2010_5-6_Commonwealth

It’s the government’s Fault (page 33) • Win a gps (page 42) May/June 2010

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

The gathering

Dark skies ahead for commercial real estate

firstword ANDREW KANTOR

PUBLISHED BY THE VIRGINIA ASSOCIATION OF REALTORS® The Business Advocate for Virginia Real Estate Professionals Cindy Stackhouse, GRI President John Dickinson, CCIM, GRI President-Elect Trish Szego, CRB, CRS Vice President John Daly, SFR Treasurer John Powell, ABR, CRB, CRS, GRI Immediate Past President R. Scott Brunner, CAE Chief Executive Officer scott@VARealtor.com Ben Martin, CAE Vice President, Marketing & Communications ben@VARealtor.com Andrew Kantor Editor & Information Manager andrew@VARealtor.com For advertising information, Brittany Sullivan at (410) 584-1968 or e-mail var@networkmediapartners.com The mission of The Virginia Association of REALTORS® is to enhance its membership’s ability to achieve business success.

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Line of fire BACK IN 1999 there was a madefor-TV movie called, simply, “Y2K.” Hopefully you used that two hours when it aired to do something productive, like clean the grout in your bathroom.

The premise, as I recall, was this: As the clocks strike midnight on January 1, 2000, a nuclear plant in Europe somewhere melts down. In the U.S., there’s a plant of the same design with the same software. In six hours, it will strike midnight and millions of Americans will die. Our Heroes have that time to save the town.

(If you’ve seen this movie and are thinking of correcting my synopsis, keep in mind that you will be admitting to watching the thing.)

In the spectrum of movie plots, this really isn’t half-bad — the idea of seeing the disaster strike over there, knowing that it’s coming here; Larry Niven had a creepy little story called “Inconstant Moon” with a similar premise.

So now we have commercial Realtors®. They’ve spent the last two or three years seeing the residential market devastated by underwater homeowners, foreclosures, and the associated angst.

And they know their turn is coming.

In the next three to four years, about $1.4 trillion (that’s 1.4 million million) of commercial real estate loans will come due. Half of them are under water. Not only does that portend a wave of foreclosures (déjà vu all over again),

“

So if someone says that commercial Realtors® have a lot to look forward to, that doesn’t mean it’s a lot of good things.”

but many of those businesses are in hock to local banks, who might be taking a $300 billion hit.

All this comes from the Congressional oversight panel in charge of keeping tabs on TARP funds. The first sentence of its executive summary on the issue reads, “Over the next few years, a wave of commercial real estate loan failures could threaten America’s already-weakened financial system.” Joy. So if someone says that commercial Realtors® have a lot to look forward to, that doesn’t mean it’s a lot of good things.

Of course, that impending wave of potential foreclosures is just one thing on their mind these days. For this issue we wanted to find out what else is on their collective list of concerns, so we did the obvious thing: We asked. And they told us. Check out what’s happening on the commercial side of things starting on page 24. ● Andrew Kantor, Editor andrew @VARealtor.com

MAY/JUNE 2010

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MAY/JUNE 2010 Volume 17 ● Issue 3

contents

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

10 legallines Lem Marshall answers readers’ questions about real estate law

16 formfactor The scoop on forms 600E (agreed repairs) and 200/300 (residential lease)

18 lifelessons Bad examples: The

features

24

footsteps you shouldn’t follow in

35 accessibletech In the name of all that’s

in every issue

New laws your agents need to know about

30

Once bitten

33

Half empty

1 firstword

38 rpacreport 42 varbuzzcontest 43 contactvar 44 lastword APEX Award of Excellence winner 2

MAY/JUNE 2010

For commercial Realtors®, the worst may be yet to come. The fallout from the residential crisis is threatening commercial mortgages, and that’s just the beginning.

20

holy, update your Web browser

The gathering storm

On July 1, a host of new laws take effect that will impact Virginia Realtors®. You oughta know what they are.

After lending, it seems, to anyone with a pulse, banks are suddenly reluctant to work with even the most credit-worthy customers. That’s not helping matters.

The government should do something ... except when it shouldn’t.

Whether Bush’s bailouts or Obama’s program du jour, it’s easy to put the blame on Washington.

Look for this icon; it tells you when a story relates to one of VAR’s six goals for 2010. In this issue, read about legislation VAR fought for in “New laws you and your agents need to know about” (page 20).

And visit www.VARealtor.com/6goals to learn about them all. www.VARealtor.com

quickhits

ANDREw KANtoR

Two keynotes to help shape your future Bitner. Theismann. Together for the first time.

At this year’s REal show, you’ll have a chance to hear two terrific speakers — and that’s just at the keynotes: Richard Bitner, president of Housing Wire and REO Insider magazines and author of Confessions of a Sub-Prime Lender; and former NFl star Joe theismann.

Bitner — a 14-year mortgage-industry veteran — will share his firsthand knowledge of how the lending and housing markets shape the economy (and your life), and how to recognize the signals heralding the next change in your local market. In “Are we there Yet? Finding a Bottom to the Housing and Mortgage Markets,” you’ll learn: • the short- and long-term impact of federal, state, and local policy decisions; • keys for recognizing when the “bottom” of your local market is in sight; and

• the next wave of factors to impact the mortgage industry and housing markets.

And you should remember theismann: the number one NFl quarterback of the 1980s. In his address, “the challenge of change,” you’ll hear how, at age 36, the two-time Pro Bowl player (and most productive washington Redskins QB ever) managed to remake his personal and professional life after suffering a leg fracture that shattered both his career and life-long dream — and how a positive mindset and commitment to vision can guarantee great outcomes after any change.

NAR directors amend Code of Ethics to include sexualorientation protection NAR’s Board of Directors passed a change to Article 10 of the NAR code of Ethics (standard of Practice 10-3, to be specific) barring Realtors® from “denying equal professional services on the basis of sexual orientation or from discriminating against any person on the basis of sexual orientation.”

Also banned: discrimination on the basis of sexual orientation in any advertisements for selling or renting property. the code of Ethics change must still go before NAR’s delegate body for approval at the annual conference in November.

4

MAY/JUNE 2010

out of washington

News from NAR

Meeting with the Reps On May 13, VAR’s Federal Political Coordinators and their team members met for lunch with their congressional representatives as part of NAR’s Midyear Legislative Meetings to discuss legislation affecting real estate.

Pictured here are Realtors® Rita Huggins-Halstead of Sterling and Gwen Pangle of Leesburg, meeting with Congressman Frank Wolf (VA-10); and Realtors® Steve Hoover and Dennis Cronk of Roanoke with Congressman Bob Goodlatte (VA-6). www.VAREAltoR.coM

Could a granny pod be coming to your neighborhood?

According to the Washington Post, granny pods may soon be cropping up in back yards across Virginia thanks to a new state law. Granny pods, you say? Yes. The official name is “MEDcottages.” They’re shed-sized buildings designed to house and simplify care for relatives that are physically or mentally impaired. The cottages can only be installed on single-family properties, and the impairment must be certified by a physician.

The new law allows them on private property, and that law supersedes any local regulation or HOA covenant.

You can learn more about ’em at medcottage.com, or just wait to see them pop up on your block. out of washington

EPA to impose tougher standards on development the U.s. Environmental Protection Agency and the chesapeake Bay Foundation have agreed on tougher regulation in an effort to speed up cleanup of the Bay. the agreement sets deadlines and requirements for state and federal officials to cap the amount of pollution entering the Bay from farms, building sites, and city storm systems. Pollution must then be reduced and kept at safe levels — even with ongoing community growth and development.

Under the settlement, failure to meet specific targets or timelines could result in the loss of federal grants, or the EPA stepping in and rejecting permits for new development projects. the effect on home values is hard to know. they could go down (because of restricted development) or up (as the Bay’s health improves).

VolUME 17 ● IssUE 3

In 2010, Janet Holley of Danville became the first member to have achieved 20 years in the VAR Honor society. she has not only been an active and successful Realtor®, she has given back to her community in a long list of ways — working with organizations ranging from the Danville science center and chamber of commerce to its historical society and orchestra. congratulations, Janet!

“Real estate tax” debunked by NAR, Snopes Some Realtors® and homeowners have been forwarded an alarming e-mail claiming there’s a 3.8% tax on real estate transactions as part of the new healthcare bill.

Let’s be clear: It ain’t so. There is no new real estate tax. Got it? NAR has debunked this myth on its Web site (see Realtor.org/healthreform), as has Snopes (a Web site that researches urban legends), but people keep forwarding the messages without bothering to check whether its true.

Where did it come from? In the healthcare bill there is a 3.8% tax on “net investment income” — but only on any profit above $250,000 ($500,000 if you’re married), and only for people who earn more than $200,000 per year ($250,000 if you’re married).

But in an effort to scare people, someone started the rumor about a “real estate tax” — maybe the same folks who started the one about houses requiring EPA approval before being sold.

Bottom line: If you get the frantic e-mail, just hit Delete and save everyone some trouble.

MAY/JUNE 2010

5

quickhits Home buyer incentives

Tax credit extended for service members

The latest edition of The Lem & Blake Show is now available for your viewing pleasure.

In this month’s episode, When Agents Leave Firms, VAR’s real estate attorneys discuss obligations when brokers and agents go their separate ways. Check it out today at VARealtor.com/ lemandblakeshow

The short sale and the homebuyer tax credit Our attorneys have been getting several variations of this question recently, so we thought we’d share their wisdom.

Q: My buyer clients made an offer on a short sale on April 29. The sellers ratified the contract on April 30. The bank hasn’t had an opportunity to review the offer. Will my clients be able to claim the homebuyer tax credit?

A: Yes, as long as your clients meet all the other criteria, says VAR’s special counsel Lem Marshall and many other attorneys. The date of the ratified contract between the buyer and seller is what counts. Bank approval is a contingency, just like an appraisal or financing contingency.

For more information, visit the ACAR Watercooler blog at acarwatercooler.com.

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MAY/JUNE 2010

Economic news

Real estate legal FAQs, video-style

Just a reminder: While the $8000 homebuyer tax credit expired for most of us on April 30, members of the U.S. military, foreign service, and intelligence communities have an extra year to claim the homebuyer tax credit.

As long as the qualified service member has been on extended duty outside of the United States for 90 days or more (between Jan. 1, 2009 and April 30, 2010), he or she has until April 30, 2011 to sign a sales contract and until June 30, 2011 to close on the property.

Read more at the IRS Web site via VARbuzz.com/go/creditextension.

Virginia’s housing prices have less chance of declining The risk of a Virginia home losing value over the next two years is dropping as the economy improves, according to the latest PMI Market Risk Index from economics researcher PMI ECON. The report doesn’t discuss how much a home’s value could change — only the likelihood that in two years it will be worth more or less than it is today. The Market Risk Index is historically about 80% accurate.

Researchers calculated the risk using factors such as unemployment rates, housing affordability, and past price appreciation. The resulting risk index is the probability that the region’s home values will decline. So a risk index of 65 means there’s a 65 percent chance of home prices going down over the next two years.

Winchester, for example, has a risk index of 95.1 — according to PMI, prices are almost certain to drop over the next two years.

Charlottesville, on the other hand, has a risk index of 49.8 — about an even chance of prices falling or rising.

The good news in all this: While there is still a good chance of prices falling over the next two years, in every Virginia Metropolitan Statistical Area, the risk of lower prices dropped from the third to fourth quarters of 2009. And as the economy improves, home prices will continue to stabilize.

You can get all the details at pmi-us.com; click the PMI-ECON tab. www.VARealtor.com

Apply Now McDonnell to create Housing Policy Advisory Committee Homeowners and Realtors® could benefit from a comprehensive statewide housing policy created by Gov. McDonnell —the first time Virginia has created a statewide executive housing policy.

McDonnell appointed a Housing Policy Advisory Committee to develop the policy, which may address issues like homelessness, workforce housing, economic development, healthy neighborhoods, effective coordination of transportation, and environmental issues.

VAR will be working with the governor and his staff to ensure that the voices of Realtors® and homeowners are heard by the committee, and we’ll keep you updated on any new developments.

for the 2011 Virginia REALTORS® Leadership Academy

• Do you think you can make your local and state association better?

• Are you a leader in your local community?

• Are you interested in building your leadership skills?

Find out how you can join the ranks of some of the most successful Realtors® from around the state at www.VARealtor.com/LeadershipAcademy

Deadline for applications: July 1, 2010

Apply for the Virginia Realtors Leadership Academy through July 1 It’s that time of year — time to apply to be one of the lucky 20 to be accepted into the next class of the Virginia Realtors® Leadership Academy (VLA).

We probably don’t need to tell you all the reasons you’d want to join: incredible networking, increased earning potential and real estate knowledge, and a personal referral network that could pay dividends for the rest of your career. And that’s for starters.

Bottom line: VLA graduates say it’s the best way to supercharge your real estate career.

Applicants are hand-picked to participate in a ninemonth leadership development program. Participants work together over the course of four retreats in development experiences that combine individual study, group sessions, and actual project experience. Many graduates go on to leadership roles at their local associations, VAR, and NAR (including Cindy Stackhouse, VAR’s 2010 President!).

The application deadline is July 1, so you need to download and fill out your application quickly — head over to VARealtor.com/LeadershipAcademy.

Volume 17 ● Issue 3

May/JUNE 2010

7

quickhits 1Q 2010 SALES BY REGION

Quarterly home sales report: Good news and bad The home-sales numbers are in for the first quarter of 2010. And the news is mostly good. Our home sales report for transactions completed between January 1 March 31, 2010 was released today. The highlights: The median price of a Virginia home: Up 8.9% over Q1 2009, but down 1.5% from the previous quarter.

The number of home sales: Down very slightly compared Q1 2009, and down 34% from the previous quarter. Why the huge drop? The fourth quarter of 2009 had an unusually high number of transactions, probably due to the home buyer tax credit that was set to expire on November 30.

Foreclosures: Down 2.4% from Q1 2009, but up 6.1% from the previous quarter.

A potential ray of hope about foreclosures: Northern Virginia has posted two consecutive quarters of declining foreclosure rates. It's still too early to tell, but because NoVA tends to signal the beginning of statewide trends we could be witnessing the beginning of the end of the foreclosure mess. Or at least the end of the beginning.

Finally, statewide inventory has trended downward for 20 consecutive months.

Get the full report along with past versions at VARealtor.com/HomeSales.

REGION

1Q10

vs. 4Q09 vs. 1Q 09

Central

2,067

-30.4%

656

-34.5%

12.9%

Northern Virginia

7,064

-22.4%

-10.7%

South Central

7,064

-23.5%

5.3%

Southwest Virginia

1,132

-29.3%

Tidewater

3,610

-36.1%

8.4%

Upper Shenandoah Valley

628

-28.6%

14.8%

North Central

7.0%

5.5%

1Q 2010 MEDIAN SALES PRICES BY REGION REGION

1Q10

vs. 4Q09 vs. 1Q 09

Central

$209,016

6.8%

6.5%

North Central

$210,526

-8.1%

-16.3%

Northern Virginia

$305,174

-0.8%

19.2%

South Central

$118,706

-0.5%

-3.6%

Southwest Virginia

$141,524

4.7%

6.4%

Tidewater

$206,957

-2.8%

-3.9%

Upper Shenandoah Valley

$158,516

-5.9%

-6.6%

Mortgage originators have until July 1 to get licensed VAR members are urged to ask their loan officers if they are licensed in the Commonwealth of Virginia.

Virginia law requires all residential mortgage originators in the Commonwealth to be licensed through the National Mortgage License System (NMLS) before July 1, 2010 or face a fine of up to $2,500 per day.

The Virginia Bureau of Financial Institutions believes that up to 2,800 mortgage originators still need to do this, and that could spell

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MAY/JUNE 2010

trouble for originators who haven’t started on this, since NMLS has asked them to file their applications

by March 1.

There are several steps mortgage originators need to complete to become licensed, and as you might guess, it could take some time to jump through all the hoops, especially when there are an estimated 2,800 of them pushing the deadline to get through the process.

Don’t let your clients’ home purchase get held up by a non-licensed

originator. Make sure the loan officers you work with are licensed.

For more info, visit the Virginia Bureau of Financial Institutions’ site via VARbuzz.com/go/bfi. ●

www.VAREAltoR.coM

legallines

Lem Marshall, VAR GENERAL Counsel

The calls of duty “Illegal and fraudulent”

Q.

A buyer agent is assisting a buyer in the purchase of a short sale property. The buyer and buyer agent are being pressured to pay $2,300 to the second lien holder off the settlement statement. The settlement agent is apparently aware that this demand has been made and is willing to accommodate. The buyer agent believes such payment would be illegal. How should the buyer agent counsel the buyer here? being shed by the lenders.)

A. The agent should continue to

counsel the buyer that making such a payment would indeed be illegal.

The recent experience of a California Realtor® is instructive.

When faced repeatedly with similar demands, the Realtor® decided to enlist an investigative reporter who contacted several lenders whose representatives had been making

When HUD learned of the report, it issued a statement to the effect that it considers such behavior illegal and fraudulent, and that it is now investigating reports of such illegal payments.

The lesson is clear: HUD and every expert who was interviewed about such payments believe that

“

the first lien holder, and whether it is to be shown on the settlement statement. You will almost certainly not receive such written instructions. Once the dust settles on the transaction (one way or the other), I suggest you report the lender to HUD, and the settlement agent to the Virginia State Bar, which governs lay settlements in Virginia under CRESPA. Whatever you do, do not participate in this fraud on the first lien holder. If your buyer insists on going forward (or your seller, if the demand is made there), simply

Whatever you do, do not participate in this fraud on the first lien holder. If your buyer insists on going forward (or your seller, if the demand is made there), simply issues written objections and back away.”

such demands. In an interview with the reporter, a Bank of America official disavowed such behavior, and stated that Bank of America neither encouraged nor tolerated such shenanigans. A representative of CitiGroup made a more cryptic comment, stating that such behavior was against Citi policies, but refusing to deny that it participated in such actions. Other lenders whose agents were reported to make similar demands also expressed chagrin at such goings on. (It is a wonder the reporter did not drown in the crocodile tears 10 MAY/JUNE 2010

if the payment is not made with the knowledge and consent of the first lien holder and shown on the settlement statement, those who participate are risking sanctions and penalties for violating federal law. Settlement agents who knowingly tolerate such actions are putting their right to do settlements in jeopardy.

What should you do when confronted with such demands? First, confirm the demand in writing, and ask for written instructions as to how the payment is to be made, whether it has been approved by

issues written objections and back away. Do not run the risk of getting rolled up in the coming crackdown on this illegal behavior.

Whittaker Chambers, as a young man, was a Soviet fellow traveler who became, later in life, a prowestern witness to the horrors of the Gulag. After reading Chambers’ memoir Witness, Andre Malraux said to Chambers, “You did not come back from hell with empty hands.” I hope we do not come back from the hell of the housing collapse with empty hands. www.VARealtor.com

“Never be afraid to learn about our client’s affairs”

Q.

May a listing firm insist that a buyer agent be present when a home inspection is performed?

Should a buyer agent do so whether required to or not?

A. Such a simple issue, yet so much angst. There is

no legal or regulatory rule on point here, so it’s pretty much an issue of contract or other mutual understanding, and sometimes an issue of custom. I’d go further and say that it’s an issue of accommodation to the reasonable wishes of the parties involved.

I seldom see a contract provision on point, but I don’t know why an MLS could not adopt a rule permitting the listing firm to make this a requirement by notice in the listing. I can tell you that when my wife and I have bought houses, we were impressed that our buyer agents attended the inspections, and on the last two occasions, the listing agent did as well.

It seems to me that if the listing firm is sufficiently concerned about security, it can simply have someone attend.

On a related issue, I don’t think much of the

argument that buyer agents should not attend for fear of somehow incurring liability. There’s no reason for the buyer agent to render instructions or opinions during the inspection, and it seems to me that buyer agents would be better able to assist their clients if they heard what the inspector had to say about the house, including those observations that do not rise to the level of an objection about the property’s condition.

“

There’s no reason for the buyer agent to render instructions or opinions during the inspection.”

We should never be afraid to learn about our client’s affairs, including the condition of the property the client is buying. Newer agents can learn a great deal by attending inspections, and clients will generally appreciate the effort.

“His grasp of the law is faulty”

Q.

A buyer agent represents a buyer in a transaction that failed because of seller’s inability to perform. A large earnest money deposit is being held by the buyer agent’s firm. The buyer sues the seller for damages but the case is dismissed.

After the trial, the buyer produces a release signed by the seller several months before the suit was filed, in which the seller agrees to the release of the EMD back to the buyer. The buyer does not sign the release until after the hearing and is now requesting the disbursement of the EMD on the basis of the release document that is now fully executed. Should the escrow agent release the funds to the buyer?

A. Absolutely not. The Real

Estate Board regulations do not require a release of contract as a Volume 17 ● Issue 3

condition to disbursement of the EMD (the regulations require only that the parties agree in writing to the disbursement) but a release of contract is a common way for the EMD to be handled.

The key thing to note here is that a release of contract is a mutual agreement between the parties and is inoperative until agreed to by all parties to the document. In this case, the offer of release containing the authorization to disburse the EMD was rejected by the buyer – if his bringing of a suit was not a rejection it will do until one comes along – and cannot be accepted thereafter unless the seller puts it back on the table, something that has not happened here.

I like the buyer’s ingenuity here, but his grasp of the law is faulty.

Right church, wrong pew.

May/JUNE 2010 11

legallines “Start objecting to these exculpatory provisions”

Q.

listing firm, through the Mls and e-mail, represents that a house has a heat pump. Buyer agent’s recommended home inspector also references a heat pump, but in reality the home has a gas furnace and no heat pump. the buyer closes and learns the truth upon receiving a very high gas bill. the inspector’s contract with the buyer limits the inspector’s liability to the $350 cost of the inspection. who has what liability here?

A. In the civil realm, both seller and listing firm have little exposure.

Why? Because an essential element of a case for actionable misrepresentation requires evidence that the buyer reasonably relied on the facts as represented to him. That did not happen here, because the buyer obtained an independent inspection notwithstanding the misrepresentation and the courts will likely consider that the buyer was relying on the inspection rather than on the comments made by the seller.

The buyer was acting prudently in not relying on what the seller’s agent told him, and won’t be heard to claim that he ignored his own inspector’s report but acted primarily on what the seller’s agent put in an e-mail and in the comments to the MLS. However, the REB regulations make any misrepresentation a regulatory violation whether there was reliance or not, so there’s regulatory risk for the listing firm.

As for the inspector, the disclaimer of liability provision is very probably enforceable, which is consistent with Virginia common law, as much as we may dislike it. As for the buyer agent, well, I doubt that the standard of care reaches to assuring that inspection contracts contain no such provisions, although I can’t say I’ve seen any case law on this. If the agent was otherwise prudent in the referral (no conflicts, nothing to lead the agent to believe the inspector was not licensed or competent), I doubt the buyer agent will have liability.

However, how about this: Let’s acknowledge that the listing firm could face regulatory problems, that the buyer agent could face a very unhappy client, and the inspector will likely lose the business of two large customers if he refuses to participate in making this right.

It makes sense to me for the two agents, the inspector and the buyer to contribute to the cost of a new heat pump. (The buyer should contribute because he did not reasonably expect a new heat pump, which is what he’ll be getting.) I expect that if the buyer paid half the cost and the other three parties split the remaining half, this would go away.

If this works out, just remember to get a full release from the buyer for all liability, and a covenant not to bring any regulatory or ethics complaint against either agent or firm.

And your company might want to start objecting to these exculpatory provisions, or at least bring them to the attention of your clients.

Betcha the inspectors would drop or modify these provisions if enough buyers and their firms refused to accept them. (But any such decisions must be made by individual companies, not by competitors acting together.)

12 MAY/JUNE 2010

VAR Legal Hotline (800) 755-8271 Is it risky? Quick!

To the Hotline…

The VAR Legal Hotline is a free, members-only risk management tool that is among the top-rated services offered by the Virginia Association of REALTORS®. Through the Legal Hotline, you can receive timely legal information on the issues you confront day-in and day-out in your real estate practice. The VAR Legal Hotline has one major objective: to increase Realtor® professionalism and decrease professional liability.

Before you call: Please note that many of the routine questions the Hotline receives — and we receive a lot of routine ones — have previously been answered in Commonwealth articles; check the indexed Hotline archives at VARealtor.com before calling.

Guidelines for Legal Hotline calls: All principal or supervising brokers are eligible to use the Hotline. In addition, one other designated person from each office (for example, an associate broker or office manager) may register as designees of the principal broker.

How to sign up: Registration is easy. Complete the form found under the Member Services tab at VARealtor.com. You must register before you call the Hotline.

Hours of operation: Monday through Friday (except holidays) from 10 a.m. to 3:45 p.m.

How to contact the Hotline: By phone: (800) 755-8271 or (804) 264-5033.

By e-mail: hotline@VARealtor.com Call handling process: When you call, please have your NRDS number ready, and include it with any e-mailed questions.

Questions?

If you have questions about the Hotline, contact VAR at (800) 755-8271 or (804) 264-5033, or by e-mail at info@VARealtor.com The VAR Legal Hotline should not replace your own legal counsel. We will not answer questions on matters unrelated to real estate or real estate brokerage, nor can we help with pending arbitrations.

“A place of public accommodation”

Q.

Are model homes and open houses subject to the rules governing accommodations under the Americans With Disabilities Act? A. Generally, no. Model homes

and open houses do not fall within the 12 categories of places of public accommodation set out in the Act. If, however, the sales office for a residential housing development is located in a model home, the area used for the sales office would be considered a place of public accommodation and would have to comply with the ADA. So if you have a model home that is not used as a sales office it need not comply, although the Office of the ADA encourages developers to make such model homes compliant.

Sales areas within a model home must comply.

As to open houses, it just does not stand to reason that they would be considered places of public accommodation. Their use is temporary, the cost of compliance would be disproportionate, and any kind of portable solution would not work, as houses vary so greatly in what would be needed to provide access.

Volume 17 ● Issue 3

“She set in motion the chain of events”

Q.

A buyer agent is showing his brother client various parcels of land. The brother sees a parcel for sale and calls the listing firm to arrange a showing. Naturally, he does not let his brother know of this until after the fact. He likes the property and wants to make an offer, at which point the listing agent gives him – you guessed it – a dual agency consent agreement to sign.

The buyer is not happy with the level of service he’s receiving from the agent and wants to work with his brother, but the listing/dual agent refuses to release him from his agency relationship to work with his brother. What are the buyer’s rights here?

A. What’s going on here is pretty clear. The listing agent believes

(incorrectly) that whether she continues to represent the buyer somehow affects her ability to receive the selling fee in this deal. But she does not have to represent the buyer in order to earn the selling fee; she has only to be the procuring cause of the deal.

In the facts as given here, it seems to me she almost certainly is the procuring cause, but not because she represents the buyer, which is virtually irrelevant. She set in motion the chain of events that led to the deal, and as a result would likely be acknowledged as the procuring cause whether she represented the buyer or not.

The agent should let the buyer go, to work with his brother to get the deal done. The brother understands he is not entitled to claim the mantel of having procured the deal (he was a stranger to the deal until after it had occurred), but wants to give his brother the help he needs without being paid. The listing agent should let this happen, and can do so without fear of losing the selling fee.

She no doubt thinks that if she releases the buyer from the agency relationship, she will also forfeit the right to the selling fee. This is not at all the case, but reveals just how confused many of our members are about the fundamental difference between representation and the right to a selling fee.

May/JUNE 2010 13

legallines “This agent stands to gain in the long run”

Q.

A listing agent is approached by a buyer with whom the listing agent has worked in the past, and who wants to make an offer on the listing. the listing agent will not accept a dual representation in such a situation, and suggests the buyer, who wants assistance in crafting the offer, obtain other representation. the buyer obtains other assistance (non-exclusive), and makes an offer that is rejected. the buyer decides to move on to other properties and asks the listing agent to represent him in finding another property (where dual representation is not an issue). the listing agent tells the buyer about another potentially suitable property, but before the buyer can see it, the seller of the first property returns to the buyer and makes an offer virtually identical to the one the buyer had originally made. the listing agent decides not to go forward in helping the buyer with the new property until the buyer has reacted to the seller’s new offer, because she does not want to be acting against the interest of her seller.

At the buyer’s request, the listing agent refers the buyer to another agent, who assists the buyer in considering the new property. the buyer ultimately rejects the seller’s new offer, and decides to pursue the new property through the other buyer agent. that agent now offers the listing agent a referral fee if a deal happens. May the listing agent accept such a referral fee? should the listing agent have acted differently?

A. IMHO, the listing agent acted

honorably and with the best interest of her seller at heart, and accepting 14 MAY/JUNE 2010

“

we succeed best by building a reputation for putting the client first. Don’t ever fool yourself into thinking that the client on the other side of the deal doesn’t notice that.”

a referral fee does not change that.

First, the listing agent rejected conflicts of interest that would put her at odds with her duty to her seller, something I find refreshing.

She refused to create a reflexive dual agency, and then refused to assist the buyer on a deal that could have cost her seller a sale. She put his seller client first in both circumstances, while seeing to it that the buyer was directed to competent representation.

If you ask me, this agent stands to gain in the long run, because now she has two people who understand that when she represents someone, she is making a commitment to serve that client fully. The overwhelming evidence I see is that

the future business that results from such behavior will dwarf the onetime full shot she misses here.

As for the referral fee, well, I don’t see how it in any way disadvantages the seller. Technically, it’s not even related to the seller’s business, so I doubt if a disclosure to the seller is required, but I would probably do it anyway.

We succeed best by building a reputation for putting the client first.

Don’t ever fool yourself into thinking that the client on the other side of the deal doesn’t notice that. ●

legal lines is written by VAR General counsel lem Marshall.

Please note that answers to legal hotline questions are informational only. consult your own legal counsel for legal advice. More legal hotline questions and answers are in the legal Resources center on VARealtor.com.

www.VAREAltoR.coM

Get legal help 24/7

s episode on new to p w u o h h c Cat lake s B & s m e al issue of the L out leg b a ll a t find ou siness. your bu g in t c e f af m/

.co Realtor w A V . w w o w Blakesh d n a m e L

The VAR Legal Resources Center is online and open to all members. It includes: • Legal Hotline answers archive • Articles on how new laws affect your business • Info on the Realtor® Code of Ethics • Legal webcasts (including Lem Marshall’s recent Short Sales Road Show!)

• Links to dozens of NAR legal resources

Visit the Legal Resources Center today for more information on: agency, earnest money, fraud, disclosure, tax regulations, and RespA

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formfactor BLAKE HEGEMAN

Forms — they’re the bread and butter of a deal. They’re full of fine print and legalese, and not everyone “gets” the details. And that often ends up as a call to our Legal Resources Center. (Shameless plug: (800) 755-8271.)

So we asked our intrepid associate counsel (read: lawyer), Blake Hegeman, to take one of the forms the LRC gets the most questions about and illuminate it for us.

They’re all available, free for download, at www.VARealtor.com/ standardforms.

This issue: VAR Form 600E: Agreed Repairs Addendum A common question: “Must purchasers sign and date page 3 of 3 on the first delivery of Form 600E to the seller? It happens both ways — the purchasers sign on first delivery or they sign at the end of the negotiation.”

It can work either way. It’s probably a good idea for the buyers to sign Form 600E when first delivering it, but if you look at the home inspection addendum itself (Form 600D), it’s clear from section 2 that the obligation of the buyer is to deliver to the seller a report, and to use the Agreed Repairs Addendum for that purpose.

Form 600E is just a tool we use to permit an orderly reporting and negotiation. In other instances when we are obligated to deliver a report, we don’t necessarily sign the report (home inspection and repair requests made in other regimes, for example, or title reports).

I think it’s enough that the source of the report and request is clear.

A similar question: “I am dealing with a listing agent who claim that because the purchaser did not sign Form 600E it is irrelevant, even though it had been delivered by me, the buyer broker, in the proper timeframe.”

The attitude of the listing agent/sellers here is a bit formalistic, and it is far too harsh a reading of the contract to deprive the buyer of the benefits of a negotiated contingency because he did not sign the initial report and request for repairs.

All that is necessary is that both parties sign the ultimate agreement. There is no particular reason that the buyer must sign first; all the contract requires is that the buyer submit a timely report. If you did that and there is no question about the content or origin of the report, there is no reason to believe that the buyer is out of compliance just because of the failure to sign the report.

16 MAY/JUNE 2010

WWW.VAREALTOR.COM

VAR Forms 200 and 300: Residential Lease and Application for Lease The Real Estate Board Regulations make clear that, unless disclosure has been previously made, a brokerage relationship disclosure must be included in the lease or application when one party is represented and the other is not.

18 VAC 135-20-220. Disclosure of brokerage relationships.

B. Lease transactions.

1. Unless disclosure has been previously made by a licensee, a licensee shall disclose to an actual or prospective landlord or tenant who is not the client of the licensee and who is not represented by another licensee, that the licensee has a brokerage relationship with another party or parties to the transaction. Such disclosure shall be in writing and included in the application for lease or the lease itself, whichever occurs first. If the terms of the lease do not provide for such disclosure, the disclosure shall be made in writing not later than the signing of the lease.

The second paragraphs of VAR Forms 200 (Residential Lease) and 300 (Application for Lease) make clear who the agents represent. â—?

VOLUME 17 â—? ISSUE 3

MAY/JUNE 2010 17

lifelessons ANDREW KANTOR

One wrong step....

REALTORS® WHO NEGLECT Virginia real estate regs can find themselves in the crosshairs of the Virginia Real Estate Board, facing punishment ranging from a small fine to loss of their license. They can be cited for small things or large, including the eyebrow-raising finding of “Unworthiness & Incompetence.”

Here are a few real-world examples taken from the recent actions of VREB. These narratives are based on the Board’s official findings and do not necessarily reflect reality; participants may disagree with VREB’s findings and version of events as well. They are provided solely as examples of Board actions.

All of the names have been changed.

Roger’s license was revoked. He was not fined, however he filed for bankruptcy in July.

This is going on your permanent record In 2002, at the age of 55, Tom began doing some work as a contractor for the Navy in Norfolk. As part of the job, he was required to disclose any other income.

He had none at the time, but a year later he started his own small business and didn’t tell the Navy because he didn’t know whether his start-up would survive. When the oversight was discovered, he plead guilty to making a false statement (a felony) and was sentenced to probation and a fine.

In 2007, he received his real estate license and became a full-time Realtor®. When applying for his license, however, he did not disclose his conviction; later it was discovered.

Because the crime was old, had nothing to do with real estate, and was an oversight rather than any attempt at fraud, Tom was put on probation for three years and required to attend four hours of continuing education; his broker must file quarterly reports with VREB indicating that Tom is following the rules.

No big deal There’s something you need to know Roger, a real estate agent and landlord, leased a property for two years in March 2008. But in September 2008 he stopped making mortgage payments on the house. The tenants were unaware that he was a part owner of the property.

Five months later — in February 2009 — he called his tenants to tell them they had to leave immediately because (surprise, surprise) the bank was foreclosing on the property.

In fact the bank did so less than a month later; the tenants left a couple of weeks after that.

For not telling his tenants he had an ownership interest, and for not bothering to give them “written notice of any material changes to the transaction,” 18 MAY/JUNE 2010

John was a co-owner, CEO, and associate broker of his firm. Accounting errors resulted in funds from two of the firms escrow accounts being moved into a single account, and almost $300,000 disappearing.

Meeting with the firm’s board, John and the other two board members conspired (that was John’s word) not to inform the firm’s principal broker about the missing funds, and to replace those funds so no one would be the wiser.

Several months later, though, John felt guilty and contacted VREB, confessing to the entire scheme.

For “engaging in improper, fraudulent, or dishonest conduct” by mishandling escrow accounts and conspiring to keep the firm’s principal broker in the dark about it, John was fined $4150 and required to take six hours of continuing education. His two co-conspirators received similar punishment. ● WWW.VAREALTOR.COM

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New laws

now k to 0 d e e r 2 01 n you ut fo abo

On July 1, most of Virginia’s new laws take effect.

Here are the ones Realtors® need to know about.

On July 1, Virginia’s new laws take effect. Realtors® and brokers need to be aware of several, including those VAR has had a hand in: New disclosure statement. The Residential Property Disclosure Statement will now state that ‘the seller makes no representations with respect to the presence of any wastewater system located on the property,’ and advises buyers to exercise due diligence to determine the presence of a wastewater system.

The Real Estate Board has issued the new form — available at VARealtor. com/StandardForms — and members should keep in mand that there are penalties for using the wrong one.

Standardized rules for signs. Local laws can still limit the placement of many signs (e.g., prohibit them from being placed in medians or on light posts), and localities can choose whether to enforce state and federal sign laws. But starting July 1, local governments that choose to enforce state

law are responsible for the acts of their volunteers who remove offending signs.

The new law requires that local governments keep removed signs from at least five business days so that sign owners (e.g., Realtors®) can retrieve them if they were removed illegally (by, say, overzealous volunteers).

The law also clarifies that installing a sign in the ground by hand or foot, without the use of tools or equipment, does not require a call to “Miss Utility.”

New requirements for license by reciprocity. All out-of-state applicants for license by reciprocity will be required to complete education comparable to that of Virginia licensees and to pass the Virginia exam.

Amnesty for honesty. A real estate broker who discovers that a member of the firm has violated a law or regulation will no longer be penalized if he satisfies certain requirements, including notifying VREB within 30 days, submitting a written plan for fixing the issue, and possibly entering into a

voluntary compliance program (which must be completed within 90 days of submitting the plan).

Note that bill does not protect the broker if the noncompliance was intentional or the result of gross negligence.

Landlord and tenant laws changed.

A number of changes were made to landlord and tenant laws this year.

Some key revisions to the Virginia Residential Landlord Tenant Act: Landlords are now allowed to provide information about tenants to a commissioner of the revenue and, in the case of a military tenant, to his commanding officer.

A landlord may withhold a reasonable portion of the security deposit to satisfy unpaid water and sewer bills.

Utility charges are treated as rent.

Vested rights are better protected.

If a local government permits a property improvement, it can’t change its mind and later declare those improvements to be illegal.

And property owners are now allowed to replace on-site sewage systems for an existing building in the same general location, even if new regulations prohibit the sewage system there. (If access to a sanitary sewer system is available, the property owner must connect to it.)

Exchange Facilitators Act. This new act establishes requirements for the activities of exchange facilitators who, for a fee, enter into an agreement with a taxpayer to act as (1) a qualified intermediary in an exchange of like-kind property, (2) an Exchange Accommodation Titleholder, or (3) a qualified trustee or escrow holder.

Appraisal management companies are regulated. Real estate appraisal companies will be subject to new statutory requirements. Among other things, AMCs are prohibited from trying to influence any aspect of an appraisal in any way. And they cannot stop an appraiser from disclosing, in the appraisal report, the actual fees charged.

A number of changes were made to landlord and tenant laws this year.

POAs must collect disclosurepacket fees. Property owners associations that are not professionally managed must collect any fees for providing the disclosure packet at the time of delivery. If the fees aren’t paid, they will be assessed against the lot and are collectible as any other assessment.

Licensed loan originators must register. Mortgage lenders and brokers licensed in Virginia must now register with the Nationwide Mortgage Licensing System and Registry.

New rules regarding escrowed deposits: interpleader and foreclosure. Effective July 1: A real estate licensee holding escrow funds for a homeowner whose property is foreclosed upon may now file an interpleader action in court, allowing the court to take custody of the funds.

Foreclosure will now be considered as termination of a purchase contract.

If there’s an escrowed earnest money deposit to be paid on termination, the escrow agent may disburse the deposit.

Landlords who lose a property through foreclosure must transfer tenants’ security deposits to the new owner; the new owner must return that security deposit to the tenant at the end of the lease in accordance with its provisions. l

Volume 17 ● Issue 3 May/JUNE 2010 21

22 MAY/JUNE 2010

www.VARealtor.com

The gathering

Things are starting to look up for the residential real estate market. But talk to commercial Realtors® and you get a different picture: They’re not enjoying the calm. They know what’s coming next.

Volume 17 ● Issue 3

May/JUNE 2010 23

THE GATHERING STORM Commercial Realtors® see dark skies ahead

By Liam MacLeod

24 MAY/JUNE 2010

FOR RESIDENTIAL REAL estate the future is looking brighter, but on the commercial side the worst may be yet to come.

Underwater loans coming due, tight-fisted banks, retail failures, and of course the Great Recession. They’re hammer blows hitting — or about to hit — commercial property sales.

On March 29, CNBC aired an interview with Elizabeth Warren, chair of the Congressional Oversight Panel that was created to, among other things, evaluate the effectiveness of the federal Troubled Asset Relief Program, or TARP. Warren’s observations were sobering.

“By the end of the year, about half of all commercial real estate loans are going to be underwater, and they are concentrated in the mid-size banks,” she said. “We now have 2,988 banks that have these dangerous concentrations in commercial real estate lending.”

In other words, just as the residential market is recovering from the waves of foreclosures and underwater owners, the commercial market is bracing for its turn. It’s the domino effect: The collapse of housing prices started the recession, and now that

recession looks about to wreak havoc on the commercial side.

It’s a vicious cycle. Worried and out-of-work consumers cut spending.

Businesses lose business. Door close, offices consolidate, and companies go under. That’s a recession, and it’s battered every sector of commercial real estate — retail, office, industrial, lodging, multi-family, and more.

That’s why, when asked to prescribe a remedy for the ailing commercial real estate market in Virginia, Jim Tucker needed but one word: Jobs.

“We have people who aren’t getting paychecks and people who still have jobs but are deathly afraid of losing them,” said Tucker, founder and principal broker for NetWorks Commercial Real Estate, a national firm headquartered in Richmond.

“They have been putting away every nickel, cutting up their credit cards.”

Break that vicious cycle with jobs, and you just may revive the businesses that drive the commercial market.

Or you may not. As they look to the months ahead, there’s plenty keeping commercial real estate professionals up at night: financing challenges, frustrations with banks’ death grip on www.VAREAltoR.coM

distressed properties, and a political climate in Washington that may or may not be helping.

And jobs.

The coming crisis “What I’ve seen is that the crisis isn’t here yet, but it’s coming,” said Conrad Koneczny, a Winchester-based managing director for Sperry Van Ness.

“There are so many toxic properties being held by banks and institutions right now. Money is out there, but banks just want to make sure they don’t put anything else into toxic assets.”

As Warren explained, mid-sized banks are not in a position to lend to small businesses when the banks “are getting a sock in the teeth over commercial real estate loans.” No smallbusiness loans, no expansion.

So, like Tucker and Koneczny, Warren said things will likely get worse before they get better.

“I think we have another very serious economic problem that we’re going to have to resolve over the next three years,” she said. And by “we” she didn’t mean only commercial Realtors®.

In February, a report from the VolUME 17 ● IssUE 3

Congressional Oversight Panel sounded especially grim. It was titled, “Commercial Real Estate Losses and the Risk to Financial Stability.”

“Commercial real estate loans made over the last decade— including retail properties, office space, industrial facilities, hotels and apartments — totaling $1.4 trillion will require refinancing in 2011 through 2014,” the report said.

Nearly half of those loans are underwater — with the borrower owning more on the loan than the property is worth. The loans mostly likely to fail, according to the report, “are those made at the height of the real estate bubble.”

“There’s plenty keeping commercial real estate professionals up at night: financing challenges, frustrations with banks’ death grip on distressed properties, and a political climate in Washington that may or may not be helping. And jobs.”

Neither a borrower or a lender be Commercial real estate professionals across the state said fear still haunts bankers, investors, businesses large and small, would-be entrepreneurs, and others huddled on the sidelines.

Keith May is principal broker for Cottonwood Commercial, a commercial real estate brokerage firm based in Harrisonburg.

“My biggest worry presently is the financing of commercial real estate,” May said. “There are few options for MAY/JUNE 2010 25

“There are always buyers out there who are looking for a good investment.

What keeps me up at night is that the commercial banking side of the business has pretty much stopped lending.”

26 MAY/JUNE 2010

affordable, long-term fixed financing.”

He added, “A few commercial mortgage backed securities products have hit the market, but they have offered such high rates and low loan to values, they are not reasonable products.”

Commercial mortgage backed securities, or CMBSs, are debt obligations backed by cash flows from pools of mortgage loans on commercial property. A PricewaterhouseCoopers Korpacz Real Estate Investor Survey for the first quarter of 2010 reported that, nationally, delinquent CMBS, “which totaled less than $20 billion in October 2008, mushroomed to $65.2 billion at the end of November 2009.”

Cheryl Hamm also worries about lending; she’s a broker and vice president of operations for Joyner Fine Properties in Richmond. “There are always buyers out there who are looking for a good investment,” she said.

“What keeps me up at night is that the commercial banking side of the business has pretty much stopped lending,” said Hamm, “They know they have under-performing assets and they know they have distressed properties but they are not sharing it with the world.”

The perception among many — Realtors®, economists, financial

planners, and business owners — is that the financing environment will worsen as banks’ troubled commercial loans become even more troublesome, in part because of the daunting gauntlet of new standards for financing and refinancing. In the current environment, even Mother Teresa might have struggled to land a commercial real estate loan. Bankers’ wives too.

Jane Quill, an associate broker with ReMax Residential in Fairfax, put it succinctly: “I have a load of people who would like to buy property but cannot because they are not going to get financing.”

Demand-side economics While lack of financing prevents those who want to buy from being able to buy, the commercial market is also being hit from the other side: Lack of demand.

Story seems the same: A few bright spots in an otherwise darkening sky.

The Richmond region, for example, has been enduring high vacancy rates across all commercial real estate sectors, including office, industrial, and retail. Circuit City Stores went under, affecting both office and retail vacancy numbers, as did LandAmerica Financial Group; losing the Qimonda www.VAREAltoR.coM

computer-chip manufacturing plant in Henrico County was another huge economic blow.

“Retail is really in the dumps,” Hamm said. “If you go to Short Pump [a relatively new upscale shopping center] on the weekend, it looks like there is no recession. But it’s very different if you go during the week.”

Hamm said that office sales are also “struggling along.” And while they’d be much worse without the relocation by MeadWestvaco’s corporate headquarters from Connecticut to Richmond, in Hamm’s view big office buildings are a thing of the past.

“People are working from home and telecommuting and don’t need to go into an office setting,” she said.

The Millennial Generation can happily work in a virtual office: a Starbucks or a Panera.

So Hamm said believes the commercial real estate market in the Richmond area could remain sluggish for a long time. “I think it’s going to take us two to three years to come back,” she said.

“The worst is not over. We’re going to bump along the bottom for a while.”

Stuart Meredith, executive vice president of brokerage services for Hall Associates in Roanoke, said the health care industry boosts the regional economy. (The region’s largest employer is Carilion Clinic, and it continues to recruit new physicians.)

“But the rest of the market is stagnant,” Meredith said, describing commercial real estate vacancy rates in the Roanoke-area market as “somewhat higher than normal.”

“Activity is improving but it’s harder to get decision makers to ‘pull the trigger,’“ he said. “Frustration and impatience are probably keeping me up at night. The national economy Volume 17 ● Issue 3

is really keeping everyone uncertain about the future.”

“ I think it’s going to take us two to three years to

Silver linings

come back. The worst is

But at least one facet of the national economy is helping the commercial market: the $800 billion-plus gorilla in the room that is federal defense spending. It’s the main reason areas in Northern Virginia (proximity to Washington) and Norfolk (shipyards) have avoided at least some of the market downturn.

The Korpacz survey reported that “leasing demand from the federal government continued to benefit the performance of the Northern Virginia office market in the latter part of 2009.”

Quill said Northern Virginia’s economy, snuggled up as it is with the federal government and blanketed by high-tech companies, has remained somewhat insulated from the national economy’s troubles. In February, the jobless rate in Fairfax County was only 5.5 percent. By comparison, the national jobless rate in March was above 10 percent.

“People seriously think that we’re in a bad market,” Quill said. “Granted, it isn’t as robust as it was.”

In Norfolk, for example, Frank Cowling, a senior vice president for S.L. Nusbaum Realty Co., said the vacancy rate among shopping centers in the portfolio he manages is only about five percent.

There are other bright spots.

The Winchester area is just the right distance from the Beltway and Northern Virginia, said Conrad Koneczny, managing director for Sperry Van Ness. Close enough to Washington D.C. — about 72 miles — to render a car trip reasonable.

not over. We’re going to bump along the bottom for a while.”

May/JUNE 2010 27

“The positive signs from the national economy continue to pile up. There are increased retail sales and a rebound in consumer confidence, there’s been an uptick in factory output, construction is starting again, and there is at least some improvement in job growth.”

Winchester has some other things going for it, Koneczny said — things that appeal to government agencies and the security conscious. The region relies on a different power grid than nearby Washington. It offers development sites ringed by open ground.

And it’s far enough, he joked, to be outside a projected nuclear blast zone.

Upwind, too.

The Department of Homeland Security moved its FEMA disaster operations staff to a new building near Winchester. The FBI set up a Record/Information Dissemination Section in Winchester. And Koneczny said the region has benefited too from distribution centers for Home Depot and Kohl’s.

“Last year was one of the best I’ve had in real estate,” he said. “That’s the way the cookie crumbles.”

Still, that doesn’t necessarily mean a shiny, happy future. Because multimillion dollar commercial real estate projects often take years to clear logistical, permitting, and financing hurdles, Koneczny said 2009 was a good year thanks to deals long in the making.

So what about 2010?

“We’re not going to have as good a year as we had last year,” he admitted.

“But it won’t be disastrous.”

Which might be the new benchmark.

There are deals to be made, said Koneczny. Investors, he said, are looking for bargains. Hamm agreed.

“There are always buyers out there who are looking for a good investment,” she said.

28 MAY/JUNE 2010

Other, such as Cowling, see a different kind of silver lining. Tough economic conditions can help “weed out the weak players” who might have once been competitors in the development of shopping centers, he said.

“There are still deals to be made and those who know how to do it will still have money coming in,” Hamm said.

Koneczny said, “I love what I do and, so far, we are hanging on very nicely. It’s important to have a plan and to work that plan. The sky’s not falling.”

And Tucker stressed that a key to surviving and succeeding is knowledge of the regional market.

“There has never been a time in my 30-plus years in the business when local expertise is more important in commercial real estate than it is right now.”

And the positive signs from the national economy continue to pile up, even as the unemployment rate remains around 10 percent. There are increased retail sales and a rebound in consumer confidence, there’s been an uptick in factory output, construction is starting again, and there is at least some improvement in job growth.

And yes, the positive signs extend to commercial real estate. According to that Korpacz report, “Commercial real estate investors reveal a sense of hopefulness and improved sentiment with regard to the industry as the U.S. economy shows some encouraging signs of improvement.”

It included a caveat, though: “At the same time, however, investors acknowledge that challenges and concerns still exist.” ● www.VAREAltoR.coM

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Once bitten, too shy?

In dealing with the financial crisis, are banks too timid for everyone’s good?

by Liam MacLeod

30 MAY/JUNE 2010

YOU CAN ARGUE all day whether and how banks and unscrupulous lenders helped cause the financial crisis by throwing their money at anyone with a pulse. But now that the crisis is in full swing, have those banks swung the pendulum too far in the other direction?

Fear seems to rule the day. Fear of prices going down further. Fear of defaults and foreclosures. Fear of making more bad loans. That fear has led to paralysis in some cases, desperation in others. Some lenders have virtually turned off the mortgage taps, even for solid and established businesses. (Treasury secretary Timothy Geithner warned banks in 2009 that “The risk now to the economy is that

you will take too little risk.”)

Other lenders seem desperate to get out from under bad loans with at least something to show on the balance sheet — making deals that have even seasoned Realtors® shaking their heads.

Conrad Koneczny with Sperry Van Ness spoke of brokering an investor’s purchase of a former industrial site from a bank that had taken over the property. The bank ultimately agreed to sell the land and improvements for $825,000. The loan in default was for at least $2.3 million.

Another bank he spoke of sold an office building for about $2.5 million.

The loan had been for more than twice that.

Seeing numbers like those, other www.VAREAltoR.coM

broker for NetWorks Commercial Real Estate, a national firm headquartered in Richmond, and a former savings and loan executive. “They’re all using hope as a strategy and that’s about as stupid an approach as I can imagine.”

On the other hand, Tucker said, “I can feel [bankers’] pain” as they anticipate retrieving 50 cents or less on the dollar on the sale of such properties. “They’ve always been in the money business and now they’re in the asset business.”

And banks large and small must cope, he said, with ever changing federal regulatory guidance.

“They are almost as bald as I am from pulling their hair out,” Tucker said.

“Banks aren’t helping anybody. They’re all using hope as a strategy and that’s about as stupid an approach as I can imagine.”

Fool me once…

banks are holding on to distressed properties as they wait for better days.

After all, a million here, a million there — pretty soon you’re talking real money.

As Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies (and former Assistant Secretary for Housing at HUD) told the audience at NAR’s Midyear Legislative Meetings, “Most of the lenders have said ‘Let me extend for a while,’ because they have no other options.”

Industry wags to describe those decisions, somewhat derisively, as “kicking the can down the road” and “a rolling loan gathers no moss.”

“Banks aren’t helping anybody,” said Jim Tucker, founder and principal VolUME 17 l ISSUE 3

Many once-burned banks have set the financing bar so high that even a polevaulting kangaroo on steroids couldn’t clear it. “It’s just crazy,” Tucker said.

Rebel Cole is an associate professor of finance and real estate at DePaul University in Chicago and a former bank regulator. The bhigher bar has pros and cons, he said.

“Following the credit orgy of the 2003-2007 period, bank regulators have cracked down on loose underwriting standards on commercial real estate of all types, just as they have on residential real estate,” he said.

And although “this is a good thing,” he said, the horse is already out of the barn — a reality that dampens bankers’ enthusiasm for refinancing.

That’s because, thanks to the overall market, those properties — the loan collateral — aren’t worth as much as they used to be. Banks want borrowers to make up the difference, which can be significant.

MAY/JUNE 2010 31

“If the banks work with commercial Realtors®, we can turn this around because Realtors® are, generally, an optimistic group.”

“Lenders are requiring large equity injections to approve a refinancing,” he said, “but owners don’t have the funds to inject.”

To make things more complicated, not only do banks not want to offer refinancing on those underwater loans, they don’t want to write off the term mortgages when come due either, because, Cole explained, “write-offs of bad loans require off-setting write-offs of bank capital, which is in short supply these days.”

Bruce Whitehurst is president and CEO of the Virginia Bankers Association.

“This is indeed a very difficult time for commercial real estate, with higher vacancy rates in many parts of Virginia than anyone would like to see and a lot of uncertainty about values,” he said. “Banks are still lending on non-owner-occupied commercial real estate,” he said, but many non-bank lenders are not.

And Whitehurst defends the banks’ careful attitude. “Banks and banking regulators are focused on the strength of the borrowers, quality and duration of leases, and cash flow — because future values and marketability are in question,” he explained.

Teaming up Tucker, along with Cheryl Hamm (VP of operations for Joyner Fine Properties in Richmond) and Jane Quill (with ReMax Residential in Fairfax) suggested that bankers thinking about ponderous loans, looming defaults, and forestalled foreclosures turn to experienced commercial brokers. Together they can overcome thbe more formidable obstacles.

“The banks need to get together with Realtors® and say, ‘We need 32 MAY/JUNE 2010

your help,’” said Quill.

It just makes sense. “If the banks work with commercial Realtors®, we can turn this around. Realtors® are, generally, an optimistic group. We know how to market effectively, we know how to work with potential purchasers,” she said.

For example, Tucker suggested that said experienced commercial real estate professionals can help identify a transactions’ potential risks and rewards.

But Whitehurst said that, whenever possible, “banks prefer to work directly with borrowers toward a positive resolution.” He added, though, that “bringing in a third party to help with a possible sale is something banks would consider on a discretionary, case-by-case basis.”

The stakes are high, according to the Congressional Oversight Panel, which found that “a significant wave of commercial mortgage defaults would trigger economic fallout that could affect nearly every American.” A downward spiral of economic contraction could follow, the report suggested, with: “job losses, deteriorating store fronts, office buildings and apartments; and the failure of the banks serving those communities.”

And small businesses frequently depend on financing from community banks.

Cowling manages an asset portfolio of shopping centers. He said when small business tenants cannot secure loans to carry them through day after day of idled cash registers, they beseech landlords for lease adjustments.

“For years it was what we called a landlords’ market,” he said. “Now it’s more like a tenants’ market.” l www.VARealtor.com

A glass half empty “THE FOLKS ARE mad,” political pundit Terry McAuliffe (and former Democratic contender for Governor of Virginia) told a crowd at the Real Estate Summit, part of NAR’s Midyear Legislative Meetings & Trade Expo in May, “They’re mad at everybody.”

And when you get past tight-fisted banks, scared investors, and a tooquiet commercial market, the easy target is the government, which — depending on who you ask — is either doing too much or too little, and always too late. (Or is simply doing the wrong thing and not enough of it.)

Whether they fault President Bush’s $850+ billion financial stimulus and bailout packages (e.g., TARP), or the $787+ billion in Obamaadministration programs (e.g., Making Home Affordable and the $8,000 home-buyer tax credit), fears of the growing national debt and increased government involvement with the financial sector gnaw at some commercial Realtors®.

Leave the economy alone, say some.

Given time, it will correct itself.

“My biggest worry is that the ‘recovery’ will be an illusion and a second wave of financial problems will come as a result of government intervention in private enterprise,” Tucker said. “Only job creation will bring us out of this.”

Of course, job creation requires money, and that’s hard to come by.

Enter some of those government programs.

For example, the Obama administration instituted a $5,000 newemployee tax credit for businesses VolUME 17 l ISSUE 3

like Tucker’s specifically to spur job creation.

(Unemployment in Virginia — and nationwide — has been at its highest rate since Ronald Reagan’s presidency, but it dropped from that high in March especially in the healthcare and “other service” industries. And layoffs, at least, are down sharply since January. How much of that is due to the Administration’s job-creation efforts is, of course, impossible to tell.)

There’s other money being spent on small businesses: a tax cut for small business investment, increased Small Business Administration loan guarantees, nearly doubling the amount of new capital investment that can be written off, allowing small businesses to carry business losses back five years instead of two.

But all these things have to be paid for. And with the national debt having skyrocketed under presidents Reagan, both Bushes, and now Obama, some are saying enough is enough.

Frank Cowling, a senior vice president for Norfolk-based S.L. Nusbaum Realty Co., is tired of paying for tax cuts and new federal programs.

“I go out and bust my rear end and the government has its hand in my pocket,” he said. “If I’m working for the government, I might as well go out of business.”

So while the glass-half-full crowd might see tax breaks and economic stimulus as the government working for them, being in a recession since 2007 can darken the outlook of even the most optimistic. l

When all else fails, blame the government

“

Leave the economy alone, say some.

Given time, it will correct itself.“

MAY/JUNE 2010 33

A Decade of Commercial Victories Although you may hear more about VAR’s work on residential-Realtor® issues, there’s a lot going on to support commercial Realtors® and real estate development.

Over the last 10 years, VAR has introduced, endorsed, and fought for

We have helped defeat numerous initiatives that would have stifled growth, we’ve repeatedly defeated impact fee legislation, we’ve had our members (and thus our voice) on the Commission on Growth and Economic Development, and we’ve fought against — and beaten — numerous adequate public facilities ordinances.

And there’s more. Much more.

Here’s a sampling — nine ways we’ve worked on behalf of our commercial members over the past decade.

(and against) a long list of

1. Helped create the Growth and

bills affecting the com-

Economic Development Commission, which later defeated numerous pieces of legislation dealing with preservation, impact fees, adequate public facilities, restrictive building permits language, and more.

mercial real estate market – office, industrial, multifamily, and all points in between. And we’ve had a lot of success.

2. Negotiated with the Virginia Mortgage Bankers Association and Virginia Mortgage Brokers Association to pass legislation allowing real estate licensees to have ownership interests in mortgage companies.

3. Passed legislation that provides that no locality shall require cash proffers prior to the issuance of building permits.

4. Passed legislation that required some

5. Created a streamlined approval process for commercial property in localities with a population greater than 90,000.

6. Passed legislation requiring the Department of Taxation to establish a certification program for all supervisors, assessors, and appraisers contracted to perform assessments.

7. Passed legislation allowing local governments to offer incentives to owners for timely submission of a plan for demolition or renovation.

8. Passed legislation authorizing the Virginia Public Building Authority and the Virginia Resources Authority to finance economic development initiatives for major state and local government employment and investment projects.

9. Passed legislation reducing the rate of the additional real property tax that may be imposed on commercial property by localities embraced by the Northern Virginia Transportation Authority. l

blighted property to be reclassified and reassessed at a lower rate.

34 MAY/JUNE 2010

www.VARealtor.com

accessibletech ANDREw KANtoR

A better browser

Your Web browser is your window to the glories of the Internet.

Make sure it’s up to date.

IN THE NAME of all that’s holy, get a better browser.

Your Web browser. Too many of you are using outdated, incompatible, insecure, or just plain embarrassing software (AOL, anyone?). There’s no excuse.

Better browsers are free — free as in beer.

If you are not using Firefox 3.6, Internet Explorer 8, or the latest versions of Chrome or Opera, you are in violation of your user guidelines and subject to severe penalties.

All right, maybe not. But you should be if only because of the security risk.

Old browsers aren’t safe. Really. They’re vulnerable to all sorts of attacks, which is one reason we have new browsers.

The reality is that there are always Black Hats out there, looking for ways to get into your computer. The Web is the most convenient way to do it, which means a constant arms race between them and browser makers to prevent it.

Older browsers are simply more vulnerable; the chance of being infected by spyware adware, or a virus on a Web page are much, much higher if you’re using something like Internet Explorer 5.

(In the old days, viruses would simply destroy things on your computer. Today, most exist to turn your computer into a “zombie” machine, used to send spam. You might not even know you’re infected, at least until your machine slows to a crawl. Search on the word botnet if you want more.)

And if for some reason you’re still using the AOL browser, stop. Now.

as many people as possible. That means only using features that just about everyone can see. (For example, we know what size monitors our visitors use, so we don’t make the pages too wide or too narrow.)

Web sites have advanced a lot in the past few years — they’re more usable and more robust, with a host of new features, from menus that open when you hover over them, to news stories that update automatically, to powerful Web-based applications like Gmail and Zoho Office.

More sites — including VARealtor.com — are using or planning those features. Trouble is, when we look at our visitor logs we see that too many of you are using outdated browsers. That means either A) we’re

Seeing it all You also need a browser that can show you modern Web sites in all their glory, the way the designers intended. It needs to handle Flash, the latest versions of HTML and CSS*, Java, JavaScript, and so on. Heck, any smartphone worth its salt can do those things.

Why am I saying this? Because like any Web site creators, we want our site to work and look good for VolUME 17 ● ISSUE 3

MAY/JUNE 2010 35

accessibletech prevented from using those nifty things, or B) some of you either don’t see them or see a broken site.

So you need to update your browser. Not for us, for you. (Once again, browsers are free. They’re also easy to install, and they even import all your old settings.)

Besides security and features, speed is the other reason to upgrade. Browser makers are constantly tweaking their performance, so that Web pages are snappier even on a slower connection. If you’re upgrading from something more than a few months old, you’ll see a difference.

Did I mention they’re free?

Here are your choices. And you can have more than one. (In fact, you should make sure to get the newest Internet Explorer, as there are a few sites out there that — for reasons I cannot fathom — use IE-specific features.)

1. Mozilla Firefox 3.6. Highly recommended. Fast, secure, and infinitely customizable, it has about 25% of the market these days. At getfirefox.com.

2. Google Chrome. The up-and-comer. Fast and slick but with some rough edges, and missing some of Firefox’s features. At google.com/chrome.

3. Microsoft Internet Explorer 8. With about 60% of the market, it’s the big name. But it’s not the best, although it’s getting better. At microsoft.com/ie.

4. Opera 10. Like Chrome, it’s fast and slick. It’s got a loyal fan base, but its small market share means you might have trouble getting help. At opera.com.

will walk you through the process. It may be able to do that automatically, or you may have to download and run the Internet Explorer installer. (You can also go to microsoft. com/ie to download and install the latest version.) If you must use Internet If you’re using an older Explorer, be sure you’re product, such as Ye Olde using version 8.

AOL Browser: Remove it, scan for viruses and spyware (the free Avast antivirus at avast.com is a good bet), and install one of these newer browsers.

Why Firefox?

There’s a long list of reasons Firefox has gained in popularity so much. It started with security — Internet Explorer was much more prone to infection. But then it added faster browsing, new features like tabs, and a host of other improvements that other browsers eventually integrated.

Want to browse without leaving a trace on your computer? Firefox has Private Browsing. Computer crash? Firefox will restore the pages you were looking at. Lots of bookmarks? Just start typing part of one in the address bar and Firefox will automatically search your list.

But Firefox’s most useful There are others, but these feature is how customizable it is. four are the big guns. If you Sure, you can change its colors Windows Update can make sure you’re runaren’t using one, it’s time to with a click or two, but that’s ning the latest version of Internet Explorer. upgrade. Don’t make us say just eye candy. it twice.

You can add any of hundreds of search engines to your toolbar easily, including searches by Upgrading 1-2-3 MLS number, and of the NAR If you’re using a version Library Catalog and NAR Field of Firefox older than 3.7: Guides. (Not to mention Bing, Click Help, then Check for Wikipedia, eBay, Amazon.com, Updates. The updating proand a lot more.) That’s all at mycroft.mozdev.org — cess is automatic. just search on “Realtor.”

If you’re using a version of Internet Explorer older Even more powerful are the thousands of extensions than 8: Go to windowsupdate.com and the Web site available that you can install (again, with just a click * These are the languages of the Web — they’re what designers or two) to add or improve features. And yes, they’re all use to create Web pages that your browser displays.

36 MAY/JUNE 2010

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“

Even more powerful are the thousands of extensions available for Firefox that can add or improve features.” free and they’re all at addons.mozilla.org.

There are basics, like additional toolbars (including for Move.com and Yahoo Real Estate). But others add A sampling of some of our favorites: AdBlockPlus: No more ads on Web pages, period.

AutoFillForms: Enter all your information once, and you can fill in Web forms in a fraction of the time.

Brief: A clean and simple way to follow news feeds — arguably the best RSS reader for Firefox.

Forecastbar Enhanced: Current weather at the bottom of your browser; hover your mouse to pop up a radar image.

Scrapbook: Capture Web pages (or parts of them) and save them on your computer for easy reference — think of it as a powerful clipping library.

Twitterbar and Facebook Toolbar: Supersimple access to posting to Twitter or following your Facebook friends.

XMarks (now available for IE and Chrome, although it’s not as seamless): Synchronize your bookmarks across all your computers, and keep an automatic backup as well. Never lose a site again.

And there’s a lot more — addons to download YouTube videos, or to make Gmail better or to get site recommendations or to play music or to get reminders… you get the picture. Use Firefox out of the box, customize the heck out of it, or just add a few features. ●

Firefox: Speed, features, security, and customization — Firefox might be your best browser bet.

Chrome: Google chrome has a cleaner look than other browsers, and it’s no slouch under the hood.

If you put them together: Both Firefox and chrome are quick, fast, and safe browsers — and free, too.

VolUME 17 ● ISSUE 3

MAY/JUNE 2010 37

rpacreport GOLDEN R INVESTORS ($5,000)

As of May 31, 2010 the following REALTORS® and local associations have joined RPAC of Virginia as Major Investors. For more information on the value of RPAC and how your investment works to protect your business, contact Meredith Cox at mcox@VARealtor.com or (804) 264-5033. Or, if you want to get invested today, please visit rpacofva.com.

GOLDEN R ASSOCIATION ($5,000) Northern Virginia Association of REALTORS®, Fairfax Roanoke Valley Area Association of REALTORS®, Roanoke Williamsburg Area Association of REALTORS®, Williamsburg * H all of Famers have contributed a cumulative amount of at least $25,000 to RPAC.

CRYSTAL R ($2,500–$4,999)

Mike Minnery Re/Max Allegiance Woodbridge

38 MAY/JUNE 2010

Charles Burnette Burnette Real Estate Sales Blacksburg

Bill Chorey Chorey & Associates Realty Suffolk

Dennis Cronk* Poe & Cronk Real Estate Group Roanoke

John Dickinson Hall Associates, Inc. Union Hall

Joe Funkhouser Coldwell Banker Funkhouser Harrisonburg

Dorcas Helfant-Browning Coldwell Banker Professional Virginia Beach

Steve Hoover MKB, REALTORS® Roanoke

John McEnearney McEnearney Associates, Inc. Alexandria

Tom Stevens* Coldwell Banker Residential Vienna

Melanie Thompson* Century 21 AdVenture Realty Fredericksburg

Jack Torza Long & Foster Realtors® Mechanicsville

Deborah Baisden Prudential Towne Realty Virginia Beach

Bob Barton Barton Real Estate Services Richmond

STERLING R INVESTORS ($1,000–$2,499)

Bob Adamson McEnearney Associates, Inc. McLean

Julia Avent Re/Max Allegiance Arlington

Mary Bayat Bayat Realty Inc Alexandria

www.VARealtor.com

StERlING R INVEStoRS ($1,000–$2,499)

Mary Ann Bendinelli Weichert Realtors® Manassas

Laura Benjamin Roanoke Valley Association of Realtors® Roanoke

Karen Bohlke-Enriquez Re/Max Select Hampton

Brad Boland Jobin Realty Reston

Candice Bower McEnearney Associates, Inc. McLean

R. Scott Brunner Virginia Association of Realtors® Glen Allen

Robyn Burdett Re/Max Allegiance Reston

Chris Call AREAS Appraisers, Inc. Springfield

Dale Chandler Greg Garrett Realty Newport News

David Charron MRIS Rockville, MD

Billy Coons Realty Executives Virginia Beach

Benton Downer Downer & Associates Charlottesville

Mary Dykstra RE/MAX Valley REALTORS® Roanoke

Sandee Ferebee Prudential Towne Realty Virginia Beach

Claire Forcier-Rowe Coldwell Banker Elite Fredericksburg

Virgil Frizzell Long & Foster Real Estate Herndon

Pam Frohman Keller Williams Realty Chesapeake

Karen Gaskins Rose & Womble Realty Chesapeake

Libby Gatewood Napier REALTORS® ERA Colonial Heights

Bill Gearhart Coldwell Banker Townside Roanoke

Lynn Grimsley Re/Max Peninsula Newport News

Kit Hale MKB, REALTORS® Roanoke

Margaret Handley M.C. Handley, Ltd. McLean

Tom Innes RE/MAX Commonwealth Richmond

VolUME 17 ● ISSUE 3

MAY/JUNE 2010 39

rpacreport STERLING R INVESTORS ($1,000–$2,499)

Donn Irby Rose & Womble Realty Chesapeake

Margaret Ireland Weichert REALTORS® Gainsville

Jo Anne Johnson Westgate Realty Group, Inc. Falls Church

Sita Kapur Arlington Premier Realty LLC Arlington

Kathleen Kennedy Re/Max Regency Manassas

Patricia Kline Avery Hess Realtors® Springfield

Barbara Jean LeFon Rivah Realty LLC Montross

Richard Limroth RE/MAX Valley REALTORS® Roanoke

Scott MacDonald Re/Max Gateway Chantilly

Andy Mason Weichert Realtors® Mason-Davis Onancock

Shane McCullar Keller Williams Realty Alexandria

Susan Mekenney Re/Max Allegiance Fairfax

Dee Meredith Coldwell Banker Forehand & Company Lynchburg

Tom Meyer Condo 1, Inc. Arlington

Jay Mitchell Prudential Towne Realty Virginia Beach

Vinh Nguyen Westgate Realty Group, Inc. Falls Church

Forrest Odend’hal Long & Foster Real Estate Manassas

Susan Oh New Star Realty & Investment McLean

Ann Palmateer Prudential Towne Realty Chesapeake

Gwen Pangle 1757 Real Estate Company LLC Leesburg

Gail Penman William E. Wood & Associates Virginia Beach

Tracy Pless Long & Foster Real Estate Reston

John Powell Long & Foster Real Estate, Inc. Colonial Heights

Jane Quill Re/Max Presidential Fairfax

Contributions are not deductible for income tax purposes. Contributions to RPAC are voluntary and are used for political purposes. The amount suggested is merely a guideline and you may contribute more or less than the suggested amount. You may refuse to contribute without reprisal and the National Association of Realtors® or any of its state associations or local boards will not favor or disfavor any member because of the amount contributed. 70% of each contribution is used by your state PAC to support state and local political candidates. Until your state PAC reaches its RPAC goal 30% is sent to National RPAC to support federal candidates and is charged against your limits.

40 MAY/JUNE 2010

www.VARealtor.com

STERLING R INVESTORS ($1,000–$2,499) STERLING R ASSOCIATION ($1,000–$2,499)

Anne Rector Long & Foster Real Estate Alexandria

Peter Rickert Coldwell Banker Residential Brokerage Alexandria

Thomas Rickert Coldwell Banker Residential Brokerage Alexandria

Zinta Rodgers-Rickert Re/Max Allegiance Fairfax

Henry Scholz Hall Associates Inc. Roanoke

Trudy Severa Long & Foster Real Estate Reston

Jean Siebert Siebert Realty Virginia Beach

Kimber Smith Prudential Towne Realty Toano

Cindy Stackhouse Century 21 Stackhouse & Associates Dumfries

Suzy Stone Century 21 AdVenture Realty Fredericksburg

Thomas “Mack” Strickland, Jr. Strickland Realty Chester

Trish Szego ERA - Elite Group Realtors® Fairfax

Richard “Dick” Thurmond William E. Wood & Associates Virginia Beach

Christine Todd Northern Virginia Association of Realtors® Fairfax

Karen Trainor Weichert REALTORS® Fairfax

Kevin Turner Century 21 All Service Bedford

Sandra Wagner William E. Wood & Associates Poquoson

Todd Wampler Wampler Realty, Inc. Daleville

Barbara Wolcott Prudential Towne Realty Virginia Beach

Volume 17 ● Issue 3

Greater Augusta Association of Realtors® Lynchburg Association of Realtors® Lynchburg New River Valley Association of Realtors®, Christiansburg Virginia Peninsula Association of Realtors®, Hampton

May/JUNE 2010 41

varbuzzcontest Here’s your chance to win a cool Garmin nüvi 1300 GPS system for your car (Big! Color! Touchscreen!) just for reading this magazine and VARbuzz, our official blog and ‘water cooler.’

It works like this: answer the questions below by reading this issue of Commonwealth. on July 1, go to www.VARbuzz.com. there you’ll read simple instructions (e.g., “take the first letter of each word to spell out the answer” or “What’s the opposite of answer #3?”). that will give you the final answer and instructions for sending it in. there will be a deadline. We’ll take all the correct entries we receive by that deadline and draw one randomly. that winner gets the nüvi. simple, huh?

Here are the questions. Annnnnnnnd, go!

1. What three-letter certification does Var treasurer John daly hold?

2. Keynote speaker richard Binter is president of housing Wire and ____ Insider.

3. Var form 600e is the agreed repairs addendum, but form 600__ is the actual home inspection addendum.

4. In what city is Conrad Koneczny based?

5. one person’s surname is spelled incorrectly in these questions. What is the correct spelling?

Now that you’ve got your five numbers, hang onto this form until July 1, when you’ll get your final instructions at www.VARbuzz.com.

Notes: This contest is only open to current members of the virginia association of realtors®. Contest winners must skip two issues before they’re eligible to win again. all decisions about correct answers rest with var staff, and are final. Bribes are accepted but not acted upon.

Bonus!

Earning your GRI designation satisfies the 30-hour post license requirement for new licensees

42 may/JuNe 2010

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 9:30 a.m. to 3:45 p.m.

Our phone number is

(804) 264 -5033 For membership and dues questions Ask for Amy Hafer Membership Records Manager amy@varealtor.com

For questions about professional standards and the Code of Ethics Ask for Blake Hegeman, Associate Counsel blake@VARealtor.com

If you’re interested in marketing or advertising opportunities Ask for Amanda Rainsford, Marketing Manager amanda@varealtor.com

To reach our Legal Resources Center Call (800) 755-8271* * You must register first at www.VARealtor.com/LegalHotline

If you’d like to have someone speak at your association or brokerage

To find out about conferences, seminars, and professional education

Ask for Lisa Noon, Vice President of Member Outreach lisa@varealtor.com

Ask for Glenda Puryear, Conferences Specialist or Lili Paulk, Director of Education glenda or lili @varealtor.com

If you need to know about professional designations Ask for Kim Martin, Specialties and Chapter Manager kim@varealtor.com

If you have comments or questions about Commonwealth magazine or our Web sites Ask for Andrew Kantor, Editor & Information Manager andrew@varealtor.com

(804) 249-5712 scott@varealtor.com

Ask for Meredith Cox, Director of Political Communications meredith@varealtor.com VAR 2010 Leadership Team

Cindy Stackhouse, GRI President Century 21 Stackhouse and Associates Prince William (703) 580-0880 c21cindys@aol.com

VAR Member Service Partners

DNCSolution, Do-not-call solutions Security code SC1795VR Liberty Mutual Home, auto, and renters insurance LLE Language Services Telephone interpretation and document translation Promotion code VARM08 Outstaffing, Staffing and payroll Pearl Insurance E&O, medical, life, and dental insurance Phone Tag, Voice to e-mail transcription TASC/BizPlan, Medical expense tax benefits T-Mobile, Wireless service VAR Wireless Center Wireless plans and hardware

Our CEO is Scott Brunner

For information about RPAC

Virginia Department of Motor Vehicles Realtor license plates Zipform, Electronic Forms Solutions

John Dickinson, CCIM, GRI President-Elect Hall Associates, Inc., Roanoke (540) 982-0011 jrdickinson@cs.com Trish Szego, CRB, CRS Vice President ERA-Elite Group, Haymarket (703) 359-7800 trishelite@aol.com John Daly, SFR Treasurer Rose & Womble, Virginia Beach (757) 486-8800 jdaly@roseandwomble.com John Powell, GRI, ABR, CRB, CRS Immediate Past President Long and Foster Real Estate, Colonial Heights (804) 520-5600 john.powell@longandfoster.com R. Scott Brunner, CAE Chief Executive Officer (804) 264-5033 scott@varealtor.com

Volume 17 ● Issue 3 May/JUNE 2010 43

lastword SCOTT BRUNNER

Hard of hearing How poor listening isn’t solely the province of 11 year olds Just about the time a son turns 11, something goes all screwy with the wiring connecting ears to brain.

His hearing becomes unreliable (a generous term, I’d say), and your formerly obedient, well-adjusted child becomes a walking doofus.

Sound — almost always the reasonably intelligible words of a parent giving instruction — goes in one adolescent ear, is waylaid on its way to the cerebral cortex, and is redirected around the perimeter of the cranium to sputter out the other ear like so much ambient noise.

I don’t know why. I only know that, in my household at least, even repetition is not up for the challenge. To wit: “Did you brush your teeth?”

“You didn’t tell me to.”

“Yes, I did. Three times.”

“I didn’t hear you.”

So what is a parent to make of a boy’s affirmative response to each of those three previous “brush your

44 MAY/JUNE 2010

teeth” directives? He may nod, mumble “Yessir,” may possibly even amble off in the general direction of the bathroom sink — only to lose the signal somewhere along the way, like a bad Comcast router.

On the other hand, tell him you have a big ol’ piece of chocolate cake with his name on it and he’s Johnny-on-the-spot, fork in hand.

Tween-aged boys are notoriously inconsistent-of-hearing. But selective listening is not solely the province of adolescence.

These days, even adults seem inclined to hear only what we want to hear — the parts that affirm (or deny) our existing beliefs or hopes or — yes — biases. This is especially true when the speaker is of an opposing political stripe. But Glenn Beck and Al Sharpton aren’t the only ones whose aural bias empowers them to perpetuate mayhem.

Because I do it, too (though hopefully more inadvertently than Glenn Beck): I sometimes half-listen and thus half-hear and therefore go off half-cocked. Just ask my wife.

And so, I suspect, do you. More significantly, so do your customers and clients.

How, you say? Well, take disclosed dual agency for example.

What is a Realtor® to make of a buyer’s disinterested affirmation of your disclosure that in representing both him and the seller, you’ll not be able to advise him on the sellers’ situation or an amount to offer or other contract terms; not be able to

take sides if there’s a dispute; that your ability to advocate for him is neutralized, to say the least?

Mr. Buyer nods amiably and reaches for a pen, ready to sign — likely believing that dual agency disclosure is merely a technicality.

He hears, but seldom understands, that the big ol’ piece of cake he thinks he’s getting — the full services of a buyer representative — in a dual agency situation may be little more than crumbs.

And that’s but one example.

Being a Realtor® is not unlike being a parent. Particularly when you’re working with inexperienced buyers who are caught up in the excitement and apprehension of a major purchase, you have to aim not just to be heard, but to be understood.

In that, how I get my 11-yearolds’ attention may work with your clients, too: Look them in the eye.

Speak slowly. Simplify, but don’t gloss. Ask them to repeat what they heard you say. Then pat them on the rump and send them on their way. (Okay, maybe skip that last step with your clients.)

Oh…and hope for a strong signal. l Scott Brunner is VAR’s chief executive officer. Contact him at Scott@ VARealtor.com.

www.VARealtor.com