Real Estate Key to Fixing Economy
Product Showcase
Why real estate could hold the key to Wisconsin’s revival.
WRA’s new app puts industry news at your fingertips.
February 2011 $5.00
Tax Saving Solutions: New Tricks and Old Favorites
MAGAZINE
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table of contents
features 6 14 22 25
Practical Solutions Provide Tax Savings
february
Get the very latest on the WRA’s condition report forms.
Sale Tip: The Competitive Edge Gain an edge with these five tricks used by top producers.
Real Estate Key to Fixing Economy and Budget Why real estate could hold the key to Wisconsin’s economic revival.
news.wra.org
vol.
27, no. 5
articles 10
Being smart now about your taxes could mean savings this spring.
Condition Report Conundrum
2011 |
16 24 26 28
Best of the Legal Hotline
Find answers to your questions on Real Estate Owned transactions (REOs).
Lost in Translation: Understanding Assessments Wondering what assessments are all about? Read on.
David Prosser for Supreme Court Why Justice David Prosser has earned the WRA’s endorsement in the April 5 Supreme Court election.
Governor Walker Unveils Job Creation Package An ambitious plan aims to create 250,000 jobs in Wisconsin in four years.
Product Showcase New from the WRA! An app that puts industry news at your fingertips and more.
1
News
inside the wra
with bill malkasian
Top News Stories in and Around the Industry Housing Council, laments, “It’s been a long time number of people in those markets paying too much United Way Honors the Stark Family coming.” The Pewaukee-based commission has for their rental housing will double from around for Service he great to thing about working for the WRA is the not conducted a comprehensive review ofGovernor housing and Legislature for their
T
70,000 currently to a whopping 140,000 by 2010.
chance to try out new thingssince andthe see1970s. where they take support on this important legislation. patterns Some say a partial solution would be for the U.S. you. Over the past two months we’ve given our editor, government to reverse on housing policy and Speaking of government, don’tcourse forget Vanessa Merina, her own page Receives so that she could to Ease ® Wisconsin Millions substantiallyDay increase funding forAsrental assistance, REALTOR Government on April 27. Community bring you the latest on this magazine. The change allowed me Foreclosure Crisis United Way of Dane County particularly help for working families. many of you know, this is a day to get directly Business Journal (WI) to focus on what was going onMilwaukee inside the association while(09/30/08) John involved with legislation that affects you. We’ve got UnitedHorning Way of Daneyou County brought the latest from the industry. Well, guess what: The state of Wisconsin is due to receive nearly $39 NAR Releases Free FHA your Toolkit an exciting program planned, so contact local recognized the Stark Family with our editor was so good that she got another job! So this month, neighborhoods million in federal funds to stabilize Wisconsin REALTORS® Association (10/30/08) board to learn more and get involved. the 2008 Tocqueville Society folks, I’m afraid you’re left withand me.stave off a spate of abandoned homes. According
Award for outstanding service to NAR and the WRA are eager to help you meet the to HUD and Gov. Jim Doyle, the funds areOn separate a national level, your WRA leadership visited the Dane County community and Vanessa well in her new endeavors. In seriousness, we wish from approximately $9.2 million the government is current challenges of the troubled economy. We BillUnited Malkasian Washington, D.C. on February 2 to meet with the Way. The Tocqueville Society Award celebrates For us, it’s back to the drawingawarding board to how best to the foreclosure thefigure city of out Milwaukee, where know that you resources that can help you WRA congressional delegation and need discuss issues of importance and President acknowledges peoplebring or families, such as the you the latest on the magazine, the industry and yourHUD WRAis awarding the rate is currently 9.9 percent. close transactions, and you needinthem at littleand or no Starks, who have made a major impact on the quality to our industry. There’s a new government Madison staff and leadership. Look for further changes next monthStabilization as we funds via its Neighborhood Program, cost. NAR has just released an all-new FHA Toolkit of life in Dane County through their exceptional new leadership in Washington, and the WRA is not just on under which almost $4 billion isand being allocated to fine-tune our formula. As always, I welcome your comments service and commitment to the community. online for FREE to help you get clients the financing top of these changes, but looking forward to representing you. local and state governments for the redevelopment suggestions. in we’re a credit-strapped It is With so manythey newneed faces, committed environment. to ensuring your of abandoned and foreclosed houses. City Housing Authority Receives one of the most toolkits NAR has You’ll note we’ve centered this month’s magazine on taxes. Given interests are represented at all comprehensive levels. 100-Unit Grant the ups and downs of 2010, weSites: ever produced, and it’s available to all REALTORS® Not Personal thought thisJust was afor great time to Milwaukee Journal Sentinel (09/25/08) Pabst, Georgia Returning to the staff have been hardThey at work on a rightWRA, now the by visiting the link below. also have Anymore bring you ways to save moneyConnections and address new tax legislation major project: our new website. The new site will have an updated The city of Milwaukee’scome housing authority is due Minneapolis-St. Paul Business Journal (09/29/08) Grayson, launched a new page called “NAR Helps You Navigate spring. With this in mind, don’t miss Eric Trost’s feature to receive $6.7 million in federal Hope VI money Katharine look and feel, the be Current easier toEconomy” navigatewhere and employ you canstate-of-the-art find dozens of article where he walks you through the latest tax legislation and to build 100 new housing units. The 100 units will functionality to make it easier for you to findthethe information ® great products and resources, like FHA Toolkit, gives tips on how to save whenSt. youPaul, file.Minn.-based REALTOR Teresa Boardman be constructed in a 2.5-mile area and will include you need when you need it. Internally, the new site will make says Flickr, Facebook and other social networking for free or at a steep discount. Visit www.Realtor. 29 public housing andIn affordable units; be sure to check out: addition torental Eric’s article, maintenance much easier andformore Lots programs of people sites make it easy to meet people who might org/NARHelpsYou linksefficient. to these great nine affordable housing units for income-eligible have been involved in this project, and we’re looking forward to eventually become clients. While many professionals and products. families; and 62 moderately priced,Conrad’s open-market • Debbi piece on the condition forms; are WRA’s using 5these sites report to make business launching contacts it in the first quarter. condominiums. HUD Secretary Steven C. Preston and companies use them to conduct background Home Loans Going Strong, Albeit a comments, “Milwaukee’s• housing has Tracy Rucka on REO Transactions; A Legalauthority Hotline from Another checks or recruit new workers, many simply wantproduct planned for release in the first quarter is digital demonstrated it has the leadership to lead and Bit Tighter, in Area signatures. Using zipLogix Digital Ink, a product developed by to connect with people who have similar interests. • and Tomtransform Larson’s article revitalize neighborhoods lives. on Governor Walker’s Job Creation Wisconsin State Journal (10/17/08) Balousek, Marv the creators of ZipForm, members will soon be able to send the According to Boardman, “The hard sell is dead. It Package; andneed to Cities like Milwaukee change and grow and doesn’t work door-to-door, and it doesn’t parties work on to a transaction ZipForm and other documents digital Despite the ongoing national credit crisis,for property revitalize housing to make sure many aren’t priced socialonnetworks.” On Flickr, Boardman connected Theo’s informative piece how improving Wisconsin’s signature. Details and a training schedule forremains this member professionals say mortgage money available out.” Milwaukee is one• of aMike half-dozen housing with a fellow photographer who eventuallyservice used herwill bethroughout real estate Wisconsin’s economy. available assouthern we get closer to its to release. authorities nationwide to receive new industry Hope VIwill improve Wisconsin home buyers services to purchase a home. grants. with solid credit. Ron Steinhofer, manager of To turn to what’s happening inside the WRA, your directors met To conclude, we’re very pleased that so many of you chose Marshall & Ilsley Bank’s regional home lending Foreclosures Push Rents on January 21 for their first meeting of the year. The meeting wasHigher, to renew with us. And we’re happy to be able to offer a Housing Study Delay Frustrates group, states, “There’s plenty of money for home Squeezing Low Income Families a successful one and the reports were all positive: we’ve met our number of rewards for your renewal, including a brand Advocates out there. It is slightly more difficult to qualify Minnesota Public (MN) (09/21/08) Dan news apploans goals for RPAC and our legislative agenda andRadio we’re meeting our Olson, new Milwaukee Journal Sentinel (10/07/08) Williams, Scott (see Product Showcase on page 28), new than two or three years ago, but if you have a good budget In short, we’re in a good financial health and products In Minnesota’s Twin Cities, a wave of home like Tech Hottips (visit www.techhottips.com) Two years after promising the projections. Milwaukee metro credit score, good job and a down payment, money foreclosures has pushed more people into the offstudy and running 2011 programming. andrental zipLogix, and a brand anew website to come. area’s first major housing in threewith decades, is available.” Steinhofer adds that banks still are apartment sector. The result is an intensifying the Southeastern Wisconsin Regional Planning 2011 also ushers in Governor Walker’s I’m pleased making loans via such programs as Fannie Mae demandadministration. on Minneapolis and St. Paul’s rental housing Commission (SEWRPC) is still struggling to get the to report that your staff and leadership have been getting to know and Freddie Mac. Furthermore, credit standards stock, so much so that the vacancy rate is very low effort launched. Proponents hope the study will Looking to a great year in real estate, the newaffordable cabinet, and taking time meetareand withThis, them andtorents on work the rise. in to turn, means low-forward remain about the same as they were six months ago, serve as a catalyst for improving housing income working families face higher monthly rents ensure that you continue meaning that qualified home buyers can get loans opportunities throughout the city’s suburbs. Butto have a voice. even though their income hovers at unchanging commissioners have yet to assemble an advisory if they have the proper income verification. On the have some news on this front. Governor signed levels. Since 2005, Walker the Twin Cities apartment committee to oversee theWe research or setgood a specific downside, banks have been less willing to make the Health Savings Account (HSA) bill to closer to vacancy ratelegislation. has dippedThe fromHSA 7 percent timetable for conductinginto the law survey. Phil Evenson, loans with higher loan-to-value ratios. In addition, ® 4 percent. Average monthly rents over that same will allow said REALTORS Bill to deduct contributions to such accounts the commission’s executive director, other issues conventional financing without a down payment has time up more than $25, rising to more their state taxes, as theyspan can are for their federal income keep getting in the way. from The delays have income frustrated indeed disappeared. However, 100 percent financing thanyear, $850. St. due Paul-based Wilder Foundation housing advocates the taxes. most. It Bethany will applySanchez, to the 2011 tax forThe filings April 2012. is still available with Veterans Administration and recently reviewed income data for several Twin Cities vice president of the Metropolitan Milwaukee Fair The WRA worked hard to get this bill passed for eight years. Rural Development home loans. counties. The organization’s research found that the Governor Walker and the new Legislature passed and signed
this bill into law in three weeks. Our thanks to the newly elected
2
wisconsin real estate magazine
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february 2011
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 Horning, Chairman jphorning@shorewest.com
WRA Member Benefits
Robert Keefe, Chairman-Elect rkeefe@keeferealestate.com
As a member of the Wisconsin REALTORS® Association, you have member benefits available to you. The WRA carefully selects programs that offer valuable health, life, dental and errors and omissions insurance. Additional benefits include phone service plans, a delivery plan for packages and envelopes, and website design.
Renny Diedrich, Treasurer rdiedrich@coldwellhomes.com William E. Malkasian, cae, President wem@wra.org Editorial Staff:
William E. Malkasian Publisher
Robert Uhrina
Relax.
Errors and Omissions Insurance through Pearl Insurance and underwritten by XL America, Inc. www.pearlins.com
Our Member Benefits have you covered.
UPS Discounts & Delivery Plans Hassle-free! Once you enroll, your savings are automatic–every time you ship. www.savewithups.com/wra
Managing Editor
Joe Leschisin
Long Distance Telephone Service No monthly plan fee, no time-of-day restrictions. Save big money! www.ami.net
Senior Designer Wisconsin Real Estate Magazine, USPS 597-850, ISSN 1548-0526, is published monthly by the WISCONSIN REALTORS® ASSOCIATION, 4801 Forest Run Road, Ste. 201, Madison, WI 53704. Periodical postage paid in Madison, WI and additional mailing offices. An annual subscription rate of $5 is included in membership dues and a copy is mailed to every paid REALTOR® and affiliate member of the association. Nonmember subscription rate: $60. POSTMASTER: please send address changes to the WISCONSIN REALTORS® ASSOCIATION, 4801 Forest Run Rd., Ste. 201, Madison WI 53704-7337.
Real Estate Home Pages Create, edit and manage your own Web site. Free seven-day trial. www.realestatehomepages.com Subject to change.
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.
Good News for REALTORS® Under the bill signed by Governor Walker on January 24, Health Savings Accounts (HSAs) will be tax exempt. The legislation aligns Wisconsin law with federal law and allows tax deductible contributions to and withdrawals from health savings accounts. Wisconsin joins 46 other states and the federal government in not taxing HSAs. The WRA thanked Governor Walker and the Legislature for ending taxation of HSAs in Wisconsin to make health care more affordable for independent contractors, including REALTORS®. “The fact that Governor Walker and the new Legislature passed this law in 21 days is incredible,” said Bill Malkasian, President of the WRA. “We thank them for making this available to independent contractors in Wisconsin.”
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.
Contact Us: 4801 Forest Run Rd., Suite 201 Madison, WI, 53704-7337 (608) 241-2047 • (800) 279-1972 legal hotline: (608) 242-2296 • (800) 799-4468 general fax: (608) 241-2901 products/education fax: (608) 241-5168 legal hotline fax: (608) 242-2279 president fax: (608) 242-2267 e-mail: editor@wra.org Website: www.wra.org
REALTOR® and Government Day 2011
Visit http://www.wra.org/rgday to sign up today.
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february 2011
GOVERNMENT
DAY
REALTOR
Mark your calendar for April 27, 2011 for the WRA’s annual REALTOR® & Government Day conference. Join us for an opportunity to meet with state lawmakers at the Capitol and advocate for laws important to you. Key issues on this year’s agenda include job creation, farmland conversion fees, piers, property taxes, and more. The first 500 registrants are free.
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wisconsin real estate magazine
Health, Dental & Life Insurance Plans through REGIT, Inc. specifically designed with REALTORS® in mind. www.regitinc.com
2011
APRIL 27 | MONONA TERRACE | MADISON
3
news monthly wisconsin housing report
Home Sales Decline in 2010 but Prices Remain Stable By David E. Clark, Economist, C3 Statistical Solutions Inc.
> WISCONSIN HOUSING STATISTICS MONTHLY ACTIVITY - JANUARY 2011
% Change
YTD-2010
YTD-2009
% Change
-4.7% +2.3% -2.4%
125,245 50,975 $141,000
125,266 55,089 $142,500
0% -7.5% -1.1%
DEC-2010
DEC-2009
New Listings Closed Sales Median Sales Prices
5,673 3,347 $135,000
5,952 3,272 $138,250
Region
Median Price DEC-2010 DEC-2009 % Change
Existing Home Sales DEC-2010 DEC-2009
% Change
Southeast South Central West Northeast Central North
$152,000 $155,000 $126,500 $122,680 $108,950 $110,000
1149 646 403 573 228 343
-1.2% +2.5% +10.4% +5.7% -34.2% +3.0%
H
ome sales were down but prices were stable in 2010, according to a new year-end report by the Wisconsin REALTORS® Association (WRA). Sales of existing homes for 2010 were 7.5 percent below 2009, but the median home price of $141,000 for 2010 was just 1.1 percent below the previous year, according to the report.
wisconsin real estate magazine
$150,000 $157,475 $134,000 $127,850 $112,000 $110,000
+1.3% -1.6% -5.6% -4.0% -2.7% 0%
Every region across the state, except the North Wisconsin region, experienced a drop in home sales. In northern Wisconsin, existing home sales in 2010 actually increased 4.6 percent over 2009. Rural areas of the state fared better than urban regions, with Central Wisconsin sales dropping just 2.6 percent compared to sales in the Southeast region, which fell 11 percent. The Northeast and West regions both fell in the range of 6.6 to 6.7 percent, and sales were down 9.1 percent in the South Central region. In contrast, the modest drop in median home prices was much more uniform across regions, with most regions dropping 2.5 percent or less. The two exceptions are the Central region where prices fell 4.3 percent, and the North region where they increased 3.9 percent.
The housing market in the first half of 2010 was very different from the second half of the year, according to the REALTORS® report. More than 56 percent of home purchases during the year occurred in the first six months, according to John Horning, Chairman of the WRA Board of Directors. “We saw far more sales activity than is typical in the first half of the year, which is directly related to the federal homebuyer tax credit program that was originally set to expire in June,” Horning said. As a result, buyers rushed to close before the June deadline, which essentially borrowed sales from the latter half of the year. “Not surprisingly, sales dropped off sharply in July and stayed at these depressed levels for the remainder of the year,” said Horning.
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Statewide
Looking ahead, Horning said the state unemployment rate is the key to home sales in 2011, noting the November 2010 unemployment rate was 7.6 percent, more than a percent lower than the beginning of that year, and more than two percent lower than the national rate for that month. “Wisconsin added over 41,500 jobs since January 2010, including over 13,000 jobs
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february 2011
1163 630 365 542 233 333
in the relatively high-paying manufacturing sector. We need for this momentum in job creation to continue if the state’s housing market is to fully recover,” Horning said. The inventory on the market also dropped for the second straight months, according to the WRA report, falling in December to a 13.8-month supply. “These inventories have kept Wisconsin housing very affordable, presenting excellent opportunities for buyers,” said WRA President Bill Malkasian. He noted that the Wisconsin Housing Affordability Index, which shows what percentage of a median priced home a buyer with the median family income can afford, stood at 230 for December - up 16 points from December of 2009. “Although mortgage rates have increased about half a percent since hitting bottom last October, they remain below 5 percent,” he said. “A growing economy, favorable interest rates and healthy inventories form a good foundation for continued housing market improvement for 2011 and beyond,” said Malkasian. For More Information Contact: David E. Clark, Economist, C3 Statistical Solutions Inc. Office phone: 414-803-6537
news.wra.org
techhottips
View more posts at www.techhottips.com
Technology Tips & Tools for the Real Estate Professional
ipad desire?
when your visitors (or time people stay on your site) can be measured appropriately. Believe it or not, even simple color changes can even make differences.
I’ve been thinking I really need an iPad for my real estate business. To help me justify spending the near $500.00 (since I haven’t lucked out in any of the give-a-ways), I’ve come up with a list of possible uses that I thought you might like to use if you need some reasons:
Listing presentations
•
Meetings with buyers
•
More compact than laptop for portable office time
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Easy access for documents in the cloud
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Taking notes (or voice-to-text) while viewing property for CMA
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Blogging out of office
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Mapping and directions
If there is a group established – JOIN! Browse through photographs that people have posted and comment on some of them to open conversation. If there isn’t a group for the area yet, create one! Building up a collection of local photographs can be a valuable resource:
Don’t be afraid to play around with things as you research. You can’t really break anything in Google Analytics – you’ll just be clicking on various places resulting in information returned. You may not understand it all – but you can get the jist. If you’d like some suggestions on different testing you can do – check out Analytics is More Than The Numbers.
Real Estate with an iPad •
menu, choose [GROUPS].
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Send buyers a link to your group to check out the area
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Expand your local database by engaging in conversation with the people who live there and post photos where you work
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When posting on your website or blog, you will have a library of photos that you took right at your fingertips
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Keep your camera in your car/pocket/purse and snap away when you’re in the area so you can add to the group
pssst… Google has a great Help section found on the bottom left hand side of the pages of the analytics pages.
Side note: You can always schedule a PhotoWalk once you have established some relationships… just name a place and time – people meet up and take photos together. You can use the Discussion section in your Group to help spread the word..
show off your listing and area
Learn by reading “help!” One of the best places to start learning about a new social media site is its “help” section. You’ll find FAQs (Frequently Asked Questions), video demonstrations and documents with step-bystep instructions. Below is a quick list of the help sections for some of the more popular social media sites:
Overall, I know the potential clients that appreciate technology will be very impressed to see the iPad break out of the case. Candace Robinson, a REALTOR® in Arizona, came up with a list of her Favorite iPad Apps that you might want to check out.
analyzing analytics How do you know what you are doing is working? Is your website getting the traffic you’d like and if so, why or why not ? It’s important to look at the analytics of your website(s) and/or blogs to help determine what brings readers to your site. Afterall, if you aren’t getting the visitors to your site, is your site working?
Using Flickr to store and share your photos can be lots of fun and a great resource for engaging conversation and expanding your local audience. By joining in with Flickr Groups this can be done in a fairly easy way. First, log into your Flickr account – (If you don’t have one, you know I’m going to suggest you get one! They have a free version which works great, but many people will choose to pay the small yearly fee for upgraded options because it’s worth it.)
There are many different programs and plug ins you can use. My favorite is Google Analytics. You do need to sign up for a free account, then place some code they’ll provide on your website.
Next, search for a group in the area which you sell real estate.
Many people miss the first step in evaluating changes in numbers or comparisons. It’s important to track any changes you make on your site, so that
wisconsin real estate magazine
Type in the name of the town. Using the drop down
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february 2011
Facebook: http://www.facebook.com /help/ Linkedin: http://learn.linkedin.com/ Twitter: http://support.twitter.com/ Foursquare: http://support.foursquare.com/home Flickr: http://www.flickr.com/about/ YouTube: http://www.youtube.com/t/about
5
Practical Solutions Provide Tax Savings: New Tricks and Old Favorites By Eric P. Trost
With a new tax season approaching, it’s a good time to start thinking about how to take advantage of the many new tax laws and changing tax regulations for the self-employed. For 2011, Congress has opened the door with these changes for the self-employed to help stimulate the economy through small business growth. This article highlights possible tax advantages for the self-employed real estate professional. New Tax Law
Whether you prepare your own tax return or use a local accountant, don’t miss this opportunity.
2010 was a contentious year politically, and from that contention came a whole wave of new tax laws. Focused first on the economy, the Hiring Incentives to Restore Employment (HIRE) Act was passed early in the year. Following the HIRE Act, the comprehensive health care reform package was passed in March, which included significant tax pieces. In fall, the Small Business Jobs Act was passed, and finally—just in time for the holidays—the Tax Relief Act was passed, temporarily extending what are popularly known as the “Bush Tax Cuts.”
•
For one year only, the self-employment tax on the first $106,800 of self-employment income has been cut by 2%, decreasing the self-employment tax to 13.3% instead of 15.3%. Take this relief into account when calculating your estimated taxes for 2011. For a real estate broker earning $50,000 after expenses, this is a $1,000 tax savings. But don’t get too used to it – the law is only good for the 2011 tax year. In 2012, the selfemployment income tax rate hikes back to 15.3%.
Within these new tax laws, there were several high points for the self-employed: •
A deduction for self-employed health insurance premiums when computing self-employment tax
•
wisconsin real estate magazine
Tax rates extended The final tax-related act by Congress this year was the extension of all of the so-called “Bush Tax Cuts.” With its passage at the end of December, the extension means that tax rates for everyone, regardless of income, will not go up in 2011. Keep in mind, however, that these tax rates are only extended through 2012; so planning for income and deductions between 2012 and 2013 should be a focus for next year.
As any self-employed person knows, it is not always the income tax that creates the most burden; it’s the self-employment tax. Self-employment tax is a whopping 15.3% of your earned income, and has surprised more than one REALTOR® come tax time. This new deduction allows a self-employed person a deduction for health insurance premiums paid in computing the self-employment tax – and the savings could easily be four figures.
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A reduction in the self-employment tax in 2011
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february 2011
news.wra.org
wisconsin real estate magazine
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7
Rollovers
Establish a Retirement Plan
One of the tax laws that significantly changed in 2010 was allowing an individual to roll over amounts held in pre-tax accounts (such as IRAs or 401ks) into Roth accounts. While this type of rollover had been allowed in the past, in 2010 income limitations were removed, opening the planning technique for everyone. In addition, amounts rolled over into Roth accounts in 2010 had the benefit of deferring tax on the rollover until 2011 and 2012.
One of the most effective tools of tax planning is to establish a retirement plan. Besides being good for your future, most retirement plans offer current year tax deductions that save on taxes right now. Here are some of the different retirement options that any self-employed broker may choose from: •
Individual Retirement Account (IRA) – The IRA is the easiest plan to administer – in trade for extensive limitations relative to other plans. The maximum deductible contribution to an IRA in 2010 was $5,000 (or $6,000 for those 50 and older). The deduction is potentially limited for individuals participating in another retirement plan, or whose spouse is participating in a retirement plan. The IRA is adopted by the individual, not the business, so other employees of the business do not participate in the contribution. Individuals have until April 18, 2011 to make contributions to an IRA for the 2010 year.
•
As an alternative to the traditional IRA, a Roth IRA is also an option. The Roth IRA does not offer a current tax break, but earnings grow tax free, and later distributions at retirement are not subject to taxes.
•
Simplified Employee Pension (SEP) Plan – The SEP is a type of IRA account that may allow for larger contributions than the traditional IRA. The maximum deduction amount for a selfemployed person is approximately 20% of self-employment income; up to a maximum of $49,000 in 2010. The same limit
Why is a Roth account better than an IRA? Because when distributions are eventually taken out of the Roth account (at retirement), they are not subject to income tax; whereas distributions from a regular IRA are subject to income tax. This can create a huge tax savings in your later years and leave you more money for grandkids education, travel, and other activities. If you didn’t convert your pre-tax IRA’s into Roths in 2010, don’t worry; you can still do this in 2011. You just won’t get the deferral of income tax on the conversion. There are many factors to consider when deciding whether or not a conversion will be worth it to you. These include your current tax rate situation, your age, and your expected retirement and lifestyle requirements. If you have not spoken to your accountant or financial adviser about a conversion, I’d suggest you make the inquiry this year. In addition to the new tax law opportunities described above, there are several other tried and true methods an individual REALTOR® can use to lower his orher tax burden.
REALTORS® are in a unique position to take advantage of this market. They know the motivated sellers, the opportunity areas, and the market conditions on what will sell and for how much. of $49,000 applies to 2011 as well. The decision to establish and contribute to a SEP for 2010 can be made up to the extended due date of your 2010 return.
Flipping More and more REALTORS® are tackling “flipping” (the purchase, renovation and quick sale of a property for profit) as a new business opportunity to enhance earnings. REALTORS® are in a unique position to take advantage of this market. They know the motivated sellers, the opportunity areas, and the market conditions on what will sell and for how much. In addition, they have easy access to a wide inventory of properties. “Flipping” income has the potential to be classified as capital gain income, which is not subject to the self-employment tax, or as earned income from self-employment, which is subject to the self-employment tax. The rules for flip income can be complex, but in general they depend on how often flips are done, how long the flipped property is held, and the time and effort put into the fix-up by the seller. This is an area where you want to be particularly careful and consult your tax advisor in an effort to minimize the tax impact of your flip income.
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The Solo 401(k) Plan – The solo 401(k) plan is similar to a traditional SEP plan, but is only used when there are no other employees. The self-employed person may contribute an additional $16,500 ($22,000 if 50 or over) beyond the 20% limitation of the SEP Plan. However, the overall contribution is limited to $49,000 (or $54,500 if using the 50+ catch-up provision.) This type of plan has to be established before the end of the year.
Deduct Your Home Office Expense If you are a REALTOR® using your home as a main office, be sure to capture expenses related to the office portion of your home. Include such items as mortgage interest, real estate taxes, and utilities. Don’t forget your office computer, Internet connection and cell phone as well as hidden deductions for repairs and depreciation for the part of your home used as an office.
news.wra.org
Business Loss If your business has low income or a loss for the year, consideration may be given to the following: •
Roll over your pre-tax accounts into a Roth account
•
Postpone deductions, such as real estate taxes or charitable contributions, into the next year if you expect more income in the next year
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Put off purchases until next year, such as for a computer or car, if the deduction for the next year will offset higher taxed income
Proper timing of income and loss items during a loss year will help you get the most out of your tax deductible items.
Entity Choice - LLC or S Corporation Is your business currently a sole proprietorship or a Limited Liability Corporation (LLC)? Have you considered being taxed as an S Corporation? While wholly owned LLCs have become more fashionable, an S Corporation still provides the opportunity to save on your self-employment tax bill. An S Corporation generating $60,000 of taxable income can save upwards of $3,000 in self-employment taxes over an LLC generating the same taxable income. Careful planning is required to use an S-Corporation to ensure that a reasonable wage is set and all appropriate payroll tax forms are prepared.
Estimated Taxes If you are self-employed, you know that taxes must be paid in quarterly in order to avoid costly penalties. There are two alternatives to determine the amount you need to pay in:
Maximize the Deductions for Your Health Related Expenses There are several techniques to make sure you are spending pre-tax dollars on health care expenses. Consider establishing a Health Savings Account (HSA). In addition to the premium saved under the required high deductible health plan, an HSA allows for tax-deductible contributions into an account that can be later used to pay for health care expenses. Unused amounts can grow tax deferred and used in a future year. If health expenses are significant, consider employing your spouse, and then setting up a medical reimbursement account for your spouse and family. Not only will dollars spent for health expenses provide a deduction for income taxes, but they will provide a deduction for self-employment tax as well.
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1.
Pay in based on a percentage of your total tax for the last year; or
2.
Pay in a percentage of your total tax for the current year.
By computing your estimated tax under the appropriate method, you will keep your money longer, and not end up giving Uncle Sam a tax-free loan by way of overpaid estimated taxes. Factors to keep in mind when estimating: Take into account your spouse’s income and withholding, and whether you are expecting a higher income in the current year. So there you have it: a compelling selection of possible 2011 tax advantages for self-employed REALTORS®. I hope you find them useful. Please speak to your accountant or financial adviser on how you can take advantage of these tax-saving opportunities.
Eric P. Trost, CPA, MST is a Principal and Co-leader of the tax department at SVA Certified Public Accountant, S.C. Eric provides expertise to the real estate and construction industry groups within SVA, and heads up the firm’s cost segregation practice.
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legal
best of the legal hotline
with tracy rucka
Navigating the REO Papertrail Real Estate Owned transactions will be a significant part of the market for the foreseeable future. REO sellers, who are often asset managers, tend to be located in other states, frequently have their own forms, do not understand Wisconsin law and often refuse to use Wisconsin forms. The following questions and answers from the Hotline relate to the contracts and documents used in REO transactions.
Seller-Provided Listing Contract The REO seller sent their own listing form because they refuse to sign the Wisconsin form. Can the broker use an REO listing? It is a matter of broker discretion whether to enter into an REOprovided listing contract. Wis. Stat. § 240.10 sets forth the minimum requirements for an enforceable listing contract. Wis. Stat. § 240.10(1) provides Every contract to pay a commission to a real estate agent or broker or to any other person for selling or buying real estate shall be void unless such contract or note or memorandum thereof describes that real estate; expresses the price for which the same may be sold or purchased, the commission to be paid and the period during which the agent or broker shall procure a buyer or seller; is in writing; and is subscribed by the person agreeing to pay such commission, except that a contract to pay a commission to a person for locating a type of property need not describe the property. It is recommended that the broker have the company attorney
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review the contract since many important broker protections that appear in the DRL-approved forms may not be included in the seller’s form. For example, the broker must provide a Broker Disclosure to Clients form as required under Wis. Stat. § 452.133(2) and request the client’s written acknowledgment that the client has received the form if the property is residential (1-4 units). The WB state-approved forms incorporate these statutory disclosures. If the broker executes an REO listing contract the broker should incorporate the Broker Disclosure to Clients into the REO listing or concurrently use a separate Broker Disclosure to Client form. The broker may sign the seller-drafted listing contract, but may not fill in any blanks. Wis. Admin. Code § RL 16.02(5) prohibits the “use” of unapproved forms; “use” is defined to mean completion of a form by filling in the blanks. If the broker signs a listing contract presented by the REO seller to the broker on an unapproved form the broker is not “using” it under the rules by signing the contract. A great resource for this discussion is pages 10-13 of the September 2006 Legal Update, “Contract Law Basics,” online at www.wra.org/LU0609. news.wra.org
Real Estate Condition Reports
Lead-Based Paint
The broker is working with a bank to sell a bank-owned property (REO). The property is being sold in an “as-is” condition. Does the bank still have to fill out a condition report?
The REO seller made no Lead-Based Paint (LBP) disclosures prior to the buyer writing the offer, so no LBP forms were submitted with the offer. The REO seller provided a lengthy counter-offer including a Property Condition Addendum with a lengthy paragraph titled “Lead-Based Paint Disclosure” with a blank for the buyer’s initials immediately after the paragraph. The buyer has accepted the counter-offer. Does this cover the LBP requirements?
Wis. Admin. Code § RL 24.07(1)(b) requires listing brokers to inspect property prior to entering into a listing. The listing broker is required to ask the seller for a written statement regarding the property condition. If the seller elects not to provide this, the broker may ask the seller to sign the Seller Refusal to Complete Real Estate Condition Report form. There is no exemption from the Wis. Stat. Chapter 709 seller disclosure law based solely on the fact that the owner does not live in the property. Such owners might include the owner of a rental duplex or a bank that has acquired a home by foreclosure (REO). A seller in this position can either (a) complete the Real Estate Condition Report (RECR) to the best of his or her knowledge; (b) retain a professional to provide an inspection report to be used as the basis for completing the RECR; (c) refuse to complete the RECR and sell “as is,” risking buyer rescission; or (d) refuse to complete the RECR and sell “as is,” refusing to accept any offers from buyers who do not waive their Chapter 709 rescission rights.
The obligations per the federal LBP law may be met by using a WRA Addendum S or by a party-provided addendum. The content of a particular addendum provided by a seller may need to be reviewed to see if the following LBP law seller requirements are satisfied: • Give the EPA-approved information pamphlet regarding the identification and control of LBP hazards, “Protect Your Family from Lead in Your Home.” • Disclose any known information concerning LBP or LBP hazards. The seller or landlord must also disclose additional available information such as the location of the LBP and/or LBP hazards, and the condition of the painted surfaces. • Provide any records and reports on LBP and/or LBP hazards which are available to the seller or landlord (for multi-unit buildings, this requirement includes records and reports concerning common areas and other units, when such information was obtained as a result of a building-wide evaluation).
Note that the requirement to provide the lead-based paint disclosure for target housing (WRA Addendum S, for example) does not exempt REO property.
Disclosure of Material Adverse Facts
• Include an attachment to the contract (or use language inserted in the contract itself) which includes the mandatory Lead Warning Statement and confirms that the seller has complied with all notification requirements. This attachment is to be provided in the same language used in the rest of the contract. Sellers and all agents, as well as homebuyers, must sign and date the attachment.
The cooperating broker scheduled a showing on an REO property. The listing broker stated that there was no property condition report. When the broker went to the property there were broken pipes and water standing in the basement. When this was reported to the listing broker, he replied that the property is being sold “as-is.” Don’t brokers still need to disclose material adverse facts in “as-is” sales? Although the seller has elected not to complete a RECR, the listing broker and the cooperating broker are still required to make timely written disclosures of any material adverse facts. The fact that the seller will sell “as-is” does not release the brokers from compliance with Wisconsin license law and the obligation to disclose material adverse facts and information suggesting the possibility of material adverse facts. A sample disclosure form and additional disclosure pointers are available in the October 2009 Legal Update, “Diligent Disclosure,” at www.wra. org/LU0910.
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Sellers must provide homebuyers with a 10-day period to conduct a paint inspection or risk assessment for LBP or LBP hazards. Parties may mutually agree, in writing, to lengthen or shorten the time period for inspection. Homebuyers may waive this inspection opportunity in writing.
See “Addendum O, Addendum S, & LBP Issues” in the August 1999 Legal Update online at www.wra.org/LU9908, “Lead-Based Paint Disclosure Implementation” in the April 1996 Legal Update at www.wra.org/ LU9607, and “Lead-Based Paint Disclosures” in the April 1996 Legal Update at www.wra.org/LU9604 for further discussion of the LBP law and Addendum S.
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REO Addenda to the Offer to Purchase The buyer submitted an offer and the lender said that they accepted it, but when it was returned there was an additional multi-page REO addendum attached. How should the broker proceed? By adding an addendum, the seller is making a counter-offer for the buyer’s consideration. The seller may not accept and simultaneously make unilateral changes to the buyer’s offer. Instead, the seller may counter the buyer’s offer to add or modify the terms and conditions. A listing broker, knowing the seller will require additional terms and conditions or an addendum for the transaction, may be wise to provide these to the buyer in advance. This gives the buyer, the cooperating broker and the buyer’s attorney the time to review the addendum to determine if the buyer is willing to purchase the property subject to the REO addendum provisions.
identifies the land, identifies the interest conveyed, recites material terms, is in writing, is signed by the parties and is delivered. Except for rare situations where a court may, under equity or fairness grounds, waive the requirement, the offer must be signed and delivered to be binding. Acceptance is defined in the WB offers as when all the parties have signed an identical copy of the offer. Timelines running from the time of acceptance require evidence that the seller has signed the offer. If the binding acceptance date passes without the signed offer returned to the buyer, the buyer may continue the negotiations by initiating a counter-offer for the seller’s signature and delivery. Tracy Rucka is Director of Professional Standards and Practices for the WRA.
When the buyer submitted an offer to the REO seller, the buyer requested a home warranty. In the counter-offer it was countered out by the REO addendum. When the buyer mentioned it at closing the buyer’s agent said not to worry, but the listing agent reminded the buyer there was no home warranty. How to proceed? It is prudent for the licensee to refer the buyer to legal counsel to review any REO addendum and provide legal advice regarding the buyer’s rights given the modifications made in the addendum. In general, REO addenda are drafted by the seller’s attorney with the seller’s interest in mind. Frequently, these addenda modify the standard language used in DRL-approved forms. Real estate licensees are reminded not to engage in the unlicensed practice of law. It is appropriate to have an attorney review the sometimes intimidating and lengthy terms of REO addenda. Oftentimes the seller will offer the property “as-is,” modify the warranty language, include per diem penalties if the transaction fails to close in a timely manner, require the wire transfer funds to close, use out-of-state title companies, limit buyer incentives, and neglect local code compliance issues. Each of these items must be considered before the buyer accepts the offer and proceeds to closing.
Verbal Acceptances/Timelines Broker A has an REO listing. A cooperating broker has written an offer to purchase and the seller verbally stated they will accept the buyer’s offer, but the offer has not been approved in writing by the seller. Is there a contract yet? What about the timelines? Wisconsin law is clear about binding acceptance; a seller’s acceptance must be in writing and delivered to meet the requirements for conveyances of real property per Wis. Stat. § 706.02. A contract for a real estate transaction shall not be valid unless evidenced by a conveyance that satisfies the following: identifies the parties,
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legal
Condition Report Conundrum by debbi conrad
Another new year and another round of updated property condition reports. The WRA publishes five different condition report forms. Three of these are Real Estate Condition Reports (RECRs) that include the mandatory content stated in Wis. Stat. § 709.03. Sellers must complete a RECR and give the buyer a copy whenever property containing one to four dwelling units is being sold. All five condition reports including the ones for vacant land and for commercial property, fulfill the function described in the listing contracts and in Wis. Admin. Code § RL 24.07(1)(b): they are the tools sellers use to provide written information about the condition of the property in response to the listing broker’s inquiries. In turn, these reports are used to disclose property defects to buyers. The five WRA condition reports include: •
Condition Report (two pages) (WRA-CR): RECR containing the mandatory § 709.03 content with some supplementary information (appearing in italics).
•
Seller’s Real Estate Condition Report (three pages) (WRASCR): RECR containing the mandatory § 709.03 content with substantial supplementary information including many examples and prompts (appearing in italics).
•
Real Estate Condition Report – Farm (WRA-F): RECR containing the mandatory § 709.03 content, based upon the assumption that a farmhouse is on the property. This form contains some supplementary information (appearing in italics) pertaining to residential issues, and additional supplementary information regarding agricultural and vacant land concerns (also appearing in italics).
•
Seller Disclosure Report – Commercial (WRA-RCC): Not a RECR because it is designed for commercial, not residential, property. It shares many items with the other reports, but also contains distinctively commercial items.
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Seller Disclosure Report – Vacant Land (WRA-RV): Not a RECR because it is designed for vacant property purchased for development. It shares many items with the other reports but also contains many items addressing development-oriented concerns.
The revised WRA condition reports designed for use in 2011 were published in late 2010 and have a 2010 copyright.
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news.wra.org
The WRA just revised its condition reports one year ago. Why is this being done again? The Wisconsin Legislature is the culprit! Specifically, the new Wis. Stat. § 709.03(form)C.26.m requires a mandatory RECR disclosure of whether or not the prop¬erty is subject to a shoreland zoning mitigation plan, beginning with RECRs that are furnished to buyers on or after January 1, 2011. The new disclosure item states: “C.26m. I am aware that the property is subject to a mitigation plan required under administrative rules of the department of natural resources related to county shoreland zoning ordinances, which obligates the owner of the property to establish or maintain certain measures related to shoreland conditions and which is enforceable by the county.” When must the new reports be used or can sellers still use RECRs completed on the old (2009) forms? The key is the date that the RECR is given to the buyer. If the buyer receives a RECR on or after January 1, 2011, it should be (1) on a new (2010) RECR form or (2) on an old (2009) RECR that is supplemented with an addendum, amendment, etc. that adds the shoreland mitigation item C.26.m to the seller’s RECR disclosures. What happens if in January 2011 a buyer receives a RECR completed on an old form? A buyer could rescind the buyer’s offer to purchase based on the right to rescind provisions in Wis. Stat. § 709.05. A prospective buyer who receives a RECR that is incomplete may, within 2 business days after receipt of the RECR, rescind the offer. A rescinding buyer has no liability to the seller and is automatically entitled to the return of any earnest money paid. The right to rescind is the only remedy provided under chapter 709 so once the two business days have passed, a buyer may have no other remedy unless there is a shoreland mitigation plan that the seller has not otherwise disclosed. The offers to purchase currently undergoing revision at the Department of Regulation and Licensing will include a shoreland mitigation item in the definition of “Conditions Affecting the Property or Transaction,” so a seller might also be in breach of contract if the seller fails to disclose a mitigation plan to the buyer. Why isn’t there an optional use date and a mandatory use date? Optional use dates and mandatory use dates are used by the DRL with regard to state-approved forms. The property condition reports are not DRL forms. What is the new material regarding managed forest lands? New statutory revisions make various changes to the Managed Forest Law (MFL) program administered by the Department of Natural Resources. These changes include providing a process for an MFL owner to receive a withdrawal tax estimate from the Department of Revenue. The newly created Wis. Stat. § 710.12 establishes specific disclosure requirements regarding the sale of real property that will continue to be subject to an MFL order after the sale. The seller must provide written disclosures no later than 10 days after the acceptance of the offer or option contract that explain that MFL orders remain in effect for 25 or 50 years and that the DNR Division of Forestry monitors MFL management plan compliance. The seller must provide Division of Forestry contact information. The disclosure also must
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contain the following mandatory language: “Changes you make to the property that is subject to an order designating it as managed for¬est land, or to its use, may jeopardize your benefits under the program or may cause the property to be withdrawn from the program and may result in the assessment of penalties.” These disclosure requirements apply to offers accepted on or after January 1, 2011. The WRA has created a separate Managed Forest Law – Seller Disclosure form on ZipForm for use in making these disclosures. Also look for these disclosures as check-box provisions in the WB-12 Farm Offer to Purchase and the WB-13 Vacant Land Offer to Purchase, currently being updated by the DRL. Managed forest lands are also referenced on each of the WRA condition reports as a precaution to hopefully bring the issue to the agents’ and parties’ attention. That language states: “I am aware that all, or part, of the property is subject to, enrolled in or in violation of a Farmland Preservation Agreement (see x.x.x.), Forest Crop Law, Managed Forest Law (see disclosure requirement in Wis. Stat. § 710.12), the Conservation Reserve Program or a comparable program.” Each of the programs listed in this disclosure item can potentially trigger stiff penalties, so it is best not to overlook them. If a property will continue in the MFL program after closing, the listing broker and seller must make sure that either the appropriate disclosure language is given within the offer or the separate Managed Forest Law – Seller Disclosure is executed and furnished to the buyer no later than 10 days after acceptance. What are the other additions to the condition report forms? Piers: To be grandfathered, a pier must meet certain size requirements and, in some situations, be registered with the DNR by April 1, 2011. Because a pier could be considered illegal and thus subject to a DNR enforcement action if it does not meet the state law size and registration requirements, a prospective buyer will likely want to know this prior to purchasing a waterfront property with an existing pier. Accordingly, the WRA added a pier disclosure provision to each of the five WRA condition reports asking if the seller is “aware of a pier attached to the property that is not in compliance with state or local pier regulations. See http://dnr.wi.gov/ for information.” Carbon Monoxide Detectors: Beginning February 1, 2011, state law requires that all homes with fuel appliances and/or attached garages have carbon monoxide detectors installed on each floor. The WRA RECRs have been modified to add a reference to CO detector laws in disclosure item C.19: “I am aware of defects in a woodburning stove or fireplace or of defects caused by a fire in a stove or fireplace or elsewhere on the property or a violation of applicable state or local smoke detector laws; NOTE: State law requires operating smoke detectors on all levels of all residential properties, and operating carbon monoxide detectors on all levels of most residential properties (see Wis. Stat. §§ 101.149 & 101.647).” Why were the vacant land and commercial disclosure reports updated when they are not required by statute? The WRA believed it was best to keep these reports up-to-date and remind agents and parties of the newest disclosures and the latest developments that might inadvertently trap a party or cause unnecessary problems, expense or delays in a transaction. Debbi Conrad is Senior Attorney and Director of Legal Affairs for the WRA.
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legal
Lost in Translation Understanding Assessments
This time of year often brings an abundance of real estate tax questions relating to establishing assessed value and the appeal process. As the assessments are established, consumers are looking to you as their agent to help them. Your sellers want to know about the appeal process By cori lamont
and buyers want to have a better understanding
Cori Lamont is Director of Brokerage Regulation and Licensing for the WRA.
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of what terms like “equalized value� mean.
february 2011
news.wra.org
Basics The 2010 property tax bill is based on the assessed value of a property as of January 1, 2010. So basically, the assessed value was created a year ago and there is no correcting or challenging the 2010 assessment. At this point, property owners can only worry about 2011. By March or April of 2011, most assessors will have established the 2011 assessed values. If a property owner believes their 2011 assessed value is too high, now’s their moment. By law, property owners have an opportunity to challenge their current-year assessment if they do so in a timely manner.
Appeal Process A notice of any increase in the assessed value must be mailed to the property owner at least 15 days prior to the local board of review or board of assessors meeting. There is specific information the notice must contain, including the date, time and location of the board of review meeting. The notice must also establish the protocol available for a property owner who wishes to object to the assessment. Property owner’s may meet with the assessor to discuss their property assessments. By Wisconsin law, the local government must publish or post a notice at least 15 days before the tax rolls will be open for inspection. The local municipal clerk will be able to confirm the dates for the open book sessions and the availability of the assessors. If a property owner was not able to rectify the issue with the assessor, or would like to appeal the assessment to the board of review, the property owner must file a notice of intent to challenge the assessment. This challenge must be filed with the board’s clerk at least 48 hours before the board of review’s first meeting. The property owners objection form must be filed with the board’s clerk no later than two hours before the board’s first scheduled meeting. This form can be obtained from the local municipality’s clerk. The board’s first meeting will occur sometime during the 30-day period beginning on the second Monday in May and will be at least two hours long. In order to ensure that the property owner has preserved the right of appeal, the property owner must attend this meeting. The board will schedule all properly filed objections for a subsequent hearing. The board is required to provide notice of the hearing to the property owner and assessor a minimum of 48 hours prior to the hearing, which the parties may mutually agree to waive. The board consists of municipal officials, local residents or a combination of the two, as set forth by local ordinance. State law also sets additional requirements, such as requiring at least one member be the municipality’s chief executive office and complete Department of Revenue (DOR) training. The process itself varies depending on whether the objection is presented to a board of review or board of assessors.
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Question and Answer Lastly, I would like to share a hotline question posed to me the other day which led to two questions. A consumer asked the licensee how high a municipality can set an assessment ratio. According to the agent, the property owner’s current assessment ratio is 106.6%. Both the licensee and consumer wanted to know “is there a cap as to how high a municipality can set the assessment ratio?” To make sense of it, there is only one place to turn: the DOR. The following information is provided on the DOR website. “Why am I paying taxes on an assessment that’s higher than my property is worth?” http://www.revenue.wi.gov/faqs/slf/declmrkt.html#market4. DOR Response: Property owners know their assessment is used to calculate their December tax bill. What many taxpayers find confusing is that the assessment is only one part of the equation for computing the property tax. The other variable used to compute property taxes is the tax levy.
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The levy represents the budgets established by the municipality, schools, etc. to cover their expenses. Those expenses are apportioned among property owners according to the percentage of ownership they have in the total property of the municipality. Thus, the actual tax bill is dependant on both the amount of all the taxing jurisdiction levies and the proportion of your assessment to the total value of property in the community. If you own 1% of the property value in your community, then you will pay 1% of the tax levy. It is the proportion of your assessment to the total value of the community that affects your tax bill, not the assessment number itself. Said another way, your municipality must collect a certain amount; no more, no less. It divides that amount among all owners in proportion to the amount of property they own. Whether the property in the municipality is assessed at 90% of market value or 110% of its market value has no effect on your particular tax bill so long as your neighbors are also being assessed at that same 90% or 110%. This is the concept of uniformity and the basis for Wisconsin tax law. An increase or decrease in the assessment of an individual property does not predict whether the tax bill for that property will go up, down, or remain the same. “What is the difference between assessed value and equalized value?” http://www.revenue.wi.gov/pubs/slf/pb060.pdf. DOR Response: The assessed value is the value placed on each parcel of real property and on each individual’s taxable personal property by the local assessor. State law provides that all non-agricultural assessments must be based upon the market value of property as of January 1. State law recognizes that every municipality cannot be assessed exactly at market value each year. The law allows each municipality to be within 10 percent of market value, provided there is equity between the taxpayers of the municipality. The assessed values determined by the local assessor are recorded in the assessment roll. The assessment roll is open for public inspection. Assessed values are used to determine how much of the property tax will be charged to each property owner. Because assessors in different taxing districts value property at different percentages of market value, it is necessary for the Department of Revenue to convert the assessed values, by taxing jurisdiction, to a uniform level. These uniform values are called equalized values because all the various local levels of assessment have been equalized and all non-agricultural property has been valued on an equal basis, namely 100 percent of market value. The equalized values are used for apportioning county property taxes, public school taxes, vocational school taxes, and for distributing property tax relief. The assessed value is important for maintaining equity among individual taxpayers within the municipality while the equalized value maintains equity between municipalities and counties. In summary, equalized values are not only used to distribute the state levy among the counties, but also the equalized values distribute each county’s levy among the municipalities in that county. The assessed values are used to distribute the municipality’s tax burden among the individual property owners.
HSA HOME WARRANTY PROTECTION
Make HSA Your Home WarrantyPartner. We provide comprehensive, affordable home warranty coverage and service that is second to none. See why HSA is the right home warranty for you and your clients. Contact HSA for your next home warranty. Aleena Heldt Territory Manager Milwaukee & NE Wisconsin 262-649-7092
Ben Rettig Territory Manager Madison & SW Wisconsin 608-957-6829
Resources The DOR website (www.dor.state.wi.us/html/govpub.html) offers a number of helpful publications regarding property taxes and the assessment process, including the “Guide for Property Owners,” found at www.revenue.wi.gov/html/govpub.html#property.
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2011
APPRAISAL CONFERENCE
March 16-17
Ho-Chunk Casino, Hotel & Convention Center
Conference Overview:
Why YOU should attend:
The WRA’s 2011 Appraisal Conference features instructors Joe Traynor, Craig Harrington, Alan Simmons and Rob Sherman. The conference includes the 2010-2011 7-hour National USPAP Update Course, Residential Sales Analysis, Appraisal Profession After Dodd-Frank, HVCC and the Mortgage Crisis, 2011 FHA Update, Residential Market Analysis and Complete and Accurate Appraisal Review. These courses have been approved for 2010-2011 Wisconsin Appraisor CE. They have been submitted for Assessor CE, Michigan and Minnesota Appaiser CE.
»»
You need the continuing education hours before December 14, 2011 and you can earn 14 of those hours at the Appraisal Conference.
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The 7-hour mandatory USPAP class offered at the Conference and taught by Craig Harrington includes the USPAP book (single copy-$75 value).
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Room rates are only $70 at Ho-Chunk Hotel and Casino - remember… the release date is March 7, 2011.
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Both dates of education with lunch, breaks and materials is only $265; that’s less than $19 per credit hour.
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You can build a network of other appraisers that you can refer business to or rely on for market comps.
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The information you receive will jumpstart your year with knowledge about changes to your business.
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If you register before March 2, you save the most dollars.
Conference Highlights: »»
2010-2011 National USPAP Update Course, 7 hrs. Sponsored by the Earl Espeseth Scholarship Fund.* (This course has been approved for Wisconsin, Michigan, Minnesota Appraisor and Wisconsin Assessor.)
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Residential Market Analysis – How to Meet Your Obligations, 3.5 hrs.
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Residential Sales Analysis – Tools and Strategies, 3.5 hrs.
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Appraisal Profession After Dodd-Frank HVCC & Mortgage Crisis, 7 hrs.
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2011 FHA Update, 3.5 hrs.
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Complete and Accurate Appraisal Review, 3.5 hrs.
* Includes copy of latest USPAP book.
register today!
wra.org/APPConference
education
New Broker Training February 16-18, 2011 WRA Headquarters - Madison
The WRA is offering a class dedicated to new brokers in preparation for starting your own office. You will learn about the daily practice of broker operations and management. Some of the topics include: Business structures and models, employment and compensation of agents, financial management and budgeting, company policies, trust accounting, plus more. Registration includes the latest version of the Broker Desk Reference.
2010-2011 7-Hour National USPAP Update Course March 16, 2011 Ho-Chunk Casino - Baraboo, WI The 2010-2011 version of USPAP incorporates a number of changes that affect most real property appraisers directly and immediately. Changes include three definitions being rewritten (Signature, Assignment and Jurisdiction Exception). Also, three rules (Ethics, Competency and Jurisdiction Exception) and the review standard, Standard 3, were significantly rewritten. (USPAP book included.) USPAP course approved for 7-hours CE credits for Wisconsin Appraiser and Assessor CE and Michigan and Minnesota Appraiser.
Residential Market Analysis How to Meet Your Obligations - 3.5 hours March 16, 2011
In the past three years the appraisal profession has gone through significant changes starting with the sub-prime mortgage meltdown, followed by HVCC and now the Dodd-Frank legislation. The changes are generational, similar to the S & L bailout, FIRREA, and licensing and certification of appraisers 25 years ago. How did we get here, what does this mean and what does the appraisal profession, particularly the residential mortgage appraisal business look like in the future. These and other timely topics will be covered in this one day seminar.
Ho-Chunk Casino - Baraboo, WI
This Market Analysis session will address USPAP requirements for market analysis and supplement it with the requirements for market analysis under Fannie Mae, Freddie Mac, FHA, VA, and ERC. It will demonstrate how to complete the market analysis sections of the URAR, 1004MC addendum, AI Summary Report, and the ERC form. Case examples, a demonstration of analysis using Excel functions, and extensive information on data courses will be also covered.
This seminar will concentrate on the latest procedures for all FHA appraisals, including: new sources on FHA web site, New Mortgagee Letters, New FHA FAQs, FAQs Lead based paint, FAQs Reasonable Fees and Time, New Reporting requirements, Appraisal Update or Completion Report, Home Ownership Center Resource Guide and more.
Complete and Accurate Appraisal Review – 3.5 hours March 17, 2011
Residential Sales Analysis – Tools and Strategies 3.5 hours March 16, 2011
Ho-Chunk Casino - Baraboo, WI
Ho-Chunk Casino - Baraboo, WI Sales Analysis will discuss analysis of sales and adjustment support through various methods, including statistical analysis through Excel and other software programs. It will also address comparable selection in a declining market (or other type), selecting and supporting market adjustments, REOs, relocation appraisals, and working with the underwriter.
wisconsin real estate magazine
Ho-Chunk Casino - Baraboo, WI
2011 FHA Update – 3.5 hours March 17, 2011
Ho-Chunk Casino - Baraboo, WI
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The Appraisal Profession After Dodd-Frank, HVCC and the Mortgage Crisis – What Comes Next? - 7 hours March 17, 2011
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Complete, accurate and competent appraisal reviews begins with defining the assignment type and understanding the level of detail required in each type of report. Reports are broken down into review categories with each category explained in detail. The accuracy of information in each category is explored and verification sources are examined. Each phase of a sample report is examined for accuracy and competency. Selection of comparable sales, adjustments and knowledge of geographic areas are explored. The class will end with completion of the appraisal review form and discussion. news.wra.org
Course Schedule
Visit wra.org/CourseSchedule for full schedule.
Sales & Marketing Management Date Course Location
*Submitted for CE credit February 16-18, 2011 ** Early registration applies two weeks prior to the of the course. March 10-11, 2011 start April 18-19, 2011 # Appraiser section members receive a discount. ^Check out special REBAC pricing. - $30 discount
Madison Madison Madison
Conference and Conventions
Date Event
March 16-17, 2011 September 13-15, 2011
Appraisal Conference # WRA Annual Convention
Baraboo Wisconsin Dells
Real Estate Continuing Education
Date
Course
Location
February 17, 2011 February 22, 2011 February 23, 2011 February 23, 2011 March 2, 2011 March 3, 2011 March 9, 2011 March 10, 2011 March 16, 2011 March 17, 2011 April 14, 2011
2011-12 Course 1 & 2 2011-12 Course 1 & 2 2011-12 Course 1 & 2 2011-12 Course 1 2011-12 Course 3 & 4 2011-12 Course 3 & 4 2011-12 Elective C & B 2011-12 Elective C & B 2011-12 Elective A & D 2011-12 Elective A & D 2011-12 Course 1 & 2
Brookfield Marinette Madison Sheboygan Madison Brookfield Madison Brookfield Madison Brookfield Sturgeon Bay
2011-12 Electives: Elective A – Short Sales & Foreclosures Elective B – Environmental Matters Elective C – Other Approved Forms Elective D – Financing
Appraisal Continuing Education
Course
Date
March 16-17, 2011 March 16, 2011 March 17, 2011
New Broker Training 2-day ABR Course* CRS210 – Referral Course (co-sponsored with the Wisconsin CRS Chapter)
April 4-7; 11-14, 2011 May 9-12, 2011
315 ^260
325 270
ATD
$
345 290
Location
800-279-1972 $27/m/$35nm 715-735-0547 800-279-1972 $27/m/$35nm 920-457-7908 800-279-1972 $27/m/$35nm 800-279-1972 $27/m/$35nm 800-279-1972 $27/m/$35nm 800-279-1972 $27/m/$35nm 800-279-1972 $27/m/$35nm 800-279-1972 $27/m/$35nm 920-743-9651
Location
Appraisal Conference# Ho-Chunk Casino, Baraboo 7-hour Mandatory National USPAP update course or #A.M. - Residential Market Analysis - 3.5 hours and P.M. - Residential Sales Analysis - 3.5 hours #The Appraisal Profession After Dodd-Frank, HVCC and the Mortgage Crisis - What Comes Next? 7 hours or #A.M. - 2011 FHA Update 3.5 hours and P.M. - Complete and Accurate Appraisal Reviews - 3.5 hours
Date Course Location
Pre-License * Plus books
Early Reg.** $Reg.
$
Member
Non-Member
Sales Pre-License Course 8:00 - 5:00 Madison 325* Broker Pre-License Course 8:00 - 5:00 Milwaukee $260 member
325* $280 non member
Available online!
QuickStart sales training program
www.wra.org/QuickStartOnDemand
wisconsin real estate magazine
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february 2011
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Realtor® sales tip
The Competitive Edge:
5 tips for Top Producers By marcus a. wally
Sustainability is key to the real estate business and as we dive into the New Year, let us remind ourselves what we need to do to remain competitive in the business of real estate. A challenging real estate market requires brokers to do business in new ways! According to the latest stats, Top Producers around the nation have 5 things in common. Top Producers:
the business-ordering option online, or using the vendor’s business-ordering
Starting any new business requires capital. And approaching a bank for a business loan requires two things: your income statement and your business plan. Becoming a true real estate professional means understanding that you are in business for yourself. As I’ve always said, our business is YOU.INC. Many salespeople do not have a written business plan or clear goals/timeline for achieving their dreams. Consistently, real estate professionals who have a written business plan are more successful than practitioners who don’t. If you don’t know where to start, you can copy a sample real estate business plan from Palo Alto Software Inc.’s Business Plan Pro. The company also offers Marketing Plan Pro. Get yourself a business and marketing plan for the new year and become accountable for all your actions or lack thereof.
2. Purchase Equipment as a Business Entity. Most of us purchase our laptops, digital cameras, or PDAs as consumers. This is a big mistake. If the technology breaks or you need help with the device, you will be sent to customer support, and we all know that this is not a happy place
wisconsin real estate magazine
you purchase equipment, buy it as a business entity. You can do this by stating that you are a business when you purchase the equipment in-store, choosing
1. Develop a Business or Marketing Plan.
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to be. This “purgatory” is completely avoidable and unnecessary. The next time
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february 2011
phone number. When you need help, you can call a support line that is reserved for business accounts. That means that you’ll only spend about five minutes on the phone with one person and the needed part or parts will be sent overnight. In some cases, you can even get a technician dispatched to your home or office to fix the problem. Did you know this? Another tip: business customers usually receive financial discounts that individual customers are never offered. Try it!
3. Use training as both a learning and a networking opportunity. I have always been a big believer in education. So it’s not surprising that I became an instructor. To this day, I find myself in many a classroom setting each year making sure that I am in the know. My philosophy is to never have my students know more than me. For REALTORS® our philosophy should be, never allow the customer (buyers and sellers) to know more than us. I also want to increase my exposure in my community as a sale associate who is knowledgeable and respected. This word-of-mouth is my most valued and trusted weapon.
news.wra.org
proper direction makes all the difference. In a market like mine, getting rid of a depreciating asset sooner rather than later puts more $$ into my seller’s wallet.
Along the way, I have learned about negotiation, fair housing laws, website development, marketing, and social networking. And there is always a need to brush up on computer basics, as this is a primary skill for every top producing REALTOR®.
Waking up on the positive side of the bed each day is not always easy, but it is always required to be a top producer. I put my company name badge on each day, but not before I put my smile on. It’s so amazing what a positive attitude can do for your bottom line. Choose to look at all the glasses as half-full instead of half-empty. Choose to only hang around people who support you and love you for who you are. As I always say, negative people don’t want to be a witness to your greatness. As an aviation lover, I always believe that your attitude sets your altitude!
Today’s education also focuses on emerging technologies and international business in addition to allowing us to connect with real estate pros from all over the world. Some of my best sales come from the new friends I meet in school. The new relationships I build allow my referral base to increase: I grow academically and my business grows financially.
4. Are disciplined. When you’ve previously worked for an employer, entering the unstructured world of real estate can be jarring. It’s therefore important to create your own structure. This starts with setting goals. I set daily, weekly, monthly and yearly business goals, ranging from the very specific – such as how many prospects to call on a given day – to more general goals, such as total annual sales volume, including how much money I want to make each year.
There is very little that separates an excellent REALTOR® from a mega successful REALTOR®. And that’s true for any profession: medicine, sports, music. The basics are all the same and minor adjustments are made for each unique field. For us, it’s the simple stuff that derails a potentially
successful real estate career, eclipses your joy in helping clients and customers in buying or selling a home, and causes practitioners to burn out prematurely. We are where we are today because of decisions we made or did not make. As you tackle 2011—or before you try to move your career to a new level of production—take a hard look at yourself and see if you need to develop the essential habits that will ensure success. Once you make the decision to invest in developing the topproducing habits like those I’ve shared, the level to which you’ll soar will surprise even you. Marcus A. Wally, MBA, is an active Florida REALTOR® in St. Augustine, Florida. Marcus is the founder and broker of New World Realty, which also manages coaching and facilitation of education classes around the world. Marcus earned his MBA from the University of North Florida in Jacksonville. He can be reached at (904) 669-1081 or by e-mail at marcuswally@comcast.
When I find myself short of my target for the year, I might increase my advertising in a given month to ramp up business for the remainder of the year. It is so important that I am out there even in the challenging times. Our current environment is no time to pull back on marketing efforts. Instead, I’ve just tweaked it for the present economy. We all must push ourselves to do just one more thing each day prior to going home.
5. Price it right and remain positive. The most powerful advice I can share as a fellow top producer and national trainer would be to always price listings correctly no matter what. When sellers don’t want to listen or follow your guidance, walk away. In today’s environment, price is the only thing that is allowing properties to sell. By not advising potential sellers of the falling market prices, we are doing a disservice to them and to ourselves. Price is the most important element to any real estate transaction and I find my success by getting sellers to take the medicine. If they elect not to, then I pass on the listing and look forward to getting it the next go-around. 2010 has been a terrific year for my firm and I know that my ability to steer my customers and clients in the
wisconsin real estate magazine
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23
public affairs
David Prosser for Supreme Court
By joe murray
The Wisconsin REALTORS® Association (WRA) has endorsed sitting Justice David Prosser for a full 10-year term in the Wisconsin Supreme Court election to be held on April 5, 2011.
P
Votes conservatively – Justice Prosser is generally a strict constructionist on the statutes, upholds contracts where possible, and sides with property owners in cases dealing with private property rights; especially those cases in which the DNR is on the other side.
rosser was appointed to the court in 1998 by former Governor Tommy Thompson and elected without opposition in 2001. Justice Prosser has demonstrated a solid understanding of private property rights in cases involving the environment, eminent domain, title insurance, public nuisances, appraisals, assessments, easements, condemnations, permits, contracts and land use.
Vote February 15 and April 5
The WRA’s Political Strategy Group, RPAC Trustees and Board of Directors all voted unanimously to re-elect David Prosser.
Supported WRA position on unauthorized practice of law – Under the terms of a State Bar of Wisconsin proposal (“petition”), the ability of a real estate licensee to draft forms would have vanished. The State Bar petition would have taken away a great portion of the role of the real estate licensee in a real estate transaction. Justice Prosser and the Court ruled in the WRA’s favor. As noted by WRA attorneys Kevin King and Cori Lamont, “If this event (petition) did occur, clearly your day, your career, your life would be very different.”
Why Support Prosser? Prior to his time as a State Supreme Court Justice, Prosser served in the Wisconsin Assembly as Minority Leader and Speaker of the Wisconsin State Assembly. So his support for our industry precedes his twelve years on the State Supreme Court. But let’s get to the point and briefly highlight the primary reasons for the WRA Board’s unanimous endorsement, provided by WRA attorney Tom Larson:
Supported WRA motion for new rules on judicial recusal – In response to a judge recursing herself in a case involving the WRA simply because the WRA had supported her during her election campaign, the WRA filed a motion with the Supreme Court asking the Court to amend its internal rules to say that endorsement and political support alone does not require a judge to recuse him/herself from a case. Justice Prosser led the majority of Supreme Court justices in support of the WRA’s motion. As a result, the WRA and other organizations will continue to be able to exercise their constitutional rights to support and endorse judicial candidates without fear that the judges will be required to recuse themselves from hearing the case.
Excellent record on cases impacting the real estate industry – Since 1998, Justice Prosser decided 46 cases involving issues important to the WRA. Of these 46 cases, Justice Prosser ruled in a manner that was beneficial to the real estate industry or property owners in 35 cases. Prosser’s overall record of property owner support: 76%. Outstanding on WRA cases – The WRA has filed amicus briefs in 25 cases decided by the Supreme Court during the last 12 years of Justice Prosser’s tenure. Of those 25 cases, Justice Prosser ruled with us (in whole or in part) in 22 cases. Prosser’s record on amicus briefs: 88 %.
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Three primary challengers have entered the race to run against Prosser in the February 15 primary election: Joanne Kloppenburg, an assistant state attorney general; Marla Stephens, director of the state’s public defender’s office appellate division; and Joel Winnig, a Madison attorney. For Justice Prosser to advance to the April 5 general election, he must survive the February 15 primary. The WRA will conduct a crucial “Get-Out-the-Vote” effort prior to the primary and spring elections. Please be sure to mark your calendars and vote in both elections. Issues involving private property rights, the environment, contracts and land use will be decided by those sitting on the bench. A judge with a solid and fair legal perspective can resolve these issues favorably. Here in Prosser’s own words is how he describes himself as he asks for your vote: “I present myself as a judicial conservative, devoted to the constitution and the rule of the law. My job is to find the law and apply it properly, not to make it up to advance some ideological objective.” Please vote for David Prosser for Supreme Court! Joe Murray is Director of Political and Governmental Affairs for the WRA. news.wra.org
By Michael theo
Real Estate Key to Fixing Economy and Budget
T
he 2011-12 legislative session will be a difficult one, as the state struggles with a challenging economy and a significant budget deficit. Wisconsin’s real estate markets face a similarly challenging year, with hopes of starting to reverse declining home sales and stabilize home prices. With a new governor, new administration and new legislative majorities in both the State Assembly and Senate, there is a new opportunity for the WRA to demonstrate the irrefutable link between the state economy, budget and real estate market. The inevitable conclusion is real estate holds the key to Wisconsin’s economic revival.
Impact on the Economy Understanding the connection between the state’s economy, budget and real estate market is the first step toward finding solutions to our current economic and fiscal problems. The real estate industry has historically generated between 15 and 18 percent of the national gross domestic product. Despite a down market, real estate holdings in the U.S. were valued at $16.5 trillion (Q1 2010). In Wisconsin, the real estate industry constitutes approximately 14 percent of the gross state product. Every $100 spent on real estate generates an additional $44 in spending on related products and services in other sectors of the economy.
Impact on Government Revenues and Quality of Life The property tax is the largest tax in Wisconsin, generating $10.1 billion (gross) in 2009-10 ($9.1 billion net after tax credits) for local wisconsin real estate magazine
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governments, according to the respected Wisconsin Taxpayer’s Alliance. Propertyrelated taxes and fees provide well over 90 percent of all local government revenues. Property taxes are levied for K-12 schools, technical colleges, municipalities, counties and special districts.
legislative agenda that recognizes the link between the state’s economy, budget and real estate market and will be encouraging lawmakers to adopt policies to improve Wisconsin’s real estate industry. Specific recommendations are being advanced under these four major goals:
Property taxes increased 4.3 percent in 2009-10 over the previous year. Responsible for the increase were schools (up 6%) and technical colleges (up 3.9%). Property taxes have increased in Wisconsin every year since 1980, except for 1997 when the state first implemented the two-thirds state school funding formula.
1. Economic and Job Development: Encourage greater economic development and job growth in Wisconsin by providing additional incentives to attract new businesses, retain existing employers and stabilize local economies.
At the state level, the tax on real estate transfers generated $4.3 million in 2010, nearly 8 percent more than the previous year. However, these collections were far less than the amount collected in previous years when home sales and values were higher. For example, the tax ($3 per $1,000 of value) generated $80.5 million in 2006 and $71.7 million in 2007, before the decline in the national housing market began. For our quality of life, homeownership produces tangible social benefits, including improved educational achievement, civic participation, better schools, lower crime and improved property values. These numbers lead to one conclusion: Wisconsin’s economy and quality of life cannot recover until Wisconsin’s real estate markets recover.
2. Real Estate Transactions: Improve the real estate market in Wisconsin by reducing real estate transaction costs, protecting consumer choice in real estate services, and clarifying regulatory uncertainties related to real estate professionals. 3. Regulatory Reform: Improve the regulatory climate in Wisconsin by creating greater certainty for property owners and permit applicants, streamlining the permitting process, and eliminating unnecessary regulations and penalties. 4. Tax Reform: Improve Wisconsin’s real estate market by reducing the tax burden related to the ownership and transfer of real estate, and health care costs for independent contractors.
WRA Legislative Agenda
Focusing on improving Wisconsin’s real estate industry will, at the same time, improve Wisconsin’s economy and budget. The work on all three has now begun.
As the new slate of state policy makers settle in, the WRA has been actively promoting a
Michael Theo is Senior Vice President of Legal and Public Affairs for the WRA.
february 2011
25
public affairs
Governor Walker
Unveils Job Creation Package
By tom Larson
On January 3, 2011, Wisconsin Governor Scott Walker issued an executive order calling the Wisconsin Legislature into special session to focus on job creation. Governor Walker has vowed to create 250,000 jobs in Wisconsin over the next four years and has introduced a package of job-creating initiatives aimed at accomplishing this goal. Walker has asked the legislature to pass his jobs plan by the end of February. The Governor’s job creation plan consists of various initiatives that fall into the categories of regulatory reform, tax reform, tort reform and restructuring the Wisconsin Department of Commerce. Specifically, the jobs package includes the following:
3.
Governor accountability – Requires the governor to approve all administrative rules before they are sent to the legislature for review. This proposal makes Wisconsin’s top elected official directly accountable to the public for the laws and regulations adopted by the administrative branch of government.
4.
Wind siting – Modifies the wind siting law to adequately protect the health, safety and property values of the neighboring property owners by:
Regulatory Reform 1.
2.
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Separation of powers -- Clarifies that an agency’s broad statement of authority does not override the specific regulatory framework set forth in state statute. This clarification will prevent the DNR and other state agencies from usurping the authority given to them by the legislature in regulating matters such as municipal wells, sprinklers, shoreland zoning, and piers. Choice of venue -- Authorizes legal challenges to administrative rules to be brought in the circuit court for the county where the plaintiff resides. Requiring all challenges to administrative rules to take place in Dane County centralizes power in one county and is unfair to the property owners and businesses located in the other 71 counties.
wisconsin real estate magazine
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february 2011
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Requiring a minimum setback of 1800 feet from the property line, unless the nonparticipating property owner(s) agree(s) to something smaller;
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Allowing the property owner to terminate the lease agreement within 10 business days after entering into the contract;
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Requiring lease negotiators to disclose in writing whether they have a Wisconsin real estate license or meet one of the exemptions under Ch. 452 (real estate licensing law);
news.wra.org
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Requiring the state to study the impacts of wind turbines on property values;
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Requiring the state to produce a pamphlet for property owners discussing the wind siting law and the potential impacts of wind turbines on health, safety and property values, and require the pamphlet to be given to property owners prior to entering into a lease agreement;
manufacturer to sue and also protects a seller from liability for negligence unless the seller failed to exercise reasonable care in assembling, inspecting or maintaining the product or in giving warnings or instructions; 2.
Risk Contribution -- Eliminates the “risk contribution” theory in manufacturing lawsuits. The Wisconsin Supreme Court created the standard allowing plaintiffs to sue any lead paint manufacturer that sold paint in the state without proving which product caused the harm.
Tax Reform
3.
Includes various tax-incentive initiatives to encourage new employers to locate in Wisconsin and current Wisconsin employers to expand their operations in the state.
Expert Opinion. Requires expert witnesses to base their opinions on sound science and well-established theories.
4.
Punitive Damages – Heightened standards for the award of punitive damages, requiring a plaintiff to show that the defendant acted “maliciously” toward the plaintiff or with “intentional disregard” of the plaintiff’s rights.
•
1.
Requiring all notices to be sent to property owners within a ½-mile radius of the proposed wind turbine.
Small business tax credit -- Allows a business with gross receipts of $250,000 or less to claim a tax credit of 15 percent of its total tax liability. The credit fades gradually until a business reaches gross receipts of $500,000. Businesses will be able to claim the credit on income earned starting on January 1, 2011.
Creating of the Wisconsin Economic Development Corporation (WEDC)
2.
Relocation tax credit – Exempts from income and franchise taxes for two years businesses that have not done business in Wisconsin for the previous ten years. It gets them in our front door where our state’s workforce will then help the company grow.
3.
Economic development tax credit – Increases the amount available for the existing economic development tax credit from $75 million to $100 million. The credit is currently awarded at the discretion of the Department of Commerce to retain existing businesses or assist businesses that are expanding in Wisconsin.
Creates a public-private partnership whose sole mission is to promote economic growth and create jobs for Wisconsinites. Transforming the Department of Commerce will align state government with its most important mission: creating an environment for job growth. The regulatory duties currently assigned to the Department of Commerce will be reviewed to determine their impact on public safety or public health before being reassigned to other agencies or eliminated. The new authority will be led by a “chief executive officer” and a twelvemember board of directors. The board of directors will be comprised of the Governor, who will serve as chairman, and eleven members appointed by the Governor and confirmed by the Senate. The WEDC will be required to report to the Legislature annually on the progress of its economic development initiatives and subject to annual audits by the Legislative Audit Bureau.
4.
Health savings accounts -- Creates an exemption from state income taxes for contributions to health savings accounts.
WRA’s Message – a strong real estate market is key to Wisconsin’s economy
5.
Supermajority – Requires 60 votes in the Assembly and 20 in the Senate to pass any bill that raises taxes.
The WRA lobbying team will continue to work closely with Governor Walker’s administration, the legislature, and state agencies to develop and enact job creation proposals that will improve the job climate and regulatory environment for Wisconsin.
(Note -- the Wisconsin Legislature modified Governor Walker’s small business tax credit proposal by creating a (1) $4,000 income tax credit for every job created by a company with less than $5 million per year in gross receipts, and (2) $2,000 income tax credit for every job created by a company with more than $5 million per year in gross receipts)
Tort Reform Includes several initiatives targeting liability schemes that put Wisconsin businesses at a competitive disadvantage. 1.
Product Liability – Requires proof of a “reasonable alternative design” to prove a defective design, moving Wisconsin away from the much broader and loose “consumer contemplation” test. This significant change will bring Wisconsin in line with 46 other states. In addition, the proposed legislation will remove sellers from strict (product) liability litigation whenever there is a viable
wisconsin real estate magazine
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february 2011
Our message will be that improving the real estate market is the first step to advancing state and local economies, as well as solving the budget problems facing our state. For more information on the Job Creation proposals, please contact Tom Larson at tlarson@wra.org or (608) 240-8254. Tom Larson is Chief Lobbyist and Director of Legal and Public Affairs for the WRA.
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product showcase New!
Mobile News App Puts Real Estate News at Your Fingertips
Ten Market Facts Consumer Postcard Updated for 2011!
Just Released! It’s easier than ever to access real estate-specific news, videos and technology tips with the all-new mobile news app from the Wisconsin REALTORS® Association!
What’s good about today’s market? Lots of things! But do consumers know? Get the good news about the real estate market to consumers with WRA’s new market facts postcard.
Get the most comprehensive real estate news app in Wisconsin. You’ll receive coverage of both local and national markets plus updates on association business – all in the palm of your hand.
Whether you’re trying to build confidence within your prospect base or get consumers to consider buying or selling a home, the WRA’s 10 market facts postcard is designed to promote the positives about today’s industry.
TEN
FACTS you should know about the Wisconsin real estate market.
There’s no such thing as a national real estate market. If you listen to the media, you might get the idea that real estate markets are the same everywhere. If conditions are bad in San Diego and Miami, they must be bad everywhere, right? Wrong! Real estate markets are local; when you’re looking to buy or sell, pay attention to price trends, sales, and inventory levels in your area. Don’t look at your local market through the lens of national indicators. Wisconsin home prices remain stronger than other parts of the country.
Buying a home now can pay off later.
REALTORS® can help you find your dream home.
Have you ever heard the saying “buy low, sell high?” We’re in that market now. As home prices continue to be affordable in Wisconsin, not only can you find a good deal, but when the market turns upward, you will see your value grow. Investing in a new home today means increased equity tomorrow.
Everyone knows you can search for a home on the Internet, but it’s pretty lonely out there if you don’t have someone representing your interests. REALTORS® don’t just sell homes; they represent you. They want you to find a dream home. REALTORS® see hundreds of homes each year. They know a good deal when they see it and can help you avoid costly mistakes. If you are getting the itch to buy, hire a REALTOR®. They will be by your side the whole way, giving you greater confidence and a smoother experience.
A house is a place to make a home, not just a buck. Most people don’t buy a house to flip it – they buy it to live in it. The value of strong communities, rooted families, civic pride, comfortable retirement, and a higher quality of life can’t be expressed on a balance sheet.
Why sift through multiple emails or websites to get the latest scoop on the industry? Get reports from Wisconsin Real Estate Magazine, Inman News, Real Trends, WRA’s Agent Newswire, WRA Legal Hottips, WRA Tech Hottips and more.
Using a REALTOR® is a smart financial decision. REALTORS® are the experts at bringing buyers and sellers together. Unlike people who sell as a FSBO, you’re not alone. REALTORS ® have contacts to help speed up your transaction. They can also get you the latest market data on pricing your home and expert knowledge on real estate forms and transactions. The advantage of developing an ongoing relationship with a professional – a REALTOR® – speaks for itself.
Interest rates are at all-time lows. You can get a 30-year loan for less than 5% interest. What’s not to like about that? These are the lowest rates on record. As recently as two years ago they were about 6.3%. That drop slashes your monthly payments. And today you get more house for the money. People say it all the time and it’s true…. we may never see a market like this again in our lifetime.
It’s prime time for second homes.
Sixty percent of the average homeowner’s wealth comes from home equity. Savvy investors and prospective retirees know real estate is important to their portfolios. About one-third of all home sales are second homes or vacation properties, and Wisconsin has plenty of inventory and desirable locations for those seeking them.
The postcard is available for download from the WRA website in print, web and email formats. If you need hard copies, a print-ready version is also available, allowing you to order copies through your local printer. >> Get the 10 market facts postcard today by visiting www.wra.org/10factspostcard.
The WRA mobile news app is available for Apple iPhone and Android users. Stay on top of the news and enjoy real-time access to emerging developments in the industry. It’s easy to install, easy to use and FREE! >> Get it today by visiting the Apple iPhone App Store or the Droid Market and searching for “WRA News.”
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february 2011
news.wra.org
Introducing the new
WRA Mobile News
Real Estate News at 4G Speeds. The real estate industry is moving fast. Are you moving at its speed? It’s easier than ever to access real estate news with the all-new mobile news app from the Wisconsin REALTORS® Association! Get local, state and national news headlines daily; and top news from Wisconsin Real Estate Magazine, Inman News, Real Trends, WRA’s Agent Newswire, WRA Legal Hottips, WRA Tech Hottips and more. It’s easy to use, easy to install and free. Visit the Apple App Store or Droid Market to test drive it today.
One App, Many Perks.
Industry News
Videos
Made for:
Tech Headlines
Education
iPhone
Android
What is our WHEDA Advantage ? ®
Home buyer education.
H
ome buyer education is built into every WHEDA Advantage loan and prepares first-time home buyers for successful homeownership. Through WHEDA’s trusted network of non-profit partners, your first-time home buyers have access to education giving them
the knowledge and confidence to become responsible, long-standing homeowners. Discover the WHEDA Advantage! Income and purchase price limits apply. Interest rates are subject to change daily. To learn more, go to wheda.com/Realtors/.
WISCONSIN HOUSING AND ECONOMIC DEVELOPMENT AUTHORITY 201 West Washington Ave ■ Madison, WI 53703 800.334.6873 ■ www.wheda.com