Change Form” to “Signature Authority Form” and more. (Some examples are at right.) The purpose of the change, according to DPOR agency director Gordon Dixon, is to make the forms less confusing to both applicants and staff. “Applicants often did not know which box to check off,” he said in a letter. “And if certain blocks were not checked off, the forms would be returned and the application process would have to start over again.” The new forms also collect more information, such as individual and firm e-mail addresses “so we can better [communicate] with the regulants in the future,” according to Dixon. You must begin using the new forms immediately — the Board will only accept the most recent versions; using an older one can slow down your application. So make sure the form you’re using has a date of 01/17/2013 or later. (Look in the lower-left corner.) You can find all the new forms at DPOR.Virginia.gov/Boards/ Real-Estate. ●

Salesperson License Application Settlement Agent Registration Application

Firm Name/Address Change Form Signature Authority Form

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 legal 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.

18 FEBRUARY/MARCH 2013

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 under the middle cup. Visit us at VARealtor.com/HomeSales

Another great member service brought to you by the Virginia Association of REALTORS®

20 february/march 2013

www.VARealtor.com

How To

Pick Out & Understand The Real Estate Numbers That Matter Most

Andrew Kantor

ver notice that the real estate statistics you hear on the news are sometimes completely disconnected from reality? You don’t even need to do any research — you know what the market is doing in your area because you live it every day. Clients, however, don’t. And convincing them to ignore that trusted talking head on the news (or byline in the news paper) isn’t easy; “Trust me, I know the area,” doesn’t seem very convincing. Knowing and understanding the numbers, though, can help tremendously. Accurate market data can be a powerful tool not only to help clients directly, but to cement your place as the local-housing expert. “I use market stats constantly when working with buyer and seller clients,” says Scott Rogers, a broker with Funkhouser Real Estate Group in Harrisonburg and author of VAR’s Home Sales Reports.

Volume 20 ● Issue 1

“My clients often have questions such as, ‘Should I put my house on the market now, or later?’ or ‘How long should I expect it to take for my house to sell, given my price range?’ Market stats can shed light on all of these questions.” In other cases, though, clients think they know what the market is doing because of the headlines they read or the sound bites they hear. Everyone who follows the news knows (or thinks they know) that prices and sales are up, and that mortgage rates are down — at least in general, at least nationwide. But you’re a Realtor. You need to set yourself apart by knowing things beyond what everybody else does. That means knowing which stats to keep an eye on, as well as which numbers to be cynical of — and why. Let’s start with a look at the kinds of mistakes many people make, and that you should be ready to explain. february/march 2013 21

a cynic

Why does what’s being reported differ from what’s actually happening? Despite what the tin-foil hat crowd might say, there isn’t a conspiracy among the media, nor do reporters prefer to write about negative things. What happens is simple laziness. There’s more to most numbers — especially economic ones — than meets the eye, but when a press release comes out from a respected source, a rushed reporter may not take the time to look behind the scenes. You, on the other hand, can do better. It’s a matter of knowing what numbers matter, which ones don’t, and how to be sure you know what you’re reading about.

$$$$ $$$ $$

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November

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Easy mistakes to make Perhaps the most obvious error is assuming that nationwide numbers reflect the local market. “I tell my clients that the numbers from the NAR, the Census Bureau, Zillow — national numbers — are just that, national,” said Charlottesville Realtor® and numbers wonk Jim Duncan of Nest Realty. “We can use them as guides to gauge the sentiment of the national market psychology, but these numbers simply aren’t particularly relevant with respect to the Charlottesville real estate market.” Not that there isn’t a place for sentiment. Consumer psychology can be a powerful thing over the long term. Market optimism can lead to a market worthy of optimism — but on any given day, in the trenches, it doesn’t mean much. Another common error: Forgetting that there are always ups and downs over the long haul, no matter which direction the market is headed. Put another way, even though a road may be heading north, it’s going to have a few curves here and there. An incautious reporter or analyst might react to a short-term dip (“Sales down 12%!”) not realizing it’s just a small bump and still part of a longterm gain. Focus on trends, not points. An easy way to do that is to watch year-to-year housing numbers, not month-to-month. www.VARealtor.com

n R o i e t n a t r e n e

• The number to watch: the cost of renting vs. owning • The news to look for: student loan debt If you want a peek at the future of the housing market, you need to think about the 20-somethings that are going to make it. Hopefully. They’re not only the next in line to buy those starter homes, they’re the ones that by doing so will allow the previous cohort of owners to move up. Will they buy? That depends on the survey you believe. (See “Feelings, nothing more than feelings” on page 23 for a reminder why to take those with a grain of salt.) Some say they’re itching to buy. Others say they’re not interested. Forgetting the social issues for the moment — kids these days want to be mobile, they don’t need to put down roots, they rent everything — two related issues you need to keep an eye on are the amount of student debt they’re carrying, and the cost of renting vs. owning. Because no matter what someone wants to do, economic reality might have something to say about it. Student loans are a tremendous burden on 20-somethings — we’re talking a trillion dollars nationwide. In Virginia, about 59 percent of college graduates have significant debt on the day they Volume 20 ● Issue 1

receive their degrees — an average of $24,717. When you consider the dearth of good-paying jobs for recent grads, you realize they’re not only starting off 20 or 30 grand in the hole, they’re looking at putting a significant portion of their income toward paying for school. Result: Rental vacancies are at their lowest level in a decade, says NAR. And as Kirsten Salyer wrote for Bloomberg, “Commitment phobia isn’t a fad. For most, it’s an economic reality. Renting isn’t a choice when you can’t afford to buy, or qualify for a loan, or count on being in the same job for more than a few months.” Think home ownership is less expensive? A recent Census Bureau/HUD study found that owners typically pay more for housing than renters — $927 per month vs. $845. Certainly owners get more bang for their buck in the long run, when a home has built some equity. But $90 or $100 a month right now is a big deal for someone with a crippling loan and questionable job prospects. l

+ There are

two kinds of statistics, the kind you look up and the kind you make up.

—Rex Stout

february/march 2013 23

+ ...he uses

statistics as a drunken man uses lampposts — for support rather than for illumination. —Andrew Lang

24 february/march 2013

Housing is cyclical — sales (and prices) go up through the middle of the year and down after the summer. It’s not news… or it shouldn’t be. To see why, look at the (fictional) chart on the opposite page. Imagine you’re talking about that blue dot. You could focus on the fact that it’s down from the month before (the red line). In reality, it’s up from the year before (the green line); the dip is just part of the annual cycle.

Feelings, nothing more than feelings If a client mentions something he heard on the news, determine whether the numbers he’s quoting are based on reality, someone’s estimate, or on a poll of people’s feelings. The differences are huge. As statistics guru Nate Silver showed during the 2012 election, the harder the data, the more accurate the result. Facts about housing count for a lot more than even the most well-considered opinions; beware stories such as the recent, “Expert believes housing starts will double in 2013.” Even more suspect are numbers based on polls. One recent AOL Real Estate story was “Renters Looking to Own Are Ready to Buy.” Home builder Pulte Group, it seemed, found a dramatic increase in the number of renters who say they intend to buy a home “in the near future.”

How valuable is that? Well, if you poll Americans, you find that they report watching about eight hours of television a week. If you actually track them, though, you find it’s closer to 34 hours. So when people say they ‘intend to buy in the near future,’ they may simply be saying what sounds good. Finally, there’s the awful hybrid of the two: stories based on what regular Joes predict for the housing economy. “47% Expect Higher Interest Rates One Year From Now,” reads one headline. “43% of Americans expect home prices to rise” reads another. No offense, but who cares what a group of random non-experts think will happen? You shouldn’t.

Context counts Keeping a cynical eye out in general is a good idea, as is not taking headlines at face value. But there are some statistics you’ll see that may in fact be accurate, but that require some (missing) context to be useful. Mortgage rates: Watch your apples and oranges “Mortgage rates are at their lowest point in forever” — that’s a headline you could run for weeks on end. And it’s true. Just make sure your clients aren’t fooled by the headlines into thinking that they can borrow at 3.4 percent (or whatever it is by the time you read this). www.VARealtor.com

s e ur

s o l c e r Fo and distressed sales • The number to look for: percentage of distressed homes sold in a market • The number to look for: percentage of new homes sold in an area (16.7% was typical until the crash) Once upon a time, there was a big worry that there were too many properties in the foreclosure pipeline — homes in or near foreclosure that had yet to make it onto the market. This “shadow inventory,” housing pundits predicted, would stop the recovery in its tracks as it caused prices to plummet. It didn’t happen. Foreclosures entered the listings, certainly, but never in a tsunami — more of a gently rising tide that was absorbed by the market. Still (to continue the metaphor), the water level is higher than is good for the business. Foreclosure sales do keep prices down, and they also hit the home-building industry by reducing the demand for new homes. These distressed properties are making up less and less of the market, but they bear watching. For example, in October 2011 foreclosures made up 16 percent of the market in MRIS territory (which includes a lot of Virginia). A year later, in October 2012, that number

was down to a bit more than nine percent. Further, NAR stats show that, as sales continue to increase, most of that gain is coming from conventional sales, not distressed ones. (In fact, the numbers lately have shown the lowest level of distressed sales since 2007.) Homebuilders in particular should be happy. Before the housing bubble and burst, new home sales accounted for about 16.7 percent of the market (one new home was sold for every six existing homes). That figure held true for decades. But when the crash came, new homes weren’t nearly as popular; new home sales slipped to about 7.1 percent. So keep an eye on those new-home sales — not just the number, but the percentage of the market. That’s a good gauge of the effect of short sales and foreclosures, and will hopefully make its way back to that 16.7 percent norm. l

+ Definition of Statistics: The science of producing unreliable facts from reliable figures.

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—Evan Esar february/march 2013 25

For one thing, that 3.whatever percent (which typically comes from Freddie Mac) is an average across the country. For another, it’s for someone with near-perfect credit. And finally, it will often depend on putting points down. As I write this, Freddie Mac reports an average rate of 3.34 percent for a 30-year loan… with 0.7 points. So while the rates you see reported are a good gauge of the general direction of the market, they aren’t something you can count on in reality. Building permits and starts (from Census Bureau): Beware the asterisk Two measures of the health of the upcoming housing market are the number of home-construction permits being issued, and the number of new homes being constructed. Those figures come monthly from the Census Bureau, they are reported in all the business media, and they’re almost always hogwash. The numbers that make the headlines almost always have an (unreported) margin of error, and it’s often huge. For example, one month last year the bureau reported that starts were up 3.6 percent, plus or minus 13.1 percent. So the figure could actually be down 9.5 percent, up 16.7

percent, or somewhere in between. If your child told you he got a 65 on an exam, plus or minus 30 points, would you be proud or embarrassed? Delinquencies: Cut some slack RealtyTrac and other companies post information about the number of mortgages that are delinquent, with the implication that they’ll go into foreclosure and be added to the distressed inventory. But often those numbers lump together borrowers who are 30, 60, and 90 days past due, as well as those in which foreclosure has begun. While technically all of them are “delinquent,” there’s a world of difference between missing one payment (i.e., being 30 days past due) and skipping three months — or actually being in foreclosure. Unfortunately, you have to look at the data from these reports to get a more accurate picture, because the summary or press release typically doesn’t break the numbers down. So when a report says that ‘delinquencies are up 10 percent’ it might sound bad, but it might also be a big jump in the “30 days behind” category — and (as anyone who has accidentally missed a bill payment will tell you) that’s not necessarily something to worry about. l

+ Say you were standing with one foot in the oven and

one foot in an ice bucket. According to the percentage people, you should be perfectly comfortable. 26 february/march 2013

—Bobby Bragan www.VARealtor.com

+ I can prove

anything by statistics except the truth.

y r o t en

Inv

—George Canning

• The number to look for: months of inventory The real estate market can’t recover if there’s nothing to sell, so inventory is critical. More and more markets are finding that the buyers are there but the sellers aren’t; inventory is too low. Unfortunately, it can lead to a vicious cycle. Low supply means rising prices — which is exactly what we’ve seen. Sellers who have seen their property values tank in the last few years are finally seeing them rise. They realize the bottom of the market is behind us, but they want to wait for prices to get away from near bottom. (Especially if they’re underwater. They may not be able to sell until they can get enough to cover their mortgage.) So watch inventory numbers. As prices rise, more sellers should come off the fence, easing the pressure. And as inventory then begins to increase (from conventional sales, foreclosures, new homes, or whatever), prices will stop rising quite so quickly. And that may well convince yet more sellers to jump in, fearful of missing the market peak, and swing the pendulum back. l

Unemployment • The number to look for: the official Bureau of Labor Statistics unemployment figure Low unemployment is a good thing. The more Americans working, the more stuff we produce and the more taxes get paid. Everyone wins when everyone works. These days, though, we’re at an official rate of about 7.7 percent nationally and about 5.6 percent in Virginia. (Real unemployment is actually much higher, because of the way the BLS has calculated it for the last few decades.) But there’s been a thin silver lining to higher unemployment: Low interest rates. The Fed has kept them so low in part because so many Americans are out of work, hoping low rates will encourage businesses to borrow and expand. And at one point, the Fed had said it Volume 20 ● Issue 1

wouldn’t raise rates until at least 2015. It’s since backed off from that, and now says it won’t raise rates until unemployment hits 6.5 percent (or inflation gets above 2.5 percent). And unemployment has been going down. When it gets low enough, the Fed will act and mortgage rates will probably start going up. When will that happen? It depends who you ask — 2018 according to the Brookings Institution; sooner according to economists surveyed by Bloomberg. So watch that unemployment figure. When it hits 6.5-percent we could start to see a very different market. l

february/march 2013 27

VAR’s 2013 Legislative Agenda “Man is the only animal that laughs and has a state legislature.” —Samuel Butler As the General Assembly begins its 2013 session, VAR has already been working on a list of bills designed to make our members more successful and their business easier to conduct. Some may seem minor or technical, but every one of them will have a significant and direct effect on the real estate industry. As always, our agenda is aggressive but sensible, and stands to help Realtors, the public, and the Commonwealth.

Occupancy Standards for Residential Units SB 841; Senator Mamie Locke This bill confirms the two person per bedroom limit originally established by HUD and is the appropriate standard for landlords to use in determining the maximum number of occupants for a dwelling unit. Passage of this bill brings overcrowding provisions of the Uniform Statewide Building Code into accord with federal standards, enabling landlords and their agents to limit the number of occupants of a residential unit.

POA/Condo Act and Disclosure of Qualification for Federal Financing HB 1807; Delegate Jackson Miller Sellers and buyers of residential condo units and lots in a property owners association are often restricted from using FHA financing because of the of the number of rental units in the community. This bill would require POA/COA disclosure packets to include information on how many units are owner occupied vs. rented, to help prospective buyers determine whether FHA financing might be available.

Dangerous Drug Lab Disclosure HB 1593; Delegate David Bulova With the more residential properties being used in the manufacture of illegal methamphetamines, it isn’t clear what a property owner or landlord must disclose to a potential buyer or tenant. This bill would amend the Virginia Residential Property Disclosure Act to require disclosure if a property had been used as a meth lab, unless that property is cleaned to Department of Health standards. This legislation is modeled after existing legislation for the disclosure of Defective Drywall.

28 february/march 2013

Authority for the Real Estate Board to Hear Fair Housing Violations HB 1480; Delegate Peter Farrell Currently in Virginia, there are two regulatory boards with jurisdiction in fair housing cases, and which board hears a case depends on in whether it involves a real estate licensee or a non-licensee property manager. This bill would give the Virginia Real Estate Board jurisdiction in any case involving a licensed real estate agent or agents, including those that might have been heard by the Fair Housing Board. It avoids a potential situation where the same fair housing case could end up being heard by two regulatory boards.

Landlord/Tenant and Failure of Electronic Payment HB 1509; Delegate Greg Habeeb More and more landlords and property managers are beginning to accept electronic payments from tenants. This legislation would give the recipient of a failed or stopped electronic payment the same right to pursue civil action as if it had been a bad check. www.VARealtor.com

Virginia Residential Landlord Tenant Act; technical amendments HB 1734; Delegate Manoli Loupassi This “umbrella” legislation makes several technical amendments to the VRLTA, including clarifying the difference between an application deposit and an application fee, allowing landlords to refund a security deposit at the end of a lease with a single check for all tenants, to an address provided by the tenants (if forwarding the refund isn’t possible within a year, the money would go to the Virginia Housing Partnership Revolving Fund), and authorizes a landlord to send a seven-day notice of abandonment regardless of whether the lease contains a provision to that effect.

Real Estate Licensee Reliance on Public Records

First Time Homebuyers Savings Account

HB 2073; Delegate David Yancey Realtors frequently rely on public information, information from the client, and information from other professionals — such as a surveyor or engineer — for use in advertising property for sale, and sometimes this information is inaccurate, through no fault of the Realtor. This bill would shield Realtors and brokers from civil or regulatory action if they provide information from a reliable source that turns out to be incorrect.

HB 1868; Delegate Tag Greason This bill would create “firsttime homebuyer’s savings accounts” into which individuals could contribute funds tax-free to be used for a first property purchase. This is similar to the structure of a Virginia 529 college savings plan and is designed to promote the value of homeownership to a new generation of Virginia homebuyers.

Transportation funding: a plan we can support VAR is pleased to offer its support for Governor Bob McDonnell’s plan to help fund transportation in Virginia. Members have asked us, as part of our political efforts, to work on issues with a clear and direct effect on real estate. Transportation, because it impacts neighborhoods, commuting, and commerce, is obviously one. VAR President Mary Dykstra of Roanoke said in support of the governor’s plan: “Transportation is a quality of life issue for every Virginia community. It is one of the first questions a Realtor is asked about when someone is looking to buy a home anywhere in the Commonwealth. And until the General Assembly addresses the funding challenges we face, Virginia communities can’t thrive as they should.”

Volume 20 ● Issue 1

Protection of Escrow Funds by Real Estate Licensee HB 1736; Delegate Peter Farrell This bill addresses escrow requirements related to rental transactions. First, pre-paid rent has to be placed in the escrow account, but current rent does not. Second, the bill makes a distinction between the handling of security deposits vs. application deposits. Last, the bill would require that security deposits and pre-paid rent given to a landlord or broker be placed in an escrow account within five business days or receipt, and remain in the account.

Regulating Appraisal Management Companies; technical amendments HB 2222; Delegate Gordon Helsel Legislation was passed previously to set up regulation of AMCs by the Virginia Real Estate Appraiser Board, as required by laws stemming from the Dodd/Frank Act. The main goal was originally to authorize regulation of AMCs that manage residential appraisers, but did not address AMCs managing commercial appraisers. This legislation would extend that regulation to include commercial AMCs. l

february/march 2013 29

accessibletech ANDREW KANTOR

Don’t be that guy Guess what? Chances are you do at least one thing that annoys the people who receive your messages. I’m not talking about hitting “Reply All” when you should just reply, or forwarding too many notas-funny-as-you-think jokes. These are more subtle. The good news is that once you’re aware that there’s a better way, you can make your clients, co-workers, friends, and family a bit happier.

Use your words English is, without a doubt, the coolest language on Earth. It’s flexible, detailed, lyrical, and it’s absorbed words, grammar, syntax, and more from every other tongue on the planet. So use it. That doesn’t mean every message has to be grammatically perfect. But you’ll look a lot more professional when you take the time to write a full sentence, check your spelling, and put in punctuation. Yes, it means taking an extra moment when you reply to an e-mail — or waiting a bit to respond to a text message. But it’s worth it to look like you graduated from grammar school (figuratively if not literally). Oh, and if you’re over the Never ever ever. age of 16, don’t even think of using text-speak or silly abbreviations (other than the occasional “ASAP”). The message it sends is not “Look how quickly I responded to you!” It’s “Look how sloppy I can be!”

A picture is worth a thousand curses Keep unnecessary images out of your e-mail — and that includes logos, signatures, and stationery. It’s one thing if you’re sending a picture as part of 30 february/march 2013

the message (“Here’s a photo of the back of the building”), but if you typically include a company logo, an image promoting an organization or policy, or any little picture at the top or bottom of your message, stop. Depending on your recipients’ mail settings, there’s a good chance that cute little company logo of yours will end up as a red X or be listed as an attachment. Some e-mail programs won’t display images by default (for bandwidth or security reasons), which means your message ends up looking, well, messy. And if you’re sending anything other than simple black text on a blank white background, don’t. (All right — Outlook users might have to use blue for replies.) That means no fancy stationery and no background colors. There’s no telling how those will look when your message gets through or is forwarded, especially for users on smartphones or tablets.

Clean your forwards and replies We’ve all been part of e-mail chains that go on through reply after reply. Unfortunately, after the second go-round, they also get cluttered with rere-re-indented messages, with the original somewhere at the bottom and multiple replies above it. Clear the clutter. Unless you have a pressing need for your recipient to read the original message and every single reply, delete the often-huge chunks of older messages. It makes for a much easier read, especially if someone in the www.VARealtor.com

conversation includes a signature every time. (Note: There are times, of course, when you want to keep all the replies and re-replies together. In those cases, you — and they — will just have to live with it.) Speaking of signatures, keep yours short. You have legal requirements, of course (your name, your firm name, its location, and where you’re licensed), but beyond that keep it short. A quick line about you is fine, but don’t go crazy. Today I received a two-line note that included 14 lines of legalese at the bottom — legalese that was, frankly, nonsense: (“The information in this electronic mail message is the sender’s business confidential…”). It was a request for a back issue of Commonwealth. Hardly confidential, and hardly needing of 144 words of legal disclaimer. Bottom line: Reduce those bottom lines if you can.

Paste cleanly Sometimes, when you paste some text that you cut from another source — e.g., a message or a Web page — you’ll end up pasting the formatting as well. A mishmash of fonts isn’t exactly the professional look you want to cultivate. You might have the option to “Paste without formatting” or “Paste Special,” but there’s also a simple workaround: First paste the text into your browser’s address bar, then cut it from there and add it to your message. (You can also paste it into Notepad, or a search box, or many other places.)

That ends up removing the formatting, so whatever you paste will fit cleanly into your message. Speaking of which….

Those are the only ones your recipient is guaranteed to have. Anything else (Bookman, Franklin, Palatino, etc.) will not show up properly on a lot of devices — and there’s no telling what it will end up looking like. So don’t get fancy, no matter how much you like Futura Condensed.

Everyone make’s mistakes If you post something to your Web site (blog or otherwise), and then realize something needs to be changed — maybe you need to correct a factual error, or change an incorrect date — there are a couple of common and well-respected ways to make the change. And yes, you should make the change to the original, not to a separate message or post. You want current readers to get the correct information, and returning readers not to be confused. Method one is to add a phrase to the beginning of the post/article/entry explaining succinctly what happened: “This article updated on 8/15 to correct the price of the paneling.” Simple and clear. The other is to use a strikethrough — a line through the text that’s being replaced, with the new text next to it bold or colored red. That has the added benefit of letting readers see the original, warts and all. Now that you know better, it’s time to share the knowledge. Grab this column online and send it to a few dozen of your closest friends. They’ll thank you for it… eventually. l

Keep your fonts few There are seven fonts permitted in an e-mail message: Arial, Courier New, Georgia, Tahoma (Geneva on a Mac), Times New Roman, Trebuchet, Verdana. Period*. Volume 20 ● Issue 1

* Technically, Comic Sans is also compatible with just about everything. But that should never be used for a recipient over the age of six. february/march 2013 31

rpacreport As of January 15, 2013, 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 Heidi Schlicher at heidi@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

Dennis Cronk Poe & Cronk Real Estate Group, Roanoke

John Dickinson Hall Associates Union Hall

Joe Funkhouser Coldwell Banker Funkhouser, Harrisonburg

Deborah Baisden Prudential Towne Realty Virginia Beach

Cindy Hawks Keller Williams Realty Virginia Beach

Dorcas HelfantBrowning, Coldwell Banker Professional, Virginia Beach

Steve Hoover MKB, Realtors® Roanoke

Thomas Jefferson, III Joyner Fine Properties Richmond

John McEnearney McEnearney Associates Alexandria

John Powell Long & Foster Real Estate Colonial Heights

Forrest Odend’hal Long & Foster Real Estate, Gainesville

Jane Quill RE/MAX Presidential Fairfax

Trish Szego ERA-Elite Group, Realtors®, Fairfax

Bill White Joyner Fine Properties Richmond

Golden R Associations ($5,000) •C harlottesville Area Association of Realtors®, Charlottesville • R oanoke Valley Association of Realtors®, Roanoke • W illiamsburg Area Association of Tom Stevens Coldwell Banker Residential, Vienna

Melanie Thompson Century 21 AdVenture Realty, Fredericksburg

all of Famers have contributed a cumulative H amount of at least $25,000 to RPAC.

Jack Torza Long & Foster, Realtors® Mechanicsville

Realtors®, Williamsburg

Sterling R Investors ($1,000) Sterling R — Hall of Fame Sandee Ferebee Prudential Towne Realty, Virginia Beach Tom Innes RE/MAX Commonwealth, Richmond Robert Adamson McEnearney Associates, Inc., Arlington Laura Benjamin Roanoke Valley Association Of REALTORS®, Roanoke Mary Bayat Bayat Realty Inc, Alexandria Tracy Baynard Mary Ann Bendinelli Weichert Realtors, Manassas Bradley Boland Keller Williams Realty, Reston Beckwith Bolle Carter Braxton Preferred Properties, Leesburg, VA Suzanne Brady Century 21 Adventure Redwood, Fredericksburg Moon Choi Re/Max Presidential, Fairfax Vic Coffey RE/MAX All Stars Realty, LLC, Daleville Claire Forcier-Rowe Coldwell Banker Elite, Fredericksburg Virgil Frizzell Long & Foster Real Estate, Reston Beverly Frowen Long & Foster Real Estate, Inc, Manassas Anne Gardner Charlottesville Area Association of Realtors, Charlottesville Lynn Grimsley RE/MAX Peninsula, Newport News George Grundy George Grundy & Assoc Realty, Petersburg Amy Hudson RE/MAX 8 - Blackburg, Blacksburg Karen Kidwell Long & Foster Real Estate, Falls Church Betty Kingery Mountain to Lake Realty, Rocky Mount Patricia Kline Avery Hess Realtors, Locust Grove Keith May Cottonwood Commerical, Harrisonburg Shane McCullar Keller Williams Realty, Alexandria Jim Mellen RE/MAX Peninsula at New Town, New Town, VA Brooke Miller Long & Foster Real Estate, Inc, Fredericksburg Percy Montague Montague Miller & Co Westﬁed, Charlottesville

Fred Morgan 1st Choice Real Estate, Staunton Muraji Nakazawa Olympic Realty, Inc., Herndon Susan Oh New Star Realty & Investment, Mc Lean Jason Outten The Buyer Brokerage LLC, Ashburn Gwen Pangle Pangle and Associates, Leesburg, VA Kimberly Plourde Exit Realty Central, Norfolk Denise Ramey Roy Wheeler Realty Co., Charlottesville Anne Rector Rector-Best Property Management Alexandria Katy Richards Joyner Fine Properties, Midlothian Fetneh Schacht Long & Foster Real Estate, Herndon Henry Scholz MKB, Realtors, Roanoke Katrina Smith Long & Foster/Webber & Assoc., Winchester Karen Smith RE/MAX Commonwealth, Richmond Patricia C. Snyder Coldwell Banker Four Seasons, Mt. Jackson Susan Spellman Long & Foster, Realtors, Williamsburg Patricia Steele Coldwell Banker Professional, Virginia Beach Suzy Stone Century 21 AdVenture Realty, Fredericksburg Mack Strickland Strickland Realty, Chester Patricia Sury Montague Miller & Co. Downtown, Charlottesville Christine Todd Northern Virginia Association of Realtors, Fairfax Mary Ann White RE/MAX Commonwealth, Mechanicsville Shanna Wiseman Parr & Abernathy, Hopewell

Sterling R Associations ($1,000) • Fredericksburg Area Association of Realtors • Greater Augusta Association of Realtors • Harrisonburg-Rockingham Association of Realtors • New River Valley Association of Realtors

WHY I INVEST

For me, it was a

transfer tax fight

that made its way to the state level that got me involved. I realize now more than ever that as Realtors we must be proactive in protecting our business, and that’s why I stroke that check every year.” —Cindy Stackhouse, GRI, Century 21 Stackhouse & Associates, Prince William Area Visit RealtorsChoose.com/RPAC-101 to hear about what inspired Cindy to become an RPAC investor. 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.

See how your RPAC investment is paying off: Visit www.RealtorsChoose.com!

ChIldRen FAmIly FutuRe Invest In RPAC, Invest In youR BusIness neIghBoRhood sChools CommunIty FRIends ClIents Fellow ReAltoRs AmeRICAn dReAm

VISIT REALTORSCHOOSE.COM FOR MORE INFORMATION.

Contributions are not deductible for federal or state income tax purposes. Contributions to RPAC are voluntary and are used for political purposes. You may contribute more or less than the suggested amount. You may refuse to contribute without reprisal and the National Association of REALTORS速 or any of its state associations or local boards will not favor or disfavor any member because of the amount contributed. Up to 100% of your contribution is sent to National RPAC and is charged against your limits under federal law (2 U.S.C. 441a); National RPAC returns up to 70% of your contribution to Virginia RPAC for use in connection with the election of state and local candidates in Virginia.

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 erika@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 Analyst andrew@varealtor.com VAR Member Service Partners

See your member discounts at www.VARealtor.com/ discounts

Liberty Mutual, home, auto, and renters insurance

Call (804) 622-7955*

Pearl Insurance, E&O, medical, life, and dental insurance

* You must register first at

Phone Tag, voice to e-mail transcription

VARealtor.com/LegalHotline

Realtors Federal Credit Union T-Mobile, wireless service UPS, shipping and more

Our CEO is Scott Brunner (804) 249-5702 scott@varealtor.com

Volume 20 ● Issue 1

Zipform, electronic forms solutions Vertical Response, social media management platform

For information about RPAC Ask for Heidi Schlicher Director of Political Operations heidi@varealtor.com VAR 2013 Leadership Team

Mary Dykstra, ABR, CRS President MKB, REALTORS® Roanoke (540) 989-4555 mary@varealtor.com Bradley Boland President-Elect Keller Williams Realty Reston (703) 437-1717; bradleyboland@gmail.com Deborah Baisden, GRI Vice-President Prudential Towne Realty, Virginia Beach (757) 486-4500 deborah@deborahbaisden.com Bill White Treasurer Joyner Fine Properties Richmond (804) 967-2740 bill.white@hoynerfineproperties.com Trish Szego, CRB, CRS Immediate Past President ERA Elite Group Haymarket (703) 359-7800; trishszego@gmail.com R. Scott Brunner, CAE Chief Executive Officer (804) 264-5033; scott@varealtor.com

february/march 2013 35

VARworks

Why numbers matter VAR President Mary Dykstra, Roanoke

What do we need to pay attention to while tracking the housing recovery? What numbers are really important to our members as we counsel homeowners? We’re all aware that we are inundated with data, and that consumers can find a statistic to support any position they’re wanting to take — the seller who’s certain how much more his house is worth, or the buyer who’s certain how much less than list price she should offer. As professionals, we are the experts in how the tsunami of statistics actually influences the value of that 3/2 split level on the corner that was purchased in 2007 and still needs a bath remodel and new carpet. We are the ones who have to cut through the noise of numbers to find the reality.



Used judiciously, we can help our clients make wise decisions based on past performance and futurecasting. Our staff at VAR spends hours assembling and analyzing housing data, and then presents it to us in a user-friendly format. Read those numbers and understand what they mean. It’s one of the most important benefits of our association membership, and it’s critical to our continued positioning

More than 900 Virginia brokers participated in a recent survey on licensee competency. Hear what they had to say at the VAR town hall meeting, Wednesday, February 6, at the Get Active conference. (VARealtor.com/getactive).

 36 FEBRUARY/MARCH 2013

as the respected resource for all things related to housing. ●

What do new licensees need more training in? Contracts, agency, and ethics topped the list, brokers said. What do you think? Come share your thoughts at GetActive.

More than half of the brokers surveyed think that Virginia’s prelicensing curriculum needs to be updated to teach a broader skill set to compete in today’s market. WWW.VAREALTOR.COM

Upgrade yourself. 1. Realtors速 who earn their GRI earn an average of twice as much as those without a designation. 2. Many of the courses you take for your GRI count toward your post-licensing and continuing education requirements. 3. What are you waiting for? The Graduate Realtor速 Institute is the most popular designation among successful Realtors速. To find out how you can upgrade your career, visit us at VARealtor.com/GRI

Another great member service brought to you by the Virginia Association of REALTORS速

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