February 2010 - Wisconsin Real Estate Magazine by Lauren Bizorik

APPRAISAL CONFERENCE 2010 Mark the date for the WRA Appraisal Conference, March 10-11.

R&G DAY

Free to the first 500 registrants, R&G Day is February 24.

MAGAZINE February 2010 $5.00

Your Clients Are Talking

Are You

Listening? >> page 6

What’s YOUR Company Doing For You?

Marketing Materials

Training & Education

Business Plans & Forms

Referral Network

Message Boards & Chat Room

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table of CONTENTS

february

2010 |

vol.

features

articles

Best of the Legal Hotline

Practice of Law Petition Considered – Again

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Your Clients Are Talking: Are You Listening? Although the emphasis in real estate today seems to be on technology, your clients are looking for the basics: integrity, honesty and follow through.

ELD Does Not Bar Claims Against Agents A recent Court of Appeals decision confirms the Economic Loss Doctrine would not block misrepresentation lawsuits against licensees.

Off to the Races! While it’s too early to make predictions on what voters will do in November, we update you on fund raising developments, the 8th Congressional District, and more.

Wisconsin’s Pending Fiscal Peril Several recent reports on Wisconsin’s fiscal future paint a disturbing picture, and we may face budget reform not by design but by default. Here’s what you should know.

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news.wra.org

26, no. 5

Are you ready to use the new WB-11? Here are answers to questions about the new forms.

Find out what the WRA is doing to protect your ability to negotiate and draft real estate contracts.

Product Showcase Renew your ZipForm subscription and check out the new Wisconsin Real Estate Law manual.

P-R-I-C-E: Tell You What it Means to Me Pricing the property to sell is key. Marcus Wally has some suggestions in this month’s Sales Tip.

New Rezoning Penalty for Farmland REALTORS® should disclose a new conversion fee – whether or not the buyer plans to rezone.

Operation Tax Credit: Campaign Update The Homebuyer Tax Credit Program has found new life and greater reach. Read all about it.

News

inside the WRA

with BILL MALKASIAN

Top News Stories in and Around the Industry

Top News Stories in and Around the Industry UNITED WAY THE STARK FOR SERVICE COMMUNITY

those of you interested increase in helping he lead story in this month’s magazine is a recap of TOFor substantially funding for rental assistance, HONORS WISCONSIN RECEIVES MILLIONS EASE us out in the particularly legislative arena, the Home Buyer and Seller Focus Group presentation help forNAR’s working families. FAMILY FORECLOSURE CRISIS Mid-Year meetings are May 11-15 that took place Milwaukee at Management Conference on Business Journal (WI) (09/30/08) TO this year, with ourRELEASES Capitol Hill visit December 10 in Pewaukee. This is the second time NAR FREE FHAonTOOLKIT The state of Wisconsin is due to receive nearly $39

Wednesday, May 12. You might want to check and we’ve gottenfunds greattofeedback United Way of Dane Countywe’ve done a focus group like this Wisconsin REALTORS® Association (10/30/08) million in federal stabilize neighborhoods

with your local board office or the WRA for on this program. I recommend that take to read the andyou stave off some a spatetime of abandoned homes. According United Way of Dane County recognized the Stark and theifWRA to help detailed NAR information you are are eager interested in you meet the responsesSociety to the Award questions of theand group if they’re to HUD Gov.and Jim see Doyle, the funds aremore separate Family with the 2008 Tocqueville for asked current challenges of the troubled economy. We attending. similar to those you hear in your part of the state. from approximately $9.2 million the government is outstanding service to the Dane County community awarding the city of Milwaukee, where the foreclosure know that you need resources that can help you and United Way. The Tocqueville Society Award Later the this year we plan to do some external outreach Also, I’d like to thank everyone rate whoisattended Convention currently Winter 9.9 percent. HUD is awarding celebrates and acknowledges people or families, close transactions, and you need them at little or no work throughout the state as the WRA prepares for the in aWisconsin’s Northwoods – it was aStabilization great funds via its Neighborhood Program, such as the Starks, whothis haveyear made major impactbeautiful cost. NAR released an all-new FHA Toolkit balance of this year and has nextjust in program planning. success. under which almost $4 billion is being allocated to on the quality of life in Dane County through online for FREE to help you get clients the financing local and state governments for the redevelopment exceptional service and commitment to the Billtheir Malkasian I’d also like to point out some personnel changes. I’m pleased February brings two big events for WRA this year – Designation of the abandoned and foreclosed houses. community. they need in a credit-strapped environment. It is WRA President

to announce that, after a series of interviews, Kristi Mikalsen Week – which will be occurring around the time you receive this one of the most comprehensive toolkits NAR has ® of our Business Services Department has been promoted to issue, and REALTOR & Government Day, which is happening SITES: NOT JUST FOR PERSONAL CITY HOUSING AUTHORITY RECEIVES ® everasproduced, it’s available to all REALTORS replace Kitty Kuhl WRA Viceand President for Business Services. CONNECTIONS ANYMORE 100-UNIT GRANT February 24 in Madison. visiting the33link below. ey also have Minneapolis-St. Paul Business Journal (09/29/08)Kitty, Grayson, who hasright beennow withbyus almost years, offiThcially retires Milwaukee Journal Sentinel (09/25/08) Pabst, Georgia So what’s different this year from the Government Day you’ve Katharine launched a new pagestepping called “NAR Helps YouJuly Navigate September 30, 2010, with Kristi in effective 1. I’m The city of Milwaukee’s housing authority due 1) It’s free – not your time, of course, come to know in theispast? ® delighted that Kristi has been selected to take on that position. St. Paul, Minn.-based REALTOR Teresa Boardman the Current Economy” where you can fi nd dozens of to receive $6.7 million in federal Hope VI money but registration; 2) it’s one of thesays top fiFlickr, ve biggest eventsand in Madison Facebook other social networking Congratulations, Kristi! As the months move forward, look to build 100 new housing units. The 100 units will great products and resources, like the FHA Toolkit,for of any special interest trade group; hope havepeople all who sites and make3)itweeasy to tomeet might more Businessfor Services staff alignments. be constructed in a 2.5-mile area and will include free or at a steep discount. Visit www.Realtor. three major gubernatorial as part of our program. eventually become clients. WhileTwo many professionals 29 public housing and affordable rental units;candidates org/NARHelpsYou for linkshas to these great the programs Kevin King, WRA General Counsel, accepted position of units them are confirmed. are using these sites to make business Also, contacts nine affordable housing for already income-eligible of Executive Vice and companies use them to conduct background andPresident products.of the REALTORS® Association of South families; and 62 moderately priced, open-market My final thought on Government checks Day: weorneed 500new people theremany to simply recruit workers, want Central Wisconsin and will be returning “home” effective February condominiums. HUD Secretary Steven C. Preston let the press,authority candidateshasand legislators know goingsimilar 16. to connect withwhat’s people really who have interests. comments, “Milwaukee’s housing HOME LOANS GOING STRONG, ALBEIT A on in Wisconsin we are facing in the real to Boardman, “Theestate hard sell is dead. It demonstrated it has the leadership to and leadthe andissuesAccording BIT TIGHTER, IN AREA industry. likeonto personally thank Kevin for giving us an additional five doesn’t work door-to-door, and it doesn’tI’d work revitalize neighborhoods and transform lives. Wisconsin State Journal (10/17/08) social networks.” On Flickr, Boardman connected years of his expertise and help. We know Balousek, he won’tMarv be leaving Cities like Milwaukee change and grow and need to Moving to the actualphotographer election, you’ll a fellow whowant eventuallyus used her revitalize housing to make surefrom manyGovernment aren’t pricedDay onwith – just moving downstairs for a new opportunity. Despite the ongoing national credit crisis, property to of read Joe Murray’s article about gubernatorial raising as services to purchasefund a home. out.” Milwaukee is one a half-dozen housing professionals mortgage availableto whatnew mightHope be the We have redesigned the say legal team money and Iremains am pleased authorities nationwidewell to as receive VI most exciting of the upcoming races – southern16 Wisconsin to home buyers FORECLOSURES grants. the Fox Valley’s 8th Congressional District race. PUSH RENTS HIGHER, announce thatthroughout effective February Cori Lamont, our current SQUEEZING LOW INCOME FAMILIESattorney/trainer, takecredit. on aRon newSteinhofer, position, Director withwillsolid manager of of The rest of our Public Affairs team writes about new (09/21/08) rezoning Olson, Brokerage Minnesota Public Radioa (MN) Dan HOUSING STUDY DELAY FRUSTRATES Regulation Debbi Conrad becomes Marshall && Licensing. Ilsley Bank’s regional home lending penalty in effect for farmland and the pending fiscal peril Wisconsin ADVOCATES Senior Attorneygroup, and Director of Legal Affairs.ofTracy Rucka will In Minnesota’s Twin Cities, a wave of home states, “Th ere’s plenty money for home Milwaukee Journal Sentinelfaces (10/07/08) Williams, in the futureScott (now do you understand why we a into the foreclosures has pushed morehave people rentalDirector of Professional Standards and Practices. become loans out there. It is slightly more difficult to qualify Government Day?). metro apartment sector. The result is an intensifying Two years after promising the Milwaukee than or guration three years but if you havethe a good This new legal teamtwo confi willago, continue to offer demand on Minneapolis and St. Paul’s rental housing area’s first major housing study in three decades, Moving beyond our public policy area, the month of March brings products in the stock, so much so that the vacancy rate isbest verylegal low services creditand score, a good job andindustry. a down payment, money the Southeastern Wisconsin Regional Planning the WRA Appraisal Conference,and which well-attended rents isarealways on the rise. This, in turn, means lowCommission (SEWRPC) is still struggling to get the is available.” Steinhofer adds that banks still are (wra.org/appraisal). March when we families offer out-of-state As you income working face higher monthly rentscan see we’re off and running with a lot of effort launched. Proponents hope the study will is also making loans all via of such programs Mae continuing education (wra.org/celasvegas). This year we will be at changes here at the WRA, which put usasinFannie a even though their income hovers at unchanging serve as a catalyst for improving affordable housing Freddie Furthermore, Tuscany Hotelsuburbs. & CasinoBut in Las Vegas, strong positionand as we moveMac. forward in 2010. credit standards levels. March Since 1-3. 2005, the Twin Cities apartment opportunities throughout the city’s commissioners have yet to assemble an advisory vacancy rate has dipped from 7 percent to closer to remain about the same as they were six months ago, I encourage you a clook at4 out Web site (wra.org/education) Untilsame next month, committee to oversee the research or settoa take specifi percent. Average monthly rents over that meaning that qualified home buyers can get loans to the seesurvey. the array classes we offer statethan plus$25, the rising to more timetable for conducting PhilofEvenson, time throughout span are upthe more if they have the proper income verification. On the wide rangesaid of other delivery methods available, for your the commission’s executive director, issues than $850. Thparticularly e St. Paul-based Wilder Foundation downside, banks have been less willing to make keep getting in the way.continuing The delays education. have frustrated The WRArecently is truly committed offering reviewed incometodata for several Twin Cities housing advocates theyou most. Bethany Sanchez, counties. The organization’s research found that the loans with higher loan-to-value ratios. In addition, a wide range of choice to help you complete your continuing vice president of the Metropolitan number of people in those markets paying too Bill much education byMilwaukee the end ofFair the calendar year. conventional financing without a down payment has Housing Council, laments, “It’s been a long time for their rental housing will double from around indeed disappeared. However, 100 percent financing coming.” The Pewaukee-based has Internally, commission there are a number of70,000 thingscurrently for me to on: 1)140,000 a to report a whopping by 2010. is still available with Veterans Administration and not conducted a comprehensive review of housing Some partial solution would number of us went to Washington, D.C.,sayonaJanuary 25 and 26 and be for the U.S. patterns since the 1970s. government to reverse course on housing policy and Rural Development home loans. received a policy briefing by the NAR legislative team on issues

that will impact us in 2011 by Congressional action.

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wisconsin real estate magazine wisconsin real estate magazine

february 2010 oCTober 2009

news.wra.org news.wra.org

REAL ESTATE

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

notes from the wra

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

Nominating Commitee Seeks Candidates

John Horning, Chairman-Elect jphorning@shorewest.com

Are you interested in serving in a leadership role for your state association? The WRA Nominating Committee is seeking candidates for the positions of 2010-11 WRA Executive Committee Vice President, NAR Director and WRA Board of Director Regional Representative positions. The number of openings for Regional Representative is determined by the membership as of February 28, 2010. The application deadline for these positions is March 15, 2010.

Robert Keefe, Treasurer rkeefe@keeferealestate.com William E. Malkasian, CAE, President wem@wra.org Editorial Staff:

William E. Malkasian

One Two Three Four Five Six Seven

2 2 3 1 0 1 1

Day 2010

Robert Uhrina Managing Editor

Help lobby your legislators at REALTOR® & Government Day on February 24 at the Monona Terrace in Madison. Success hinges on what we advocate together. REALTOR® & Government Day is your opportunity to help shape laws that impact you. Through lobbying efforts at the state Capitol, you’ll meet state lawmakers and have a unique opportunity to advocate for issues that impact your business and the real estate industry in Wisconsin.

Terry O’Connor Publication Editor

Joe Leschisin Senior Designer

Our success as an industry requires activism and hinges on what we advocate together. In 2009, the WRA and its membership demonstrated an impressive show of REALTOR® strength by bringing in more than 300 REALTORS® from all around the state. With your support and advocacy, 2010 will be a day well remembered at the Capitol when key votes are taken.

Wisconsin Real Estate Magazine, USPS 597-850, ISSN 1548-0526, is published monthly by the WISCONSIN REALTORS® ASSOCIATION, 4801 Forest Run Road, Ste. 201, Madison, WI 53704. Periodical postage paid in Madison, WI and additional mailing offices. An annual subscription rate of $5 is included in membership dues and a copy is mailed to every paid REALTOR® and affiliate member of the association. Nonmember subscription rate: $60. POSTMASTER: please send address changes to the WISCONSIN REALTORS® ASSOCIATION, 4801 Forest Run Rd., Ste. 201, Madison WI 53704-7337.

REGISTRATION IS FREE!!

WRA Member Benefits

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.

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

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.

PRoFIT Retirement Program

UPS Discounts & Delivery Plans

(Planned Retirement Future Investment Trust) through M&I Institutional Trust Services. (800) 279-1972 ext. 256 for application

Hassle-free! Once you enroll, your savings are automatic – every time you ship. (800) 325-7000

Health, Dental & Life Insurance Plans

No monthly plan fee, no time-of-day restrictions. Save big money! (800) 254-3202

through REGIT, Inc. specifically designed with REALTORS® in mind. (800) 537-9786

legal hotline: (608) 242-2296 • (800) 799-4468 general fax: (608) 241-2901 products/education fax: (608) 241-5168 legal hotline fax: (608) 242-2279 president fax: (608) 242-2267 e-mail: editor@wra.org Website: www.wra.org

Errors and Omissions Insurance

Long Distance Telephone Service

Real Estate Home Pages Create, edit and manage your own Web site. Free seven-day trial, (800) 280-6926

through Pearl Insurance and underwritten by XL America, Inc. (800) 289-8170

Correction: Last month’s feature article, “The Wisconsin Real Estate Outlook for 2010” used an incorrect term on page 8 in the following sentence: “That’s why we’ve shifted from a subprime crisis to a crisis in prime mortgages that are underwater with unemployed or underemployed mortgagees.” (Should read mortgagors) Wisconsin Real Estate Magazine Managing Editor

facebook: www.wra.org/facebook linked-in: www.wra.org/linkedin youtube: www.wra.org/youtube

wisconsin real estate magazine

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REALTOR® & GOVERNMENT

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Region

february 2010

REALTOR beneﬁts®

The REALTOR Benefits® Program is your member benefits program. NAR has partnered with industry leaders to provide you with value-added offers and significant savings on products and services you use on a daily basis. Did you know that you can earn back more than your national membership dues by simply taking advantage of the REALTOR Beneﬁts® Program? Choose from a variety of value-added offers and savings from industry leaders. Plus, every partner provides products and services that you can use every day, in your business or personal life. Here is just one example of how the REALTOR Beneﬁts® Program can save you money TODAY: •

Lowe’s®— provides REALTORS® with a FREE marketing tool to help build even stronger relationships with clients, including: -

A FREE, personalized direct mail coupon for 10 percent off at Lowe’s

FREE e-newsletters with home improvement content you can send to clients

FREE subscriptions to Lowe’s publications that you can give to clients

5 percent discount on Lowe’s gift cards you can use as closing gifts

See partner listing for details or online at www.LowesRealtorBeneﬁts.com.

For More Information Visit www.REALTOR.org/ RealtorBenefits regularly to learn about new partnerships and offers. You can also call the REALTOR Beneﬁts® Help Line at 1-800-NAR5233 for updates and assistance.

wisconsin real estate magazine

february 2010

Check out the National Association of REALTORS® REALTOR® Benefits® Program ABR®/ABRMSM American Home Shield Avis Budget eNeighborhoods Entertainment® Book Dell, Inc. DocuSign e-PRO® FedEx Hertz Corporation Hewlett Packard InfoUSA InternetCrusade® Lenovo Liberty Mutual Lowe’s REALTOR.com REALTOR® Core Health Insurance REALTORS® Federal Credit Union REALTOR® Team Store™ RELAY® Transaction Management Sentrilock, LLC SRES® Xerox ZipForm® As of 1/2010. List Subject to change

news.wra.org

REALTOR NEWSWIRE ®

Top News Stories in and Around the Industry

RIGHT TOOLS, RIGHT NOW Realtor.org

The National Association of REALTORS® has extended the Right Tools, Right Now initiative to 2010. NAR members can continue to take advantage of hundreds of NAR products and resources that can help their business now for FREE or AT-COST. Visit www.realtor.org/righttools for more information.

REALTORS SUPPORT HAITI EARTHQUAKE RELIEF EFFORTS ®

Realtor.org

In the wake of a devastating earthquake in Haiti on Jan. 12, 2010, NAR quickly mobilized its resources to support the more than three million people affected by this tragedy. The REALTORS® Relief Foundation of the National Association of Realtors® is contributing $550,000 to provide relief to Haiti earthquake victims, and NAR is calling upon its 1.2 million members to help. REALTORS® can contribute by visiting www. realtor.org/about_nar/haiti_relief

GROUP ESTIMATES WIS. PROPERTY TAXES UP 4.2 PERCENT WQOW TV-18 (WI) (12/24/09)

The Wisconsin Taxpayers Alliance estimates that property taxes are set to rise an average of 4.2 percent statewide. According to the research group, school districts are raising their taxes by an average of 6 percent across the state. Technical colleges, meanwhile, are raising them by 3.9 percent and counties by 3.2 percent. Combined, it adds up to 4.2 percent higher taxes for homeowners, who have been receiving their bills in the mail this month. Alliance researchers caution that individual bills may be significantly higher or lower depending on where the taxpayer resides.

STIMULUS FUNDS BRINGS MAJOR EXPANSION TO WEATHERIZATION PROGRAM Ashland Daily Press (WI) (12/21/09) Olivo, Rick

For years, Wisconsin has had programs to assist its residents to weatherize their homes. That effort has taken on new importance under the American Recovery and Reinvestment Act (ARRA), which boosted federal funds available for such programs by more than $5 billion. Opponents charge that the rapid ramp-up of spending on weatherization will leave numerous homeowners vulnerable to shoddy craftsmanship and even outright fraud and theft. In Wisconsin, though, state and local officials say that

simply isn’t the case. Dan Schoof, deputy director of the Wisconsin Department of Administration, remarks, “We have spent a lot of time making sure our oversight is robust enough. We’ve also beefed it up with the new money coming in.” Schoof added that despite the fact the program has doubled in size, the infrastructure to keep tabs on the program was already in place. He remarks, “We are not like some other states where there was no program. They are starting from scratch and having a massive amount of money given to them for weatherization. There could be valid concerns about what kind of accountability they have in place.”

WISCONSIN ECONOMIC RECOVERY HAS BEGUN

LOAN PROGRAM HELPS BUYERS GET INTO FORECLOSED HOMES

decline, as is the number of company job layoff notices

OnMilwaukee.com (01/06/10) Jagler, Steve

Analysts report that Wisconsin’s economic recovery has begun and will continue to gain momentum throughout the new year. In recent surveys, 86 percent of BizTimes.com readers say their company will either add jobs or at least maintain the status quo in 2010. In addition, 76 percent say they are optimistic about how their business will do in the year ahead. The number of first-time unemployment claims in the state is on the filed with the Wisconsin Department of Workforce

Janesville Gazette (WI) (01/03/10) Vogel, Stacy

Development. This all bodes well for the state’s

The Wisconsin Housing and Economic Development Authority (WHEDA) has had success with the Neighborhood Advantage program, which encourages people to purchase foreclosed homes in five counties statewide. The program uses funds from the federal government’s Neighborhood Stabilization Program for loans to buy and repair foreclosed residences. In today’s economy and tight lending environment, it can be difficult to obtain conventional financing to buy foreclosed homes, notes Tim Shortreed, a mortgage loan officer with Johnson Bank in Janesville. Even those fortunate to get approved for a loan must often come up with extra cash for home repairs. Neighborhood Advantage addresses the overall problem by offering loans not only for home purchase, but for home repair to low- and moderateincome households. Additionally, the WHEDA program offers a separate, forgivable loan of up to 25 percent of the purchase price for those who make less than 120 percent of the county median income. Applicants who make less than 50 percent of the county median income are eligible for a loan of 50 percent of the home’s purchase price. Ten percent of the loan is forgiven each year the recipient resides in the home. Those who live in the house for at least a decade get the entire loan forgiven. On the downside, the program has a number of requirements. The property must go through a couple of inspections, all repair work must be done within 90 days, and the buyer is required to take eight hours of homebuyer classes. Shortreed states,” It’s more work, but frankly in the current environment, everything’s more work. The days of walking a consumer through the door and writing an offer quick and making a lot of assumptions are over.”

housing stock. On the downside, Wisconsin’s market for new commercial development is flat. Additionally, some of the banks around the state remain on shaky financial footing. Finally, because employment is a lagging indicator, researchers say it may take a few more months before there is a clear and definite reversal out the Great Recession.

HOUSING MARKET HEATING UP nbc15.com (01/12/2010) Pollack, Barclay

In Wisconsin and elsewhere, now may be the ideal time for sellers to list their homes. Interest rates remain low, home prices have come down, and there’s the 8,000 federal tax credit for first-time buyers. This past November, the federal government extended the $8,000 first-time home buyers tax credit. Additionally, those who have owned a home for five of the last eight years consecutively may be eligible for a tax credit of up to $6,500. Joe Murray with the Wisconsin REALTORS® Association says these factors combined have gotten many people who previously had no interest in buying to start house hunting. Murray remarks, “If you’re interested in buying a home, you should probably move sooner rather than later.” Both the tax credit for first time buyers and the one for existing homeowners is set to expire at the end of April. The Wisconsin REALTORS® Association has launched a Web site containing information about these two tax credits at www.wisconsinhomebuyer. org.

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

wisconsin real estate magazine

february 2010

Your Clients Are Talking

Are You

Listening? By Terry Oâ&#x20AC;&#x2122;Connor

Although much of the emphasis in real estate today seems to be on technology and how it has changed the home buying and selling process, in the final analysis the things that matter most to your clients are the tried-and-true basics: integrity, honesty and follow through.

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news.wra.org

When 10 homebuyers and sellers get together to discuss their recent real estate transactions, REALTORS® are all ears. That was the case for those who attended the WRA’s Management Conference in Pewaukee last December. Watching the discussion live from another room, they were able to not only hear what the consumers had to say, but they were able to submit questions to the group. Sharon Chamberlain of Chamberlain Research facilitated the discussion. The 10 consumers had all recently bought, and some had also sold a home, primarily in the Milwaukee metropolitan area. They discussed everything from finding a REALTOR® to the service level they expected and their likes and dislikes, as well as how the Internet is affecting the process. The following excerpt gives REALTORS a unique perspective on the home buying and selling process through the eyes of the consumer, and how the more things change, the more they remain the same. ®

First Step: Get Online

K: Initially we used Craigslist. That is really the Wild West, but I see a lot more REALTORS® using that forum. On the selling side you can bypass the commissions and some of the costs if you do it yourself. But you’re on your own so it’s a give and take. Ch: We definitely got some hits on Craigslist when we were trying to sell our condo on our own. It was just another avenue besides word of mouth and other advertising. D: There really wasn’t anything fresh out there unless it was “For Sale by Owner,” but I put our house on there with our REALTORS® contact information. SC: What other sites did people use? L: We liked the Google Maps program, where you could see a 360-degree view and get a better idea of the surroundings and the neighborhood. J: Because we have kids, we used a site where we could see where sex offenders were living.

All of the participants agreed that they began their home buying (and/or selling) process online, which comes as no surprise.

K: Trulia has a lot of neighborhood demographics, so we pulled statistics from there to use on our Web site when we were trying to sell the house ourselves.

SC: You all started your search on the Internet. Tell me some of the things you saw out there that you liked.

Did any of you use any kind of social media – Facebook, Twitter, blogs, or anything like that?

They all agreed that they liked to search by school district, number of bedrooms and bathrooms, and price range. When they found properties that met their criteria, they wanted details – and pictures – before they wasted their time visiting a property.

N: My wife uses Facebook 24/7. She found our REALTOR® and our mortgage broker through Facebook and her friends.

B: If I didn’t see pictures I just skipped that property and went to the next one. Also a good description of the house – every single detail counts. L: If there was only a picture of the front of the house or of the outside of the house I took that as a huge red flag. D: Definitely need pictures of the kitchen and bathrooms. SC: Did you see anything out there you didn’t like or that you thought was inferior to others?

“… my real estate agent had promised to send me coupons and I never got them, and even though I was happy with what she did I don’t think I would ever use her again … if you’re going to put incentives out there, follow through … it shows integrity.”

D: On one of the sites you had to click through several times to get to the property, even when you had the MLS number. Just put it on the front page so you only have to click once. J: Not removing the listing. You look online and decide “these are the 10 houses I want to look at,” and then you call and none of those houses are available, which is really frustrating. I understand why they leave them on the site – to get people to call – but let’s get down to it. Tell me what you’ve got available. L: It would be nice to have some designation on the Web site that a property has an accepted offer so you know that up front.

Going Online Saves a Lot of Time Everyone agreed they saved a lot of time by deciding from a property’s online presence whether or not they were interested in visiting the property. SC: Did anyone use the Internet for a purpose other than what we’ve talked about?

Pricing to Sell

Choosing a REALTOR®

SC: For those of you that sold a house, how did you go about determining the price?

SC: All of you worked with a REALTOR® at some point, right? So how did you pick that person?

Ch: We used comps that we found online when we tried to sell our condo ourselves.

B: Since we were moving from overseas, we used the REALTOR® through my husband’s company. She did a lot of the legwork for me because I wasn’t here. It worked really well for us and we were really happy.

L: We went online to compare what other houses in our area of similar size were selling for in comparison to the assessed prices and then we got our REALTOR®’s opinion. K: We used the municipality Web site for comparables to come up with a listing price to sell it on our own. Later, when brought a real estate agent in we realized we were still too high for the market at that time. J: We went to Zillow, which aggregates sales information by neighborhood, and leveraged that against the REALTOR®’s comparables. SC: Did price ever become a sticky issue? K: It’s a reality check when you have to accept that the numbers are not what you had hoped for. L: You have to accept that you might not get what you originally hoped, but trust that your REALTOR® is going to go for the price you agreed on and that you’re not going to have to cut the price a second or third time.

Help for First-Time Homebuyers SC: Of the first-time homebuyers, did the homebuyer tax credit influence your decision to buy? N: We didn’t even know about the credit. Our REALTOR® told us about it but it didn’t influence our decision. C: I was going to purchase a home anyway, but it definitely influenced me to buy sooner. I: I was already looking to buy but it influenced my decision to buy sooner, too. SC: As first time buyers, what was going through your head? What were the “worry points?” N: We didn’t know any of the steps to buying a home. Our REALTOR® really helped out by meeting with us a lot, calling every day, asking questions, and walking us through his Web site. I was worried about buying a “lemon” and that the most money we’ve ever spent would end up being on a piece of junk that would need major repairs.

C: I was referred to my REALTOR® through my loan officer. D: A co-worker. She’s a friend, too, and her father is a REALTOR® so I went with him. I probably wouldn’t use him again. SC: Why wouldn’t you use him again? I think if you have someone too close it’s hard. Several things went wrong and I wanted to complain about him but I couldn’t because it was her dad. SC: How did the rest of you choose a REALTOR®? K: We tried to sell our house ourselves, so when we decided to use a REALTOR® we drove around and looked at the signs in the area to see who had the most listings. Then we researched online to see what their sales records were, and then called a few and talked to them. N: My wife got the recommendation from friends and co-workers who had all used the same REALTOR®. He and his wife are a team, and they send us free stuff every couple of weeks. Buy one meal; get one free, or a free round of golf or whatever it may be. He also recommended a home inspector and was with us at the inspection, asking questions and going through everything with us. I don’t have anything to compare to, but my friends have all said they had problems with their REALTORS®. I couldn’t have asked for anything more. SC: How do you feel about the things that come in the mail, the coupons? N: They’re nice – they have his picture and company name on them. He keeps in touch, e-mailing my wife asking how things are going, how the first snow was living in our new house, things like that.

Staying in Communication

C: My fear was buying a house that ended up needing work. Maybe the furnace would go out or something right after I moved in. The sellers bought a year home warranty for me which helped ease my mind.

SC: How did your real estate agent stay in touch with you?

“If you say you’re going to do something, do it. It’s a business transaction so respect the person you’re working with. That will get you the return business.”

C: Texting, because I always have my cell phone with me and it’s easier to check and get back to each other sooner – within minutes.

wisconsin real estate magazine

february 2010

I: Phone. E-mail takes a lot of time. You might send an e-mail, and they might not check it right away because they’re doing something else.

L: I found that both worked. With a young daughter it doesn’t always work well to talk on the phone, so it was convenient to have listings e-mailed to me that I could review on my own time. news.wra.org

What Could Your REALTOR® Have Done Differently? SC: What is one suggestion you would have for your REALTOR® to improve their performance during and after the sale? If you could ask them to do one or two things better? C: One thing that really stands out to me, and it’s a minor thing, but my real estate agent had promised to send me coupons and I never got them, and even though I was happy with what she did I don’t think I would ever use her again. I believe in doing what you say you’re going to do, so if you’re going to put incentives out there, follow through. Even though it’s just a dinner, it shows integrity. D: I never got a copy of the home inspection report of the property that I was selling. My REALTOR® got a copy, but I never did. SC: Anything else your REALTOR® could have done? J: Follow through. It’s not just about when you get the listing and when the sale closes. Bend over backwards because you’re getting a large chunk of change – earn it, work through, follow up. Do what you say you’re going to do. It’s a business transaction, so respect the person you’re working with. That will get you the return business. SC: So I hear honesty is really important; follow through on what you’re going to do. Obviously the home inspection means a lot and you’d like to see a copy of that. D: We had a lot of contingencies based on the home inspection of the property we bought, and it would have been nice if our REALTOR® had pointed out to us what was done and what wasn’t. A number of things were not fixed and after the sale, when we asked our REALTOR® about it he called the sellers, who said, “No, we didn’t fix those things and we’re not going to.” And he said, “I’ve never had this problem before. You can sue them.” We bought the house from a lawyer – we’re not going to win. SC: Anything else your REALTOR® could do for you? K: Keep up the communication, even after the honeymoon period. N: Being a first-time homebuyer, I would have liked information about the steps to buying a home and what to expect. SC: With all the information available out there today, are REALTORS® worth the commission? N: I’d say yes because I liked having someone who knew what he was doing. If that’s your career you should know what you’re doing – and to me it’s worth the money to have it done right.

Internet, searching our comparables – and yet the commission rate is still the same and house prices have gone up. REALTORS® are actually earning more money, yet we’re doing more of the legwork. C: I agree we’re doing a lot more legwork. My REALTOR® told me I could look for myself, and then sent me an e-mail with properties that hadn’t been weeded through first; I thought that was too much legwork for me, for the amount of money she ended up with. B: Our REALTOR® knew that we had to buy a house because we were moving from overseas and yet I felt she was always on our side, worried about me and my family. We saw 52 houses in just one week because that was the week I had here in the states to look. K: In the end it’s finding a buyer for a seller. So it’s really the connections and the resources that they have. It’s getting harder to justify the fullservice brokerages because the discount brokers are starting to develop some of the same pools of people to work with and they’re starting to take hold. L: Our REALTOR® coordinated the closings for us when we sold our house and bought a new one. That was a big help that I don’t know if we’d have been able to do ourselves. SC: What kinds of things could a real estate agent do for you that would make you think, “That was really worthwhile?” K: You’re saying a full-service agency? Lower the commission. L: In buying our house she was very helpful and gave us a lot of insight. I think it’s a little harder when you’re selling your house. We sold for significantly less than we paid for it four years ago. Then at the closing there were charges and fees on top of the commission that we didn’t know about. It would have been helpful to know about those beforehand.

The General Consensus The general consensus of the group is that they are doing more online research prior to working with a REALTOR® than ever before, due to the availability of information on the Internet – everything from searching for properties, to researching comparable properties when pricing a property to sell, to using a variety of Internet resources to help them pinpoint a neighborhood and home – before they even step out on the street to look at properties. All agreed that the Internet saved them a lot of time. But beyond that, while consumers are doing more research online, they like having property information available to peruse on their own time. And while REALTORS® are not the sole source of that information anymore, they still play a vital role in the home buying and selling process. The advantages of using a REALTOR® ranged from providing the contacts to find a buyer for a seller, coordinating the closings for sellers who are both buying and selling a home, providing expertise in pricing a property to sell, and being the “expert” in an often overwhelming and confusing process that many consumers are not familiar with. And in providing those services there are some basic characteristics that consumers value – honesty, integrity, and follow through. Those qualities in a REALTOR® seem to stand the test of time. Terry O’Connor is Publication Editor for the WRA.

D: We’re doing a lot of our own legwork now – searching the wisconsin real estate magazine

february 2010

LEGAL

best of the legal hotline

with tracy rucka

New Offer / New Forms Mandatory-Use Date: March 1, 2010 WB-11 Residential Offer to Purchase WB-40 Amendment to Offer to Purchase WB-41 Notice Relating to Offer to Purchase WB-42 Amendment to Listing Contract WB-44 Counter-Offer WB-46 Multiple Counter-Proposal WB-47 Amendment to Buyer Agency

The following questions have been recently submitted to the Wisconsin REALTORS® Association in regards to new forms.

Water Treatment Systems

Earnest Money The buyer has agreed to pay additional earnest money within five days of acceptance. Line 43 of the new 2010 WB-11 Residential Offer to Purchase refers to U.S. Mail delivery. If the box at line 43 is marked “N/A,” does this preclude mailing the additional earnest money called for at lines 11-12? No. Line 11 provides that the additional earnest money may be mailed, commercially delivered or personally delivered. Therefore, unless the language is struck at line 11, the WB-11 allows earnest money to be mailed. The delivery provisions on lines 34-55 of the offer are for the delivery of documents and written notices only.

wisconsin real estate magazine

Before taking a listing, the listing broker inspected the property and saw there was a reverse osmosis water system. The seller said the system was rented when the listing broker asked about it. The offer was presented and nothing was said about the osmosis system. Is this acceptable?

Pre-Closing Walk-Through

Brokers must consider rented water treatment systems both at the time of listing and when the offer is presented to the seller. The updated definition of fixtures, found at lines 185-195 of the new WB-11, now includes water treatment systems. It is important when listing the property to ask what systems are rented and make that information available to cooperating brokers. If the rented water system is not excluded at lines 17-18 of the offer, the seller will need to counter the buyer’s offer or be prepared to purchase the system for the buyer. Drinking water systems, house water filters or other systems are now by definition fixtures and must be excluded at lines 17-18 if they are rented.

inspections or tests done, the buyer has

february 2010

The buyer wants to have his home inspector do another home inspection before the closing. Can the buyer do this per the walkthrough provisions? Regardless of whether the buyer has had the right to view the property again within three days before closing. There are two purposes for the walk-through provisions at lines 204-207 of the new WB-11: (1) to make sure that the property has been maintained in the condition it was at the time of the offer and that any damage that occurred since then has been repaired, and, (2) if the seller agreed to cure defects or otherwise make repairs, to make sure that such repairs were correctly performed. The walk-through is not an opportunity for the buyer to have a home inspector conduct an additional home inspection. news.wra.org

Loan Commitment – Written Authority to Deliver

The buyers have to sell their current home before they can buy the new property. They have an offer on their home. Should the buyers use the Closing of Buyer’s Property Contingency in the new WB-11?

The buyers have a loan commitment from the lender and they have signed it. Can the broker now forward this commitment to the seller?

Although the buyers do have an accepted offer on their property, they cannot purchase the new home until that offer closes. In such a case, because the buyers cannot complete the purchase of a new home until they have sold their current home, including the Closing of Buyer’s Property Contingency in their offer is prudent and practical. If the buyers’ buyer does not close by the date specified at line 308, the buyers will not be obligated to buy the new property.

Occupancy Agreements The agent was looking at the new offer and realized the occupancy section has been removed. Can the buyer still have an early occupancy? Yes, the parties may negotiate for pre- or post-closing occupancy. The broker may provide terms in the additional provisions section of the offer or consider using an

The re-crafted contingency on lines 307314 of the WB-11 automatically includes a “bump clause” for the seller. Until the buyers’ property closes, the seller may continue to market the property for sale and accept secondary offers. If the seller accepts another bona fide offer, the seller may notify the buyers of this fact. The buyers must then consider whether they can proceed with the transaction and waive the Closing of Buyer’s Property Contingency or whether they must terminate the offer on the new property.

addendum such as the Wisconsin REALTORS® Association Addendum O to the Offer to Purchase – Occupancy Agreement. The WRA Addendum O has been recently updated and includes many optional provisions relating to occupancy including, but not limited to, occupancy charges, security deposits, maintenance, utilities, property taxes and keys. The 2009 version is available on ZipForm or for purchase at www.wra.org/forms.

wisconsin real estate magazine

Closing of Buyer’s Property Contingency

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The question here is whether the buyers’ signatures constitute written authorization to deliver the loan commitment, as required by lines 240-243 of the new WB-11. Some lenders require the buyer to sign the commitment as evidence of the agreement between the lender and the borrower to fund the transaction. Such a signature is not evidence that the buyers have directed delivery of the commitment to the seller. The offer now provides that the buyer must review the commitment and then give written authorization to deliver. Buyers, lenders and brokers are cautioned to not deliver a loan commitment without the buyers’ prior written delivery authorization. The written delivery directive must accompany the offer. The buyer, for instance, may authorize delivery of the loan commitment by using a WB-41 Notice Relating to Offer, signing the loan commitment in a manner that directs delivery to the seller or attaching a cover letter. Legal Hotline ... continued on page 12

best of the legal hotline

continued from page 11

Home Inspection Contingency The buyer is thinking about writing an offer. In the Real Estate Condition Report, the seller states that there was a hail storm that caused some damage to the roof. The seller did not, however, repair or replace the damaged shingles after the storm. How can the buyer use the new Inspection Contingency in the WB-11 residential offer in this situation? The new Inspection Contingency on lines 413-435 of the WB-11 provides for three types of possible inspections: a home inspection, a component inspection and follow-up inspections recommended by authorized home inspection or component inspection reports. The preprinted language in the contingency calls for a home inspection by a Wisconsin-registered home inspector, who is required by law to have a certain level of expertise and to conduct inspections and make reports according to certain rules. The contingency provision can also be completed to provide for an inspection of a particular component or item by a qualified independent inspector or a qualified third party, for example, an experienced roofer could inspect the roof. Given that the seller has disclosed the damage to the roof, the buyer may want a roof inspection. If the roof inspection discloses damage and defects beyond what is disclosed in the RECR, the buyer may issue a notice of defects. If, however, the nature and extent of the damage disclosed in the inspection report is the same as that disclosed by the seller in the RECR, then the buyer may not issue a notice of defects. As stated on lines 427-428 of the offer, defects do not include conditions of which the buyer had actual knowledge or written knowledge, including the nature and extent of the condition, before signing the offer. What happens if the fact situation is different? Assume that the RECR was silent regarding any roof damage because the seller did not know of the damage. The buyer included an Inspection Contingency in his offer and the Wisconsin-registered home inspector listed roof damage on his written home inspection report and recommended a roof inspection. The third type of possible inspection contained in the Inspection Contingency on lines 413-435 of the new WB-11 offer to purchase is a follow-up inspection. The trigger for a follow-up inspection is a written report from an authorized home or component inspection recommending a follow-up inspection. When working with buyers it is important to have inspections conducted soon enough to allow time for any recommended follow-up inspections to be completed before the deadline at line 423. Please also note also that the follow-up inspection provision does not authorize testing. If testing is required, an independent testing contingency must be included in an addendum, additional provisions or an amendment.

wisconsin real estate magazine

february 2010

WB40 Amendment to Offer The agent has a question on the new Amendment to the Offer to Purchase. What is expected on Lines 30, 32 and 34, and what was the thought process behind it? The agent understands “drafted by” as the agent who drafted the amendment for the buyer or seller. The agent understands “presented by” as the agent who presented the amendment to the seller or buyer who would be accepting the amendment as drafted by the other party. But “delivered by” is confusing. Delivered to whom? The other agent? The other party to the transaction? Back to the party to the transaction that originated the amendment so that both now have a signed copy? The form is somewhat unclear as to who the person delivering the contract is. Any broker delivering the amendment could complete Line 32. For example, it may be completed by an agent who drafts the amendment for the buyer and delivers it to the listing agent to present to the seller. It could be completed by a listing agent who drafts an amendment for the seller and delivers an amendment for the buyer’s consideration. It may also remain blank in circumstances where an agent is working with both buyer and seller. Tracy Rucka is a Staff Attorney for the WRA. news.wra.org

SUPREME COURT CONSIDERS PRACTICE OF LAW PETITION – AGAIN

LEGAL

BY KEVIN KING

On March 8, 2010, the Wisconsin Supreme Court will once again conduct a public hearing and conference with respect to a petition by the State Bar of Wisconsin asking the Court to create a new rule defining the practice of law and a new system that will administer and enforce of the new rule. Labeled the “Legal Services Consumer Protection Act,” this matter has been the subject of discussion and/ or hearings by the Court since at least 2003. And each time we successfully have opposed the proposal.

to monitor and enforce the law against the UPL is needed because district attorneys are not interested in pursuing complaints under Wis. Stats. § 757.30 (which makes UPL a crime) and the statute’s definition of UPL is vague. They apparently do not believe that the various state agencies like the Department of Regulation and Licensing which regulate and discipline persons licensed in different professions adequately address their concerns. But the State Bar has never supported this allegation with concrete evidence of a widespread problem. In fact, the Supreme Court has repeatedly asked the State Bar to submit evidence of the need for a new rule defining the practice of law. And the State Bar has yet to do so.

Why Should REALTORS® be Concerned With This? Under the rule proposal presented by the Bar, the practice of law would be defined to include, among other things: •

Almost fifty years ago in State ex rel. Reynolds v. Dinger, 14 Wis. 2d 193, 109 N.W. 2d 685 (1961), the State Bar, acting through the Wisconsin Attorney General, sought to take away the ability of real estate brokers and salespersons to use certain state-approved forms incidental to their practice of real estate brokerage, contending that this activity constituted the practice of law and therefore must be limited to licensed attorneys. The Wisconsin Supreme Court agreed that when a broker or salesperson selects, completes and uses one or more standard approved forms to accomplish the purpose of the client, he or she does practice law. But the Court went on to state that this practice provided a useful benefit to the public and that the Brokers Board (now the DRL Real Estate Board) offered appropriate protection for the public. It cautioned, however, that the Court will act at any time it determines that the interest of the public requires it. With respect to REALTORS®, it never has.

The selection, drafting, or completion for another entity or person of legal documents or agreements that affect the rights of the other entity or person;

•

The negotiation of legal rights and responsibilities on behalf of another entity or person(s);

•

Any other activity determined to be the practice of law by the Wisconsin Supreme Court.

Does any of this look familiar? Although these tasks now are performed every day by Wisconsin real estate licensees, under the State Bar proposal an individual would have to be licensed to practice law in Wisconsin and an active member of the State Bar of Wisconsin to perform these activities, unless otherwise excepted or excluded by the proposed rule. For the past 15+ years, the State Bar asserts it has received numerous complaints describing the alleged unauthorized practice of law (UPL) by a wide range of individuals, including real estate licensees, title companies and others. The State Bar contends that a new mechanism wisconsin real estate magazine

The State Bar’s proposed rule would not expressly protect REALTORS®. Therefore, the WRA has responded to the proposed rule with three key modifications. These changes were prepared at the request of the Court following a

february 2010

public hearing in December of 2007. Two of our recommendations were approved by the Court in March of 2008 – yet the State Bar opposes our recommendations. Our third offered change has not been approved or disapproved by the Court– and will likely be the subject of additional discussion. All of our changes are necessary to assure that protections provided in Dinger are preserved under the State Bar’s proposed new rule, if adopted by the Court. The WRA will be actively engaged in the upcoming hearing – once again. An updated statement of our position and recommendations will be filed with the Court prior to the hearing. Your legal counsel – both WRA attorneys and attorneys from Godfrey & Kahn, retained to represent the Association through the WRA Legal Action Program – will be present at the hearing. Several other groups will also likely be present at the hearing to present their position on the State Bar’s petition. In the past, numerous groups have joined the REALTORS® in successfully opposing the State Bar’s petition. These groups have also asked the Court to deny the petition entirely or at least adopt revisions and exceptions necessary to protect these groups’ members. There is nothing more fundamental to consumers and your real estate practice than the ability to negotiate and draft real estate contracts to accomplish the intent and purpose of the consumer. There is no legal precedent more clear than the Dinger decision. The WRA is optimistic that the Court still recognizes the significance of protecting this practice and the risk posed by the State Bar’s petition. Still, the WRA will be there to do everything it can to assure that this lawful practice is not compromised. Kevin King is General Counsel for the WRA.

LEGAL

ECONOMIC LOSS DOCTRINE DOES NOT BAR MISREPRESENTATION CLAIMS AGAINST REAL ESTATE AGENTS BY DEBBI CONRAD

Because agents and brokers are not parties to the offer to purchase or other contracts between the parties, it would appear that the Economic Loss Doctrine (ELD) would not block misrepresentation lawsuits against licensees. The Wisconsin Court of Appeals has now confirmed, in Shister v. Bipin, 2009 WI App 163, that the ELD does not bar home purchasers from suing the seller’s real estate broker for misrepresentations committed in a residential real estate transaction. In Below v. Norton, (2008 WI 77) (www.wisbar. org/res/sup/2008/2005ap002855.htm), the Wisconsin Supreme Court held that the ELD applies to residential real estate transactions, thereby barring a buyer’s common law misrepresentation claims against the seller. (See Pages 1-6 of the August 2008 Legal Update, “2008 Supreme Court Decisions Affecting Real Estate,” at www.wra.org/LU0808 for further discussion of the case and its impact.) The ELD is a judicially created doctrine that encourages the parties to a contract to anticipate all of their potential legal claims relating to the contract and address them in the contract. According to the ELD, there should not be any lawsuits based on misrepresentation, fraud or negligence (referred to as tort claims) with regard to the subject of a contract because the parties should have provided the remedies they need in their contracts. This has been changed, at least for one- to fourfamily residential real estate transactions, by the recently enacted Wis. Stat. § 985.10. This statute allows homebuyers who are harmed by a seller’s intentional misrepresentation or fraud to once again sue the seller for both compensatory and punitive damages. In Shister, the buyers received the sellers’ Real Estate Condition Report (RECR) before making

wisconsin real estate magazine

their offer to purchase. The sellers’ RECR stated the sellers had no knowledge of any remodeling done without the required permits and were not aware of any pending property tax reassessment. The sellers knew they should have had a building permit and told the listing broker that they had remodeled their basement without the necessary permits. She had advised them to not disclose this information on the RECR. She told them not to worry because she would take care of it. The listing broker’s property flyer advertising a finished basement alerted the city assessor that the sellers had remodeled and finished their basement, a fact not reflected in the assessment records or in the assessed value. The assessor contacted the sellers to arrange for a reassessment and the real estate broker met with the assessor in place of the sellers. The property was reassessed between the date of the buyer’s offer and closing. After closing the buyers learned that the sellers had remodeled the basement without the required city permits and that the home had just been reassessed due to the city’s discovery that the previously unfinished basement was remodeled and finished. The assessed value increased by nearly $60,000, which resulted in a total of $4,408.34 in increased property taxes over a period of three years, and the buyer also had to pay $2,143.20 for retroactive remodeling permits. The buyer sued the sellers for fraudulent misrepresentation under Wis. Stat. § 100.18, the false advertising statute, and for common law intentional and strict liability misrepresentation. The buyer sued the listing broker for breach of professional duties and intentional and strict liability misrepresentation. The circuit court

february 2010

dismissed all claims except the false advertising claim against the sellers based on the ELD and allowed only the cost for the retroactive permits. The buyers appealed and the Wisconsin Court of Appeals held that the Below v. Norton case did not apply to brokers. The ELD “does not address or limit the liability of third party professionals who are involved in the real estate transaction, and whose duties and responsibilities to the plaintiff do not arise out of contract.” The ELD does not apply to claims arising from the provision of services or for professional malpractice. Additionally, there was no contractual relationship between the buyers and the listing broker. The broker’s duties arise from license law, and, the Court observed, “[T]here is no insulation from liability [for an agent] under the law for making untrue factual statements about the condition of a property during the course of a sale.” The broker has an independent duty under Wis. Stat. § 452.133(1), not arising from contract, to provide brokerage services honestly and fairly and with reasonable skill and care, and to disclose material adverse facts to all parties. •

REALTOR® Practice Tips: AS ALWAYS, real estate brokers must fulfill their legal duties to disclose material adverse facts and information suggesting the possibility of material adverse facts, promptly and in writing, to all parties. The ELD provides no excuse for licensees failing to disclose, disclose, disclose! Review the October 2009 Legal Update, “Diligent Disclosure,” at www. wra.org/LU0910 for disclosure duty details.

Debbi Conrad is Director of Legal Affairs for the WRA. news.wra.org

DON’T WAIT TO SAVE MORE

member BENEFITS

BY B.T. THOMAS

Does it seem like it’s never a good time to save more for retirement? Do other financial needs always seem more pressing? If you keep waiting for a “good” time, you may never increase the amount you are saving. Then you could be at risk of not having a retirement that’s financially secure.

Timing Is Everything The sooner you start saving more for retirement, the better. An early start will give your money more time to benefit from compounding. If you wait too long to start saving more, your money will have less time to grow. Delaying could mean that you’ll have to put aside larger amounts later to reach your retirement savings goal.

A Little More Now, a Lot More Later Increasing the amount you save for retirement earlier in your career may make a big difference in the amount you have when you’re ready to retire. Compare the account value after 30 years of four different saving strategies. $100,452

$123,554

$135,101

Save $100 a month Save $100 a month Save $100 a month for 30 years for 10 years, then for 5 years, then $150 a month $150 a month for 20 years for 25 years This is a hypothetical example used for illustrative purposes only. An average annual return of 6% and monthly compounding is assumed. It is not representative of any particular investment vehicle. Your investment results will be different. Source: NPI Wisconsin REALTORS® Association members can take advantage of the WRA PRoFIT (Planned Retirement Future Investment Trust) program as a savings vehicle. Contact Debbie Thacker of the Wisconsin REALTORS® Association at 1-800-279-1972 or dthacker@wra.org with any questions. The content of this article should not be construed as tax, legal or investment advice. Coverage of a specific investment vehicle is not intended as an endorsement of that vehicle. The content may not be appropriate to the specific investment objectives, financial situation and/or needs of any specific person who may receive this article. M&I Wealth Management offers products and services through various affiliates of Marshall & Ilsley Corporation, including Marshall & Ilsley Trust Company N.A., M&I Investment Management Corp., M&I Financial Advisors, Inc. (member FINRA/SIPC, maintaining its principal offices at 111 E. Kilbourn Ave., Milwaukee, WI 53202), North Star Trust Company and North Star Deferred Exchange. Insurance coverage is underwritten by a number of insurers. Insurance products are the obligation of the insurance company.©2010 Marshall & Ilsley Corporation Investment Products are: Not FDIC Insured, No Bank Guarantee, May Lose Value B. T. Thomas is Vice President and Relationship Manager for M&I Institional Trust Services. wisconsin real estate magazine

february 2010

$149,643 Save $100 a month for 5 years, then $150 a month for 10 years, then $200 a month for 15 years

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ZipForm Expires March 1

2010 Wisconsin Real Estate Law Manual Available

ZipForm is an electronic forms product available to REALTOR® and Legal Section members as a benefit of membership with the Wisconsin REALTORS® Association. It is available for download free of charge at www.wra.org/zipform. There are two software programs available – an online version (Professional) and a desktop version (Standard). Both are included in your membership.

The new edition of Wisconsin Real Estate Law (2010) provides a complete updating of the prior 2008 edition based on the many significant changes resulting from approval of the new Residential Offer to Purchase (WB-11) by the Wisconsin Department of Regulation and Licensing. Each chapter of the respected treatise is updated to reflect changes in real estate transactions created by the new form. In addition, the new edition explains important new legislation and court decisions that affect Wisconsin real estate transactions.

During registration of the program, the software is stamped with an expiration date of March 1. Within 30 days of the expiration a message will display indicating that the program license is expiring. To renew ZipForm, you must be a member of the WRA and follow a series of steps. The edition of the software determines the renewal steps you will follow:

WISCONSIN REAL ESTATE LAW

ZipForm 5 users – To renew your program an upgrade to ZipForm 6 is required. • If you are a ZipForm®Online user please select the “Free Upgrade to ZipForm 6” button located in the program.

2010 Edition

• If you use ZipForm®Desktop, you will upgrade via a button (REALTOR® member or Section Member) on the WRA’s Web site at www.wra.org/zipform • Once selected, – REALTOR® members will be directed to a log in page at ZipForm® where you will be prompted to enter your NRDS number and last name. The NRDS number is printed on your NAR REALTOR® Magazine mailing label and on your NAR Membership identification card. A look up option will be provided should you need further assistance in locating this number. – Section members will be directed to log into the WRA’s Web site and then will be sent to ZipForm for upgrading.

SCOTT C. MINTER

Formerly by Walter B. Raushenbush & James B. MacDonald

Among the more significant changes in the 2010 edition are: •

Disclosure and misrepresentation issues (Chapter 4): false advertising remedies in Wisconsin statutes, effect of the economic loss doctrine

•

New offer to purchase provisions (Chapter 7): apportionment of real estate taxes, title restrictions and encumbrances, title evidence, inspections and testing, contingencies, delivery issues, seller’s property condition disclosures

•

Closing issues (Chapter 8): Gap coverage, Real Estate Transfer Return, closing proration, new HUD Settlement Statement

ZipForm 6 users – This is a summary of the renewal process for both zipForm® 6 Standard and Professional.

•

Mortgage lending issues (Chapter 12): Wisconsin and federal legislation on foreclosures and fraudulent lending/borrowing

• When you open or log into the software, you will see a message that your account is expired or expiring.

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Ownership by domestic partners

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Land use controls (Chapter 20): Wisconsin’s “Working Lands Initiative,” Pier Protection Act, Shoreland Development rules (Department of Natural Resources)

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Landlord-Tenant issues (Chapter 21): rental unit energy efficiency requirements, protecting tenants’ rights in foreclosure, tenant terminations based on imminent threats

• After logging in, you will select to upgrade your current ZipForm account or create a new ZipForm® 6 account. Create a New Account. ®

• Next you will be asked to create a username and password. • You will verify you company information, enter any missing information and proceed to check out. • When finished, you will receive an e-mail confirmation informing you how to access ZipForm® 6 Professional (formerly ZipFormOnline) and zipForm® 6 Standard (formerly ZipFormDesktop).

• If you click on Renew Now in the application, you will be logged into your customer dashboard to complete your renewal. • In the customer dashboard, – REALTOR® members will click the Renew Now button and will be taken to a shopping cart to renew. – Section members will click the Authenticate Now button, log in to the WRA’s Web site and be returned to the customer dashboard. Clicking on the Renew Now button will take you into the shopping cart to complete your renewal. >> To learn more about zipForm® 6 please visit http://www.ziplogix.com/products.

DEBRA PETERSON CONRAD

wisconsin real estate magazine

february 2010

Order your copy today by visiting www.wra.org/pub285 or calling 608-241-2047. Price is $45 plus shipping and tax. news.wra.org

Las Vegas CE SOLD!

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Marc h 1 - 3 , 2 0 1 0 Great Food! Great Shows! Great Continuing Education! Course 1 – Listing Contracts Course 2 – Offer to Purchase Course 3 – New Developments Course 4 – Buyer Agency Agreements Elective A – Risk Reduction Elective C – Condominiums

Out of State CE - Las Vegas March 1-3, 2010 Tuscany All Suites Hotel & Casino | Las Vegas, Nevada

Great Food. Great Shows. Great Education.

w w w. w r a . o r g / l a s v e g a s

Fulfill your 2009-2010 real estate continuing education requirements in style. Escape the winter weather and join the WRA in sunny Las Vegas, Nevada. Whether you enjoy the spectacular dining or try your luck at the many casinos, this is one educational opportunity you won’t want to miss. Choose from as many as six CE courses or electives and still have plenty of time to catch a show on the strip. You may even be able to write it off as a business expense (check with your tax accountant)!

EDUCATION

2009-2010 Commercial CE February 3, 10 & 17, 2010: Brookfield (co-sponsored with Commercial Association of REALTORS® - Wisconsin)

March 10, 17 & 23, 2010: Appleton (co-sponsored with REALTORS® Association of Northeast Wisconsin) Tired of taking continuing education classes that focus on residential issues only? Then the WRA commercial CE courses are exactly what you need. The WRA has created commercial-centric courses specifically for those who practice in the commercial real estate world. Commercial brokers and agents: Complete your required 18 hours of continuing education in three days at one of two locations. Visit: wra.org/CommercialCE

New Broker Training February 17-19, 2010

ABR Course March 25-26, 2010

WRA Headquarters - Madison

Wisconsin Dells

This course provides guidance for brokers who are opening up their own brokerage office or are becoming a manager for their company. The three-day course covers the fundamentals of being a broker and the responsibilities that come with that supervisory role. Registration includes the latest version of the Broker Desk Reference – a $75 value. Visit: www.wra.org/newbroker

GREEN (2-Day) Course April 7-8, 2010

GREEN Residential Elective April 9, 2010

Brookfield

NAR’s GREEN designation gives you the tools you need to guide clients through buying, selling, or building in the sustainable marketplace. You will learn how to explain to your clients what makes a home, building or property green; list and market green properties; determine the energy efficiency of a property, and moire. For more information, visit: www.wra.org/Green

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

Short Sales & Foreclosures April 23, 2010

QuickStart On Demand

WRA Headquarters - Madison

The QuickStart program assists agents in learning the business of real estate. Courses focus on contract issues, agency relationships and negotiating strategies. The program is designed to help agents become confident in their practice as well as focused on their personal business plan. Completion of the QuickStart program (four days) and passing the exams fulfills the requirements for GRI Course 1. Visit: www.wra.org/QuickStartondemand

Working with buyers and sellers of distressed properties can be frustrating and time consuming, but also rewarding. This CRS elective provides you with practical approaches to the pre-foreclosure and foreclosure processes that will result in the successful disposition of these properties. Learn the intricacies of the short sale and foreclosure processes. Visit: www.wra.org/CRSinfo

The Accredited Buyer Representative (ABR) designation is the benchmark of excellence in buyer representation. The overall goals of the ABR Designation courses are to educate and prepare buyer’s representatives to provide the kind of service and fidelity to buyers that seller have always enjoyed, and to offer methods for building your buyer representation business. Visit: www.wra.org/ABRcourses

wisconsin real estate magazine

february 2010

news.wra.org

Course Schedule Sales & Marketing Management *Plus books ** Early registration applies two weeks prior to the start of the course. ***Includes Winter Convention Registration. # Appraiser section members receive a discount.

Conference and Conventions

Real Estate Continuing Education

Visit wra.org/CourseSchedule for full schedule. Date

Course

February 17-19, 2010 March 25-26, 2010 April 7-8, 2010 April 9, 2010 April 23, 2010

New Broker Training Madison 315 325 ABR Course Wisconsin Dells 260 270 GREEN (2-day) Brookfield 285 295 1-day GREEN Residential Elective Brookfield 130 140 Short Sales & Foreclosures: Protecting Madison 145 155 Your Clients Interests (CRS Core 1-day class ) Fulfills core education for NAR new Short Sales and Foreclosure Resource (SFR) certification

Date

Event

March 1-3, 2010 March 10-11, 2010 March 10, 2010 March 11, 2010

Out of State CE (Courses 1-4, Electives A & C) Las Vegas, NV Appraisal Conference Wisconsin Dells - Ho-Chunk Casino 2010-2010 7-Hour National USPAP Update (includes USPAP book) or Current Trends – 7 hours Appraising the FHA Way – 7 hours or Technology Resources 3.5 hours Appraising in a Down Market – 3.5 hours

Date

Course

Location

February 10, 2010 February 17, 2010 February 17, 2010 March 1, 2 & 3, 2010 March 3, 2010 March 10 2010 March 10, 2010

2009-10 CE 3 &4 (Comm.) 8:30 – 4:30 2009-10 Elect. B & E (Comm.) 8:30 – 4:30 2009-10 CE 3 & 4 8:30 – 4:30 2009-10 Courses 1,2,3,4 & Electives A & C 2009-10 Electives A & E 8:30 – 4:30 2009-10 Courses 1 & 2 8:30 – 4:30 2009-10 Courses 1 & 2 8:30 – 4:30 (Commercial) 2009-10 Courses 3 & 4 8:30 – 4:30 2009-10 Courses 1 & 2; 3&4 8:30 – 4:30 2009-10 Courses 3 & 4 8:30 – 4:30 2009-10 Courses 3 & 4 8:30 – 4:30 (Commercial) 2009-10 Courses 3 & 4 8:30 – 4:30 2009-10 Elective B & E 8:30 – 4:30 2009-10 Courses 1 & 2 8:30 – 4:30 2009-10 Courses 3 & 4 8:30 – 4:30 2009-10 Elective A & C 8:30 – 4:30 2009-10 Courses 3 & 4 8:30 – 4:30 2009-10 Electives D & E 8:30 – 4:30 2009-10 Elective A & E 8:30 – 4:30

Brookﬁeld Brookﬁeld Beaver Dam Las Vegas Beaver Dam Grafton Appleton

800-279-1972 800-279-1972 920-885-3312 800-279-1972 920-885-3312 262-375-4730 800-279-1972 $30/m; $35/nm

Brookﬁeld Merrill Grafton Appleton

800-279-1972 $27/m; $35/nm 715-627-4885 262-375-4730 800-279-1972 $30/m; $35/nm

Madison Appleton Duluth, MN Duluth, MN Duluth, MN Sturgeon Bay Brookﬁeld Marinette

800-279-1972 $27/m; $35/nm 800-279-1972 $30/m; $35/nm 218-728-5676 218-728-5676 218-728-5676 920-743-9651 800-279-1972 $27/m; $35/nm 715-735-0547

March 11, 2010 March 16-17, 2010 March 17 2010 March 17, 2010 March 17, 2010 March 23, 2010 March 23, 2010 March 24, 2010 March 25, 2010 April 8, 2010 April 21, 2010 April 22, 2010 Elective A: Elective B: Elective C: Elective D: Elective E:

Location

Course

Location

* Plus books

February 1-4, 2010 April 5-8; 12-15. 2010 April 19-22, 2010 July 19-22;26-29, 2010

Broker Pre-License Course Sales Pre-License Course Broker Pre-License Course Sales Pre-License Course

8:00 - 5:00 Milwuakee 8:00 - 5:00 Madison 8:00 - 5:00 Madison 8:00 - 5:00 Madison

sales training program

345 290 315 150 175

Risk Reduction 1031 Exchanges and Exchange Opportunities Condominiums Landlord/Tenant and Property Management Financing the Sale

Date

QuickStart

ATD

Location

Pre-License

Now available online!

Early Reg.** $Reg.

Early Reg.** 260* 325* 260* 325*

Regular Reg.

280* 325* 280* 325*

www.wra.org/QuickStartOnDemand

wisconsin real estate magazine

february 2010

2010

APPRAISAL

MARCH 10-11 Ho-Chunk Casino, Hotel & Convention Center

CONFERENCE

www.wra.org/APPConference

Conference Highlights Day 1

March 10, 2010 8:00 - 8:30 | Registration

Day 2

March 11, 2010 8:00 - 8:30 | Registration

8:30 - 4:30 | 2010-2011 7-Hour National USPAP Update Course (includes copy of the USPAP book) Instructor: Jim Jacobs

8:30 - 4:30 | Appraising the FHA Way 7 Hours Instructor: Jim Jacobs

8:30 - 4:30 | Current Trends - 7 Hours Instructor: Joe Traynor

8:30 - 12:00 | Technology Resources 3.5 Hours Instructor: Joe Traynor

12:00 - 1:00 Lunch (Included in fee) Continuing Education Credit: Each full day class has been submitted for 7 hours of continuing education credit for Wisconsin Appraiser and Assessor, Michigan Appraiser and Minnesota Appraiser. Each half day class has been submitted for 3.5 hours of continuing education credit for Wisconsin Appraiser and Assessor, Michigan Appraiser and Minnesota Appraiser.

12:00 - 1:00 Lunch (Included in fee) 1:00 - 4:30 | Appraising in a Down Market 3.5 Hours Instructor: Joe Traynor

P-R-I-C-E : eans to Me M it t a h W u o Y Tell A LLY

REALTOR® SALES tip

SW BY MA R C U

Ever since our first real estate classes, we have all been familiar with this slogan: LOCATION, LOCATION, LOCATION. Today, I describe the three most important elements to any real estate transaction this way: PRICE, PRICE, PRICE.

between price and value. Two homes might have identical prices and similar specifications, but there are a number of factors – location, upgrades, and condition, for example – that could make one home a better value than the other.

Even the most talented salesperson cannot close a

Most of the nation is in a serious buyer’s market, and home prices are being determined by the buyers, not the sellers. Keeping in mind that prices are still settling, it’s more important than ever to accurately price a new listing to sell and not add to the inventory of overpriced properties.

The best way to assess your listing’s value proposition is to be extremely familiar with the competition. Check broker Web sites, national real estate Web sites, and print and online advertisements to gather general information about competitive listings.

appreciation and average days on the market.

Pricing is an art, not a science. Part of it is a gut feeling, and part of it is assessing supply and demand. It is no different than at the grocery store: if the supply of tomatoes is low, prices tend to be high; if tomatoes are abundant, then bargains can be found.

Complement this intelligence with firsthand knowledge. By visiting properties, you will also be able to evaluate the homes’ locations within a particular community. Does the back of a property face woods or another home? Is the home on a corner lot or in the middle of the block? Get out there and preview as many homes as you possibly can. If you don’t know your inventory, you can’t sell it!

Ask yourself: “Where and when was the last sale?” If it was three months ago and there is very little inventory on the market, you may be able to push up the asking price, especially if there is nothing else available in a desirable neighborhood. I just sold and closed on a home for full price.

An Appealing Price Point Second, you want to find a price point that will generate interest among multiple buyers. By attracting more than one interested party, you create a greater sense of urgency and competition.

Some sellers refuse to accept that prices have leveled off; others are confused about the changing market. Last week I had an opportunity to go the extra step on a new listing by taking the sellers to see eight other homes on the market that would be our competition. My goal was to have them step into the shoes of the buyers to see just how much house you can get for the money and to see how their home compares to the others on the market.

One way to create interest is to capitalize on the fact that buyers often search for properties within a certain price grouping, such as $480,000 to $500,000. If a reduction is necessary, the listing agent could drop the price to the top end of the next price grouping ($479,000). That exposes the listing to a new crop of buyers who might otherwise not have found it. Our MLS systems are all set up according to price – from lowest to highest – so it truly is all about PRICE!

A number of dangers exist when a property is overpriced from the start. First of all, the house sits on the market and does not sell. Then it gets shopworn, and the sellers end up taking a lower price than they might have if they had priced it correctly from the beginning.

Before suggesting a listing price, determine your sellers’ motivation. Find out if the sellers are serious or just testing the waters. Do they need to sell fast because they are relocating or have a signed contract on another house? Or are they willing to wait for the highest possible offer to maximize the equity they receive? In other words: are the sellers pricing for today’s market or for the year 2012?

Here are some things you will want to keep in mind when helping your clients determine the right price.

Price vs. Value First, you have to understand the difference wisconsin real estate magazine

february 2010

transaction if the buyer or seller lacks motivation. This conversation gives you an opportunity to discuss realistic expectations. Be sure to talk about recent changes in the market, such as rates of Current interest rates also affect price. If your sellers have an understanding of current market conditions, there will be less stress, confusion and anxiety for everyone.

Reprice early and often A REALTOR®’s goal is to price each listing correctly when it first comes on the market. But pricing a home is not a one-time task, especially in a changing market. You will need to stay on top of changes – new listings, recent transactions, overall inventory shifts, price adjustments and improvements to previously listed houses – that could affect the perceived value of your seller’s home. Review your listings at least every 30 days – more often if there is a lot of transaction activity. Your best chance for a full-price offer comes in the first three weeks. Do not let a listing languish at the wrong price. If there is no activity on your listing, consider a price reduction or a series of timed reductions to generate interest and excitement. As a top professional, I think of myself as the real estate doctor – in order to get well clients must listen to my advice, fill the prescription and take the medicine. My job is to use my expertise and professional judgment to analyze market information and make recommendations to my clients. That guidance is more valuable in the current market than it has been for a long time. And that’s what the doctor ordered! Marcus A. Wally, MBA is an active Florida REALTOR® in St. Augustine, Florida - “Our Nations Oldest City.” Marcus is the founder and broker of New World Realty, which also manages coaching and facilitation of education classes around the world. Marcus earned his MBA from the University of North Florida in Jacksonville. Marcus can be reached at 904-6691081 or by e-mail at marcuswally@comcast.net.

public AFFAIRS

OFF TO THE RACES BY JOE MURRAY

With nine months to go before the midterm elections, it’s just too early to make hard and fast predictions on what voters will do in November. The economy, unemployment, taxes, health care and more will all factor into the outcome when voters head to the polls. But it’s not too early to take a snapshot look at political trends as they stand today for clues about what could happen on November 2. Here are a few of the most recent developments. 8th Congressional District – Democratic Congressman Steve Kagen from Appleton was first elected to the Fox Valley’s 8th Congressional District in 2006, replacing Republican Mark Green, who vacated this seat to run for governor. Kagen was re-elected in 2008 with 54 percent of the vote.

have jumped into the primary and there may be others looking to get in. The six include businessman Reid Ribble, Door County Commissioner Mark Savard, Brown County Supervisor Andy Williams, physician Marc Trager, former state Representative Terry McCormick and state Representative Roger Roth.

Kagen had the good fortune of running for this seat in back-to-back election cycles that strongly favored Democrats. Kagen barely won the first time before winning the second race comfortably. In both elections Kagen faced former Assembly Speaker John Gard.

Republicans believe Kagen will have a difficult time getting re-elected given the political trend today that appears to favor the GOP. But more interesting is this: the 8th Congressional District has elected a Democrat only four times in the last 100 years, and none of the four were elected for more than two terms. This historical fact and Kagen’s votes for cap and trade, health care reform and controversial stimulus spending could make this seat very difficult to hold.

The 2010 election has generated a large number of Republicans looking for the chance to run against Kagen in November. Six GOP candidates

wisconsin real estate magazine

february 2010

news.wra.org

at 27 percent approval, 66 percent disapproval; and 36 percent of the country believes we are heading in the right direction, while 57 percent feel we are on the wrong track. These numbers are almost as bad today for Democrats as they were for Republicans before they lost power in 2006 and 2008.

Gubernatorial Fundraising – One sure way to judge the legitimacy of any top-tier gubernatorial candidate is fundraising capacity. The more money a statewide candidate can raise, the more serious voters (and political insiders, including the media) take them. The three top-tier candidates running for governor this year include City of Milwaukee Mayor Tom Barrett on the Democratic side, former Republican Congressman Mark Neumann and Republican Milwaukee County Executive Scott Walker.

Charlie Cook, an independent and highly respected political handicapper out of Washington, D.C., wrote in a recent article titled “Trouble for Democrats,” “This election year is just beginning and much can and will happen over the next ten months. But it would be hard to describe the last year, politically speaking, as anything less than a nightmare for Democrats and a fantasy-filled dream for Republicans.” In the 2006 and 2008 election cycles, Republicans were demolished at the polls over the war in Iraq, political scandals, earmark spending that resulted in a “bridge to nowhere” and the near collapse of the banking system. Unless something changes soon, Democrats may be heading for a train wreck of their own this November.

All three candidates have made it a point to highlight their fundraising success since their announcements. In 2009, Tom Barrett raised $1.5 million, Mark Neumann raised $1 million and Scott Walker raised $1.9 million. Neumann’s total came from a large personal loan to his campaign and Walker’s fundraising number was generated from 10,000 donors statewide. Barrett hasn’t released the details on where his money comes from. The 2010 race for governor is expected to break all previous fundraising and spending records.

RPAC Success – Congratulations to all REALTORS® Political Action Committee Trustees, local association RPAC chairs, government affairs staff and association executives for the successful RPAC fundraising in 2009. The 2009 goal of $350,000 was set in January and, even with a challenging economy and sluggish real estate market, that goal was met and exceeded. The final fundraising total was $356,539.

2010 Landscape – Democrats, who only a year ago were riding high after winning the White House and strengthening their control over the Senate and House of Representatives, are feeling a broad public backlash against their party. Ten percent unemployment, higher taxes and record-setting deficits appear to be turning voters, especially independent voters, against the party in record numbers. According to Real Clear Politics Poll Averages, the public is in a very sour mood. President Obama’s job approval stands at 50 percent approval, 45 percent disapproval; congressional job approval stands

wisconsin real estate magazine

february 2010

The importance of RPAC and involvement in political campaigns cannot be overstated. Decisions made in Washington, Madison and at the local level have a direct impact on your ability to earn a living in the real estate industry. The purpose of RPAC is to help elect candidates who will promote and defend issues that impact homeowners, property owners and the livelihood of every Wisconsin REALTORS® Association member. In short, RPAC exists to kill bad laws and pass good ones. To all of you who contributed, thank you! We hope to have all WRA members involved through RPAC in 2010. Joe Murray is Director of Political & Governmental Affairs for the WRA.

public AFFAIRS

WISCONSIN’S PENDING FISCAL PERIL Budget Reform May Come by Default if Not Design BY MICHAEL THEO

Given the current status of our economy, it’s become increasingly important for REALTORS® to pore over as much economic news and data as we can get our hands on, looking for new threats, opportunities and clues for the future. Toward that end, several recent reports and analyses regarding the state’s fiscal future are particularly noteworthy. Together, these reports paint a disturbing picture of Wisconsin’s pending fiscal peril. Current Fiscal Condition The first noteworthy analysis is a recent snap-shot of our state’s current fiscal condition. The analysis comes from the respected Wisconsin Taxpayers Alliance (WTA) about an all-but-ignored yearend report by the state comptroller. According to the WTA, the state comptroller must use generally accepted accounting principles (GAAP) when preparing the state’s official financial statements. Which means all the accounting maneuvers, delays in payments, borrowing, use of one-time money, and other tactics used by lawmakers and governors to show a “balanced” budget, must be ignored. What emerged is a $2.71 billion state general fund budget deficit at the end of 2009. Perhaps even more disturbing is the WTA analysis shows Wisconsin is among the worst states in the nation when it comes to budget

wisconsin real estate magazine

february 2010

deficits. In reviewing 2007-2008 data, only four states – Wisconsin, California, Illinois and Maine – had GAAP deficits. Wisconsin’s $2.50 billion deficit compared to California’s $4.16 billion deficit, Illinois’ $3.93 billion deficit, and Maine’s $0.24 billion deficit. But the real magnitude of Wisconsin’s deficit problem is demonstrated when you consider how many more people California and Illinois have compared to Wisconsin. On a per capita basis, we’re by far in the worst shape. California has 36.8 million people and Illinois has 12.9 million people, compared to Wisconsin’s 5.6 million. Thus, on a per capita basis, Wisconsin has the largest GAAP deficit in the nation at $445 per person, followed by Illinois at $305, Maine at $181, and California at $113 per person according to the WTA analysis. That means, on a per capita basis, Wisconsin’s budget deficit is four times larger than the poster child of state budget deficits, California.

news.wra.org

Future Fiscal Condition The second noteworthy analysis is a look at Wisconsin’s future fiscal condition. This analysis was produced by the Wisconsin Policy Research Institute (WPRI) and was authored by former state Department of Revenue Secretary Rick Chandler. (Mr. Chandler has been a tax and economic policy consultant to the WRA for the past 7 years.) According to the WPRI, the next state budget (covering 2011-13) will have a $2.2 billion gap between general fund revenues and expenditures. This disturbing projection is based on realistic estimates that revenues and major expenditures (school aids, medical assistance, the UW System and corrections) will grow at about the same rate as they have for the past 10 years or so, and that all other expenditures will remain flat.

agency operating budgets. The report concludes that none of these approaches by themselves would solve the problem because:

According to the WPRI report, the major reason for this future budget gap is that the state will likely not have huge amounts of federal stimulus revenues in the next biennium like it did in the last two biennia. (Wisconsin has received $2.2 billion over a three-year period from the Feds, averaging about $740 million a year.) The report goes on to review the four main options being discussed to address this problem, which includes hoping for an economic boom; freezing all spending; raising taxes on the rich; and cutting state

•

Even if the economy grew by a whopping 5.7 percent per year, the budget gap would still be $1.2 billion (Wisconsin’s most robust level coming out of the last recession).

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Even if we froze spending on all state programs, including the big four programs, the budget gap would still be $778 million.

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Even if we raised taxes on the wealthy like we did this past year, it would only close the gap by $287 million.

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And even if we cut state operations by 5 percent, it would only close the gap by $375 million.

This doesn’t paint a very rosy fiscal picture for Wisconsin or for our new governor who takes office in January 2011. The state would have to experience 5.7 percent growth in revenues AND freeze all state spending for two years in order the balance the budget, both of which are unlikely. The bottom line is the next state budget will not be business as usual. Wisconsin needs fundamental change in both how we raise money and how we spend it. We may face radical budget reform not by design but by default. Michael Theo is Vice President of Legal and Public Affairs for the WRA.

wisconsin real estate magazine

february 2010

public AFFAIRS

NEW REZONING PENALTY GOES INTO EFFECT FOR FARMLAND BY TOM LARSON

On January 1, 2010, a new state law went into effect requiring local zoning authorities to impose a conversion fee on farmland currently located in a farmland preservation zoning district. Despite strong opposition by the Wisconsin REALTORS® Association, which included a Call to Action to WRA members, the fee was adopted in the 2009-2011 state budget as part of a comprehensive package of new regulations (known as the Working Lands Initiative) designed to better protect farmland from development.

Calculating Conversion Fee A property owner must pay a conversion fee when rezoning land out of a certified farmland preservation district. A “certified farmland preservation district” is defined as land that is currently subject to a farmland preservation agreement, or land that is located in an exclusive agricultural zoning district. The conversion fee is equal to the greater of: •

three times the assessed value of property, as determined by the Department of Revenue under Wis. Stat. § 73.03 (use value program), or

•

an amount specified by the county in its Farmland Preservation Zoning Ordinance.

If a county chooses to impose a higher fee, the county gets to keep the additional revenues generated. Therefore, a county has a financial incentive to impose a higher penalty. Based upon the state’s average assessed value for farmland in 2009 ($270 per acre), the minimum fee that a property owner must pay when

wisconsin real estate magazine

february 2010

converting land out of a farmland preservation zoning district will be $810/acre in 2010. If the county chooses to impose a higher fee, the fee will naturally be higher. Conversion fees are assessed based on the Wisconsin DOR Use Value Guidelines for Agricultural Land Assessment, which can be found at www.revenue.wi.gov/slf/ useval/10useval.pdf. To determine the fee for each acre of land being rezoned, multiply the Grade 1 Agricultural Land Assessment value or highest class of tillable land by three. (Note: the conversion fee is assessed based upon the number of acres to be rezoned, not the entire parcel.)

Conversion Fee vs. Use Value Penalty Although they both apply to farmland, the new farmland conversion fee is different from the use value penalty that has been in effect since 2003. The new farmland conversion fee applies only to property located in a farmland preservation zoning district, and only when the property is rezoned by the property owner. If the property is rezoned by the local unit of government as part of a comprehensive revision to the zoning ordinance, no fee is owed. The use value penalty is owed any time a property owner changes the use of farmland to a non-agricultural use, which includes having the property lie fallow. The use value penalty is calculated by multiplying the number of acres converted by a percentage difference between the average fair market value of agricultural land in the county (based on the previous year’s sales of land that is larger than 38 acres and intended to be used as agricultural) and the average

news.wra.org

equalized value of agricultural land. The DOR calculates these figures and provides them to the County Treasurer each year. They are also available at www.revenue.wi.gov/slf/useval/uvindx.html. Land can be subject to both the new conversion fee and the use value penalty if the land is (1) located in a farmland preservation zoning district, (2) rezoned to a different zoning classification and (3) converted to a nonagricultural use. Farmland converted for development purposes will often fall into this category.

Disclosure of New Conversion Fee Although the new law does not specifically require the new conversion fee to be disclosed to prospective purchasers, a REALTOR® and seller should disclose this information to prospective buyers, even if the buyer is not planning to rezone the property. For more information on the new conversion fee, visit www.datcp.state. wi.us/workinglands/index.jsp. See also 2009 Legal Update “Wisconsin Farmland Initiatives” at www.wra.ogr/LU0909. To help ensure that buyers are aware of the penalty, the WRA has included information about the conversion penalty in five of its disclosure forms: the Condition Report, the Seller’s Real Esate Condition Report, the Real Estate Condition Report - Farm, the Seller Disclosure Report - Commercial, and the Seller Disclsoure Report - Vacant Land. Tom Larson is Director of Regulatory and Legislative Affairs for the WRA.

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SPECIAL report

THE BUZZWORDS AT WORK

Social media and traditional media converge to build tax credit awareness BY PETER RAISCH

When building any campaign, buzzwords like “social media and public relations” are often thrown around, but may be quickly forgotten. For the Wisconsin Homebuyer Tax Credit Program, those buzzwords are hard at work. Utilizing a full array of marketing resources, the Wisconsin Homebuyer Tax Credit Program found new life and greater reach in late 2009 and early 2010.

Keeping it centralized Kennedy Communications and the Wisconsin REALTORS® Association colluded to design and approve a strategy that capitalized on traditional awareness vehicles, and a renewed emphasis on emerging medias. At the end of the day, all roads, links and clicks led to www.WisconsinHomebuyer.org. Since the campaign began, the site has grown in all the right ways, surpassing the campaign goals across the board. The microsite’s traffic indicates an almost perfect geo-target of Wisconsin, and continues to build search engine visibility on Google, Yahoo and Bing. Moreover, the pay-per-click campaign has seen thousands of impressions and a click-through rate (CTR) roughly six times better than average.

Joe the HomeBlogger: Social Butterfly One of the very first considerations in the expansion and extension campaign was the social media content. Research actually shows the campaigns that really make an impact are the ones that offer strong and consistent material to the public.

Enter Joe the HomeBlogger. Joe is a mutation of the Twitter feed @ JoetheHomeBuyer, and speaks in a casual, conversational tone. He doles out home buying advice from his own digital home, and offers tax credit insight in a new voice. Moreover, the blog gives our Facebook and Twitter affiliates an added incentive to suggest our material to their network. Thus far, Joe has racked up 5 posts – one every week. That production will continue until the campaign’s end on March 28th. To read Joe’s musing yourself, go to joethehomeblogger.com.

REALTweetORs With content firmly in place, the Wisconsin Homebuyer Tax Credit Program revamped its style within popular social media spaces Twitter and Facebook. With a huge potential exponential Twitter network,

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the social strategy behind our microblogging arm is dedicated to education. New information and research is constantly sought out to feed Joe, and ultimately provide REALTORs and their clients with a constant stream of useful information. To date, Joe boasts about 353 followers, with our insights re-tweeted (or copied and passed on by other users) consistently – strengthening the level of awareness. In terms of Facebook, Wisconsin Homebuyer Tax Credit enjoys a healthy amount of fans (722 at the time of print) thanks partly to the high frequency of posts. Interactivity is at an all-time high as Facebook proves to be a popular destination for those seeking more personal information on the tax credit.

Ready for our close-up After the WRA and Kennedy Communications kicked the campaign off in earnest, a press release went out to media outlets all over Wisconsin touting the new campaign, and calling out its details. On January 13th, the WRA was asked to participate in a story by NBC15 in Madison about how the housing market is “heating up.” WRA’s Political Affairs Director, Joe Murray, gave his expert commentary during an in-house interview where Murray highlighted the tax credit as a key force in the market’s improvement. Murray’s insights coupled with an interview with The Holdermans (an area family of four looking for a new home) left a strong impact. The story ran more than two minutes on the 10 p.m. nightly news, as well as several times during the 5-7 a.m. morning show. Through a publicity formula that takes into account the length of the piece, interview quality and impressions (over 37,000) - the overall investment in the public relations outreach was returned in publicity value 11 times over.

The Whole Landscape The tax credit campaign continues to find success and new ways to reach the homebuying community. By interacting through multiple venues, the Wisconsin Homebuyer Tax Credit Program is spreading the word, filling the education gap, and hopefully, getting homebuyers active in the market. Peter Raisch is the Public Relations Director at Kennedy Communications in Madison. KennedyC is an integrated advertising, marketing and interactive agency and has been a media and advertising consultant with the WRA for many years. news.wra.org

The WHEda Fannie mae advantage gets first-time buyers into a home with as little as $1,000 out-of-pocket, no private mortgage insurance requirement and a low, 30-year fixed interest rate. In 2010, WHEDA will continue to offer innovative, market-driven loan products, job loss mortgage payment protection and unique down payment options. For the latest information about the WHEda Fannie mae advantage or to check out our new, higher income and purchase price limits allowing more borrowers to qualify, go to wheda.com. Follow us on Facebook. Just click on the icon

found on our website.

Eligible first-time home buyers can use the federal housing tax credit with this loan. Buyers must enter into a contract by April 30, 2010 and close by June 30, 2010.

Wisconsin Housing and Economic dEvElopmEnt autHority 201 West Washington Ave n Madison, WI 53703 800.334.6873 n www.wheda.com