August 2010 - Wisconsin Real Estate Magazine by Lauren Bizorik

CAUTION: SLIpPERY SLOPE AHEAD The possible legal consequences of texting.

insider vs. outsider

The Feingold-Johnson U.S. Senate race heats up.

MAGAZINE

August 2010 $5.00

r u o Y ing

t x n e o N erati nts n e i l e G of C

lop e v e D

6 Page e e S >>

What’s YOUR Company Doing For You?

Click for Creativity. State-of-the-art Advertising & Marketing is easy with the RE/MAX Design Center. With RE/MAX, all the tools you need to keep you

Over 1,300 professionally created templates available.

and your business top-of-mind are right online. Imagine a FREE online marketing suite where you can… • Create virtual tours, slide shows, postcards, fliers, even animated web commercials. • Select from more than 1,300 professionally created templates. • Choose to download and print from your desktop, or have your material professionally printed and delivered to you within 24 hours. • Host any marketing piece, free. Email the link to your clients; who click and read all about it. It’s cutting edge marketing at its best, right at your fingertips...and free to all RE/MAX associates and offices.

Interested in a RE/MAX Franchise? Check out the 8 Minutes with RE/MAX video at…

SoldSignBlog.com

800.878.8138 Outstanding Agents. Outstanding Results.

RE/MAX NORTH CENTRAL

table of contents

august

features 6

vol.

26, no. 11

articles

Developing Your Next Generation of Clients Learn what sets younger generations apart and how to make these tech-savvy buyers your clients.

Caution: Slippery Slope Ahead

Let’s Make a Deal: Purchasing Properties at Auctions and Sheriff’s Sales

12 24

As texting gains in popularity, real estate licensees should be aware of possible legal consequences.

Auctions and sheriff’s sales can be intimidating and there are dangers lurking for the uninformed.

2010 |

Focusing on the Big Stuff

Best of the Legal Hotline This month, the hotline addresses questions about piers, waterfront property, wells and more.

Legal Briefs A profile of three recent court cases that directly impact the real estate industry.

Feingold-Johnson: Insider vs. Outsider This 2010 U.S. Senate race could easily become the most interesting contest in Wisconsin politics this year.

Product Showcase WI Real Estate Magazine is now available as a digital edition! Find out more...

It’s time for candidates to discuss key issues, such as the pending state budget deficit and property taxes.

AND THE

WINNER IS... September 26

-28, 20

news.wra.org

10 REGISTRANT ONE INFORMATION:  Check here if you are an Association Executive Name __________ ____________________ _____________ Address __________ Firm Name __________ ____________________ ____________________ ____________ City __________ Phone (W) ( ____________________ ) ____________________ ___State_______ _______________ Zip _________ E-mail Address __________ (H) ( ) ____________________ ____________________ ___________________ ________ WRA member # ____________________ *TWO-FER Conventio _________________ n Special: Register WRA member at a one WRA member special introductory for one full convention price. (see details the WRA who has pass at regular price at www.wra.org/convention2 NEVER attended the and register a second Fall Convention or 010fees) Your second order. Register using has NOT attended guest must be a member this form or by visiting in the past five years. code. Give this promotion www.wra.org/convention2 of Limit one discounted code to a WRA member 010reg. After you registration per have registered you and tell that member TWO-FER: 2nd WRA will receive a promotion to visit the Web site MEMBER INFORMATI Hotel informatio to register and redeem n: ON: the discounted pricing. Name __________ ____________________ ____________ Firm Address__________ Kalahari Resort and Name________________ ____________________ Convention Center ____________________ ___________ City 1305 Kalahari Dr. Phone (W) ( ___ ____________________ | Wisconsin Dells, ) ____________________ WI __ State _____ Zip _____________ Phone: 877-253-54 E-mail Address __________ ________ (H) ( 66 or 608-254-54 ) ____________________ ____________________ 66 ___________________ _____ WRA member # ____________________ Member Room __________ Rates _____ Thru 7-31  1-Day Pass ( Sun/Mon/Tue Thru 8-23 After 8-23 Standard Room: s ) circle one ATD  Full Convention $119 $ 84 Jacuzzi Suite: Pass $ 94 $ 104 $ 124  TWO-FER: 2nd WRA $119 $ 114 Royal African Queen Member* $ 124 $ 134  Unlicensed Spouse/Sig. Suite: $ 154 $119 $ 54 Release Date: Other $ 64 $ 74 Name of Spouse or August $ 94 25, 2010 $ 35 Significant Other:______ $ 35 ____________________ $ 35 $ 55 Non-Member Included in Registrati __________________. on Fee: Thru 7-31 Thru 8-23 • Icebreaker Party  1-Day Pass ( Sun/Mon/Tue “A Night at the Awards” After 8-23 ATD s ) circle one – 9/26  Full Convention • Real Estate Continuing $ 114 Pass $ 124 $ 134 Education – Four of $ 154 Six $ 154 courses included in $ 164 $ 174 Full Convention Pass Real Estate Continu $ 194 - MUST register in advance ing Education - first come, first served! Thru 7-31 CE - Attend All 6 (4 Thru 8-23 After 8-23 FREE – You pay for • Access to Indoor ATD 2) Theme Park following (You may select up $15 per to FOUR courses for $20 per $25 per Chairman’s Dinner free included in a  Elective B – 1031 - 9/27 $45 per Full Convention Pass; Exchanges & Exchange each additional course  Elective E – Financing Opp. 8:30 – 12:00 pricing above. (9/26)  Course the Sale – 1:00 – 1 – Listing Contracts 4:30 (9/26) Event Fee – Per – 8:30 – 12:00 (9/27) Person:  Course 2 – Offer to Purchase – 1:00 – 4:30 (9/27) Golf (9/26) ....................  Course 3 – New Developments – 8:30 ........................................ Designation Classes Wild Rock Golf Club – 12:00 (9/28)  Course 4 – Buyer ...$98 Wisconsin Agency Agreements – 1:00 Dells Thru 7-31  Intro to CCIM 9/26-9/27  Member One – 4:30 (9/28) Thru 8-23 After 8-23  Member Two w/conv ATD Two-Fer Pricin  ABR Elective – $ 330 Short Sales & Forecl. g Chairman of the Board’s $ 340 $ 350 9/26 w/conv  CRS 111 – Short Dinner (9/27) .................... $ 370 $ 169  2nd WRA Member* Sales & Foreclosures  Member One .$49 $ 179 $ 189 .....$ 276  Member Two 9/27 w/conv  ABR & CRS – Short $ 209 $ 169  2nd WRA Member* Sales & Forcl. 9/26-9/27 $ 179 $ 189 .....$ 115 After Party Bowling  Ninja – Part 1 – $ 209 w/conv $ 229 Tournament (9/27)  2nd WRA Member* 9/26 $ 239 $ 249 .................. FREE .....$ 115  Member One  Ninja – Part 2 $ 269 $ 185  2nd WRA Member* – 9/27  2nd WRA Member* $ 195 $ 205 .....$ 175  Spouse/Sig. Other  Ninja Part 1 & 2 $ 225 $ 185 – 9/26-9/27 w/conv $ 195 $ 205 $ 225 $ 330 Appraisal CE Course $ 340 $ 350  8:00 - 9:00 pm s - 9/28 $ 370  2nd WRA Member*  8:00 - 9:00 pm Thru 7-31 WRA Appraisal Section .....$ 276  9:00 - 10:00 pm Thru 8-23 After 8-23 Member  9:00 - 10:00 pm ATD Two-Fer Pricin  Class Only  10:00 - 11:00 pm g  10:00 - 11:00 pm  Class w/ Convention $ 134 $ 144 $ 154 CRS Luncheon (9/28) $ 174 ........................................ $ 144 WRA REALTOR® Member $ 154 $ 164  Member One .......$22 $ 184  Member T  2nd W C

AND THE

WINNER IS... WRA 2010 CONVENTION

Tear off the back page to register for convention! See page 29 1

News

inside the wra

with bill malkasian

Top News Stories in and Around the Industry

Top News Stories in and Around the Industry United Way Stark Family to Community

increase Joe funding for rental assistance, legal to politics, ugust is a the month of transitions: vacations are winding Honors Wisconsin Receives Millions toJumping Ease fromsubstantially Murray bringsparticularly us the latest the families. down,Service kids and their parents are gearing up for school, help foron working for Foreclosure Crisis

Business Journal Feingold-Johnson senate race. Mike Theo football season is justMilwaukee around the corner, and(WI) the(09/30/08) state brings$39 his focus to Releases property taxes for fall elections. at the WRA, NAR Freeand FHAtheToolkit The state Here of Wisconsin is duewe’re to receive nearly state budget deficit as he continues his series no exception. Wisconsin REALTORS® Association (10/30/08) million in federal funds to stabilize neighborhoods United Way of Dane County recognized the Stark on the opportunities gained by voters during an and stave off a spate of abandoned homes. According Family with the 2008 Tocqueville Society Award for Speaking of the football season, the to WRA will be launching a statewide NAR and the WRA are eager to help you meet the HUD and Gov. Jim Doyle, the funds areelection. separate outstanding service to the Dane County community public awareness campaign Packers Radio network, starting current challenges of the troubled economy. We approximately $9.2 million the government is and United Way. The Tocqueville Society Awardon thefrom These opportunities are you especially important in August and running through theawarding end of October. goal of where this the foreclosure the city ofThe Milwaukee, celebrates and acknowledges people or families, know that need resources thatwhen can help you you consider that September 14 is the day of the state campaign is to afurther on the complexity real is awarding rate is currently 9.9 percent.ofHUD the such as the Starks, who have made major educate impact consumers close transactions, and you need them at little or no primary, that teaming up via withitsa Neighborhood REALTOR® canStabilization help funds Program,offering citizens—including YOU—many options on the quality of estate life in transactions Dane Countyand through cost. NAR has just released an all-new FHA Toolkit underthe which almost billion is being allocated to their exceptional service and commitment the simplify on the election ballot. Make sure you circle September 14 the public find the best to values, process and$4help prevent online FREE to help you get clients the financing local and state governments for the redevelopment Billcommunity. Malkasian on your calendar and for vote. costly errors and delays during a transaction. Also, despite national of abandoned they need in a credit-strapped environment. It is WRA President industry reports, the Wisconsin housing market and is inforeclosed a leaguehouses. of its August is also one an important time for the WRA because we hit City Housing Authority Receives own. of the most comprehensive toolkits NAR has Sites: Not Just for Personal the road to start interviewing candidates for the fall elections.® 100-Unit Grant ever produced, and it’s available to all REALTORS Milwaukee Journal Sentinel (09/25/08) Pabst, Georgia These interviews are a chance for staff and REALTORS® to On July 30, the board of directorsConnections met and workedAnymore through a full rightissues now byand visiting linkvoices below.heard. They also have Minneapolis-St. Paul Business Journal (09/29/08) Grayson,important agenda discussing our fiscal discuss get the their Between The city of Milwaukee’s housing authority is duebudget and new products and services Katharine launched a new page called “NAR Helps You Navigate for the comingHope year. VI I would like to take a moment to thank John Flor now and October, we will visit every corner of the state to find the to receive $6.7 million in federal money ® St. Paul, Minn.-based Teresa Boardman the Current can find dozens of for hisunits. leadership andunits the will entire board of directors for a REALTOR tremendous strongest candidates who’llEconomy” representwhere youryou interests. to build 100 new housing The 100 says Flickr, Facebook and other social networking be constructed in a past 2.5-mile and will include year area of service. great products and resources, like the FHA Toolkit, Themight WRA and local boards will offer you lots of information on sites make it easy to meet people who 29 public housing and affordable rental units; free or at a steep discount. Visit www.Realtor. Moving forward, the board approved an aggressive progressive candidates andfortheir relationships to the real estate industry in the eventually become and clients. While many professionals nine affordable housing units for income-eligible org/NARHelpsYou links towill these great are using these sites to make business contacts program budget the new leadership of John Horning. The board weeks and months to come. JoeforMurray also be programs doing a voter families; and 62 moderately priced,under open-market and companies use team them intoplace, conduct background and issue products. condominiums. HUD Secretary Steven C. Prestonchairmen. also approved all committee With this new guide in a future to help you navigate the process, so stay checks or recruit new workers, many simply want comments, “Milwaukee’s we arehousing ready forauthority our annualhas fall convention. tuned. United Way of Dane

County is preparing

to connect with people who have similar interests. demonstrated it has the leadership to lead and Home Loans Going Strong, Albeit a According to than Boardman, “Thethink. hard sell isMoving dead. Itahead, many local boards will make changes to their local revitalize neighborhoods andof convention, transform lives. Speaking it’s coming up faster you may Tighter, in Area doesn’t door-to-door, andWild it doesn’tleadership, work on andBit Cities like MilwaukeeThere change grow and needactivities to areand a number of fun planned,work including golf at the we are excited to be a part of this process, which Wisconsin State Journal (10/17/08) Balousek, Marv social and networks.” On Flickr, Boardman connected revitalize housing toRock makeGolf sureClub, many aaren’t priced bowling tournament our opening ceremony allows us to get back out and visit with everyone. out.” Milwaukee is complete one of a with half-dozen housing with a fellow photographer who eventually used her karaoke. Despite the ongoing national credit crisis, property authorities nationwide to receive new Hope VI services to purchase a home. professionals say mortgage money remains available grants. We also have many chances for you to fulfill your CE requirements. If you In closing, stay in touch. I look forwardWisconsin to seeing to youhome at convention, throughout southern buyers Foreclosures Push Rents Higher, haven’t already done so, please visit www.wra.org/2010convention

Housing Studyand Delay Squeezing Income Families checkFrustrates out the programming. You can registerLow right there online. Minnesota Public Radio (MN) (09/21/08) Olson, Dan Advocates Milwaukee Journal Sentinel (10/07/08) Scott this Turning to theWilliams, magazine,

month’s focus is on Twin developing In Minnesota’s Cities, next a wave Bill of home generation clients. More than ever, as industry professionals we people need into the rental Two years after promising the Milwaukee metro foreclosures has pushed more to consider and technical prowess of young area’s first major housing studythe in communication three decades, styles apartment sector. The result is an intensifying the Southeastern Wisconsin Planning buyers. BobRegional Corcoran’s feature article someandpractical demanddiscusses on Minneapolis St. Paul’s rental housing Commission (SEWRPC) is still struggling get the stock, so muchalso so that the vacancy ways in which to dotothis. Cori Lamont’s article touches on the rate is very low effort launched. Proponents hope the the study willimplications and rents on theBoth rise. This, in turn, means lowsubject, exploring legal of are texting. of these serve as a catalyst for improving affordable housing working familieswith faceyoung higher monthly rents pieces parallel information we heardincome from our discussions opportunities throughout the ®city’s suburbs. But even though their income hovers at unchanging REALTORS across the state.

commissioners have yet to assemble an advisory levels. Since 2005, the Twin Cities apartment committee to oversee the research or set a specific ratewe hasbring dippedyou from 7 percent to closer to Switching to the legal side of thevacancy business, several timetable for conducting the fit survey. Philseason, Evenson,including 4 percent. Average monthly rents articles for the the best of legal hotline, in over that same the commission’s executive director, said other issues time about span are up more thanDebbi $25, rising to more which Tracy Rucka answers questions summer cabins. keep getting in the way. The delays have frustrated than $850. The St. Paul-based Wilder Foundation Conrad offers helpful advice on purchasing properties at auctions and housing advocates the most. Bethany Sanchez, recently reviewed income data for several Twin Cities sheriff’s sales, a topic we’ve been hearing a lot about lately. And Tom vice president of the Metropolitan Milwaukee Fair counties. The organization’s research found that the Larson writes about threetime key legalnumber cases impacting REALTORS®. Housing Council, laments, “It’s been a long of people in those markets paying too much coming.” The Pewaukee-based commission has for their rental housing will double from around not conducted a comprehensive review of housing 70,000 currently to a whopping 140,000 by 2010. patterns since the 1970s. Some say a partial solution would be for the U.S. government to reverse course on housing policy and

2 2

wisconsin real estate magazine wisconsin real estate magazine

august 2010 october 2009

with solid credit. Ron Steinhofer, manager of Marshall & Ilsley Bank’s regional home lending group, states, “There’s plenty of money for home loans out there. It is slightly more difficult to qualify than two or three years ago, but if you have a good credit score, a good job and a down payment, money is available.” Steinhofer adds that banks still are making loans via such programs as Fannie Mae and Freddie Mac. Furthermore, credit standards remain about the same as they were six months ago, meaning that qualified home buyers can get loans if they have the proper income verification. On the downside, banks have been less willing to make loans with higher loan-to-value ratios. In addition, conventional financing without a down payment has indeed disappeared. However, 100 percent financing is still available with Veterans Administration and Rural Development home loans.

news.wra.org news.wra.org

Real Estate

Wisconsin Real Estate Magazine™ is published by the WISCONSIN REALTORS® ASSOCIATION. Trademark issued pursuant to Wisconsin state statute; federal trademark is pending.

notes from the wra

John Flor, ABR, CRS, e-PRO, GRI, RRS, Chairman johnflor@sixlakesrealty.com

Congratulations to the Following Award Recipients!

John Horning, Chairman-Elect jphorning@shorewest.com

2010 Distinguished Service Award Winners

Robert Keefe, Treasurer rkeefe@keeferealestate.com

2010 Presidential Citation Award

William E. Malkasian, cae, President wem@wra.org Editorial Staff:

William E. Malkasian Publisher

John Flor

ABR, CRS, e-Pro, GRI

Robert Uhrina

Lee Kessler e-Pro

Peter Sveum CRB, GRI

Managing Editor

WHEDA Advantage Helps Indecisive Buyers Off the Fence

Vanessa Merina Publication Editor

You may be hearing a lot of “Get Off the fence” lately from the National Association of REALTORS® about the advantages of buying and selling a home in today’s market. The Wisconsin Housing and Economic Development Authority (WHEDA) has joined this effort and recently launched a piggyback campaign to reach a wider audience. A series of four “Get Off the Fence” themed radio ads will air in major markets across Wisconsin through the end of August. The campaign takes a lighthearted approach to home buying and features potential homeowners who are on the fence and looking for the right opportunity to purchase a home. The right opportunity is the WHEDA Advantage, with less cash-to-close, a 30-year fixed interest rate, job loss mortgage payment protection, and homebuyer education. Banner ads will run through the end of September on REALTOR.com, Trulia.com, Zillow.com and Bankrate.com. Only viewers entering these sites through a Wisconsin portal will see the WHEDA banner ads.

Joe Leschisin Senior Designer Wisconsin Real Estate Magazine, USPS 597-850, ISSN 1548-0526, is published monthly by the WISCONSIN REALTORS® ASSOCIATION, 4801 Forest Run Road, Ste. 201, Madison, WI 53704. Periodical postage paid in Madison, WI and additional mailing offices. An annual subscription rate of $5 is included in membership dues and a copy is mailed to every paid REALTOR® and affiliate member of the association. Nonmember subscription rate: $60. POSTMASTER: please send address changes to the WISCONSIN REALTORS® ASSOCIATION, 4801 Forest Run Rd., Ste. 201, Madison WI 53704-7337. Permission to reprint or quote any material from this issue is hereby granted, provided the Wisconsin Real Estate Magazine is given proper credit in all articles or commentaries, and the WISCONSIN REALTORS® ASSOCIATION is provided with a copy of any reprint. Advertising of third party products and services herein does not imply endorsement by the WRA unless specifically stated. Furthermore, the WRA does not endorse, approve, or otherwise warrant the accuracy or legality of any information or content contained in advertisements. Any questions regarding advertising policies should be directed toward the editor.

Nominate a Technology Leader by August 13

The Center for REALTOR® Technology (CRT) introduces the annual REALTOR® Technology Spotlight Award. It honors REALTOR® family members and their direct support staff who have shown excellence and visionary use of technology. From you and your creative use of technology to the staff person who makes sure your website stands out to the individual who keeps your servers running effectively so that the REALTOR® members shine in their day-to-day business...this is an opportunity to celebrate them!

4801 Forest Run Rd., Suite 201 Madison, WI, 53704-7337 (608) 241-2047 • (800) 279-1972 legal hotline: (608) 242-2296 • (800) 799-4468 general fax: (608) 241-2901 products/education fax: (608) 241-5168 legal hotline fax: (608) 242-2279

The award goals are to:

facebook: www.facebook.com/wisconsinrealtors twitter: www.twitter.com/wirealtors linked-in: www.wra.org/linkedin youtube: www.wra.org/youtube

3 wisconsin real estate magazine

recognize those who have implemented, created or embraced technology in a way that shows understanding of the medium and therefore puts them in a’ best in class’ category,

disseminate innovative and effective strategies to accomplish this, and

increase awareness within the real estate industry of technology trends & promote innovation.

These individuals set the technology benchmark for our industry, and provide one more reason why REALTORS® are better prepared to serve the consumer. For more information, go to http://www.crt.realtors.org/award.

august 2010

REALTOR benefits®

As a member of the Wisconsin REALTORS® Association, you have WRA-endorsed member benefits available to you. The WRA carefully selects benefit programs that offer valuable services in health care, dental care, and errors and omissions insurance. Additional benefits include a retirement fund, phone service plans, website design, and a new delivery plan for packages and envelopes. A detailed description of the member benefits is available online at www.wra.org/membership_info/group_benefits.htm.

PRoFIT Retirement Program – An IRS-approved KEOGH Plan designed

for REALTORS® interested in long-term financial planning. Your contributions to the program are tax deductible, and your earnings in the PRoFIT program grow tax deferred. Call Debbie Thacker at (608) 241-2047 ext. 256 or (800) 279-1972 for an application.

Health, Dental & Life Insurance – Save on health insurance premiums without compromising your coverage. REGIT, Inc.’s health program provides access to insurance plans that can be customized to meet the needs of the individual. Call today for a free, no-obligation quote at (800) 537-9786 or visit www.regitinc.com. Errors & Omissions Program – The WRA-endorsed carrier for errors and

omissions (E&O) insurance is Pearl Insurance. The REALTOR® E&O Insurance program is designed specifically for the real estate industry and the particular risks you face. It provides special coverage for claims arising out of regulatory complaints, personal injury, lockbox liability or allegations of discrimination. For more information and a free quote, please contact Pearl Insurance at (800) 289-8170 or visit www.pearlinsurance.com.

For More Information Visit www.wra.org/membership_ info/group_benefits.htm to find a detailed description of WRA member benefits and find links to individual programs.

wisconsin real estate magazine

august 2010

Website Development – Interested in creating your own website? WRA members can design and maintain their own websites through Real Estate Home Pages. Software templates and easy-to-use tools for adding images and formatting text provide a professional look, usually only attained by a graphic artist or Web designer. Visit www. realestatehomepages.com for more information. You’ll be amazed at how easy and inexpensive having a website can be. Long-Distance Program – Save big money on your long-distance rates

by calling AMI Communications, Inc. The plan features low rates with no monthly plan fee, no time-of-day restrictions and no term or volume commitments. AMI also offers a variety of products, including teleconferencing and toll-free service. Call them at (800) 254-3202 and mention that you are a WRA member or visit www.ami.net to begin enjoying the quality of service and savings AMI provides.

The Wisconsin REALTORS Association has a **NEW** Member Benefit Agreement with UPS! Here is what you can save with UPS: •

Save up to 30% on UPS Next Day Air® and Worldwide Expedited services

•

Save up to 23% on UPS 2nd Day Air and Worldwide Expedited services

•

Save up to 18% on UPS 3 Day Select® services

•

Save up to 16% on UPS Ground Commercial services

Please note: WRA Members currently enrolled in the UPS Savings Program must re-enroll to take advantage of this new exclusive offer. If you do not have a UPS account, UPS will set one up for you and e-mail you all the information you need to start shipping. Just take a few minutes to fill out the short application form available at www. savewithups.com/enroll. To enroll, use promo code NCR308. If you have any questions, call UPS at 1-800-325-7000.

news.wra.org

REALTOR NEWSWIRE ®

Top News Stories in and Around the Industry

Mixing Business With Business: Are You Sending Mixed Messages?

SEL-2010-09, addresses many concerns raised by the National Association of Realtors (NAR) regarding the Home Valuation Code of Conduct (HVCC) and the appraisal policies of the government sponsored enterprises (GSE), Fannie Mae and Freddie Mac.

Realty Times (07/19/10) Allan, Jennifer

With the economic landscape still unstable, real estate practitioners may be tempted to supplement their income with a side business. REALTORS® who decide to pursue this approach, however, must be warned that crossmarketing products and services that do not complement each other likely will prove to be an unsuccessful venture. For example, a realty professional who decides to also sell beauty products to the same client base could end up losing credibility with both sets of customers. While the optimal strategy may be for a REALTOR® to simply devote 100 percent of his or her time and energy to the primary business of real estate, those who do dabble in other areas should at the very least choose to crosssell products and services that are compatible. If that is not possible, another person should be brought in to spearhead the secondary business. In cases where neither of those options will work, agents should refrain from promoting the two businesses simultaneously, meaning that they should keep marketing for the two income streams completely separate -- whether in written marketing materials or in person, such as by wearing a REALTOR® pin while hosting a Pampered Chef event.

The guidance states that Fannie Mae requires lenders use appraisers with geographic competency. Although USPAP allows an appraiser who does not have the appropriate geographic knowledge to accept an appraisal assignment, Fannie Mae does not allow this flexibility. Further, the announcement states that appropriate communication with the appraiser is permitted under HVCC and nothing in the Code or in Fannie Mae appraisal policy requires the use of third party appraisal management companies (AMC). Fannie Mae found that lenders are sometimes reducing the opinion of market value in the appraisal report. Appraisal policies for Fannie Mae have been updated to provide information on steps lenders may take if an appraisal is found to be deficient. The lender may request a field or desk review of the report in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP). The lender may forgo the review and obtain a new appraisal. Fannie Mae offers additional guidance for the use of short sales and foreclosures as comparable sales. The appraiser is responsible for determining which comparables are appropriate for the appraisal report and must account for all factors that affect value when completing the analysis. According to the guidance, the appraiser may use a short sale or foreclosure as a comparable but must identify and consider differences from the subject property and cannot assume the properties are equal.

Simple Truths About Selling Real Estate – Getting Back to Basics RISMedia (07/19/10) Fialk, David

Real estate agents need to remember the basics about selling homes, especially in a tough market. They should work to make a good first impression during the initial buyer inquiry, showing that they are knowledgeable and prepared so as to convert the inquiry into an appointment. At the first appointment, REALTORS® should have a list of goals, turn off their cell phones to avoid interruptions, explain the MLS and the showing process, show how they search for properties and review the search results, present agency disclosures, and take other steps to forge a relationship with the buyer. When it comes to preparing and presenting offers, agents should contact the listing agent for disclosures and information about current offers; spell out the contract presentation process to buyers; focus on the price, as well as other terms and conditions; and emphasize the importance of pre-approval letters. The contract should be structured in such a way that the seller or listing agent will not question it, which could delay the process.

6 Strategies for a Realistic Asking Price Inman News (07/15/10) Ross, Bernice

Listing agents must be prepared for sellers to insist that their home is worth more than the recommended asking price and be armed with information to show them that a realistic pricing approach is best. REALTORS® should calculate the absorption rate, which considers current inventory and the owner’s likelihood of selling in a given month, and detail the holding costs that will accumulate if homes sit unsold at a time when prices are on the decline. They also should inform sellers of the priceper-square-foot to get a more realistic number, remind them that buyers need to qualify for a loan, and consider nearby properties that have closed and their price-persquare-foot. Finally, REALTORS® can take sellers on a virtual tour of comparable properties and use online, third-party pricing tools to show how the asking price is in line with the market.

Fannie Mae Addresses Appraisal Concerns NAR (07/10)

Fannie Mae’s Selling Guide Updates and Additional Guidance on Appraisal-Related Policies, Announcement

Home Buyers Are Ready to Move From the Sidelines: Survey RISMedia (07/15/10)

Although home sales statistics for May reflected a 26.8 percent slump after the federal home buyer tax credit program ended in April, new research hints at a forthcoming surge in activity. According to a June survey by Relocation.com, some families have decided to rent while they look into opportunities for a new, more desirable properties in their communities. Of the 60 percent of individuals moving into rental units, for instance, nearly a quarter were previous homeowners leasing on a temporary basis while hunting for a new property to purchase. Moreover, for many of these households, foreclosure was not the motivation for moving. “While the housing market continues to flux from month to month, we’re seeing strong, continued interest as consumers looking to move start their research with us,” said Relocation.com Chairman and founder Sharon Asher. “These findings suggest that more Americans may be poised to re-enter the housing market this year.”

Coalition Envisions New Way for Wisconsin Kenosha News (WI) (07/14/10) Potente, Joe

The Wisconsin Way’s blueprint for the future envisions a state with a strong middle class, a growing economy, and a robust tax base. The coalition, which involves such diverse interests as the Wisconsin REALTORS® Association and the state’s biggest teachers union, recently presented a plan that includes more than 100 specific recommendations for changes to Wisconsin’s state and local government systems. Jim Wood, a Madison-based lobbying and communications consultant and a leader of the Wisconsin Way, notes that a key strategic initiative of the plan is building a more comprehensive and aggressive statewide economic development program; and it offers recommendations for the state to generate roughly $480 million in venture capital funding over 10 years. These include such measures as the creation of a mutual fund dedicated to investing in business start-ups and expansions throughout Wisconsin and a 1 percent income tax checkoff for a state-managed capital investment fund. According to Wood, the next step for the Wisconsin Way is a series of three economic summits next month and in October. The final one will be held in Milwaukee and center around issuing concept papers and recommendations for the governor and Legislature that will take office after the first of the new year.

REALTOR® Newswire is a monthly news service prepared exclusively for the Wisconsin REALTORS® Association by Information, Inc. Reproduction, use, or inclusion of this material in other publications, products, services or Web sites is not allowed without prior written permission from the Wisconsin REALTORS® Association.

wisconsin real estate magazine

august 2010

Developing Your

Next Generation of Clients

The great actor and comedian George Burns once said, “I look to the future because that’s where I’m going to spend the rest of my life.” If that acting thing hadn’t worked out so well for him, I think Mr. Burns would have made a fine businessman. To be successful in any industry (and real estate is certainly no exception) you have to think carefully about – and act upon – the future. If you’re in real estate, it’s very likely the economy over the last couple of years has caused you to contemplate your future more than usual. No doubt, times have been a little tougher of late, and yes, that’s a fine reason to consider your future—specifically, to think about who will be your next generation of clients. By Bob Corcoran

or the last four decades this has primarily been baby boomers. Their impact on society and the economy has been massive. And make no mistake; they continue to wield their financial might throughout all sectors of the economy. (The tail end of the baby boomers is still just 45 years old.) But when it comes to your future, you’d be remiss in not seeking out who’s going to help you pay your bills (because, as Mr. Burns so aptly said, that’s where you’re going to spend the rest of your life). So who are the folks who come after baby boomers? I’m sure you’ve heard. They’re called generations x and y, the newest wave of homebuyers (think roughly 18 to 40 years old).

In Wisconsin, census figures estimate that more than 40 percent of the population fall into this younger age group. So I say unless you’re in the market for a dismal future, it’s high time you began learning more about these younger real estate consumers. Here are four key points I’d like to share with you that can help you build a brighter future for your real estate business: 1. Know your future clients. It’s rule number one in sales: know your prospect. Though younger consumers are, of course, individuals, they do share certain traits in common. That’s something Charlie Wills knows well. He is a younger consumer – 31 years old. He’s also a REALTOR® with First

Weber Group Inc., in Madison. And he’s been targeting generations x and y since he first started in real estate six years ago. “What I’ve found is they’re big picture buyers who are very analytical in their approach to real estate,” Wills says. “They can find information easily and so they’re much more informed; sometimes it seems they have too much information. I’d say they often have the amount of knowledge that’s equal to someone who’s bought a home before.” Of course, many haven’t bought before. And that’s why Peter Geisheker, CEO of the Geisheker Group Marketing Firm in Green Bay, says REALTORS® should target renters.

“They often rent until they get married, so target people who are newly engaged and newly married,” he says. “You also want to really help them understand the mortgage process, as many young people assume buying a house is difficult, so they don’t even try.”

Shakespeare, was that the downfall of a generation, or did we progress with new and improved ways to communicate?” Despite all the new communications tools, Wills says older REALTORS® can bond with younger consumers. “My advice is to work to relate with them. You don’t have to speak their language, but just connect with them in a way they like to be.”

Some other words and phrases that describe younger consumers come from Packaged Facts, a business that provides consumer insights: “Scrappy, fiercely independent, style-conscious, financially responsible, question authority, prize individuality, value leisure and family activities over fat paychecks and are inherently suspicious of marketing campaigns even as they embrace products and services that answer their iconoclastic, resolutely youthful tastes and needs.”

And one tool he’s found extraordinarily useful is the smart phone. Wills, who conducts trainings on how to use technology in real estate, says some REALTORS® he knows initially opted against smart phones. “But when they see they’re not getting business, then they start using them and it really helps.” Another tidbit: communicate quickly. Mike Zahrt of the Start with Zahrt Team at First Weber Group in Wausau has been targeting younger buyers for the past three years and says younger buyers often have a short attention span, and they’ll move to the person who responds first to their calls. “Remember, the newest buyers don’t really know a world without the Internet. They’re used to being able to get any information that they want in a matter of seconds at any time of the day.”

2. Adjust how you communicate. For those of us who remember when phones actually had dials, we also recall that when we were growing up and perhaps first entering real estate, phones were pretty much our only form of talking with people (outside of face-to-face and occasional smoke signals!). Today, of course, we have smart phones, e-mail, websites, iPods, and so on. And younger folks aren’t shy about using any and all of them. In short, they’re serious communicators.

3. Embrace interactivity. As much as I believe in the phone, younger buyers often prefer the computer. Specifically, they expect websites not only to be informative, but also highly interactive and, dare I say, fun. They want exotic virtual tours, eyepopping photos and tons of useful, pertinent information on neighborhoods. And if your site doesn’t provide these, they’ll go find one that does.

And that’s a point Ben Rivard of Coldwell Banker–Brenizer REALTORS® in Rice Lake wants to drive home. Rivard, who explains he’s always targeted younger buyers, says older REALTORS® feel younger generations can’t handle social situations because they don’t spend as much time communicating in person.

So reevaluate your site to see if it’s interactive and entertaining enough. Ask yourself: Does it have a form that lets users request a wish list items? Do you have a mortgage calculator? In short, does it have interactivity and entertainment at every turn?

“That’s bologna,” says Rivard. He believes younger generations are communicating “at a far higher level with more quantity” than any previous generation in history. “Just because the medium has evolved into something unfamiliar or even uncomfortable for past generations doesn’t mean it’s bad. Younger buyers require minimal face-to-face, and prefer to communicate electronically.”

Geisheker says the key with websites is that they need to educate younger users “in an interesting way” to keep their attention.

This difference between generations, Rivard says, is a natural byproduct of progress. “When people stopped jotting down thoughts on cave walls or speaking like

wisconsin real estate magazine

Besides websites, though, Facebook, the social networking tool, has proven to be yet another interactive avenue for millions,

august 2010

though it’s certainly not the end-all be-all for REALTORS®. Zahrt, Rivard and Wills all say they have a presence on Facebook, but they agree it’s just one way among many to communicate. “I use it more as a tool to stay in front of potential buyers instead of trying to recruit buyers,” Rivard says. “I believe if they’re continually reminded that I’m a REALTOR®, when the need arises, I hope the connection will be etched in their minds.” Zahrt says he’s had “some great results” with Facebook, but adds, “the key is that it, like any other tool, needs to be part of a larger marketing plan. If I were to use only Facebook, or any other tool for that matter, I don’t believe I’d reach a very high level of success.” 4. Reallocate your ad budget. There’s a distinctive sound I bet some of you older readers (like me!) remember fondly: the sound of the newspaper landing in the driveway. Many younger folks don’t know that sound. That means eyeballs aren’t where they used to be. Geisheker agrees and says younger people “are now using the Internet far more than reading the newspaper or local real-estatefor-sale magazines. People in their 20-30s live on the Internet and if you want their attention, you need to go where they are.” So now many agents and brokers are spending money online; specifically, on electronic billboards, banner ads, e-mail marketing and the like. Another avenue Geisheker and many other marketing experts are touting are the pay-per-click campaigns (you only pay when a user clicks on your ad) such as Google Ad Words; and they’re proving to be a cost-effective option for those who lack larger ad budgets. And consider putting money toward search engine optimization (SEO). Your website can be the best site in the world, but if no one sees it, it might as well not even exist. “You have to make yourself very easy to find on the Internet,” Geisheker says. “Good SEO can yield high rankings for the search phrase you want to be found for, such as ‘Madison Wisconsin real estate for sale.’” How do you get found? Search engines.

news.wra.org

Google, Yahoo, MSN/Live and Ask.com are a few of the top ones. Take time now to submit your website’s URL to them: •

Google: http://www.google.com/addurl/

•

Yahoo!: http://www.search.yahoo.com/info/submit.html

•

MSN Live: http://search.msn.com/docs/submit.aspx

Consider putting money toward search engine optimization (SEO). Your website can be the best site in the world, but if no one sees it, it might as well not even exist. Wills says that while he does advertise on the Internet, his communications with potential clients are geared more toward “useful information versus just traditional ads that tout my services.” “I explain what’s going on in the market over the last quarter in the different areas, financing news, anything relevant,” he says. But Wills goes on to make a point I think is vital in working not only with young people but with anyone. “I truly believe it comes down to the little things. Everyone wants to be thought of, so I work to remember the small stuff: birthday and anniversary cards, handwritten notes, that kind of thing. It’s the little touches of what I call ‘appreciation marketing.’” Everyone latches on to that kind of attention.” I couldn’t agree more. And because I began with a quote, I’ll end with one as well. It comes from the great business guru Peter Drucker who once said, “The best way to predict the future is to create it.” And that’s my parting note to you now: go out and create your best future. And please feel free to e-mail me at Bob@ CorcoranCoaching.com (yes, that’s how this old guy is communicating these days, too!) if you have any thoughts on this article or if you would like a copy of our Buyer Information Sheet. Best of luck to you! Bob Corcoran is a nationally recognized speaker and author who is founder and president of Corcoran Consulting Inc. (CorcoranCoaching.com, 800-957-8353), an international consulting and coaching company that specializes in performance coaching and the implementation of sound business systems into the residential or commercial broker or agent’s existing practice. Sign up for your complimentary business consultation at www.CorcoranCoaching.com/bpw.php. We look forward to hearing from you.

legal

Caution: Slippery Slope Ahead

Legal Concerns Relating to Texting

By cori lamont

uring the recent statewide young REALTORS® focus groups conducted by Chairman of the Board-Elect John Horning, a majority of participants said they marketed properties through the use of Facebook, LinkedIn and Twitter. They also stated that text messaging was the most common method of communication with the consumer. Some of the most popular reasons cited for texting included confirming a meeting time or scheduling and suggesting properties. For most of us, technology plays a huge part in both our social and business worlds. A concern for the real estate agent, however, is the increased role technology has played in legal matters. Over the course of the last few years, we have seen technology begin to play a bigger role in the court room. Attorneys now utilize text messages and postings on Facebook and other social networking sites as evidence in divorces, criminal trials and employment matters. While it was no surprise that the majority of communication by young REALTORS® is accomplished by text message, it does raise the question: what, if any, are the legal consequences of texting for real estate licensees? The following discussion is an attempt to make you think before you text the consumer.

wisconsin real estate magazine

august 2010

In April 2009, Michael Antoniak wrote an article for REALTOR® Magazine that provided tips for the texting agent entitled, “Tech Watch: Reach Out and Text Someone.” Below are some of those tips: •

Texting is not just for the young – it is done by all ages.

•

DO NOT text without permission – Ask clients if you may send them a text message.

•

Learn the lingo – See Webopedia www.webopedia for commonly used terms.

•

Be considerate – Do not fall for the addictive qualities that texting may produce. If you continuously respond immediately to clients, they will always expect it.

•

Set limits – Establish a schedule of when you will be available.

The entire article is located at www.realtor.org/rmotechnology/ techwatch/columns/00904_techwatch_texting. When dealing with the ever-evolving world of technology there are always challenges. And while texting is easy, it does come with some potential legal risk. One noteworthy item to consider: currently there is no Wisconsin case law that addresses texting in a real estate transaction. news.wra.org

Here are a few things to consider before texting a consumer.

Be careful where you text 1. Wisconsin’s new ban on texting or e-mailing while driving is effective December 2010. An individual caught sending an e-mail or text message while driving could be fined anywhere from $20 to $400. When Governor Doyle signed this into law in May, Wisconsin became the 25th state to enact such a ban. This ban will be included in Wis. Stat. §§ 346.89(3) and 346.95(11).

iv. State Anti-Spam Laws: The CAN-SPAM Act is intended to preempt – or replace – state anti-spam laws, but states are allowed to enforce the parts of the CAN-SPAM Act restricting non-wireless SPAM. Also state laws prohibiting fraudulent or deceptive acts and computer crimes remain in effect.

Be careful what you text 1.

Keep it simple. Do not discuss confidential or transaction information. E.g., do not negotiate with your consumer via text.

Advertising rules apply. a.

Wis. Admin. Code § RL 24.04(1) Licensees shall not advertise in a manner which is false, deceptive, or misleading.

The Code of Ethics applies to text messaging.

CAN-SPAM Laws i.

ii.

Wireless Domain Name List: To help enforce its ban, the FCC required all wireless service providers to provide all Internet domain names used to transmit electronic messages to wireless devices. The FCC published this list on its website at www.fcc.gov/cgb/policy/DomainNameDownload.html. Non-exempt senders of commercial e-mail messages are prohibited from sending them to any Internet domain name on this list without the recipient’s express prior authorization. These senders have 30 days from the date the domain name is posted on the FCC site to stop sending unauthorized commercial e-mail to Internet addresses containing the domain name. Wireless service providers must add new domain names to the FCC’s list within 30 days of activating them. FTC Rules/FCC Enforcement: The FCC can enforce the FTC’s restrictions on any commercial e-mail message sent to a non-wireless device, such as a desktop computer, if: 1.

The sender is a communications company (telephone, radio, paging, cable, or television company), or;

The message advertises or promotes a product or service of a communications company.

Identification – Unsolicited commercial e-mail sent to non-wireless accounts must be clearly identified as a solicitation or advertisement for products or services.

Offering a Way to Reject Future Messages – Commercial e-mail senders must provide easily-accessible, legitimate ways for recipients to reject future messages from that sender.

Return Address – All commercial e-mail, and e-mail considered transactional and relationship messages (about existing transactions), must contain legitimate return e-mail addresses, as well as the sender’s postal address. wisconsin real estate magazine

august 2010

Resources: 1.

The information above was provided by www.fcc.gov/ cgb/consumerfacts/canspam.html.

August 2005 “Federal Laws Impacting REALTOR® Practice,” Legal Update at www.wra.org/Legal/Legal_ Updates/pdf/2005/Aug2005LU.pdf.

Do not discriminate. Fair Housing laws, along with all other state and federal laws, apply to text messages.

Record Retention 1.

Wis. Admin. Code § RL 15.05 requires, “A broker shall retain for at least 3 years exact and complete copies of all listing contracts, offers to purchase, leases, closing statements, deposit receipts, cancelled checks, trust account records and other documents or correspondence received or prepared by the broker in connection with any transaction. The retention period shall run from the date of closing of the transaction or, if the transaction has not been consummated, from the date of listing. The broker shall make these records available for inspection and copying by the department. If the records are retained outside this state, the broker shall, upon request of the department, promptly send exact and complete copies to the department.”

The challenge with text messages is the ability to document the conversation, which may create difficulty in producing them at a later time. The following may be one of the ways to successfully print a text message. a.

Attempt to send it to your e-mail address by opening the message, forwarding it and entering your e-mail address rather than a phone number. The issue with this process may be proving who sent the original text since you are forwarding the text from your phone number.

Try connecting a data cable to a computer that may permit transfer of the messages to a computer, save them and print.

iii. The FTC’s rules require: 1.

Subject Lines – Commercial e-mail senders must use subject lines that are accurate. Using misleading or bogus subject lines to trick readers into opening messages is prohibited.

Cell phone providers should have a record. However, most will only provide a detailed text message with a court order. It is also unclear the length of time the provider will keep the detailed message.

Check your company policy regarding text messaging the consumer and retention of the communication.

Cori M. Lamont is Director of Brokerage Regulation and Licensing for the WRA.

legal

best of the legal hotline

with tracy rucka

The following questions were recently asked of the WRA Legal Hotline:

Piers as Fixtures When the listing contract was signed, it stated that a pier was included. When the offer was drafted, the pier was not mentioned as an inclusion. Is it included with the property? The newly revised WB-11 Residential Offer to Purchase informs buyers and sellers that the offer, not the listing or marketing materials, determines what is or is not included in the sale. The WB-11 definition of “fixtures” includes docks and piers on permanent foundations and so they are automatically included in the sale unless explicitly excluded. Therefore, if the pier is on a permanent foundation it is included. If, on the other hand, it is removable or portable, then it would need to be specifically listed as an inclusion to be part of the sale.

Pier Registration The buyer is looking at a waterfront property that has a huge pier. Does the pier need to have a permit? The Pier Protection Act signed into law in 2007 made changes to Chapter 30 of the Wisconsin Statutes regulating piers. Most piers don’t need a permit. Some piers that exceed stated size limits can be grandfathered if registered no later than April 1, 2011. The need for registration is determined, in part, by length, width, platform size, number of boat slips, location and date of first placement. A pier eligible for registration (1) must have been placed before February 6, 2004; (2) have a main stem that is no more than 8 feet wide; (3) have a loading platform at the end of the pier that is no more than 200 square feet, or no more than 300 square feet if it’s no more than 10 feet wide; and (4) does not interfere with the rights of other riparian owners. If the existing pier meets these criteria it can be registered with the Department of Natural Resources (DNR) by the April 2011 deadline. Another alternative is for the buyer to bring the pier into compliance with Chapter 30 parameters for exempt piers. If the pier does not meet

wisconsin real estate magazine

august 2010

the standards for an exempt pier and is not registered by April 2011, then the owner may need to apply to the DNR for a pier permit. A complete list of these standards is contained in the pier grandfathering article in the May 2010 Wisconsin Real Estate Magazine at http:// news.wra.org/story.asp?a=1316. In addition, the DNR publications “Wisconsin’s Pier Regulations: Everything you need to know for 2010” at http://dnr.wi.gov/waterways/factsheets/Piers2009.pdf and the “Pier Planner” at http://dnr.wi.gov/waterways/factsheets/pierplanner2009.pdf include permit and exemption information.

Buying Waterfront Property The buyer is considering a waterfront parcel of land. What should the buyer consider before purchasing if they want to improve the home, do landscaping and make other changes? There are both benefits and limitations to consider when purchasing riparian or waterfront property. Projects will be subject to county and local shoreland zoning ordinances. Ordinances may require the buyer to obtain permits, limit uses or prohibit some types of development within the shoreland zoning area. Shoreland zoning ordinances are designed to balance the property owner’s interest in development with the need to protect lakes, streams, water quality and wildlife habitat, and the rights of the public to use public waterways. Although riparian rights include the use of the shoreline, access to the water and reasonable use of the water, any private use must coexist with the Wisconsin Public Trust Doctrine that requires the state to protect the public right to Wisconsin’s waterways. Before beginning any project, the buyer may consult with the DNR “Activity Atlas” which allows riparian owners to learn what may be done and what permits or limitations there may be by project type. The Activity Atlas may be found at http://dnr.wi.gov/waterways/help/ activity_index_text.html. In addition, the buyer must comply with county and municipal zoning ordinances. news.wra.org

Eurasian Milfoil The broker has heard that there is Eurasian milfoil in a lake in the area. Is this something that must be disclosed to a buyer? Real estate licensees must disclose material adverse facts and information suggesting material adverse facts promptly and in writing. Whether the existence of Eurasian milfoil (see http://dnr.wi.gov/invasives/fact/ milfoil.htm) or any other aquatic invasive species is a material adverse fact is a judgment the licensee makes after considering all of the facts and circumstances in the situation. If the agent, as a competent licensee, knows that the presence of Eurasian milfoil in the lake: (1) has a significant adverse affect on the value of the property, (2) significantly reduces the structural integrity of the property, (3) presents a significant health risk to the occupants of the property, or (4) is information that indicates that a party to the transaction is not able to or does not intend to meet their obligations under the contract, then it is an adverse fact. If a party to the transaction indicates, or if a competent licensee would generally recognize, that the presence of Eurasian milfoil is of such importance that it would affect a reasonable party’s decision to enter into a contract, or would affect the party’s decision about the terms of the contract, this fact is both adverse and material. If that is the case, then Wis. Admin. Code § RL 24.07(2) requires the licensee to disclose the fact in writing to all parties to the transaction in a timely way, even if the client would direct the licensee not to disclose. If the licensee knows or is aware of information suggesting the possibility of a material adverse fact, Wis. Admin. Code § RL 24.07(3) states that the licensee will be practicing competently if the licensee makes timely written disclosure of the information suggesting the material adverse fact to all parties to the transaction, recommends the parties obtain expert assistance to inspect or investigate for the possible material adverse fact, and, if directed by the parties, drafts appropriate inspection or investigation contingencies. Information about invasive species is available from the DNR at http://dnr.wi.gov/invasives/. The DNR Resources for Waterfront Property Owners website contains links to laws, regulations, shoreland management practices and other DNR resources at http://www.dnr.wi.gov/ org/water/wm/dsfm/shore/property.htm.

wisconsin real estate magazine

august 2010

Private Septic Systems and Wells A buyer is considering purchasing a lakefront cabin and wonders what additional inspections or tests should be done given that the property is not on city sewer and water? The WRA Addendum B has been designed to address many well and septic requirements for a rural property sale.

Septics/POWTS Brokers working with buyers on rural property must be aware of any local requirements for POWTS (private onsite wastewater treatment systems). Many municipalities are beginning to enact their own rules and ordinances regulating POWTS and other property features, so it is best that the parties check with county and municipal zoning authorities to see if there might be additional septic and well requirements that may apply to the property. For instance, in a few counties, POWTS inspections are required when a property is sold and the inspector is required to submit a copy of his or her report to the municipality. This is being done in an effort to build an inventory of POWTS records.

Well Water and Wells The Addendum B provides for safe water testing. The key is for the real estate licensee to know what tests may be appropriate given the presence of contaminants in the local area. For example, higher levels of radium have been found in wells in the sandstone aquifers that run from the Green Bay, Wisconsin area to the Illinois state line. Buyers with questions may be directed to the DNR website at http://dnr.wi.gov/org/water/dwg/priweltp.htm for information regarding other substances for which they may wish to test. Additional resources discussing contaminants in well water include pages 4-10 of Legal Update, February 2010, “Drinking Water and Wells,” online at www.wra. org/02.10. The DNR brochure, “Tests for Drinking Water from Private Wells,” online at http://dnr.wi.gov/org/water/ dwg/pubs/TestsForWell.pdf, is also loaded with useful information for consumers and REALTORS®.

Shared Well Agreements When the seller has a property with a shared well agreement, is it transferrable to the next buyer? Do the parties have to re-write the agreement between the new owner and the old neighbor? Shared well agreements may be as informal as a verbal agreement between neighbors or may be drafted by attorneys and recorded. In transactions with shared wells, it is in the parties’ best interest to have a written agreement and know the terms of the agreement and whether it is assignable. In many cases when the buyer is seeking financing, a recorded shared well agreement may be a condition of obtaining the loan. Taking this into consideration, the WRA Addendum B includes a shared well provision that requires the seller, at the seller’s expense, to provide the buyer with a shared well agreement that provides standards for the operation, maintenance, water testing, repair and use of the well for residential purposes, and the prorata sharing of costs and responsibilities among all parcels served by the well. Other issues that might be addressed include major improvements and the eventuality of well closure if the parties want to include such terms and conditions as a condition of the sale. More information about wells, shared wells, POWTS and the WRA Addendum B is available in the April/May 2008 Legal Update “Addendum B Revisions: Wells and POWTS” at www.wra.org/LU0804. Tracy Rucka is Director of Professional Standards and Practices for the WRA.

wisconsin real estate magazine

august 2010

news.wra.org

legal

Let’s make a deal: Purchasing Properties at Auctions and Sheriff’s Sales By debbi conrad

wisconsin real estate magazine

august 2010

Ever been approached by a buyer who has been watching infomercials on late night T.V. and has heard he can buy a home “on the cheap” if he bids at a foreclosure sale? The first thing to do in such as situation is to find out if this prospect is talking about buying a property at an auction conducted by an auction company, either in person or online, or buying a property at a sheriff’s sale. Both auctions and sheriff’s sales can be intimidating and there are dangers lurking for the uninformed. Finding a good buy is possible, but it requires thorough preparation and homework. The key is to find out as much as possible about the property, including title, extent of repairs needed and value, before any bids are placed.

Auctions Who is the Seller? Properties sold at auction may be REOs or real estate-owned properties that lenders have acquired at sheriff’s sales because there was no other bidder willing to pay more than the total amount due on the lender’s mortgage. The seller at auction might also be an investor trying to quickly resell properties purchased in bulk. Other auction properties are not foreclosures or distressed properties and even may be brand new. Sellers are attracted to auctions because they are quick, efficient, public and generally set a valid market price. “As-is.” Auction properties are almost always sold in “as-is, where-is” condition. This means that prospects looking at REO properties have to be extra cautious. The former owners of distressed properties were in financial trouble and likely not focused on home repair. Some angry homeowners may have damaged the home or ripped out appliances and property components. Open house previews. Fortunately, most auction companies hold open houses before the auction. A prospect should inspect a property before bidding on it, ideally bringing a home inspector or rehab contractor along to find hard-to-spot damage and help estimate repair costs. A property at a lower price is no longer a bargain if the repair and renovation costs will be high. Bidder’s package. Often the prospect will receive a bidder’s package while at an open house. The bidder’s package normally includes the contract that will be used by the winning bidder to purchase the property. These contracts usually are “as-is” with no contingencies and no attorney review provision. The buyer will have approximately 30-45 day after acceptance to secure funding (if not already done) and close. Prospects can take the contract to their attorney for review before the auction. The bidder’s package may also contain copies of a home inspection report, a survey and floor plans and a title report. A home warranty might be offered. REO properties often have title issues, so a buyer should also have a title search report prepared if there is no report in the bidder’s package or if it is not current. A bargain price evaporates quickly if the buyer must pour money into outstanding taxes, liens and encumbrances. Neighborhood Comps. Find out the recent selling prices on neighboring homes. Real estate agents can provide these “comps,” which show what comparable homes in the neighborhood are selling for.

Auction Tips 1.

Observe first. Both real estate agents and prospective buyers should first attend and watch a real estate auction before actually going to bid.

Registration and rules. Contact the auction company conducting the auction to verify the requirements of the sale and get registered. Advanced registration, sometimes at least 24 or 48 hours before the auction, is often required.

Types of bidding. The bidding for any given property may be absolute, with reserve or a minimum bid format. In an absolute

wisconsin real estate magazine

august 2010

auction, the property goes to the highest bidder, regardless of price. In a reserve auction, the seller retains the right to accept or reject the high bid after the auction has concluded. In a minimum bid auction, the public is made aware that the seller has set a minimum bid and is not obligated to sell to anyone bidding any less. 4.

Auction format. Traditional bidding starts with the auctioneer asking for an opening bid and then the price increases until the highest bid is reached. The most familiar auction is an open outcry auction, but auctions can also be conducted using sealed bids, online bids or a combination of these techniques.

Bidder deposits. Bidders must bring a 5-10% earnest money deposit—for instance, a certified check made payable to the bidder, to show that they are serious. The successful bidder signs the check over to the auction company. This nonrefundable earnest money will be lost if the buyer cannot close.

Buyer surcharge. The buyer’s fee or surcharge is an amount of money, usually based on a percentage of the successful bid, charged to the successful bidder and either added to the successful bid to determine the final selling price or paid separately by the successful bidder in addition to the successful bid.

He who hesitates. When several bidders are competing for a property, a wise buyer will wait until the bids start to die down before bidding. Realize that the first few properties offered often sell for less because most bidders are trying to get a feel for pricing patterns before jumping into the fray.

Dress like a banker. Some buyers like to dress like bankers and arrive early to position themselves near the auctioneer so other bidders will assume they’re representing the lender and possibly shrink back from a bidding war.

Sheriff’s Sales Sheriff’s sales mark the final stage of the foreclosure process. Sheriff’s sales are open outcry sales with no sealed bids. The successful bidder, upon full payment and judicial confirmation, will receive a sheriff’s deed. The rule of Caveat Emptor (“let the buyer beware”) is in full force at sheriff’s sales. Notice published. Sheriff’s sales are advertised in the newspaper once for each of the six weeks prior to the date of sale. Written notice describing the properties to be sold are also posted in three public places in the town or municipality (1) where the real estate is to be sold and (2) where the real estate is situated at least three weeks prior to the sale. Peeking through the window. The sheriff’s office does not know whether or not the properties for sale are occupied and cannot give permission for prospective bidders to enter and inspect the home. Some people drive to the house and look in windows when no one is around or talk with neighbors. This may help a buyer find out a bit more about the home’s interior but it also might result in trespass charges. A drive around the neighborhood, however, may be instructive because a home in a neighborhood where there are a large number of foreclosures may lose value as prices are probably still dropping.

news.wra.org

ATTENTION HOMEBUYERS . . .

“Both real estate agents and prospective buyers should first attend and watch a real estate auction before actually going to bid.”

100%, NO DOWN PAYMENT Financing is Available  No Down Payment.  No Private Mortgage Insurance.  Closing costs and repairs can be financed.  Affordable 30 - 38 year fixed rate financing.  Income guidelines apply.

Sheriff’s deed comes with no guarantees. The sheriff’s deed is a quitclaim and may not give clear title to the property – each property is sold subject to any restrictions not removed in the foreclosure action. Consequently, a title search is recommended before a bid is made. If there is a legal question, an attorney should be consulted. Some sheriff’s sale buyers have found themselves obligated for past-due taxes, IRS liens or construction liens, and some discovered they were responsible for evicting property occupants. Ten percent down. The highest bidder at the sale shall be the buyer, who must pay 10% of the total bid in cash or with a certified check or money order immediately after the sale. Upon judicial confirmation of the sale, the highest bidder must pay the balance of the sale price. The court then pays the parties entitled to the sale proceeds and delivers the sheriff’s deed transferring ownership to the highest bidder. If the buyer fails to pay the balance of the sale price within 10 days after the confirmation of sale, the deposit is forfeited and a resale is held. The purchaser must pay the recording fees and Real Estate Transfer Fees when the sheriff’s deed is recorded.

Agent Best Practices The agent will be wise to sign this infomercial-watching prospect to a buyer agency agreement. Cooperating agents should attend pre-auction open houses with buyers, help buyer-clients determine the market value of the property prior to the auction, assist the buyer with auction registration and strategy and attend the auction with the bidder. Many auction companies pay cooperative commissions when the property closes. Be sure to check with the auction company regarding commissions and pre-auction registration requirements. While many auctioneers will pay commission to agents working with successful bidders, the same is not true at a sheriff’s sale. The buyer will have to pay any fee due to the broker out-of-pocket. •

For more information about auctions see the July 2007 Legal Update, “Real Estate Auctions,” at www.wra.org/LU0707 and Legal Update 97.10, “Real Estate Auctions,” at www.wra.org/LU9710.

•

For more information about sheriff’s sales, read Legal Update 99.05, “Mortgage Foreclosures,” at www.wra.org/LU9905 and pages 12-15 of the March 2009 Legal Update, “Working with Distressed Sales,” at www.wra.org/LU0903.

Debbi Conrad is Senior Attorney and Director of Legal Affairs for the WRA.

wisconsin real estate magazine

august 2010

 Direct & Guaranteed Loan Programs Available. For a Free Prequalification, Contact your local USDA Rural Development Office or call toll free 1-866-474-3600 www.rurdev.usda.gov/wi

Committed to the future of rural communities

USDA Rural Development is an equal opportunity provider, lender and employer

of Wisconsin

THE NATIONS LARGEST PROVIDER OF WORKING CAPITAL FOR REAL ESTATE PROFESSIONALS

OVER $300,000,000 ADVANCED NO CREDIT CHECK SIMPLE APPLICATION All you need is a signed contract with no contingencies except financing. We do business with real estate agents throughout Wisconsin. Local Office... Personal Service CALL US NOW!

262-798-3820 www.commissionexpress.com

Affiliate Member: NAR, WRA and ® Greater Milwaukee Association of REALTORS Official Registered Supplier for Realty Executives International

education

Short Sales & Foreclosures: What Real Estate Professionals Need to Know September 26, 2010 Core course for SFR Certification and ABR Elective WRA Convention - Wisconsin Dells For many real estate professionals, short sales and foreclosures represent the new “traditional” real estate transaction. Knowing how to navigate the complexities of short sales as well as how to identify the distinct real estate opportunities in foreclosure are not merely good skills to have in today’s market; they are critical. This course will help you evaluate all available options for distressed homeowners and identify the components of an effective short-sale package. This course looks at how you can counsel buyer-clients in the purchase of foreclosure properties. And as a practical resource, this course shows you how consumers can avoid foreclosure in the future. For more information, visit: www.wra.org/Convention2010

GREEN (2-Day) Course August 18-19, 2010 WRA Headquarters - Madison NAR’s GREEN designation gives you the tools you need to guide clients through buying, selling, or building in the sustainable marketplace. You will learn how to explain to your clients what makes a home, building or property green; list and market green properties; determine the energy efficiency of a property, and more. For more information, visit: www.wra.org/Green

Ninja Selling September 26, 2010 WRA Convention - Wisconsin Dells A powerful one-day seminar that teaches you a system of selling based on building relationships, listening to the customer and then helping them achieve their goals. It is less about selling and more about helping people buy. The goals of the course are to help you increase your income per hour, increase your customer satisfaction and improve the quality of your life. For more information, visit: www.wra.org/Convention2010 One credit toward CRS Designation.

CI Intro to CCIM September 26-27, 2010 WRA Convention - Wisconsin Dells This updated introductory course provides an overview of the key aspects of commercial investment real estate. In two days you will be introduced to the many facets of the dynamic commercial investment real estate field. Course requires an HP10BII calculator. Fulfills 9 credits of the 2009-2010 Continuing Education (Courses 1, 2 and 4). For more information, visit: www.wra.org/Convention2010

wisconsin real estate magazine

august 2010

GREEN Residential Elective August 20, 2010 WRA Headquarters - Madison NAR’s GREEN Designation Residential Elective Course gives you the knowledge and awareness of green building principles applied in residences so that you can guide buyerclients in purchasing and retrofitting green homes as well as help sellers by listing and marketing green properties. For more information, visit: www.wra.org/Green

Ninja Selling: Life Planning September 27, 2010 WRA Convention - Wisconsin Dells Builds upon the career-and-life-changing ideas from the number one real estate company nationwide in average agent production. 1 credit toward CRS Designation. For more information, visit: www.wra.org/Convention2010

CRS 111: Short Sales & Foreclosures September 27, 2010 WRA Convention - Wisconsin Dells This program was created to provide REALTORS® with sufficient information to provide competent counsel and service to homeowners in the challenging time of foreclosures and short sales. It will in turn create another profit center for you by increasing your potential to sell and list distressed properties and better protect client’s interests.. For more information, visit: www.wra.org/Convention2010 news.wra.org

Course Schedule

Visit wra.org/CourseSchedule for full schedule.

Sales & Marketing Management Date Course Location

*Fulfills core education for NAR new Short Sales and Foreclosure Resource (SFR) certification August 18-19, 2010 ** Early registration applies two weeks prior to August 20, 2010 the start of the course. ***Includes Convention Registration. September 26-27, 2010 September 26-27, 2010 # Appraiser section members receive a discount. September 26, 2010 September 27, 2010

GREEN (2-day) Madison 285 1-day GREEN Residential Elective Madison 130 Ninja Selling and Ninja Selling: Life Planning Wisconsin Dells ***340 CI Intro to CCIM Wisconsin Dells ***340 *1-day ABR Elective: Short Sales & Foreclosures Wisconsin Dells ***179 *CRS 111: Short Sales & Foreclosures: Protecting Wisconsin Dells ***179 Your Clients Interests (CRS Core 1-day class )

Conference and Conventions Date Event September 26-28, 2010 WRA Annual Convention Real Estate Continuing Education Classroom offerings of the 2009-2010 Approved for Minnesota Real Estate Credit.

295 315 140 160 350 370 350 370 189 209 189 209

Wisconsin Dells - Kalahari Resort To register call 800-279-1972

Course

Location

August 6, 2010 August 12, 2010 August 13, 2010 August 18, 2010 August 19, 2010 August 25, 2010 August 26, 2010 September 1, 2010 September 1, 2010 September 8, 2010 September 8, 2010 September 9, 2010 September 15, 2010 September 15, 2010 September 16, 2010 September 16, 2010 September 22, 2010 September 22, 2010 September 23, 2010 September 23, 2010 September 26, 2010 September 27, 2010 September 27, 2010

2009-10 Courses 1 & 2 2009-10 Courses 1 & 2 2009-10 Courses 3 & 4 2009-10 Elective A & E 2009-10 Courses 3 & 4 2009-10 Elective A & E 2009-10 Elective A & E 2009-10 Courses 2 & 1 2009-10 Courses 1 & 2 2009-10 Courses 4 & 3 2009-10 Courses 3 & 4 2009-10 Courses 2 & 1 2009-10 Commercial 1 & 2 2009-10 Electives D & E 2009-10 Courses 4 & 3 2009-10 Course 1 & 2 2009-10 Commercial 3 & 4 2009-10 Electives A & C 2009-10 Electives D & E 2009-10 Course 3 & 4 2009-10 Electives B & E 2009-10 Course 1 &2 2009-10 Courses 3 & 4

Madison Brookfield Madison Stevens Point Brookfield Madison Brookfield Madison West Bend Madison West Bend Brookfield Brookfield Madison Brookfield Lake Geneva Brookfield West Bend Brookfield Lake Geneva Wisconsin Dells Wisconsin Dells Wisconsin Dells

Date

ATD

Location

Date

Elective A: Risk Reduction Elective B: 1031 Exchanges and Exchange Opportunities Elective C: Condominiums

Appraisal Continuing Education Check out the Appraisal Continuing Modules available by DVD and Online. Pre-License * Plus books Available online!

Early Reg.** $Reg.

800-279-1972 $27/m; $35/nm 800-279-1972 $27/m; $35/nm 800-279-1972 $27/m; $35/nm 800-279-1972 $27/m; $35 nm 800-279-1972 $27/m; $35/nm 800-279-1972 $27/m; $35 nm 800-279-1972 $27/m; $35 nm 800-279-1972 $27/m; $35 nm 262-338-8114 800-279-1972 $27/m; $35 nm 262-338-8114 800-279-1972 $27/m; $35 nm 800-279-1972 $45/m $50 nm 800-279-1972 $27/m; $35 nm 800-279-1972 $27/m; $35/nm 262-723-6851 800-279-1972 $45/m $50 nm 262-338-8114 800-279-1972 $27/m; $35 nm 262-723-6851 Register for Convention Register for Convention Register for Convention

Elective D: Landlord/Tenant and Property Management Elective E: Financing the Sale

Course

September 28, 2010 Foreclosures and Short Sales 8:30 â&#x20AC;&#x201C; 4:30 Challenges and Solutions (submitted for approval) Date Course Location August 9-12, 2010 Broker Pre-License Course 8:00 - 5:00 Madison October 4-7;11-14, 2010 Sales Pre-License Course 8:00 - 5:00 Madison

Location

Thru 8-23/2010

Wisconsin Dells $144 - Section Member $154 - WRA Member $164 - Non Member Member 260* 325*

Non-Member 280* 325*

QuickStart sales training program

www.wra.org/QuickStartOnDemand

wisconsin real estate magazine

august 2010

Realtor® sales tip

Our Duty to Mother Earth With the recent gulf oil spill still profoundly impacting our shores, I can’t help but share my thoughts concerning our role as REALTORS® when assisting with the purchase and sale of property that may be impacted by the environment. No matter what area of our nation we live in, we all have some sort of environmental duty to our customers and clients when it comes to assisting them with their due diligence when By marcus a. wally

purchasing land, whether improved or unimproved. Remember the saying: Ignorance is not bliss! Many times I have heard agents tell a customer that a listing on one acre is fully buildable. I cringe as I think to myself, how does this agent know that the full lot is indeed buildable? Our answer must always be, “Wetland delineation and other tests can be run to determine whether wetlands are buildable.” If we answer in any other manner, we are misleading and performing a disservice to our customers/clients. Generally speaking, the definition of land that holds water is wetlands and the opposite is uplands. Uplands are the area of land that are high and dry and what we would consider as the buildable part of the parcel. Because I practice in Florida, my standard line is, “Our entire state is almost under water!” So it pays to do your homework when purchasing any type of property. Today it is possible for a real estate professional to walk a piece of property with a prospect and not even notice wetlands. Unless we are specifically trained to recognize certain ferns and other plants that live in a wet environment, we may well be in an area designated as “wetlands,” but walking in an area that appears to be high and dry to us.

wisconsin real estate magazine

august 2010

Hence the need for a well-trained environmental specialist to be part of your team. I have a good buddy without whose advice I don’t make a move. I offer his business card to all who are considering buying a property and may need his expertise and guidance. It’s much too risky today to try and sell a property without the proper due diligence. There are just too many unknowns…including endangered animals. In a coastal area such as Florida, we of course have beach erosion. Every so often, the ocean takes away the beach sand and leaves our beaches much narrower. Now we all know that the word “erosion” means loss of land, so what about the gain of land? When I am selling a beachfront property, it is my duty to bone up on the areas of my town that have a history of severe beach erosion and alert my prospects to this. In fact, in some of the parcels that lie east of the CCCL (coastal construction control line), an owner must not only have a written disclosure statement, but may be prevented from rebuilding should a disaster occur. In addition, the government may not offer to compensate the property owner for their loss. Imagine losing your property to Mother Nature and not being allow to rebuild and additionally, not having any reimbursement money for your claim. Now that’s scary! Now here’s a concept to consider: ever heard of the opposite of erosion? We call it “accretion.” One of the most fascinating experiences I have run across in my 20-plus-year career was news.wra.org

a large track of oceanfront land that was owned for a number of years by one family. A few years ago, the family decided to sell to a large developer who would turn this grand track of land into a very upscale seaside community. The family listed the land based on the survey that was performed at the time of purchase. You can only guess what’s coming… A buyer was found and a contract was negotiated. During the due diligence phase, the buyer discovered that the land had accreted dramatically. At least 5 additional acres of land—OCEANFRONT land—was now present (existing) when the final survey was completed. Now, multiply the priceper-foot of oceanfront property by the additional land that had accreted (grown). Now that’s some big bonus bucks! That must have been a very happy buyer. Speaking of big bucks, anytime a parcel of land is being purchased for development, significant money should be invested to protect the buyer from land that could possibly be contaminated. Many states have lists of contaminated sites available for review. Go to http://dnr.wi.gov/org/aw/rr/gis/

Phase II environmental site assessment to pinpoint the exact areas where contamination are present. And we’re not just talking about former gas station sites. Dry cleaners, food establishments, marinas, city and federal buildings, strip malls, etc. all may have some sort of contamination on-site. This could keep the site from being developed until the clean-up is complete. And clean-up is timeconsuming and costly. It always amazes me that some buyers of real property are not inclined to purchase governmentbacked (FEMA) flood insurance unless the lender requires it. In my experience, when a storm strikes, it does not seem to matter whether or not your property is located within a flood zone or not. If it strikes your area, chances are you may suffer damage/loss/flooding. Many families have sustained severe property damage from a North Easter or extremely heavy rains, but not a “named storm” or hurricane. So my practice is to educate all my customers on the value of purchasing flood insurance even if the property they are buying is not located within a designated flood zone. This type of insurance is regulated and priced by the federal government, so you don’t shop around for the costs as they are the same no matter what agency sells you the policy.

One last element worth mentioning is our endangered/threatened species. When we speak of the environment, we must also consider our animal friends that count on us to protect them while we transact real estate. Each area has its own unique species that need protection, whether it is eagles, scrub jays, gophers, etc. Recently, I listed a vacant lot for a local bank. Upon my arrival at the lot to perform my CMA, I noticed a tall pine tree with a large nest in the top. I could see baby birds poking their heads out. Did this nest belong to an endangered species? Would my new listing be saleable? Looking out for the interest of others is part of our Code of Ethics and in the name of full disclosure, be extremely careful when working with our environment. You could make the difference! Marcus A. Wally, MBA, is an active Florida REALTOR® in St. Augustine, Florida. Marcus is the founder and broker of New World Realty, which also manages coaching and facilitation of education classes around the world. Marcus earned his MBA from the University of North Florida in Jacksonville. He can be reached at (904) 669-1081 or by e-mail at marcuswally@comcast.net.

for a list of contaminated sites here in Wisconsin. This is super information to have under your cap for your customers/clients. One of the first items to be tackled during the homework phase of a raw land purchase is a Phase I environmental site assessment. This initial look will determine if any recognizable environmental conditions (pollution, contamination) exist or have existed in the past. This study also includes title issues past and present. If positive readings are found, the buyer usually elects to complete further investigation by having a

   

Western Wisconsin & Southeast Minnesota



(Licensed in Both States)

Serving La Crosse and Surrounding Communities



Site Signs, Yard Signs, Banners, Stationary, Brochures, Sell Sheets, Business Cards... Supreme can set you up with Centralized Web Ordering...perfect for multi-location Real Estate companies. For more info, visit...

Jo Baldridge, CRS, GRI, CHMS

 



wisconsin real estate magazine

608-797-0337 jo_baldridge@centurytel.net www.JoBaldridgeRealtor.com

Serving Clients on Both Sides of the Mississippi

august 2010

By michael theo

Last month, I wrote about using the elections of 2010 to debate the big stuff – the hard public policy issues that directly impact our quality of life in Wisconsin, and therefore impact REALTORS®. While many of us are turned off by the electioneering activities of campaigns, it’s critical we use the opportunity campaigns offer to ask candidates about real, consequential issues. In recent weeks, two such issues have made headlines – the pending state budget deficit and the substantial increase in property taxes this year.

wisconsin real estate magazine

august 2010

news.wra.org

Focusing on the Big Stuff Budgets, taxes, spending and campaigns

State Budget Imbalance In early July, the respected Legislative Fiscal Bureau – the legislature’s professional, non-partisan budget office – reported that the next state biennial budget, which begins in July, 2011, faces a $2.5 billion shortfall. A budget deficit of this magnitude is significant in and of itself, but the fact that it’s released smack dab in the middle of an election where there is no incumbent governor running (for the first time since 1981) and where 117 of the 132 legislative seats are up for election, makes the news a potential game-changer for would-be lawmakers at all levels. The $2.5 billion deficit is based on current law commitments, making no changes in existing spending obligations or potential revenue growth. For 2011-12, that translates to revenues of $13.32 billion and expenditures of $14.55 billion and for 2012-13, revenues of $13.30 billion and expenditures of $14.58 billion. After adding required balances of $65 million in each year, that leaves a budget deficit of $1.23 billion in the first year of the biennium and another $1.27 billion in the second year. While the state faced a larger beginning budget deficit last biennium, there will likely be no massive federal stimulus funds flowing from Washington this time. We’ve also likely exhausted all the budget gimmicks and tricks available. The new governor and legislative leaders, whether they’re from the same party or not, will have to find a way to resolve this budget mess. Bottom line: the state’s new leader and legislature will face deep spending cuts, large tax and fee increases, or some combination thereof when they lower their hand from taking the oath of office in January. If the solution involves finding new revenues, what taxes or fees are acceptable? If the solution involves cutting spending, then what spending, how much and what are the impacts? Regardless of the solutions you support, candidates should be asked to present their plans for solving Wisconsin’s looming budget crisis so citizens know what, not just who, they’re voting for this fall.

Property Tax Curse The second major issue that has emerged in recent weeks involves the most detested tax of all, the property tax. Maybe it’s because these taxes are all paid at once or maybe it’s because Wisconsin has long

wisconsin real estate magazine

august 2010

over-relied on this one revenue source, but whatever the reason, taxpayers have consistently cursed annual property tax increases. And this year they have a lot to complain about. A new report by the respected Wisconsin Taxpayers Alliance (WTA) shows net property taxes totaled $9.4 billion in 2010, which is up nearly 5% from last year – matching or exceeding increases in six of the last 10 years. Worse yet, property taxes claimed 4.5% of all personal income in Wisconsin, the highest share of personal income in 14 years! According to the WTA analysis, school levies constituted the largest increase, growing 6%, followed by technical colleges (up 3.9%), counties (up 3.2%), and municipalities (up 3.2%). While everyone wants lower property taxes and it’s certainly true that lower property taxes means increased housing affordability, voters also value the services funded by this tax. The fact is, many government services, including K-12 schools, technical colleges, street and road maintenance, garbage collection, snow blowing and police and fire protection, are all funded by the property tax. It’s true we all want these services AND lower taxes, but candidates for office this fall should tell us how they plan on balancing these inconsistent public desires. Whether or not this unusually big jump in property taxes will have an impact on the outcome of the fall elections is unclear, but the WTA report says that when property tax levies claimed around 5% or more of personal income in the past, voters took note and pressured candidates for state office, resulting in major political and/or policy changes.

The Ball’s in Your Court How candidates answer these tough questions is uncertain, but what is certain is that they should be asked – and that’s where you come in. The ball is in your court. Take the time to meet the candidates and ask them about these and other pressing issues they’ll face once in office. These issues will impact your family, your pocketbook, your business, your schools, your real estate prices – in short, your quality of life. Share your ideas about what constitutes the big issues of this election by emailing me at mtheo@wra.org. Remember, campaigns should focus on the big stuff, but they only will if you do. Michael Theo is Vice President of Legal and Public Affairs for the WRA.

public affairs

Legal Briefs

Three Recent Court Cases Impact REALTORS® Three cases recently decided by the Wisconsin Supreme Court and Wisconsin Court of Appeals have a direct impact on the real estate industry, providing useful information to REALTORS®. In each of these cases, the WRA filed an amicus curiae (“friend of the court”) brief with the court explaining the law and how the outcome of the case could impact property owners and the real estate industry. By tom larson

Konneker v. Romano (decided July 7, 2010) In Konneker v. Romano, the Wisconsin Supreme Court overturned a lower court ruling and held that language in a deed conveying a 20-foot wide lakefront easement to the Konnekers was ambiguous and it was “not clear from the deed whether the parties intended the easement holder to have riparian rights, including the right to construct and maintain a pier.” In this case, a developer created a subdivision consisting of 8 backlots and giving each of these lots an easement 20 feet wide along a lakefront lot. The recorded purpose of the easement was to “gain access to [the lake]” from a nearby road. However, no other purpose was recorded, nor did the easement indicate whether it was to include riparian rights.

wisconsin real estate magazine

august 2010

For 23 years, no pier, boat lift or boat was located upon the easement. During this span of time, at least two easement holders obtained non-transferable leases for the use of the neighboring property owners’ pier, which was located adjacent to the easement. In 2004, Konneker purchased one of the backlots, along with easement rights to gain access to the lake. In 2006, Konneker installed a pier along the shore of the easement. The neighbors (Romanos) removed the pier and a lawsuit followed. The circuit court granted summary judgment in favor of Konneker, finding that lake access easements, in the absence of any indications to the contrary, implicitly include riparian rights, which include the right to erect and maintain a pier. (A court may award “summary judgment” if it determines that no disputable facts news.wra.org

exist.) However, the court of appeals overturned the circuit court’s ruling and granted summary judgment in favor of the Romanos, finding that the purpose and scope of the easement was to look to the actions of the original parties, who made use of the easement for 23 years without constructing a pier. In its review of the lower courts’ decisions, the Wisconsin Supreme Court concluded that competing affidavits in the case raised a genuine issue of material fact concerning the intent behind the easement and therefore, summary judgment awarded by both lower courts was inappropriate. The supreme court also concluded that the Wisconsin Statutes regulating riparian easements and pier placement (Wis. Stat. §§ 30.133 and 31.131) did not apply to the easement in this case because (a) the easement was granted prior to the effective date of Wis. Stat. §30.133 (which prohibits the conveying of riparian rights (except the crossing of land) after 1994) and (b) the issue before the court is whether the easement grants riparian rights, including the right to construct and maintain a pier, not whether a pier – if and once constructed by the easement holder – constitutes a lawful structure under Wis. Stat. § 30.131.

Why This Case Is Important to REALTORS® In Wisconsin, thousands of lake-access easements exist and many contain language that is equally ambiguous to the language used in this case. Because the value of the easement depends upon the rights conveyed, it is important to make sure that buyers and sellers of property subject to easement understand the meaning of the easement language. If a property is subject to an easement, REALTORS® should continue to encourage parties to seek the advice of legal counsel to help them better understand the meaning of the easement.

Saddle Ridge Corp. v. Board of Review for Town of Pacific (decided June 18, 2010) In Saddle Ridge Corp. v. Board of Review for the Town of Pacific, the Wisconsin Supreme Court held that declared, but unbuilt, condominium units can be assessed for property tax purposes. Saddle Ridge (the project developer and owner of several unbuilt units) objected to property tax assessments when the assessment on the declared, but unbuilt, condominium units went from $5000 to $32,000 per unit. Saddle Ridge maintained that condominium units are to be assessed only after they are built. However, the Town argued that condominium units are to be assessed after they are declared and given a tax parcel ID, even if they are not built. Both the circuit court and the court of appeals ruled in favor of Saddle Ridge, concluding that declared, but unbuilt, condominium units are not to be assessed under Wisconsin’s condominium law or the condominium declaration in this case. The Wisconsin Supreme Court reversed the court of appeals ruling and held that declared, but unbuilt, condominium units are tax parcels and can be assessed for property tax purposes. [Note: the Wisconsin Supreme Court did not decide whether these condominium units were assessed properly.]

Why This Case Is Important to REALTORS

From a practical standpoint, the outcome of this case was important

wisconsin real estate magazine

august 2010

because it decided who must pay the property taxes on the common elements associated with a condominium – owners of all condominium units (built and unbuilt) or just owners of built condominium units? If owners of built condominium units would be required to pay the entire tax burden associated with the common elements of a condominium project, they could be responsible for a sizable tax bill until the other units in the project were constructed. Moreover, buyers might be reluctant to purchase newly constructed condominium units until all the units in the project are built. Fortunately, the supreme court’s ruling makes it clear that a condominium unit must share in this tax burden as soon as it is declared, even if it not yet built.

St. Croix Valley Home Builders Association, Inc. v. Town of Oak Grove (decided June 22, 2010) In St. Croix Valley Home Builders Association, Inc. v. Town of Oak Grove, the court of appeals held that the St. Croix Valley Home Builders Association (SCVHBA) failed to exhaust all administrative remedies before filing a lawsuit challenging the constitutionality of an impact fee ordinance. Between 2003 and 2007, the Town of Oak Grove collected over $450,000 in impact fees from developers to fund such things as new parks, road improvements and emergency service vehicles. However, many of these fees were never spent on the improvements for which the fees were imposed, including $110,000 for new parks (to date, the Town has not created a single new park). Other fees were imposed only on new development, even though they were being used to fund improvements (new addition to town hall) that would benefit all residents. In 2007, the SCVHBA filed a lawsuit claiming that the impact fee ordinance, among other things, is unconstitutional and that it violated Wis. Stat. § 66.0617(6) because the needs assessment is erroneous. The circuit court dismissed the action based upon SCVHBA’s failure to exhaust all administrative remedies before filing the lawsuit. Specifically, the court declared that SCVHBA is required to first go through the administrative appeals process set forth in the Town’s impact fee ordinance, which allows parties to challenge the amount, collection or purpose of an impact fee. The court of appeals affirmed the circuit court’s ruling. The case will likely be appealed to the Wisconsin Supreme Court.

Why This Case Is Important to REALTORS® This case is important because it emphasizes the need to follow the proper process when challenging an ordinance. If a property owner has a concern with an ordinance or the application of an ordinance to a piece of property, the owner should first review the local ordinance or relevant state statute to identify whether a process has been established for challenging the ordinance. One point worth noting: the court of appeals’ ruling is troubling from the standpoint that only a court can decide whether an ordinance is constitutional. Therefore, it seems unjust to require a property owner to exhaust administrative remedies (in this case, appealing to the town board) when they are making a constitutional challenge to an ordinance. For more information on these cases, please contact Tom Larson (tlarson@wra.org) at (608) 240-8254. Tom Larson is Director of Regulatory and Legislative Affairs for the WRA.

public affairs

By joe murray

Feingold â&#x20AC;&#x201C; Johnson Insider vs. Outsider The 2010 U.S. Senate race between incumbent Democratic Senator Russ Feingold and Republican challenger Ron Johnson could easily become the most interesting and spirited contest in Wisconsin politics this year.

In one corner you have Feingold, a three-term, election-savvy incumbent who has successfully defeated three prior opponents in hard-fought campaigns to maintain his seat.

In the other corner is Ron Johnson, a wealthy manufacturing company owner and first-time candidate who has never held political office.

wisconsin real estate magazine

august 2010

news.wra.org

Democrats perceive Rasmussen Reports polling as slanted to the GOP; Public Policy Polling is a Democratic polling firm. And both firms have arrived at the same conclusion: Feingold must convince undecided voters in Wisconsin that he is not part of the D.C. problem, or the “insider.” Johnson, the “outsider,” must convince voters he can forcefully represent their interests in a way they believe isn’t happening today.

career politian vs. a political newbie. The classic “insider” vs. “outsider.”

The Feingold-Johnson race is taking place in a year where voters are extremely unhappy with the status quo in Washington. Poll after poll shows the economy and jobs are the top issues on voters’ minds. Voters want problems solved and an economy that creates jobs without bankrupting the nation. What they perceive is partisan gridlock and finger-pointing. And, even worse for incumbents, voters give a big thumbs down to the major bills Congress has passed this session such as health care reform (“ObamaCare”) or the economic stimulus package. This makes re-election of all incumbents, including Russ Feingold, far from a sure bet.

This conclusion was summed up neatly by Dean Debnam, President of Public Policy Polling. “Johnson should win the primary and has a good chance of winning the general,” Debnam said. “But he needs to focus on spreading his name and message. Feingold can’t depend on his popularity alone; he has to win over undecided voters; that is who is going to determine this election.”

The Numbers

Dynamics of the Race

Two separate polling firms released polling results in June and July that illustrated the vulnerability of Senator Feingold. A July 13 Rasmussen Reports survey of 750 likely voters and a June 26 Public Policy Polling survey of 638 Wisconsin voters illustrate how close this race is.

Russ Feingold’s campaign and allies will spend a lot of time and money to convince Wisconsin voters that Ron Johnson is not a “mainstream” candidate. Johnson cavorts with unseemly authors (Charles Murray, author of The Bell Curve); can’t be trusted to stand up to the oil companies (he owns stock in BP); and generally holds positions too conservative for Wisconsin voters on taxes, abortion, etc. The Feingold camp will label Johnson as the “extreme” as well as inexperienced candidate every chance they get.

Rasmussen Reports Wisconsin Survey of 750 Likely Voters July 13, 2010 Election 2010:

Wisconsin Senate

Russ Feingold (D)

47%

Ron Johnson (R)

46%

Not Sure

Some Other Candidate

Ron Johnson’s campaign and his allies will portray Feingold as a Washington “insider” who supported the unpopular health care reform bill (“ObamaCare”) and economic stimulus legislation, along with other unsustainable debt and spending that threatens the future of our children (“intergenerational theft”). Feingold is incapable of controlling his urge to spend and is taking the country to the “brink of bankruptcy,” according to Johnson.

Public Policy Polling Survey of 638 Wisconsin Voters June 26-27, 2010 Russ Feingold (D)

45%

Ron Johnson (R)

43%

Undecided

12%

wisconsin real estate magazine

The back-and-forth that takes place in a highprofile U.S. Senate race is already underway, but the issues that will likely dominate the fall campaign will be Feingold’s support for the health care reform bill and economic

august 2010

stimulus spending package. Feingold is the incumbent and voted for both bills, and it’s Johnson’s intent to focus the attention of voters on the issues he believes makes Feingold vulnerable this year. Johnson’s personal wealth will allow him to match or exceed Feingold’s significant national fundraising ability, so the fundraising advantage that usually goes to the incumbent should not be a factor. The biggest challenge for Johnson may be the very issue that bedevils so many firsttime candidates, the “big gaffe.” It’s that special moment where a candidate says something really offensive or foolish that convinces voters he or she is perhaps not ready for prime time. Johnson is stepping into a politically charged campaign where everything he says will be dissected by the opposition. As a rookie, the possibility of saying something he regrets is very real. Feingold’s biggest advantage will be his experience on the campaign trail. Since 1982, Feingold has won all six of his elections, three in the Wisconsin Senate and three U.S. Senate races. He has never lost an election in 28 years and he knows how to win. This, more than any other factor, may be his greatest strength in a year where incumbents appear to be vulnerable. So the frame for this election looks like this: a middle-class, three-term Democratic incumbent running against a wealthy Republican opponent with no campaign experience and no experience in public office. The incumbent Washington “insider” vs. the anti-Washington “outsider” intent on taking advantage of a tea party backlash against huge deficit spending and borrowing. Savvy and politically experienced campaigner vs. first-time newbie running in a high-profile campaign with the national spotlight focused squarely on it. Career politician vs. businessman. Regardless of which candidate you support, this match-up will likely be the big show this fall. Stay tuned! Joe Murray is Director of Political and Governmental Affairs for the WRA.

product showcase New!

WRA Launches Digital Edition of Wisconsin Real Estate Magazine New Format Helps Readers Navigate and Share Wisconsin Real Estate Magazine is now available as a digital magazine in addition to its print edition, mailed out monthly. Unlike our online version of the magazine (news.wra.org), the digital edition features articles with animated page flip options, making reading more intuitive.

Other features include: thumbnails for quick page jumps, zoom tools and the option of saving for offline viewing. You can even share articles via email, Facebook and other third-party websites. Android users can read the magazine directly on their phones (Blackberry and iPhone applications are coming soon).

To view the new digital edition of Wisconsin Real Estate Magazine, visit www.wra.org/wrem_digital_edition_july2010. Please let us know what you think.

View as fullscreen, individual pages, or zoom in to read copy.

Embed magazine into your website to allow vistors to flip through.

Rate articles or full issues to give readers a sense of their importance.

Share articles via e-mail, Facebook, Twitter and numerous social media sites.

Comment on an article with a sticky note and pass along to friends.

Jump quickly from page to page with the easy-to-use navigation bar.

wisconsin real estate magazine

august 2010

news.wra.org

and the

winner is... September 26-28, 2010

Registrant One INFORMATION:  Check here if you are an Association Executive Name_ ___________________________________________ Firm Name ________________________________________ Address_ __________________________________________ City_ _______________________State_______ Zip__________ Phone (W) (

)____________________________________ (H) (

) _______________________________________

E-mail Address_ ______________________________________ WRA member # _____________________________________

*TWO-FER Convention Special: Register one WRA member for one full convention pass at regular price and register a second WRA member at a special introductory price. (see details at www.wra.org/convention2010fees) Your second guest must be a member of the WRA who has NEVER attended the Fall Convention or has NOT attended in the past five years. Limit one discounted registration per order. Register using this form or by visiting www.wra.org/convention2010reg. After you have registered you will receive a promotion code. Give this promotion code to a WRA member and tell that member to visit the Web site to register and redeem the discounted pricing.

Two-FER: 2nd WRA Member INFORMATION: Name___________________________________________ Firm Name_______________________________________ Address__________________________________________ City ______________________ State _____ Zip ________ Phone (W) ( )_ _________________________________ (H) ( ) _______________________________________ E-mail Address_ ___________________________________ WRA member # ___________________________________ Member

Thru 7-31

Thru 8-23 After 8-23 ATD

 1-Day Pass ( Sun/Mon/Tues ) circle one $ 84 $ 94 $ 104 $ 124  Full Convention Pass $ 114 $ 124 $ 134 $ 154  TWO-FER: 2nd WRA Member* $ 54 $ 64 $ 74 $ 94  Unlicensed Spouse/Sig. Other $ 35 $ 35 $ 35 $ 55 Name of Spouse or Significant Other:____________________________________________. Non-Member

Thru 7-31

 1-Day Pass ( Sun/Mon/Tues ) circle one  Full Convention Pass

Real Estate Continuing Education

$ 114 $ 154 Thru 7-31

Thru 7-31

 Intro to CCIM 9/26-9/27 w/conv  ABR Elective – Short Sales & Forecl. 9/26 w/conv  CRS 111 – Short Sales & Foreclosures 9/27 w/conv  ABR & CRS – Short Sales & Forcl. 9/26-9/27 w/conv  Ninja – Part 1 – 9/26  Ninja – Part 2 – 9/27  Ninja Part 1 & 2 – 9/26-9/27 w/conv

$ 330 $ 169 $ 169 $ 229 $ 185 $ 185 $ 330

$ 124 $ 134 $ 154 $ 164 $ 174 $ 194

• Access to Indoor Theme Park following Chairman’s Dinner - 9/27

Thru 8-23 After 8-23 ATD

$ 340 $ 350 $ 179 $ 189 $ 179 $ 189 $ 239 $ 249 $ 195 $ 205 $ 195 $ 205 $ 340 $ 350

$ 370 $ 209 $ 209 $ 269 $ 225 $ 225 $ 370

Two-Fer Pricing

Golf (9/26) ��$98 Wild Rock Golf Club - Wisconsin Dells  Member One  Member Two Chairman of the Board’s Dinner (9/27) ��$49  Member One  Member Two After Party Bowling Tournament (9/27) �� FREE  Member One  2nd WRA Member*  Spouse/Sig. Other

 2nd WRA Member* .....$ 276

 8:00 - 9:00 pm  8:00 - 9:00 pm  9:00 - 10:00 pm  9:00 - 10:00 pm  10:00 - 11:00 pm  10:00 - 11:00 pm

$ 134 $ 144

$ 144 $ 154 $ 174 $ 154 $ 164 $ 184

 2nd WRA Member* .....$ 90

WRA REALTOR® Member  Class Only  Class w/ Convention

$ 144 $ 154

$ 154 $ 164 $ 184 $ 164 $ 174 $ 194

 2nd WRA Member* .....$ 100

Non-Member  Class Only  Class w/ Convention

$ 154 $ 164

$ 164 $ 174 $ 194 $ 174 $ 184 $ 204

Thru 8-23 After 8-23 ATD

Event Fee – Per Person:

 2nd WRA Member* .....$ 276  2nd WRA Member* .....$ 115  2nd WRA Member* .....$ 115  2nd WRA Member* .....$ 175

Appraisal CE Courses - 9/28 WRA Appraisal Section Member  Class Only  Class w/ Convention

Thru 7-31

Room Rates Standard Room: $119 Jacuzzi Suite: $119 Royal African Queen Suite: $119 Release Date: August 25, 2010

• Real Estate Continuing Education – Four of Six courses included in Full Convention Pass - MUST register in advance - first come, first served!

Thru 8-23 After 8-23 ATD

Kalahari Resort and Convention Center 1305 Kalahari Dr. | Wisconsin Dells, WI Phone: 877-253-5466 or 608-254-5466

Included in Registration Fee: • Icebreaker Party “A Night at the Awards” – 9/26

CE - Attend All 6 (4 FREE – You pay for 2) $15 per $20 per $25 per $45 per (You may select up to FOUR courses for free included in a Full Convention Pass; each additional course pricing above.  Elective B – 1031 Exchanges & Exchange Opp. 8:30 – 12:00 (9/26)  Course 1 – Listing Contracts – 8:30 – 12:00 (9/27)  Elective E – Financing the Sale – 1:00 – 4:30 (9/26)  Course 2 – Offer to Purchase – 1:00 – 4:30 (9/27)  Course 3 – New Developments – 8:30 – 12:00 (9/28)  Course 4 – Buyer Agency Agreements – 1:00 – 4:30 (9/28) Designation Classes

Hotel information:

Two-Fer Pricing

CRS Luncheon (9/28) ��$22  Member One  Member Two  Special Services: Check here if you require special needs to attend. Attach written description of needs. Cancellation Policy: The WRA reserves the right to cancel courses if not filled. Cancellations must be made in writing prior to September 26, 2010 and will be refunded, minus a $25 administration fee. Registrations cannot be transferred from person to person.

PAYMENT: Register by Mail: Wisconsin Realtors® Association 4801 Forest Run Road, Suite 201 Madison, WI 53704-7337

Total amount $__________________  Enclosed is my check made payable to the WRA  Charge my VISA / MasterCard (circle one) Card Number �� Exp. Date___________

We took advantage of WHEDAÂŽ home buyer education to become successful homeowners.

HEDA has helped more than 100,000 renters become homeowners thanks to home buyer education. Through our trusted network of non-profit partners, your buyers can gain the knowledge and confidence to become responsible, long-standing

homeowners. Thatâ&#x20AC;&#x2122;s why home buyer education is built into every WHEDA Advantage loan. Discover the WHEDA Advantage! Income and purchase price limits apply and home buyer education is required. To learn more, go to wheda.com/Realtors/.

Wisconsin Housing AnD Economic DEvElopmEnt AutHority 201 West Washington Ave n Madison, WI 53703 800.334.6873 n www.wheda.com