August 2012 - Wisconsin Real Estate Magazine by Lauren Bizorik

Real Estate WISCONSIN

MAGAZINE

A PUBLICATION OF THE WISCONSIN REALTORS速 ASSOCIATION

August 2012 Vol. 28 No. 11

It's Check-In Time!

The new WRA Information Check-In Sheet is here.

Health Care Reform Law

The recent PPACA upholding and how it impacts REALTORS速.

Hot Topics

The hottest topics on the Legal Hotline this summer.

Thank You and Goodbye

by Scott

K l

A final message from WRA Chairman Rob Keefe.

FOCUS

REALTOR速 Roundtable Discussion

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CONTENTS August 2012 | Vol. 28, No. 11

18 6 Sell? Rent? Both? 18 Check-In Time 32 20 Hot Hot Topics 22 32 Wisconsin Senate Race Health Care Reform Law 30 34 REALTOR® Sales Tip Chairman’s Corner Rob Keefe recaps his year as 2011-2012 WRA Chairman.

Tips to proceed with caution into simultaneous listings.

Using the new WRA Information Check-In Sheet.

How the recent upholding of the PPACA impacts you.

A review of the candidates and chances for success.

How to avoid legal problems that could cost you your license.

Packer Football Raffle!

Cover Story

As part of the Packer Party at Convention, don’t miss the raffle for an Aaron Rodgers-autographed official NLF football! ($450 value.) Tickets will be sold on site on Sunday, September 9 at the Convention Golf Outing and at the WRA registration desk. Tickets are $5 each or 3 for $10. No tickets sold in advance. The raffle drawing will be held after the Packers game, approximately 6:30 p.m., at the registration desk. Winner must be present to win.

What do the experts have to say at the roundtable discussion? Former U.S. Congressman and journalist Scott Klug details the good, the bad, and the ugly in the market in his discussion with the biggest real estate players from across the state, page 10. Cover photo by Lauren Bizorik.

WIREALESTATEMAG • AUGUST 2012

A summary of the hottest topics on the Legal Hotline this summer.

A MESSAGE FROM THE PRESIDENT by Mike Theo

Homeowners Make Better Lovers

WIREALESTATEMAG • AUGUST 2012

kay, now that I have your attention, I admit I don’t have quantitative data that proves homeowners make better lovers. However, it’s indisputable that homeowners help make safer neighborhoods, better schools, stronger families and better students as well as better local, state and national economies. But homeownership rates in Wisconsin have fallen recently, according to the respected Wisconsin Taxpayers Alliance. Their latest report, called “Measuring Success – Benchmarks for a Competitive Wisconsin 2012,” says that Wisconsin’s homeownership rate, which is the percent of total households that own homes, fell to 68.5 percent in 2011, down from 71 percent in 2010. That’s also a five percent drop from our peak of 73.3 percent back in 2004. While we’re still better than the U.S. average of 66.1 percent, Wisconsin lags behind most of our upper Midwest neighbors. Homeownership in Michigan is 74.1 percent; Minnesota is 71.34 percent; Iowa is 71.2 percent; and Illinois is 68.4 percent. What can we do to improve homeownership in Wisconsin? Unfortunately, many of the economic factors that determine whether someone or some family can afford a home are not in our immediate control. Those factors include the mortgage interest rate, the unemployment rate and the consumer confidence rate. But there are some factors that influence the price of a home that we do have some control over. One of those factors that can be controlled is how we tax homeownership, including the real estate transfer tax annual property taxes. When the Wisconsin legislature commences a new legislative session in January, they should consider reforming Wisconsin’s property tax system as a way of reducing the cost, and thus increasing our rate, of homeownership.

68.5%

Wisconsin’s homeownership rate in 2011, down from 71 percent in 2010.

Wisconsin is far more reliant on revenues derived from property taxes than most other states, and as a result, the cost of owning a home in Wisconsin is higher than many other states. The WRA was a founding partner in the Wisconsin Way project, which was a multi-year effort by a coalition of diverse organizations that produced a far-reaching set of recommendations to revolutionize the way we tax, spend and invest in Wisconsin. The Wisconsin Way partners included the WRA, the statewide teachers union, counties and municipal government representatives, transportation builders and perhaps most importantly, hundreds of citizens who attended numerous town hall meetings held across the state over many months. Among the group’s recommendations were ideas for how to reform property taxes in Wisconsin. The recommendations included ideas on both the revenue and expenditure side of the equation. At the risk of being overly brief, some of the ideas included: • A goal of permanently cutting property tax revenues by 25 percent by consolidating the management and delivery of many local governmental services, including public safety, human resources, K12 education and infrastructure maintenance.

• Consolidating appropriate school district administrative functions including school building priorities and regional purchasing of energy, textbooks, paper and technology. • Shifting funding of certain services off the property tax to the state general fund using new or existing sales tax revenues and/or user fees for specific services to pay for them. • Allow counties to increase the sales tax in exchange for permanent property tax cuts. • Restricting property taxes to only property-related services and schools. • Review all state mandates on local governments to achieve greater efficiencies and ensure appropriate funding sources. • Carefully review, and revise where appropriate, the five major existing property tax relief programs funded by the state. • Require all property tax exemptions to be justified and re-codified within 24 months, then reviewed on a staggered basis every five years. These and many other property tax reform ideas were offered in the context of other major tax reforms, economic growth and development ideas and recommendations for government reforms and modernization. A newly elected legislature in January should review these and other property tax reform ideas and adopt proposals that will increase the number of homeowners in Wisconsin and thus increase the social and economic benefits that will result. Homeowners may or may not make better lovers, but they do own a piece of the American Dream for which renters still lust.

REAL ESTATE INSIDE THE WRA

Real Estate WISCONSIN

MAGAZINE

Editorial Staff: Publisher: Michael Theo Editor: Lauren Bizorik Senior Designer: Joe Leschisin Advertising: Robert Uhrina WRA Executive Committee: Rob Keefe, Chairman Renny Diedrich, Chairman-Elect Steve Lane, Treasurer Jeffery Theisen, Vice President Tim Stemper, Vice President Peter Sveum, Vice President Paul Schieldt, Vice President Contact Information: 4801 Forest Run Rd., Suite 201 Madison, WI, 53704-7337 (608) 241-2047 • (800) 279-1972 e-mail: editor@wra.org website: www.wra.org

REALTOR® in the Community

We want to feature you in the new magazine! Welcome to the newly redesigned Wisconsin Real Estate Magazine! With the new design comes new features. In addition to the new look, we are launching a new section in the magazine that will highlight REALTORS® from across the state making positive contributions to the community. Are you a frequent volunteer at an animal shelter? Did you organize a fundraiser for a food bank? Or do you know a fellow REALTOR® who participates in Habitat for Humanity home construction? These examples and more are the types of charity involvement we will highlight in the new REALTOR® in the Community column in the new magazine. You will be able to nominate yourself as well as nominate another REALTOR® you feel is deserving of recognition. Be on the lookout for additional information to come about this new feature in the magazine. Until then, gather your photos of you or fellow REALTORS® at charity events so you can be ready for submissions! And get out, volunteer, and have fun!

THE GALE P. FOSTER CENTER for Real Estate Education

POSTMASTER: please send address changes to the WISCONSIN REALTORS® ASSOCIATION, 4801 Forest Run Rd., Ste. 201, Madison WI 53704-7337. Wisconsin Real Estate Magazine™ is published by the WISCONSIN REALTORS® ASSOCIATION. Trademark issued pursuant to Wisconsin state statute; federal trademark is pending.

Gale’s family attended the commemorative luncheon last month. Pictured from left to right: Roger Lippitt (son-in-law), Sarah (Foster) Lippitt (daughter), Greg Foster (husband), Shane Foster (son), and Jean Roeming (mother).

n June 11, the education center at the WRA was formally named “The Gale P. Foster Center for Real Estate Education,” in honor of longtime WRA staff executive Gale Foster, who passed away in February after a brief but intense battle with cancer. Gale was with the WRA for 34 years from 1978 to 2012. The commemorative plaque on the wall outside the education center reads in part: “May all who use this facility forever recognize and remember Gale’s deep love and commitment to her family, her friends, her staff and her organization.” A dedication lunch and program was hosted by the WRA Executive Committee on behalf of the entire membership and included a large contingent of Gale’s family, along with past and present WRA staff. As we have said many times since her death, Gale will be sorely missed but never forgotten.

WIREALESTATEMAG • AUGUST 2012

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. 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.

CHAIRMAN'S CORNER by Rob Keefe

Thank You and Goodbye

A Message from 2011-12 Chairman Rob Keefe

WIREALESTATEMAG • AUGUST 2012

ell, it’s been quite a year! The last twelve months have seen unprecedented political turmoil in the state and what looks like the green shoots of a real estate recovery beginning to emerge. We started the year with a very REALTOR®-friendly state government, and the top priority this year was to use the opportunity to make our best pitch for our legislative priorities. The year 2012 will be remembered as one of our association’s most productive legislative years in a generation. The quantity and quality of REALTOR®- and homeowner- friendly legislation passed and signed into last this year is unprecedented and represents the culmination of nearly a decade of hard, consistent effort by our great staff and volunteer leadership. The list is so significant it’s hard to know where to start: presumptive approval for DNR permits, piers, boathouses, nonconforming structures, variances, development moratoria, condo law and landlord/tenant law. Each of these areas was addressed with significant new legislation advancing our goals of protecting private property rights and making real estate easier to sell and own in Wisconsin. The scope of the accomplishment is a testament to the WRA’s “long view” approach to political endorsements, the extraordinary skill of our political staff, and the passion of our members. Another priority of mine this year was to continue to raise the bar for professionalism in the practice of real estate in Wisconsin. We’ve done much to advance that goal. Our award-winning broker and salesperson training programs continue to evolve and improve, with a new On Demand system coming out this fall. We continue to increase the percentage of licensees who have

2012 will be remembered as one of our association’s most productive legislative years in a generation. chosen to become members of our association and raise their hand to uphold the Code of Ethics. The Real Estate Examining Board, newly created in the last 18 months, has already made vast improvements in the oversight of agent licensure, training curriculum and licensee discipline. Finally, our board and committees are actively looking into the thorny topic of what in a person’s past may disqualify that person from having the ability to be licensed. A key element in our effort to raise the bar, the updated broker experience bill, stalled in the last stormy days of the legislative session. This bill, requiring applicants to be able to show actual real estate experience before being granted a broker license, is on the top of our list for the 2013 legislative agenda. My third priority was to begin the process of realigning our political expenditures in the new political money environment we find ourselves in. Ironically, the unprecedented money in the recall races this year helped guide our efforts. With such huge amounts of money invested by PACs, unions, and other national organizations, it was clear that we couldn’t have the influence we’ve had in the past through money alone. This forced creativity has opened doors for us we might not have explored in more “normal” years.

Expect to see our political effectiveness and efficiency increase through creative means of leveraging our client relationships, our statewide presence, and our relationship with NAR. Finally, I’d like to put in a sales pitch for volunteering for the association. If you are skeptical about the value and nervous about the time commitment, I understand. I was there myself. We’ve all been a part of boards consumed by endless meetings in which the board members are enlisted to fundraise, set up parties or do mailings. Let me assure you that this is not what I found with the WRA. Being a board or committee member means working with a professional staff — the best in the business — on enormously important issues affecting your business, your family and your clients. You will meet and become lifelong friends with people you’d not otherwise know in parts of the state you’ve never heard of. You will position yourself as an expert in your field and enhance your career and industry reputation. Most importantly, you will give back to your chosen profession and make Wisconsin a better place to work and live. Thank you from the bottom of my heart for giving me the chance to serve you this year. I am happy to leave you in excellent hands of Chairwoman Renny Diedrich and President Mike Theo. It’s been an honor and a pleasure to work for the best, most fun, and most dedicated group of professionals in real estate.

Respectfully,

Rob Keefe

WISCONSIN MONTHLY HOUSING REPORT by David Clark

Robust Home Sales and Stable Prices for First Half of 2012 WISCONSIN HOUSING STATISTICS MONTHLY ACTIVITY — JUNE 2012 Statewide JUN-2012 JUN-2011 % Change YTD-2012 YTD-2011 % Change New Listings 10,643 12,026 -11.5% 63,815 66,166 -3.6% Closed Sales 6,807 5,705 19.3% 29,268 24,276 20.6% Median Sales Prices $142,000 $140,000 1.4% $130,000 $130,000 0% Median Price Existing Home Sales Region JUN-2012 JUN-2011 % Change JUN-2012 JUN-2011 % Change Southeast $155,000 $154,450 0.4% 2,419 2,030 19.2% South Central $170,000 $168,000 1.2% 1,449 1,191 21.7% West $135,000 $134,900 0.1% 732 626 16.9% Northeast $124,500 $122,500 1.6% 1,206 996 21.1% Central $110,000 $112,500 -2.2% 402 344 16.9% North $120,000 $110,000 9.1% 593 505 17.4%

View Online View all of the housing statistics at www.wra.org/housingstatistics.

percent over the period. Finally, the North, West and Central regions saw their home sales increase approximately 17 percent in June compared to June of last year. The median price rose 1.4 percent in June compared to that same month last year. This is the fourth straight month of increasing median prices. Moreover, through the first six months of the year, median prices are about even with the first half of last year. “With 30-year fixed-rate mortgages falling to 3.68 percent in June, housing in the state remains very affordable,” said WRA President and CEO, Michael Theo. The Wisconsin Housing Affordability Index, which measures the percentage of a medianpriced home that a buyer with the median family income can afford, stood at 238 in June, which is 10.7 percent higher than it was in June of last year. “It’s clear that the conditions are ideal for consumers, and if the economy continues to improve, then we are likely to see continued moderate upward movement on home prices,” said Theo. He cautioned however that consumers need to be confident that the economy is going to continue to improve. “Consumer confidence

20.6% Percentage increase of home sales since the start of 2012.

has taken a hit in the last couple of months and the national recovery has been painfully sluggish,” said Theo, who also noted that additional uncertainty will be introduced by the upcoming national elections. Still, it is likely that there is significant pent-up demand for housing that resulted as many young households opted to rent instead of buy during the Great Recession and the slow recovery that followed. As these potential buyers see continued housing price appreciation, they are more likely to shift from renters to owners, which should continue to fuel strong growth in home sales and upward movement in prices. “So long as the national economy doesn’t slip into another recession, we think that the state is well positioned to sustain the strong growth in home sales and modest price appreciation we’ve seen so far this year,” said Theo. For more information, contact David E. Clark, Economist, C3 Statistical Solutions Office phone: (414) 803-6537

WIREALESTATEMAG • AUGUST 2012

isconsin home sales continued to grow at a robust pace with sales of existing homes up 19.3 percent in June over June of last year, according to the most recent monthly report by the Wisconsin REALTORS® Association (WRA), continuing a pattern that began last summer. Since the beginning of the year, home sales were up 20.6 percent. The report also showed June median home prices increased 1.4 percent to $142,000 relative to the same month last year, which is the fourth straight month of increasing median prices. “In a national economy that has not yet seen the kind of growth rates that typify most economic recoveries, it’s encouraging to see such strong growth in home sales over the last 12 months,” said Rob Keefe, Chairman of the WRA board of directors. He pointed out that in a normal seasonal pattern in Wisconsin, over 42 percent of our sales take place between May and August, and June is the most active month. “About 12 percent of home sales each year typically take place during June,” Keefe said. “This year seems to be no exception with healthy June home sales remarkably consistent throughout the state,” said Keefe. The WRA report shows sales up in all regions between 16.9 percent and just over 21 percent, with sales strongest in the South Central and Northeast regions, both of which grew at about 21 percent compared to June 2011. This was followed by the Southeast region, which grew 19.2

MEMBERSHIP RESOURCES

Exclusive Member Benefits We wish you success in your career and hope you take advantage of the many benefits we offer.

Is Your Health Care Insurance Reform-Ready?

he Supreme Court upheld the Affordable Care Act — but what does that mean to you? Although some of the major requirements will not be effective until 2014, many benefits are available today that you may be missing if you are in a grandfathered plan that was effective prior to March 23, 2010, when the law was signed. If you are in an older plan, you may not have the benefit of 100 percent preventive care coverage with no co-pays, co-insurance or annual maximum. This benefit means that you can receive your annual physical or well-woman exams, including blood tests, covered 100 percent. Another benefit is that the lifetime maximums have been removed. Older plans generally had a $1 million to $5 million lifetime maximum, but the new plans are unlimited. With the rate of medical inflation, this is an important factor. WRA health insurance partner, REGIT, Inc., will consult with you to find a health plan that meets your needs and your budget. If your health plan isn’t reform-ready, contact Lorraine Allen at (800) 537-9786 for your free consultation. You can also visit REGIT’s website at www.regitinc.com/aspwra for a quote. Be sure you are receiving all the benefits that are available to you!

Office Supplies

Long-Distance Program

Save big on office supplies with Office Supplies 2U, a proud Wisconsin-based company with a seasoned, experienced staff focused on customer service. OS2U’s mission is to be the single-source premier supplier of business products to customers by providing the utmost in quality, commitment and care. For more information, contact Bob Brooks at (608) 4418900, ext. 26, or by e-mail at bobb@os2u.com. Visit OS2U online at www.os2u.com.

Save big money on your long-distance rates with 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 (800) 254-3202 or visit www.ami.net and mention that you are a WRA member to begin enjoying the quality of service and savings that AMI provides.

WIREALESTATEMAG • AUGUST 2012

Business Furniture

Established in 1940, Emmons Business Interiors has marketed and distributed quality office furnishings across Wisconsin for decades. Through several statewide locations, EBI provides a complete line of quality new and used furniture, as well as refurbished office furniture products. Also available are interior design services, installation, and project management and moving management. Let the experienced team at EBI design efficient, productive and ergonomic work environments for your office or home. For more information, contact Tod Dean at (800) 324-1691 ext. 424, or by e-mail at todd@ebiweb.com. Visit online at www.ebiweb.com.

Health, Dental & Life Insurance Save on health insurance premiums with REGIT Inc. 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, contact Pearl Insurance at (800) 289-8170 or visit www.pearlinsurance.com.

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!

Shipping Discounts WRA members currently enrolled in the UPS Savings Program must re-enroll to take advantage of this new exclusive offer. 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. If you have questions about one of the WRA Member Benefits, please contact Debbie Thacker at dthacker@ wra.org or by calling 1-(800) 279-1972.

PRODUCT SHOWCASE by Nichole Mickelson

Moving Forward in the "Melting Pot"

English-Spanish Real Estate Dictionary Written with the intention to be a twoway roadmap for anyone whose primary language is Spanish or English, the EnglishSpanish Real Estate Dictionary can help educate as well as improve communication and the handling of transactions in real estate, mortgage lending, appraising, land development, urban planning, financing, consulting, investing and other related

“Those who cannot remember the past are condemned to repeat it.” – George Santayana. businesses in both languages. Providing over 2,000 terms in both English and Spanish, this bilingual dictionary provides comprehensive coverage, easy-to-find definitions and simple explanations. Keep in mind that some of the terminology from English to Spanish is equivalent, but some terms have a very different meaning or do not exist in the Spanish language, furthermore making the English-Spanish Real Estate Dictionary an indispensable reference for bridging a communication gap in any real estate transaction. For more information and to order, visit www.wra.org/PUB130.

zipForm® 6 in Spanish If you are not already aware, zipLogix, the creator of zipForm® 6, the real estate industry’s leading forms software, has developed a user interface (UI) feature for Spanish-speaking real estate professionals and their clients. Available to all zipForm® 6 software users is the ability to change the UI language from English to Spanish by toggling between the two. The Spanish UI is already included in your zipForm® 6 product — there is nothing to install and no additional fee to pay. Access it from within your zipForm® 6 program by simply clicking on the “Tools” tab, then click “Options.” In the smaller box that opens, click on the “Preferences” tab, and under the “Select Language” section, you

can change between English and Spanish by clicking on the arrow in the box to display the dropdown menu. zipForm® 6 was the first real estate forms software to offer a Spanish language interface feature designed to streamline the contract completion process and simplify navigation for many Spanish-speaking users. zipForm® 6 Professional (online) and zipForm® 6 Standard (desktop) versions both feature the Spanish language option. The ability to switch between the two languages provides convenience for thousands of Spanishspeaking real estate professionals and their clients during the sometimes confusing transaction process. zipForm® 6 is the exclusive and official forms software of the National Association of REALTORS®. Find more information at www.zipform.com.

Real Estate Forms Update! To remain in compliance with changing laws, a variety of changes to forms happened in July. The following forms have been revised: • Broker Disclosure to Customers (WRABDCU) • Nonstandard Rental Provisions (WRANRP) • Rental Disclosure (WRA-RD) The Move-In/Move-Out Report (WRA-M) is no longer available and has been replaced by the Information Check-In Sheet (WRA-CIS) and Check-Out Report/Security Deposit Withholding (WRA-COSD). Additionally, and as a reminder, the WRA-RV is no longer available and has been replaced by the Vacant Land Disclosure (WRA-VLD). The most up-to-date list of available forms and pricing can be found at www.wra.org/forms. Nichole Mickelson is the Business Services Assistant for the WRA.

WIREALESTATEMAG • AUGUST 2012

quote from my junior year history class teacher is one that has stuck with me to this day. When considering the best strategy for moving forward, take into account the past and apply the lessons learned from decisions made — good or bad — to make the best decisions moving forward. Much can be learned by examining the economic conditions of the late 1970s and early 1980s as well as the time of the Great Depression. Analyzing the successful outcomes, identifying what did not work, and determining how these lessons can be applied to our current situation can help us going forward. The point of making mistakes is to learn from them and do whatever possible to avoid making them again moving toward the future. One near certainty for the future is that Spanish will become the most commonly spoken language in the world. Currently, Spanish is written and spoken by the second largest population group in the United States, helping to solidify that the U.S. is still a “melting pot” for multiple cultures. If you have not yet experienced a transaction involving Spanish-speaking clients or agents, you probably will in the future, and probably soon. Consider these resources for bridging the communication barrier to make the process as seamless as possible.

REALTOR

WIREALESTATEMAG • AUGUST 2012

ROUNDTABLE

After a bruising five years, real estate is on the upswing. While the market is still far from the boom days, sales are steadily climbing in 2012. To get a pulse on the business, Wisconsin REALTORS® Association leaders gathered for a conversation about the state of the industry, with former U.S. Congressman and one-time journalist Scott Klug moderating.

KLUG: First, let me say as someone not in the real estate business, it’s feeling better. Wisconsin home sales recorded strong growth again in May, continuing the trend that began last summer. Have we actually turned the corner? DIEDRICH: Absolutely. It’s 100 percent better because there’s actually business to talk about. If you look at my sales board, it’s bigger than my listing board — that is a place that we haven’t been in a while — so that’s nice to experience. So I do have agents fluttering around the office and talking about real estate rather than what they’re doing on Saturday night or the weather, so I’ve seen a big improvement in our market. LANE: I was talking before we started about whether or not we’d seen the bottom, and we’ve agreed that of course we have. And one of the things that identifies that bottom is the fear factor of the

PHOTOS BY: LAUREN BIZORIK

FEATURE

by Scott Klug

Renny Diedrich Appleton

Rob Keefe Pewaukee

Broker/Manager, Coldwell Banker The Real Estate Group, Inc. Currently WRA Chairwoman-Elect, Renny has served on committees for her local association as well as the WRA and NAR.

President, WHR Group Employee Relocation Rob is the current WRA Chairman. He serves as President of WHR Group Corporate Relocation, managing over 2,000 moves per year for corporate and federal clients.

Steven Lane Stevens Point

John Horning Milwaukee

Vice President, First Weber Group Northern WI Steve is the current WRA Treasurer and also sits on the Political Strategy, Public Policy, Wisconsin Homeowners Alliance and Executive Committees.

Executive Vice President, Shorewest, REALTORS® John served as the WRA Chairman for 20102011. John is the third generation of Hornings to guide Shorewest, REALTORS®, the largest real estate company in the state.

Peter Sveum Stoughton

K.C. Maurer Appleton

President, Coldwell Banker Success Active in real estate since 1973, Peter has held leadership positions with the WRA, South Central Wisconsin MLS and the DSPS. He is currently on the WRA Executive Committee.

Broker/Owner, RE/Max 24/7 Real Estate K.C. currently serves on several committees: Executive Committee for the RANW and the WRA, Director to NAR, and Chairman of the Wisconsin Internet Real Estate Exchange.

Erik Sjowall Madison

Dan Kruse Madison

President, Bunbury & Associates REALTORS® Erik is currently the President of the South Central Wisconsin MLS. He is the chairman of the WRA Legal Action Committee and will serve on the 2013 WRA Executive Committee.

President, Century 21 Affiliated The upcoming 2012-2013 WRA Treasurer currently sits on the WRA Board or Directors as well as the President’s Advisory Council for Century 21 International.

Paul Schieldt Janesville

Jeffery Theisen Eau Claire

Broker/Owner, Realty Group of S. Central WI Paul was awarded the Rock-Green REALTOR® of the Year award in 2006. He is currently on the WRA Executive Committee.

Vice President, J Theisen, Inc. REALTORS® Jeff has served on the board for the REALTORS® Association of Northwestern Wisconsin and is currently on the WRA Executive Committee.

Timothy Stemper Milwaukee

Bob Weber Madison

Broker/Owner, Shelter Real Estate Tim’s company was rated “Five Star — Best in Client Satisfaction” by Milwaukee Magazine. He currently serves on the WRA Executive Committee.

President, First Weber Group, Inc. Bob serves as President of First Weber Group, Inc. He served as the Chairman of the Board in 2003 for the WRA.

WIREALESTATEMAG • AUGUST 2012

Meet Our Expert Panel

FEATURE

Bob Weber of First Weber Group, Inc., who served as 2003 WRA Chairman, speaks during the REALTOR® Roundtable held on July 11, 2012 in the Gale P. Foster Center for Real Estate Education at the WRA. buyers fearing that they’re not going to get the property that they want because they can’t monkey around with lowball offers and take their time on it. They’ve got to react to the current market and get their offers in. The sellers are getting much more than they expected a year ago, so our pricing is always of course adjusted, but our ratio of sales-to-list price is much better as well. WEBER: Buyers have gone from last year, maybe over the last five years,

WIREALESTATEMAG • AUGUST 2012

where they look, look, look, look, look,

and then back into the woodwork and often not even act — to this year, they’re buying. As far as their house sale, there’s a higher confidence they can move it. THEISEN: We’re seeing a good appreciation again back in the lower price ranges, under $200,000. The high end is still struggling. People are still able to throw a number out … it’ll stick in most cases. There’s still a glut of inventory on the high end.

When did we see a shift in consumer confidence when people finally felt ready to take the plunge? MAURER: There was built-up demand; I think it was the first quarter of this year. Prices were low, interest rates were low, job stability was high. But I think the greater blessing is just word of mouth. They’ve tendered an offer once already. They’ve been beat out by another offer. They tell the world about that. So the next time around, they’re taking action. SJOWALL: What I’ve seen with this market is that sellers are actually getting a little more realistic, just from pricing standpoints, from the listing standpoint. SVEUM: We’re seeing more activity in the starter area, and I think some of us have had four or five years to figure this out, too. So I do believe sellers are on board with pricing. They don’t like it,

but I think they get it now. And I think that’s helping the inventory now. KRUSE: I think we’re seeing less distressed inventory in this marketplace right now. I would say we’re seeing fewer foreclosures. The seller trying to sell their home isn’t fighting a bunch of REO properties or at least as many as we saw a year ago or even two or three years ago. WEBER: I went to our closing person who’s in charge basically of all earnest money, and I said, ‘tell me the difference of this year to last year. What do you see?’ And her answer was, ‘last year, we could have had a bushel basket next to my desk, and it would have been earnest money going back to the transactions that fell apart.’ And she said, ‘Bob, we see earnest money go back.’ But she said, ‘it’s back to normal.’ When a deal comes together, we think it will stick. LANE: A good example of that, a great example of that, as a matter of fact, is we track our showings all the way through. And I’m speaking of Central Wisconsin. Our showings are about 3 percent or 4 percent, maybe 5 percent up from last year, but our profits are up about 28, 29 percent. So our agents aren’t running around showing properties like a taxi driver. HORNING: To your question about segmentation of the market and what’s happened: in the metro Milwaukee area, we saw earlier in the year investors and first-time homebuyers were strongest in the market. Under $250,000 was what was moving the best, and now we’ve seen that creep up to about $400,000 to $500,000. That part of the market now is seeing more energy. And this year, we’ve been up about 25 percent to 30 percent each month compared to last year in our market.

How does today compare to the peak? Where was that peak? — 2007, 2008? STEMPER: Yeah, I think ’07. Maybe ’06. KEEFE: There are certain subsegments of that market that are at different points in the cycle. We should probably talk a little bit about some of the specialty segments like vacant land and condominiums. And vacant land is in terrible shape. Those values could be down as much as 70 percent or 80 percent from the

peak, I mean, an enormous decline. [That decline is] difficult to quantify because there isn’t enough movement in the market to actually tag a value to it yet. Condominiums have been very heavily impacted by the new underwriting standards. MAURER: Well, I think it’s caused by several different issues. First of all, many of the condominiums did not timely reregister so that they’re disqualified for government types of financing. That’s an issue, so whether or not that was the association’s fault or whether or not that was the government changing their rules or sun-setting registration and not properly informing the associations, that’s a huge issue still. DIEDRICH: In the condo project that I used to live in, it was a very small condo project, and they built a unit, and they’re all single families. But I’ve seen this in other projects where they’ve done multi units. So they would build one, and they would sell it. And then they would build it, and they’d sell it. They didn’t build 50 of them and have them all sit there.

“We operate in an industry that’s incredibly heavily regulated both at the federal and state level. We are the only significant voice in state politics to stand up for the homeowner and to stand up for property rights.” –Rob Keefe The headlines, at least recently, suggest that housing starts are headed back up. Is that the case? LANE: Well, it’s the new construction that … for us, is just not there yet. We’re getting next to nothing. I’m surprised any builders are still in business, frankly. We’re seeing almost no land sales. Land sales are so flat it’s not funny. SCHIELDT: I think as the demand ramps up for housing, you’re going to see that new construction starts moving its way back in again, because there’s not enough

existing working homes in the marketplace. And in Janesville, one of the building companies hasn’t signed a contract for a contract home in probably three or four years. They’ve probably signed 20 of them this year because there’s just that segment of the price point from $140,000 to $200,000; there’s not much inventory, so they’re knocking them out. THEISEN: I’ve got several subdivisions listed, and it’s hard to compete when there’s been several subdivisions in the area that have defaulted, and so they just went and dumped all the lots at basically half price. And so the ones I have, they get no activity. And until that clears, we’re not going to

WIREALESTATEMAG • AUGUST 2012

Past Chairman of the Board (left) John Horning, Executive Vice President at Shorewest, REALTORS®, and current Chairman of the Board (right) Rob Keefe, President at WHR Group Employee Relocation, engage in conversation.

FEATURE

see a full recovery on the land side. WEBER: But you are right that the headlines, including locally here in our local paper in Dane County, headlines are reading pretty well, unless you read down through, you find out that they’re coming from a very low number. I love the headlines though, because I think that pushes the market forward. MAURER: And we’re seeing Mom and Dad come in and help out a little bit more than what they have previously. MAURER: Rental prices are inflating, so renters who have the proper credit score can purchase for probably not much more than their monthly housing expense than renting. THEISEN: There’s still a huge misconception, though, out there about the buying general public of what you actually need for a down payment right now. A lot of them think you need 10 percent, 20 percent. That’s what they’ve been beat with the media not realizing the 3.5 percent loan is still available to them.

WIREALESTATEMAG • AUGUST 2012

What contribution did the banks have with the housing drop-off?

SVEUM: The banks have been involved at both ends. At one point, anybody with a house could get a loan, and that’s why there’ve been a lot of defaults. And the pendulum sways to the extreme in terms of underwriting, so they’re making it a little bit tough for people. Hopefully it will swing back toward the center somewhere. KRUSE: I was just going to say let’s not kid ourselves. Also, the banks have gone through almost what we’ve gone through over the last five years as well. We’ve seen consolidation of banks. We’ve seen lenders that we thought would give money left and right shut the doors down and say, ‘we’re not going to lend out at all.’ Now I’ve finally seen them saying we’re willing to lend more money, or we’re going to loosen up our restrictions a little bit. So I think that’s all moving in the right direction for our industry. STEMPER: The banks have been disappointing for years. Because they gave money to everybody, then they gave money to nobody, so they really needed

Left to right: Steven Lane, Vice President of First Weber Group Northern WI; Dan Kruse, President of Century 21 Affiliated; and K.C. Maurer, Broker/Owner of RE/Max 24/7 Real Estate. to look at the individual cases and get back into what America is. We all want such a wonderful life. I think people should go to the bank in their town, deposit the money, and they lend it. My last three transactions were people that bypass the lenders, parents pulled money out of the markets or were sitting on a CD at 1 percent, and they bought a house for their kid, and the kid’s paying on 3 percent. They’re making better return. It’s a very clean deal. It’s a nice way to spend your money. And I’m encouraging people to do that, exactly that — get

“Our showings are about 3 percent or 4 percent, maybe 5 percent up from last year, but our profits are up about 28, 29 percent. So our agents aren’t running around showing properties like a taxi driver.” –Steve Lane

How have your offices fared in terms of the number of agents? Who is left? Are new agents joining? LANE: That’s an easy one. 2006: 18,000 REALTORS®, 2012: 12,000 REALTORS®. THEISEN: Most of the ones under 35 are gone in our market. I mean, there’s very few younger agents. And that’s where we’re going to see a huge impact going forward. Our demographic is older; I know statewide it’s probably about 54. I’d say that ours is probably higher … 56, 57. SJOWALL: See and I think that you talked about the 80/20 rule. I’ve definitely seen in my organization that it’s 85/15 now. The people that are successful, that are working, that are out there, are making a lot of money, loving it. WEBER: The agents still standing are really good practitioners. The ones that we lost are the people that tried to get between a buyer and the house they wanted to buy. They were good at the order-taking proposition but not good at consultive selling, not good at really getting to know the party. You had to be a great listener, ask great questions. The people that didn’t fall in that vein or move to that place where they had to go are gone.

transaction are very limited in their ability to have discussions with appraisers about value. Even the appraisal management company can only have very, very limited conversations about value. WEBER: We’re sort of trying to find who

Are prospective agents showing up to your office, saying, ‘I’d like to sell’? KRUSE: Over the last six months, I think we’ve seen more people now have an interest in getting back in the business,

to blame. I think we could argue to blame everybody, including all of us in the room. Not only did the bank give us money if they had a pulse … we sold them the house because they have a pulse. And we thought, if the bank didn’t give them the money, we’re ticked at the bank, and it affected our relationship down the road. The banks are stricter. I personally don’t think I mind it because it helps us avoid going back to where what we experienced over the last six years. I think that’s okay.

13.1

Months Supply of Inventory for June of 2012, down from 18.4 months in June 2011.

WIREALESTATEMAG • AUGUST 2012

out on the market and buy real estate. It doesn’t matter what values because there’s always going to be a cash interest on the property. It’s really a no brainer. HORNING: I think probably even bigger than some of the financing issues is to get a deal together; they have financing, but then it doesn’t appraise out because the appraiser may be taking comps from six months ago or looking more at foreclosure properties, REO properties, than similar properties right in that neighborhood, and that’s been a challenge. KEEFE: I’ve got a little bit of a different perspective on the appraisal now, as the company I work for is also an appraisal management company. And I can tell you that appraisers are much a federally protected class of people. We all know that real estate agents involved in a

FEATURE

WIREALESTATEMAG • AUGUST 2012

Left to right: Scott Klug, Moderator; Peter Sveum, Broker/Owner of Coldwell Banker Success; and Erik Sjowall, President of Bunbury & Assoicates, REALTORS®.

and we’ve seen more of our agents that were doing five, 10, 12 deals a year, are now getting more transactions than just that top-heavy group. So I think it’s starting to even out a little more, certainly not back to where we were in ’05, but it’s getting back to more equal. DIEDRICH: I’ve probably had interviews every day this week. I probably had more this week than I had all of last year. So you’re getting more people interested if they hear what’s on the news, that real estate is a good career, or they hear that there’s stuff going on and not all the doom and gloom. LANE: My B, B-plus agents are coming to me saying, ‘how can we get more help?’ Hire an assistant, hire an admin, hire someone to get more work done. And that’s showing me that they’re becoming more and more professional about what they’re doing; more serious about their efforts. Then they’re saying, ‘we need to get better at what we’re doing, we need help from that perspective’ — as opposed to bringing

238

Percentage of WI Home Affordability Index in June 2012, which is 10.7 percent higher than June 2011.

more and more agents into the industry. HORNING: We’re definitely seeing increases here in the number of people at our career seminars and visiting our career website. We’re seeing now roughly ten people among the joiner company, where last year it was probably three to four people a month.

What about young people and buying? STEMPER: I think some of the young kids don’t want to be owners. They like to be tenants, which would be good for us that own investment real estate. I think there’s a whole group of young people that aren’t interested in buying anything. KRUSE: I disagree. I think the younger generation still looks at real estate as a strong investment and looks at, ‘if I’m going to be in a specific area, I really do want to invest in homeownership.’ I think the trouble we have is that the younger demographic tends to move a lot. I would say that the mobility factor is a bigger issue than seeing homeownership as a real investment. HORNING: I agree that maybe some of the younger generation is maybe waiting a little longer because they move around or maybe they want to live in downtown Milwaukee in the Third Ward where all

From a macro level, what can Washington and/or the state government do to make your lives easier and make the market move faster? WEBER: Well, how long do we have? KEEFE: Well, I say this with a caveat, that we haven’t processed the new rules that came out yesterday with the Consumer Finance Protection Bureau, 1,100 new pages governing real estate transactions and closings. I’m not even sure what secrets and gems we’ll have to find in there. But I think that in general, if Washington could recognize that the real estate value decline has stopped broadly on a nationwide level, that the

“… I do believe sellers are on board with pricing. They don’t like it, but I think they get it now. And I think that’s helping the inventory now.” –Peter Sveum recent pools of mortgages that have been originated have been performing, outperforming any pools in the last 20 years, they can take their foot off the gas a little bit on mortgage regulation.

What concerns do you have about mortgage deductibility? KEEFE: I think most of us recognize that there’s probably going to be some curtailment on mortgage interest deductibility. I think the most atrisk segments are second homes and large mortgages, maybe over half a million dollars in face value. MAURER: I’m very worried about it, and I’m worried about it because of the fear of the unknown. I think unless we start moving that forward in an informative, positive statement, we’re going to do X instead of Y, we’re going to see a slowdown in the fourth quarter of this year unrelated to the seasonality of the climate. STEMPER: We need just to study the Canadians a bit more. I think their economy has been very strong. They don’t offer any deductibility. I think we need to look at these guys a little bit. There’s something going on there that intrigues me. This is not an issue there, and housing values increase, people buy houses — so that’s my comment. I don’t know, maybe we should look at it.

What can the WRA, as a whole, accomplish? Tell me about the value of the association itself. THEISEN: Until you get involved, and

especially at this level with the WRA, you don’t see the impact that they have at the legislative level and impacting our industry across the board on a huge number of issues, like given this last session. I don’t know how many [laws] they got through that have a huge impact down the road on a lot of transactions. KEEFE: We operate in an industry that’s incredibly heavily regulated both at the federal and state level. We are the only significant voice in state politics to stand up for the homeowner and to stand up for property rights. And I think over the last few decades, we’ve been an enormous force in moving Wisconsin to being what’s turned out to be a relatively friendly state to homeowners and the people who own their property. And participating in the WRA is a key component in the health of our industry; it’s a great service that all people around this table perform for their fellow practitioners around the state. It is a time commitment, but it’s one that pays enormous dividends both professionally and obviously personally in the relationship to develop.

Scott Klug is a former journalist and lawmaker. As a U.S. Congressman, Klug served as a Republican member in the House of Representatives from Wisconsin’s 2nd District from 1991 to 1999. Following his eight-year run, Klug was the CEO of Trails Media Group in Wisconsin until selling the company to the Milwaukee Journal Sentinel in 2007. Klug also co-chaired Rudy Giuliani’s presidential campaign in Wisconsin. Currently, Klug works for Foley & Lardner, LLP, and frequently serves as a moderator for market and business discussions.

WIREALESTATEMAG • AUGUST 2012

the activity is going on; but we are still seeing people buying. Just yesterday, my assistant came to me, and she’s in her 20s. She’s engaged, and she said, ‘we were going to wait to buy a house until after the wedding and all those expenses, but we looked at what’s going on, we looked at where values are and where mortgage rates are, and we started looking at some of the opportunities that, you know, we’re going to buy a house now.’ WEBER: Just as an impression, they’re not jumping in for the reasons they did six, seven and eight years ago. In other words, they’re not thinking, ‘oh my gosh, I have to buy a house because that’s how I’ll gain equity, and I’ll, you know, buy it for $180,000 and sell it for $249,000 and move on to my next one.’ I don’t think they think like that anymore. To me though, what it is, is a bit human need, rising to the top, which is another word maybe for pentup demand that’s been out there. They want to own a [home], they want to have a family, they want to have a dog, they want to knock the wall down. They don’t want to be under the wing of a landlord, and homeownership gives them all kinds of those freedoms. The ones I talked to, including some people at our corporate office who are buying, they’re smiling.

LEGAL by Cori Lamont

n today’s market, sellers are looking at options and ways to alleviate the pressure they feel in owning their home. Some sellers have pursued options that include a short sale or had an option provided to them with foreclosure, while others have decided to rent their property. The motivation as to why a seller chooses to rent could vary. For example, the home could be the seller’s second home, or the seller could be trying to purchase another property, or the seller could be attempting to pay down the principal on their mortgage. Regardless of the seller’s motivation in attempting to simultaneously rent and sell the property, they are looking for help — and that’s where you come in. First and foremost, the sale and lease of property involve two separate interests in real estate. Therefore, licensees need to proceed with caution before jumping into simultaneously listing the seller’s property to sell and to rent. In addition, keep in mind that it is possible for a seller to enter into one listing to sell with one broker and a listing to rent with another broker, meaning the seller could have one listing to sell with broker A and a listing to rent with broker B. This scenario should raise one red flag: who gets paid, when and why? Let’s begin this conversation by discussing a few of the major issues that agents should keep in mind before entering into a listing to both sell and rent a property.

WIREALESTATEMAG • AUGUST 2012

Authority

Do you have the authority to market the property for sale and rental? The answer is most likely no, if you only have an exclusive right to sell listing contract. So how do you get such authority? After confirming with your broker that you are permitted under company policy to enter into a listing to both sell and/ or rent the property, you must gain the authority to do so. This authority may be gained by either: 1) entering into a WB-37 lease listing or a commercial lease listing, if it’s a commercial property, or 2) including an addendum that

I Want to Sell, No I Want to Rent, No … I Want Both

What to do when a seller wants to sell, rent, one or both

provides all the necessary language to effectively market the property for rentals. If you choose the second option, then at minimum the following should be addressed: • Listing date. • Parties to the listing. • Property address. • Additional authority wherein the owner gives the broker the exclusive right to negotiate a lease or rental of the property. • Term. • Broker’s duties. • Authorization for broker to use reasonable efforts to negotiate the lease. • Performance of specific services — to be determined by parties within the addendum. • Statement that the agreement is not a

property management agreement. • A statement that the agreement does not obligate the broker to perform any property management duties, including maintenance, unless specified in writing. • Lease terms and any marketing instructions — for example, rent or security deposits. • Owners Cooperation: the seller shall promptly notify the broker in writing of any prospective tenants with whom the seller negotiates during the term of the addendum and shall promptly refer all persons making inquiries to the broker. • Commission • Language that addresses how the broker earns as well as when the commission is due and payable if a lease or rental agreement is entered into by the owner.

Seller Considerations When a seller chooses to rent his property, the one concern is if the seller understands rental properties. While the seller looks at renting as an opportunity to increase cash flow, renting may not be a quick fix. The following are issues that the seller should consider: • The seller as a landlord is subject to administrative law ATCP 134 and statute chapter 704. • Needing to develop tenant selection criteria and obtaining credit reports to qualify potential tenants. • Proper advance to any current tenants is required before showings. • Offers will need to be subject to tenant’s rights. • The discussion the seller will have with an insurance carrier to determine insurance coverage during the rental period.

Resources • April 2009 Legal Update, “Wisconsin Rentals” www.wra.org/LU0904 • Wisconsin Real Estate Magazine • December 2010 “Best of the Legal Hotline: The Accidental Property Manager” • January 2011 “Best of the Legal Hotline: The Accidental Property Manager, Take 2”

“When a seller chooses to rent their property, the one concern is if the seller understands rental properties.” • Additional expenses of hiring an attorney for lease negotiations. • Whether the seller will continue to market the property to sell while the tenant is renting —the landlord will have to disclose to a prospective buyer that the property is rented. • A full appreciation that by renting the property the seller will still be tied to the property. • The tax and/or legal ramifications of renting the property, for example, whether the seller is permitted under the terms of their current mortgage to rent out the property or if they must modify their mortgage to reflect that it is now an investment property. Also, will the act of renting the property create an issue regarding the capital gains tax? These issues are both tax and legally oriented; while the licensee can raise a concern to the seller about following up with the seller’s tax and/ or legal advisor, the licensee must not answer these questions.

Role of the Agent If your company prohibits the listing of rental properties, and you are a licensed broker, are you allowed to conduct independent practice for property management or leasing services? Independent practice Wis. Admin. Code § REEB 17.03 permits a licensed broker to conduct some independent practice. To do so, the licensee: • Must have a written consent from the broker-employer. • May not hire or engage other licensees in their independent practice. • Clearly understand that the practice is completely independent.

If you move forward • Will you also be a property manager? • A property management agreement generally involves responsibility for the parties’ dayto-day operations, advertising, tenant application processing, qualifying and approval of tenants, receipt of earnest money and security deposits, execution of leases, lawn care and snow removal. • There is no state-approved property management form. The WRA has created a property management agreement, the WRA-PMA. If you’re responsible for tenant screening • You must balance who will be able to pay while avoiding illegal discrimination against applicants. • Use a written tenant application form and predetermined screening standards to screen prospective tenants. The following criteria are recommended: • Income (minimum permitted) and employment. • Credit (objective and consistent criteria). • Personal references (objective and consistent). • Behavior (may CCAP, but must be consistent). • Remember to be consistent and use uniform criteria for all!

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

WIREALESTATEMAG • AUGUST 2012

• Protected tenant: language stating that the term is extended for one year as to any tenant who personally or through any person acting for such tenant either: negotiated regarding the lease of the property, submitted a written letter of intent, or submitted a lease during the lease term. It would also be prudent to include language that addresses what names have to be on a list and delivered within three days of expiration of the listing. • Fair housing language.

LEGAL

It’s Check-In Time for Residential Tenants! Using the New WRA Information Check-In Sheet by Debbi Conrad

he new Wis. Stat. § 704.08 requires a landlord to provide a new residential tenant with an information check-in sheet. This may not be new to many property owners and managers who have voluntarily followed this practice in the past, while for others the new statewide requirement might be unfamiliar. Even for those who are accustomed to providing a check-in sheet when a tenant moves in, the statute includes a twist that may require a practice adjustment for even seasoned landlords who have provided checkin reports in the past.

WIREALESTATEMAG • AUGUST 2012

The New Requirements

Wis. Stat. § 704.08 states: “Information check-in sheet. A landlord shall provide to a new residential tenant when the tenant commences his or her occupancy of the premises a standardized information check-in sheet that contains an itemized description of the condition of the premises at the time of check-in. The tenant shall be given 7 days from the date the tenant commences his or her occupancy to complete the check-in sheet and return it to the landlord. The landlord is not required to provide the information check-in sheet to a tenant upon renewal of a rental agreement. This section does not apply to the rental of a plot of ground on which a manufactured home, as defined in s. 704.05 (5) (b) 1. a., or a mobile home, as defined in s. 704.05 (5) (b) 1. b., may be located.” Breaking this down, this new statute appears to require the following for this new Information Check-In Sheet: 1 The landlord gives the Check-In Sheet to new residential tenants, but the statute does not apply to commercial tenants. 2 The Check-In Sheet is provided when the tenant commences occupancy of the premises. 3 The Check-In Sheet provided by the landlord contains an itemized description of the condition of the premises at the time of check-in. This appears to require something new: the landlord is to complete the Check-In Sheet in some fashion to describe what the condition of the premises was at check-in time. The landlord is to provide a description of the condition of the premises at the time the tenant checks in. 4 The tenant has seven days from commencement of occupancy to complete the sheet and return it to the landlord.

5 No Check-In Sheet is required for a renewal. 6 This statute does not apply to lots in a mobile home park or other ground areas where manufactured or mobile homes are placed.

Unanswered Questions 1 Neither “occupancy” nor “time of check-in” is defined, so it is not clear if these would necessarily be the same. 2 The landlord is to provide a “standardized” Information Check-In Sheet, but there is no indication what the standard might be or how that would be determined. 3 It is not clear what is required for an “itemized description of the condition of the premises” — how much information needs to be given? “Itemized” generally means to set down in detail or by particulars, or included on a list of items. 4 It is generally assumed that the tenant “completes” the Check-In Sheet by commenting on the condition of the premises as is done in many markets already, but the statute does not specify what the tenant must do.

New Forms Available on zipForm® and in paper copies to replace the old WRA-M Move-In/ Move-Out Report: • WRA-CIS Check-In Sheet (the § 704.08 Information Check-In Sheet) • WRA-Check-Out Report/Security Deposit Withholding

Using the New Information Check-In Form The WRA has updated a few landlord/tenant forms based on the recent Wis. Stat. chapter 704 changes, including the WRA Move-In/Move-Out Report form. This form has been split into two new forms: the Information Check-In Sheet that meets the new § 704.08 requirements and a separate Check-Out Report/Security Deposit Withholding form. 1 Introductory Information: The Information Check-In

Ply 1,2,3 face: black (8.5 x 12.25)

175501 Info Check In WRA-CIS_Layout 1 6/14/12 12:40 PM Page 1

WRA-CIS

DISTRIBUTED BY WISCONSIN REALTORSÂŽ ASSOCIATION

WISCONSIN REALTORSÂŽ ASSOCIATION 4801 Forest Run Road Madison, Wisconsin 53704

INFORMATION CHECK-IN SHEET

Page 1 of 2

Landlord has provided this Information Check-In Sheet as required by Wis. Stat. Â§ 704.08. Tenant has 7 days from the date Tenant commences occupancy to complete this Information C In Sheet and return it to Landlord. PREMISES: ____________________________________________________________________________________ LANDLORD/MANAGER: _________________________

TENANT(S):

______________________________________________

___________________________________________

Address: ______________________________________

____________________________________________

______________________________________________

____________________________________________

Telephone:

____________________________________________

Date Sheet Given to Tenant:

CONDITIONS NOTED BY LANDLORD: Landlord provides the Premises in normal condition and good repair except for (list conditions or check box if none): NONE

_____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________________________________ The purpose of this form is for Tenant to advise Landlord of any other conditions noted by Tenant. If Tenant does not complete and return this Information C Sheet, then Tenant will have deemed the condition of the Premises to

ROOM/AREA

CONDITIONS NOTED BY TENANT

5 Conditions Noted by Tenant: Living room The â&#x20AC;&#x153;Conditions Noted by Tenantâ&#x20AC;? section resembles the customary Dining room tenant check-in forms used in many Wisconsin rental markets. There are Hallwaysfor a wide variety of rooms boxes and areas that might be found in a traditional apartment as well as a Kitchen rented single-family home. At the same time, the form does not presume to list prompts for assorted features in Bedroom #1: location: _______ various rooms because the potential ______________ variety is too great to effectively anticipate. Bedrooma#2: 6 Note Maintenance or Repair location: _______ Request: At the bottom of the ______________ second page, tenants are cautioned to separately request any needed maintenance or repairs. The Information Check-In Sheet is not the proper vehicle for these requests. 7 Withholding from Security Deposits: Finally the tenants are advised that the information on the Information Check-In Sheet may be used by the landlord when determining whether any of the tenantâ&#x20AC;&#x2122;s security deposit will be withheld for damages beyond normal wear and tear. This is followed by a summary of the bases for withholding amounts from a security deposit, now stated in Wis. Stat. Â§ 704.28. The WRA Information Check-In Sheet conforms to the current statutory

requirements for a mandatory Information Check-In Sheet for new residential tenants. Going forward, there may be modifications to this law, perhaps giving answers to some of the unanswered questions or eliminating the â&#x20AC;&#x153;Conditions Noted by Landlordâ&#x20AC;? feature, which is disfavored by many rental property owners and managers. Some are unhappy with the record-keeping and documentation burden the current version of Â§ 704.08 generates, particularly when a large number of units are involved in a concurrent turnover, such as with university student housing. Debbi Conrad is Senior Attorney and Director of Legal Affairs for the WRA.

MORE ONLINE â&#x20AC;˘ Wis. Stat. Â§ 704.08 at docs.legis. wisconsin.gov/statutes/statutes/704.pdf â&#x20AC;˘ â&#x20AC;&#x153;Landlord-Tenant Law: New Check-In Sheets & Property Disposal Procedureâ&#x20AC;? in the May 2012 Wisconsin Real Estate Magazine at www.wra.org/WREM/ May12/LandlordTenant/ â&#x20AC;˘ â&#x20AC;&#x153;Best of the Legal Hotline: Landlord and Tenant Questionsâ&#x20AC;? in the July 2012 Wisconsin Real Estate Magazine at www. wra.org/WREM/Jul12/LegalHotline/

WIREALESTATEMAG â&#x20AC;˘ AUGUST 2012

Sheet begins by indicating that the landlord is providing the form as legally required by Â§ 704.08 and giving the tenant basic directions: the tenant should complete the form and return it to the landlord within seven days. 2 Premises, Landlord/Manager and Tenants: The landlord should fill in the address or other description of the premises at top, complete the landlord or property managerâ&#x20AC;&#x2122;s name and contact information, list the tenants, and indicate the date the Check-In Sheet was given to the tenants so that everyone can keep track of when the seven days typically would begin. 3 Conditions Noted by Landlord: The box entitled â&#x20AC;&#x153;Conditions Noted by Landlordâ&#x20AC;? is a new feature. This box is smaller and does not contain the detail included in the â&#x20AC;&#x153;Conditions Noted by Tenantâ&#x20AC;? section because the landlord will be more familiar with the property and can zero in on any notable conditions that have not been already remedied via repairs or replacements. The landlordâ&#x20AC;&#x2122;s information may be derived from personal knowledge, prior tenantsâ&#x20AC;&#x2122; check-out forms, maintenance workers or inspection of the premises. The â&#x20AC;&#x153;Conditions Noted by Landlordâ&#x20AC;? provision states that the landlord is providing the premises in normal condition and good repair except for any listed conditions, and a box is provided for the landlord to check if there are none. Some landlords may also choose to use this box to document new carpet, fresh paint or a new appliance since there is nothing to say that the noted conditions must be adverse and cannot highlight desirable features. 4 Tenant Directions: Next are more instructions for the tenant: the tenant is to note any conditions the tenant observes that were not listed by the landlord. The tenant is told that if the tenant does not complete and return the Check-In Sheet that the landlord may conclude that the tenant found the condition of the premises to be acceptable.

BEST OF LEGAL HOTLINE by Tracy Rucka

Hot Hot Topics for Summer 2012 The hottest topics on the Legal Hotline this summer relate to several recent Wisconsin statutory changes and Administrative Code revisions; summaries of these hot topics follow for your review.

Commercial Offer to Purchase Mandatory Use Date July 1, 2012 The 2012 WB-15 Commercial Offer to Purchase mandatory use date was July 1, 2012. The updated offer reflects changes made in the other WB forms to create uniformity. In terms of customized features, the Proposed Use Contingency has been reorganized to address easements and restrictions, approvals, access and land use approvals, and a Map of the Property Contingency has been added as well. The March 2012 Legal Update discusses changes to the commercial offer in detail at www.wra.org/LU1203.

WIREALESTATEMAG • AUGUST 2012

REEB 24 Rule Changes Effective July 1, 2012

Although prompted by the need to bring the Wisconsin Administrative Code rules into compliance with changes to Wis. Stat. chapter 452 changes, the changes to chapter REEB 24 affect other areas that will change how brokers engage in daily real estate practice. The two most significant practice issues include (1) the requirement for brokers to obtain signatures on the Broker Disclosure to Customers and (2) how brokers must make disclosures and obtain consent regarding compensation, disclosure of interest and disclosure of licensure. REEB 24 revisions also create uniformity in application to both listing brokers and cooperating brokers, where historically they only applied to listing brokers. Other

changes include new definitions for agency agreement, builder, party, principal broker and written proposal. The full text of Wis. Admin. Code chapter REEB 24 can be viewed at docs.legis.wisconsin. gov/code/admin_code/reeb/24.pdf.

Broker Disclosure to Customers Needs Signatures Effective July 1, 2012 A broker cannot negotiate on behalf of a party that is a customer unless the broker first provides the Broker Disclosure to Customers. If the transaction is for a property with 1 to 4 dwelling units, the broker is required to ask for “the party’s signed acknowledgement” — in other words, a signature. The old WRA Broker Disclosure to Customers form only asked for the customers’ initials, so to comply with the new rule, brokers may: 1) Use existing paper copies of the WRA Broker Disclosure to Customers form and ask customers to sign the form instead of only initialing it. 2) Use the WRA Addendum to Broker Disclosure to Customers, which prompts the customer to sign and provides signature lines, along with the old form. 3) Use the WRA’s revised Broker Disclosure to Customers form, available in both paper copies or on zipForm®. The WRA Addendum to Broker Disclosure to Customers is available on the WRA website at www.wra.org/FormsUpdate and is intended to allow brokers to use existing inventory of paper copies of the WRA Broker Disclosure to Customers.

§ REEB 24.05(5) Disclosure of Licensure Beginning July 1, 2012, licensees acting as principals in a real estate transaction must, in writing, disclose their license status and intent to act in the transaction as a principal. The disclosure obligation itself has not changed — just the necessity to make the disclosure in writing changed. Note that this disclosure applies to all real estate transactions, including sales and rentals.

§ REEB 24.13 Drafting and Submission of Written Proposals Many of the Wis. Admin. Code § REEB 24.13 rules were originally drafted addressing prompt presentation of offers and not necessarily all written proposals. “Written proposal” is now defined and means any written document provided by one party to another during the course of a transaction, including but not limited to, notices, offers, counter-offers, options, exchanges, rental agreements and amendments. Therefore licensees must not refuse to draft any written proposal unless contrary to the specific instruction of the other party, and licensees must promptly present all written proposals received by the client or customer. Some of the § Stat. 24.13 rules formerly applied only to the listing broker when engaged in the presentation of offers. Now the rules clearly apply to all licensees, whether working with

§ REEB 24.17(5) Duty to Cooperate with the Board and the Department To assist in expediting the REEB complaint process, licensees and licensee applicants are required to respond to the REEB’s request for information within 30 days of the date of the request. Any broker receiving communication from the REEB should carefully read it and respond in a timely manner. Working with your legal counsel and/or errors and omissions insurance provider may also be appropriate.

Broker Education 72 Hours Effective July 1, 2012 The education requirement to earn a broker’s license in Wisconsin increased from 36 to 72 hours. To earn a broker’s license under the prior education requirement of

36 hours, an applicant who completed the 36-hour education course before July 1, 2012, must pass the state exam and submit a completed application for a broker’s license no later than July 31, 2012 to the Department of Safety and Professional Services. Applicants who have not completed 36 hours of pre-license education prior to July 1, 2012 must complete 72 hours of pre-license education in order to obtain a real estate broker’s license, no matter when they submit an application. For more information, see www. wra.org/Education/Careers/Broker/ Wisconsin_Broker_Pre-License_Education.

REALTOR® Code of Ethics Training (Formerly titled Quadrennial Ethics training.) All REALTORS® are required to complete 2.5 hours of ethics training between January 1, 2008 and December 31, 2012, unless they completed the new member Code of Ethics orientation course during that time frame. All continuing members who joined the WRA before January 1, 2008 must comply with this requirement. Failure to do so

is a membership violation, which may result in suspension and ultimately in termination of REALTOR® membership. Any member who attended the WRAsponsored 2011-2012 CE Course 4 Business Ethics has met the NAR Code of Ethics training requirements. REALTORS® may use the “myWRA” function at www.wra. org/myWRA/myEducation/myEducation_ Overview to see if they completed this course. REALTORS® attending continuing education provided by another sponsor must contact the sponsor to determine if the course meets NAR standards. For a schedule of classes as well as registration for the WRA’s CE Course 4 — Business Ethics live classes as well as online and self-study options, visit www. wra.org/RECEinfo. REALTORS® also may complete the NAR Code of Ethics training online for free, courtesy of NAR. The free online ethics course for existing members is available on NAR’s website at www.realtor. org/code-of-ethics/training/for-existingmembers/code-of-ethics-online-course. Additional information regarding these requirements is found at www.realtor. org/code-of-ethics/training/for-existingmembers/code-of-ethics-requirements.

WIREALESTATEMAG • AUGUST 2012

buyers or sellers. For example, § REEB 24.13(4) now requires all licensees to promptly inform clients and customers whether the other party has accepted, rejected or countered a written proposal.

BEST OF LEGAL HOTLINE

Carbon Monoxide Detectors: Do They Stay or Do They Go?

As of February 1, 2011, there are Wisconsin requirements for both smoke alarms and carbon monoxide alarms in almost all one- and two-family dwellings, regardless of the building’s age. The new carbon monoxide safety net is for dwellings with fuel burning appliances, fireplaces or attached garages.

WIREALESTATEMAG • AUGUST 2012

ecent changes in Wisconsin’s carbon monoxide detector law have led to some confusion about the seller’s obligations to install and/or leave carbon monoxide detectors in the property. Deliberate inspections and contract drafting can assure the parties have a meeting of the minds about carbon monoxide detectors. The law states that most property owners of one and two family dwellings, as well as multifamily dwellings, must install functional smoke and carbon monoxide detectors. Properties built, with a building permit issued on or after February 1, 2011 will have alarms that are interconnected and directly wired to the dwelling’s electrical system. However, for older properties, the owners may comply by using removable detectors. For information about proper installation

of smoke and carbon monoxide alarms, see the Department of Safety and Professional Service Carbon Monoxide and Smoke Detector brochure at dsps. wi.gov/sb/docs/SB-UdcAlarmsFeb11.pdf . When the property owner installs carbon monoxide units that are battery-powered or not hardwired into the electrical system, they may consider the alarms personal property and may want to take the detectors with them when selling the property. When the listing agent conducts the pre-listing property inspection, the agent should see if the seller has installed carbon monoxide detectors and if they are permanently installed or are the easilyremovable plug-in variety. The agent can discuss this with the seller, and agree how to handle it in the listing contract and then in the offer. For example, will the detectors remain on the property,

do the required detectors need to be installed, or will the seller not provide detectors? Whatever the scenario, make sure that the buyer is informed. The offer may be drafted to address who will install any missing detectors and whether detectors presently on the property will remain or be removed by the seller. If a property does not have required smoke and carbon monoxide detectors, a seller can note this on a Real Estate Condition Report as conditions that are not compliant with state law and require correction. For sellers who do not complete a RECR, the definition of Conditions Affecting the Property or Transaction in the offer includes, “dd. Violation of state or local smoke and carbon monoxide detector laws” so that the seller would still have the obligation to disclose if the required smoke and

yourChoice Realty.net carbon monoxide detectors are not installed on the property. If either agent knows there are missing detectors, they arguably need to disclose this health risk to property occupants as a material adverse fact under Wis. Admin. Code § REEB 24.07(2), which requires the licensee to timely disclose the fact in writing to all parties to the transaction. When the offer is negotiated to address the detectors, disputes will be avoided, however sometimes the concern will not be discovered until the home inspection. If a buyer’s offer includes a home inspection contingency, the home inspector is to indicate in the inspection report if the property is not compliant with the carbon monoxide and smoke detector laws. If the seller did not previously disclose missing detectors, the buyer could give a notice of defects relating to the missing detectors because it is a human safety issue and a building code violation. A seller may argue that the seller is not required to install detectors because there is no law that specifically requires that detectors be in place as a prerequisite to a real estate conveyance, even though it is a code violation. The seller might observe that the battery-operated or plug-in types of detectors are really personal property and can be taken with the seller when moving out; this would not be an issue in newer homes where the detectors are required to be tied into the home’s electrical system. In the end, this is a safety analysis versus a personal property analysis, and there is no clear-cut answer. By addressing the issue in the listing and the offer, any such debate can be avoided.

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Tracy Rucka is Director of Professional Standards and Practices for the WRA.

Providing Service To

The statutes for one- and two-family dwellings are found in Wis. Stat. § 101.647 (pages 49-50 of legis.wisconsin.gov/ statutes/Stat0101.pdf) and the pertinent rules are found in Wis. Admin. Code § SPS 321.097 on pages 27 at docs. legis.wisconsin.gov/code/admin_code/sps/safety_and_ buildings_and_environment/320_325/321.pdf.

Smoke Alarm Resources Brochure for smoke alarms in dwellings is found at dsps. wi.gov/sb/docs/SB-FormFirePrevSmokeAlarms10780.pdf. The statutes for smoke detectors are Wis. Stat. § 101.145 and Wis. Stat. § 101.645 (both found in legis.wisconsin. gov/statutes/Stat0101.pdf).

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© 2012 PrimeLending, A PlainsCapital Company. Trade/service marks are the property of PlainsCapital Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved. PrimeLending, A PlainsCapital Company (NMLS no: 13649) is a wholly-owned subsidiary of a state-chartered bank and is an exempt lender in WI.

WIREALESTATEMAG • JULY 2012

Carbon Monoxide Resources

EDUCATION

Top-Notch Classroom Education Whether your goal is to become a real estate sales licensee, enhance your career with a prestigious designation, or renew your license with continuing education, this section offers you the key courses you will need.

Real Estate Sales Pre-License October 8–12, 15–17, 2012 WRA Headquarters — Madison To obtain a real estate license in the state of Wisconsin, you must first complete 72 hours of approved education courses, such as our sales pre-license course. Second, you must pass a state-administered exam. The WRA will offer an eight-day accelerated 72-hour sales program on October 8–12 and 15–17, 2012 in Madison. For more information, visit www.wra.org/salespl

UAD: Coping with the Aftereffects

Commercial CE

September 11, 2012 WRA Convention — Appleton

City Center — Milwaukee

As a result of the new UAD assignment conditions, many appraisers have learned that there is more to the UAD than meets the eye. This seminar will help you in understanding those additional assignment conditions as well as other important obligations of which you’ll need to be aware of if your lender or client sells loan packages to Fannie Mae or Freddie Mac. *Approved for WI, MI and MN Appraiser CE and WI Assessor CE. Visit www.wra.org/ConventionAppCE for additional information.

WIREALESTATEMAG • AUGUST 2012

2-Day ABR Course

October 2-3, 2012 — Milwaukee Do you like working directly with buyer clients? If so, this course is for you! You’ll discover how to represent buyer clients with the same level of service that sellers enjoy. You’ll also learn about methods for building your buyer representation business. Complete two of the three days of required education for the ABR designation. This course qualifies for 2011-2012 CE Courses 1, 2 and 4. (It does not fulfill NAR’s Code of Ethics requirements). SAVINGS: Take $30 off your registration with the special REBAC discount. Visit www.wra.org/ABRcourses for additional information.

For CE with a focus on commercial real estate, look no further than the WRA’s Commercial CE courses! Upcoming courses in Milwaukee include: • August 30: CE 1, 8:30 a.m. – 12 p.m.; CE 2, 1 p.m. – 4:30 p.m. • September 13: CE 3, 8:30 a.m. – 12 p.m.; CE 4, 1 p.m.– 4:30 p.m. • September 27: Elective A, 8:30 a.m. – 12 p.m.; Elective D: 1 p.m. – 4:30 p.m. • November 1: CE 1, 8:30 a.m. – 12 p.m.; CE 2, 1 p.m. – 4:30 p.m. • November 15: CE 3, 8:30 a.m. – 12 p.m.; CE 4, 1 p.m. – 4:30 p.m. • November 29: Elective A, 8:30 a.m. – 12 p.m.; Elective D: 1 p.m. – 4:30 p.m.

Appraisal CE • September 11: UAD: Coping with the Aftereffects – Appleton, WI — 7 hrs.* • October 3: Foreclosures & Short Sales: Dilemmas and Solutions Appleton, WI — 7 hrs. • October 4: Bullet Proof Your Appraisal Report – Madison, WI (A.M.) — 3.5 hrs. • October 4: Calculate Your Way to More Income – Madison, WI (P.M.) — 3.5 hrs. • October 25: Excel and Appraisal Practice – Wauwatosa, WI — 7 hrs. • October 26: 7-Hour National USPAP 2012-2013 Update – Madison, WI — 7 hrs.* *Approved: balance of courses submitted for CE approval

WRA Course Schedule Visit www.wra.org/CourseSchedule for full schedule and details. Sales & Marketing Management Date Course Location Early Regular A.T.D. October 2-3, 2012 2-Day ABR course Milwaukee $250ª $260ª $280ª November 1–2, 2012 CRS 202*** Milwaukee $275 EARLY BIRD SPECIAL $199 OR $119** *Plus books ** Audit fee: If you previously completed a course. *** Wisconsin CRS Members receive a $20 discount a Take advantage of a $30 discount given by REBAC.

Conference and Conventions Date September 9–11, 2012

Event/Course WRA Annual Convention

Location Radisson Paper Valley Hotel in Appleton

Real Estate Continuing Education Date August 6, 2012 August 8, 2012 August 10, 2012 August 15, 2012 August 20, 2012 August 30, 2012 September 5, 2012 September 6, 2012 September 6, 2012 September 6, 2012 September 9, 2012 September 10, 2012 September 11, 2012 September 11, 2012 September 13, 2012 September 13, 2012 September 14, 2012 September 17, 2012 September 19, 2012 September 20, 2012 September 26, 2012 September 27, 2012 September 27, 2012

Course 2011-12 Elective A – DVD 2011-12 course 3 & 4 2011-12 Elective D & A 2011-12 Elective D & A 2011-12 Elective C – DVD 2011-12 CE 1 & 2 (Commercial) 2011-12 CE 2 & 1 2011-12 CE 4 & 3 2011-12 CE Elective B – DVD 2011-12 CE 1 – DVD 2011-12 CE 1 & 2 2011-12 CE 3 & 4 2011-12 Elective A & D 2011-12 CE 2 – DVD 2011-12 CE 2 & 1 2011-12 CE 3 & 4 (Commercial) 2011-12 Elective A & C 2011-12 CE 3 – DVD 2011-12 CE 1 & 2 2011-12 CE 4 & 3 2011-12 CE 3 & 4 2011-12 Electives A & C 2011-12 Electives A & D (Commercial)

Location Manitowish Waters Madison Brookfield Madison Manitowish Waters Milwaukee Brookfield Brookfield Janesville La Crosse Convention-Appleton Convention-Appleton Convention-Appleton La Crosse Madison Milwaukee Brookfield La Crosse West Bend Madison West Bend Madison Milwaukee

Price Call (715) 356-3400 (800) 279-1972 $27/m; $35 nm (800) 279-1972 $27/m; $35 nm (800) 279-1972 $27/m; $35 nm (715) 356-3400 (800) 279-1972 (800) 279-1972 $27/m; $35 nm (800) 279-1972 $27/m; $35 nm (608) 755-4854 (608) 785-7744 (800) 279-1972 (800) 279-1972 (800) 279-1972 (608) 785-7744 (800) 279-1972 $27/m; $35 nm (800) 279-1972 (800) 279-1972 $27/m; $35 nm (608) 785-7744 (262) 338-8114 (800) 279-1972 $27/m; $35 nm (262) 338-8114 (800) 279-1972 $27/m; $35 nm (800) 279-1972

Date Course Location September 11, 2012 UAD: Coping with the Aftereffects Radisson Paper Valley Hotel in Appleton (qualifies for 7 hours CE credit; approved for Wisconsin Appraiser and Assessor CE and Michigan and Minnesota Appraiser CE.) Check out the Appraisal Continuing Modules available by DVD and Online.

Pre-License Date October 8–12, 15–17, 2012 Nov 26-29; Dec. 10-13, 2012 *Plus books

Course Sales Pre-license Course Broker Pre-license Course

Location Member Madison Madison $325*

Non-Member $325* $345*

ATD $335*

WIREALESTATEMAG • AUGUST 2012

Appraisal Continuing Education

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SEPTEMBER 9-11, 2012 | RADISSON PAPER VALLEY HOTEL - APPLETON Convention is the perfect place to network with colleagues, get recharged about your business, complete Continuing Education courses or choose from more than 40 workshops across three days. Whether you are looking for new ideas, marketing tips, sales strategies or a primer on new technology, there’s something for everyone.

SUNDAY SEPTEMBER 9

MONDAY

TUESDAY

8:00 a.m. – 5:00 p.m. Exhibits Open

8:00 a.m.

8:30 a.m. – 12:00 p.m. Real Estate CE – Course 3 New Developments

8:30 a.m. – 12:00 p.m. Real Estate CE – Elective A – Short Sales and Foreclosures

SEPTEMBER 10

8:30 a.m. – 11:45 a.m. Real Estate CE – Course 1 – Listing Contracts 8:00 a.m. – 3:30 p.m. Golf at Butte des Morts Country Club 11:30 a.m. – 3:00 p.m. Real Estate Bar Camp 12:30 p.m. – 3:45 p.m. Real Estate CE – Course 2 – Offer to Purchase 3:00 p.m. – 6:00 p.m. Packer Party

9:30 a.m. – 11:30 a.m. Opening Session Become the Change You Wish to See in the World 1:00 p.m. – 4:00 p.m. Expanded Broker Track

4:00 p.m. – 6:00 p.m. Exhibits Open

1:00 p.m. – 4:30 p.m. Real Estate CE – Course 4 Business Ethics

8:30 p.m. – 1:00 a.m. Icebreaker Party “Connections Carnival”

2:45 p.m. – 4:00 p.m. Workshops - Session 2

1:00 p.m. – 2:30 p.m. Workshops - Session 1 5:00 p.m. – 6:00 p.m. Women’s Council of REALTORS® Meet & Greet

REG I

TO R

7:00 p.m. – 9:00 p.m. Chairman’s Installation Dinner

STE OUR M EC IE V R B ISSIO N ED YA ISC UG : OU US NT T1 PR

ICI

9:00 p.m. – 12:00 a.m. The After Party

SEPTEMBER 11

Exhibits Open

8:30 a.m. – 4:30 p.m. Appraisal CE - UAD: Coping with the Aftereffects 8:45 a.m. – 10:00 a.m. General Session: NetWORTHingTM ... The New Social Economy $500 DOOR PRIZE - MUST BE PRESENT TO WIN 9:00 a.m. – 12:00 p.m. Expanded Broker Track 10:30 a.m. – 11:45 a.m. Workshops - Session 1 11:45 a.m. – 1:00 p.m. CRS Lunch 1:00 p.m. – 4:30 p.m. Real Estate CE - Elective D – Financing 1:15 p.m. – 2:30 p.m. Workshops - Session 2 1:15 p.m. – 4:15 p.m. Expanded Broker Track 2:45 p.m. – 4:00 p.m. Workshops - Session 3

0 TH

WWW.WRA.ORG/CONVENTION

Dreamers Welcome Everybodyâ&#x20AC;&#x2122;s idea of success is different. Some dream of being a top producer. Some dream of having more time for family. Whatever it takes, our dream is to help yours come true.

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LEGISLATIVE

What REALTORS® Should Know About the Federal Health Care Reform Law On June 28, 2012, the United States Supreme Court upheld most of President Obama’s healthcare reform law known as the Patient Protection and Affordable Care Act (PPACA). This law will have a significant impact on the U.S. health care industry and the health care choices of Americans, including REALTORS® in Wisconsin. Unless changes are made, most of the key provisions under the PPACA are scheduled to go into effect in 2014.

o help REALTORS® understand how the PPACA may impact them, the following is a summary of the key provisions in the law:

WIREALESTATEMAG • AUGUST 2012

Medical Insurance Mandate

Beginning in 2014, the PPACA requires all individuals, with a few exceptions, to maintain medical insurance or pay a penalty to the IRS. To satisfy the requirement, the insurance can be a government plan, for example Medicare, an employer-sponsored medical plan, or a private plan for individuals available in the marketplace. Tax credits will be offered to certain individuals and families to make insurance more affordable. If an individual does not have insurance, a penalty can be

imposed. The maximum penalty in 2014 will be $95.00 per adult and a maximum of $285.00 per family, or 1 percent of family income, whichever is greater. The maximum penalty will increase in 2015 and increase again in 2016.

Pre-Existing Conditions Beginning in 2014, insurance companies will no longer be allowed to charge higher rates or deny coverage to people with pre-existing conditions. To qualify for coverage, you must have been unable to obtain insurance due to a pre-existing condition and have been uninsured for at least six months. The Pre-Existing Condition Insurance Plan covers a broad range of health benefits, including primary and

35%

Percentage of tax credit small businesses may qualify for with less than 25 employees and average salary below $50,000.

by Tom Larson

Insurance Exchanges Starting in 2014, Wisconsin and all other states will be required to have health insurance exchanges to allow individuals and employer groups to: (1) look for and compare health plans, (2) get answers to questions about your health care coverage, (3) determine eligibility for coverage under public plans, (e.g. Medicaid,) (4) determine eligibility for tax credits for purchasing insurance, and (5) enroll in a health care plan that meets your needs. Uninsured and self-employed individuals will be able to purchase insurance through the state-based exchange.

Young Adult Coverage With certain exceptions that will expire in 2014, if your health care plan covers children, you can now add or keep your children on your health care insurance policy until they reach the age of 26, even if the children are married, not living with the parents, attending school, not financially dependent on the parents, or eligible to enroll in their employer’s plan.

Small Businesses If you have a small business with up to 25 employees and you pay average wages below $50,000, you may qualify for a tax credit of up to 35 percent for providing health insurance. In 2014, the small business tax credit will increase to 50 percent for qualifying businesses. The PPACA also creates an Early Retiree Reinsurance Program that provides $5 billion in financial assistance to employers to help maintain coverage for early retirees, ages 55 and older, who are not yet eligible for Medicare.

Beginning in 2014, insurance companies will no longer be allowed to charge higher rates or deny coverage to people with pre-existing conditions.

$250,000 for individuals and $500,000 for married couples exclusion from capital gains on the sale of a principal residence remains unchanged. As a result, even if the AGI limits are met, the new tax would apply only to any home sale gain realized in excess of the $250K/$500K primary home exclusion that pushes the individual’s AGI over the $200K/$250K adjusted gross limit. Visit the NAR website for more information on this topic at www.realtor.org/ small_business_health_coverage.nsf/pages/ health_ref_faq_med_tax?opendocument.

Medicare Choice of Doctors For any plans created or issued after March 23, 2010, individuals are allowed to (a) choose any available participating primary care doctor as their doctor and any available participating pediatrician as their child’s primary care doctor, and (b) seek emergency room services outside of the insurance plan’s network without getting prior approval. Also, the PPACA authorizes women to see an OB-GYN without a referral.

Impact on Real Estate Transactions Despite e-mail rumors to the contrary, the PPACA does NOT create a sales or transfer tax on real estate. However, starting January 1, 2013, a new 3.8 percent Medicare tax will be imposed on the “net investment income” of individuals with an adjusted gross income (AGI) of $200,000 or more, or $250,000 for married couples filing jointly. Since capital gains are included in the definition of net investment income, the sale of real property may result in an additional tax obligation. However, for sales involving a principal residence, the existing

Under the PPACA, many preventive services, including yearly wellness visits, are covered under Medicare if the individual receives the services from a doctor or other health care provider who accepts the assignment. In addition, individuals are eligible for a 50 percent discount on covered brand-name drugs when in the drug coverage gap known as the “Donut Hole.”

Consumer Operated and Oriented Plans (CO-OPs) The PPACA creates a new type of nonprofit health insurer, called Consumer Operated and Oriented Plans (CO-OPs). CO-OPs are run by their customers and are intended to offer consumer-friendly, affordable health insurance options to individuals and businesses. Individuals and small business owners may be able to form a CO-OP with others and apply for a federal loan to get it started. For more information on the PPACA, please visit www.healthcare.gov.

Tom Larson is Vice President of Legal and Public Affairs for the WRA.

WIREALESTATEMAG • AUGUST 2012

specialty care, hospital care and prescription drugs. Premiums will vary depending on the deductible and which plan you choose, ranging from $94 to $754 per month.

LEGISLATIVE

WIREALESTATEMAG • AUGUST 2012

nstead of writing about the political dynamics of the 2012 race as it plays out, I thought I would highlight several historical facts about Wisconsin U.S. Senate races and provide a longer-term perspective on the candidates and their chances for success as they compete for the first open Senate seat in Wisconsin in 24 years.

• Tammy Baldwin will be the first female Democratic U.S. Senate nominee in Wisconsin political history. According to the Humphrey School of Public Affairs, the Democratic Party has never nominated a woman for U.S. Senate dating back to the first popular vote race 97 years ago in 1914. Republicans were the first major party to nominate a woman for U.S. Senate — state Senator Susan Engeleiter in 1988. • Including Baldwin, there have been 14 female U.S. Senate general election candidates in Wisconsin since 1926: One Republican (Engeleiter, 1988), one Democrat (Baldwin, 2012), and 12 others running as third-party candidates under the Wisconsin Green Party (2006), Socialist Workers (1970, 1980, 1986, 1988), Independent (1962, 1970), Socialist Labor (1946, 1957, 1958), Communist (1924), and Prohibition Party (1926). Women have run for U.S. Senate in Wisconsin, but most have run under a third-party banner. • Former Governor Tommy Thompson is swimming against the tide of history. In the 164 years since statehood, no non-sitting governor has ever won a U.S. Senate seat in Wisconsin electoral history, according to the Humphrey School. Since statehood in 1848, seven of the 44 Wisconsin governors decided to run for the Senate, and only three were successful. The catch? All three who won were sitting governors when they ran, not ex-governors like Thompson. • The three sitting governors who went on to win their U.S. Senate race include Republican Robert LaFollette

Wisconsin U.S. Senate Race Interesting Historical Facts

With the gubernatorial recall election out of the way, the Wisconsin U.S. Senate race has moved front and center. The Senate race has taken months to develop, and most of the delay can be attributed to the recall elections over the spring and summer. The recalls consumed all the political oxygen, making it next to impossible to focus on any other race. But the Wisconsin Senate race should be the main attraction this year. The outcome could determine if the U.S. Senate remains under Democratic control next January.

by Joe Murray

consistently polls behind Thompson,)

“The historical odds are stacked against Tammy Baldwin and Mark Neumann in the 2012 U.S. Senate race.”

and it may not work for Baldwin in the general election if history is any guide. The two U.S. House members who did launch successful U.S. Senate campaigns were Republican

•

likely win the open U.S. Senate seat. The two elections in 98 years where Wisconsin voters rendered a split decision were in 1940 in which Democrat Roosevelt carried Wisconsin and Progressive Senator Bob LaFollete won a fourth term, and in 1968 when Republican Richard Nixon carried Wisconsin and Democrat Gaylord Nelson won. The historical odds are stacked against Tammy Baldwin and Mark Neumann in the 2012 U.S. Senate race. Since 1914, according to the Humphrey School, “only two of 15 ex or sitting Badger State U.S. Representatives have run successful U.S. Senate campaigns; two more may go down in 2012.” Given that only two Wisconsin U.S. House members have made it to the Senate in 97 years, it may be difficult for Neumann to survive the GOP primary (he

Irvine Lenroot in 1918 and GOP Congressman Robert Kasten in 1980. Of the 13 who lost, six were Republicans, five were Democrats, and the remaining two included a Progressive and a Socialist. None of these historical facts guarantees that we can accurately predict the outcome in the four-way Republican primary or the general election contest between Baldwin and her opponent this November. But it’s interesting to note how long these outcomes and trends have held true. Thompson, Baldwin and Neumann all have some part of Wisconsin political history stacked against them in 2012. Joe Murray is Director of Political and Governmental Affairs for the WRA.

WIREALESTATEMAG • AUGUST 2012

in 1905, Republican John Blaine in 1926, and Democrat Gaylord Nelson in 1962. The four non-sitting governors who attempted their comeback and lost include Edward Salomon in 1868, Lucius Fairchild in 1885, Walter Kohler, Jr. in 1957, and Anthony Earl in 1988. • President Obama’s performance at the top of the ticket in Wisconsin this November may determine which party wins the U.S. Senate race. Research by the Humphrey School finds that “Wisconsin has voted for the same political party in 14 of 16 cycles, dating back to the birth of popular vote contests in 1914.” In short, if Obama carries Wisconsin this November, Tammy Baldwin’s chances are very good. The same holds true for the GOP: if Romney swings Wisconsin his way, the Republican nominee will

REALTOR SALES TIP by Marcus A. Wally

Legal Slipups: Don’t Lose Your License! Do you communicate frequently with your customers? Do you stay on top of earnest money payments? Do you follow the National Association of REALTORS® Code of Ethics and Standards of Practice?

f you answered “yes” to these questions, you are doing a solid job as a professional. But no matter how good you may be, you still face the risk of an unhappy customer filing a complaint with the state or trying to take you to court. Some of the most common violations against real estate licensees involve commission fraud, misrepresentation, concealment, culpable negligence and dishonest dealings during a transaction. We cannot live in fear, but we can live with becoming as diligent as we can as we go about our daily duties in our field of real estate.

WIREALESTATEMAG • AUGUST 2012

Here are my tips for avoiding problems:

1 Document, document, document! My corporate attorney taught me this many years ago. I always try and make notes on all my conversations. My listing and closing checklists are perfect for taking notes. 2 Fill out your contracts completely and correctly. Early on, I learned the proper way to fill in the blanks on all contracts to ensure the protection of all parties involved. 3 Ensure that buyers have reasonable expectations about the home. It is up to us to share our knowledge and experience so that unrealistic expectations are not formed and disappointment sets in after the fact. Keep all parties in the realm of realism. 4 Suggest that the customer engage an attorney especially in short sale and foreclosure transactions. Do not fall into the trap of practicing law because we are not licensed to provide legal advice.

5 Verify deposits and other trust account funds — my checklists have line items for this. Become extra diligent that you don’t carry around a customer or client earnest money deposit check instead of giving it to your broker for the timely deposit. Many REALTORS® have been fined in this area, so always turn in your earnest money to your IBRETA account ASAP.

“Having professional courtesy and manners means returning phone calls, answering questions and keeping a transaction moving forward.” 6 Disclose any potential problems as soon as possible. Disclose, disclose, disclose! Make it a habit to share with any buyer the real estate condition report as well as the findings of previous inspections if provided by the owner. 7 Keep a separate ledger for each property management customer. If you are practicing property management, be aware of the additional duties that you have. 8 Provide the seller with a property condition report. Insist that the sellers always fill it out or find someone to do it on their behalf;

never fill it out yourself. Caution all parties to place an “N/A” in a blank space so that there are no blank areas for someone else to fill something in without your knowledge. 9 Communicate more than you think you should. If one behavior gets real estate professionals into trouble with their customers, it’s the failure to communicate. Buyers and sellers become upset if they don’t know what’s going on! This communication is also critical with other agents and brokers. Having professional courtesy and manners means returning phone calls, answering questions and keeping a transaction moving forward. Follow the Golden Rule! Be extra careful to never try and find creative ways to supplement your income by performing services outside the direction, control or management of your broker as you could face charges of violating your state’s law governing real estate. Stay away from those banana peels, as I don’t want to hear about your losing your license! Marcus A. Wally, MBA, is an active REALTOR® in St. Augustine, Florida. Marcus is the founder and broker of New World Realty, which also manages the 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 at marcus@ newworldrealty.com. Learn more about him at www.newworldrealty.com.

HOW ARE CENTURY 21 AGENTS LIKE THE U.S. NATIONAL SOCCER TEAMS? THEY’VE GOT THE STREET SMARTS OF A BEEN-THERE-WON-THAT VETERAN, THE UNBRIDLED ENTHUSIASM OF A YOUNGSTER, AND THE GAME-CHANGING SPEED OF A SECOND-HALF SUB. ®

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