September 2011 - Wisconsin Real Estate Magazine by Lauren Bizorik

SEEKING CLARITY

WHEN MARS ATTACKED

The WRA pursues legislation to clarify zoning variances.

The FTCâ&#x20AC;&#x2122;s announcement on MARS Rule provisions.

MAGAZINE

September 2011 $5.00

and

Short

Sales foreclosures The Changing Landscape

Tired of being held ransom by your broker? Unlock your earnings potential by joining the most productive network in real estate. GET VISIBLE When you’re with RE/MAX, half the introduction is already over. RE/MAX is the most recognized brand in real estate, and consumers know our network sells more real estate than anyone else.

Interested in a RE/MAX franchise? Visit JoinREMAX.com or call 800.878.8138.

GET TRAINING Real estate is a fast-moving business where the rules are constantly changing – so keeping your knowledge base up to date is vital. RE/MAX University lets you access unparalleled education materials, including more than 1,000 business-building videos.

GET MORE BUSINESS Our business model is focused on your success. The RE/MAX organization is built by top producers, for top producers. Earn more listings and write more offers by tapping into the most powerful branding in the real estate industry.

North Central Home of the Best Agents®

table of contents

september

2011 |

vol.

27, no. 12

24 6 features 6

9 articles

Title Tips for Distressed Sales

Before and After MARS Attacked

History Making Recalls Complete

WRA Pursues Legislation to Clarify When Zoning Variances Expire

One key goal in all distressed transactions is the delivery of a clear title to the buyer.

Not so fast: even with the FTC’s announcement that it will not enforce certain provisions of the MARS rule against REALTORS®, not everyone is off the hook.

An overview of the results of the historic and expensive state Senate recall elections.

The WRA is seeking new legislation to provide better zoning variance clarity to benefit both homeowners and REALTORS®.

wisconsin real estate magazine

september 2011

Your Parents (and Broker) Taught You Better Than That

Getting permission before viewing property still applies to REO properties and foreclosed homes.

Legal Hotline: Short Sales and Foreclosures

A look at distressed sales: including the impact of bankruptcy, home inspections, sheriff’s sales, multiple offers and more.

Sales Tip: Five Ways to Practice Law - Unlawfully

This month’s sales tip reminds us that we are REALTORS® - not attorneys. Follow the five steps in this article to avoid crossing the line from practicing real estate into practicing law.

Give Me A Break!

As long-term tax reform is a hot topic of debate both locally and nationally, one tax break that should remain unchanged is the mortgage interest deduction.

News

inside the wra

with bill malkasian

Top News Stories in and Around the Industry vice president of the Metropolitan Milwaukee Fair counties. The organization’s research found that the United Way Honors the Stark Family Housing Council, laments, “It’s been a long time number of people in those markets paying too much for Service toedition of the magazine features two eptember’s in Wisconsin Dells. You hopefully got the

coming.” The Pewaukee-based commission has

for their rental housing will double from around

phrases, or practices, that are part of your everyday before Convention, and not conducted a comprehensive review of magazine housing just 70,000 currently to a whopping 140,000 by 2010. existence in the real estatesince business: short sales and last-minute decisions are okay. Think about patterns the 1970s. Some say a partial solution would be for the U.S. foreclosures. These two words are part of our regular attending one more time - we’d love to have government to reverse course on housing policy and Wisconsin Receives Millions Ease vocabulary today – but not five years ago. Imagine talking about toyou there! substantially increase funding for rental assistance, Community Crisis short sales and foreclosuresForeclosure in 2005 – you’d be on another particularly help for United Way of Dane County The month of September alsoworking is thefamilies. end of Milwaukeethe Business Journal (09/30/08) planet! Today, if you don’t understand concepts of(WI) short sales the WRA’s fiscal year. Coming up in October, we United and Wayforeclosures, of Dane County it’s difficult to in the Thebestate of business. Wisconsin is due to receive nearly $39 Free FHAteam Toolkit introduce ourNAR newlyReleases elected leadership and our recognized the Stark Family with million in federal funds to stabilize neighborhoods Wisconsin REALTORS® Association (10/30/08) Our feature article,Society “Title Tips for Sales,” by our Senior new 2012 Chairman Rob Keefe. 2012 promises to be as the 2008 Tocqueville andDistressed stave off a spate of abandoned homes. According Award for outstanding service to the Dane Countywill provide Attorney Deb Conrad, you with useful information exciting as 2011 on many association fronts, andyou while NAR and the WRA are eager to help meet the to HUD and Gov. Jim Doyle, the funds are separate Billcommunity Malkasian and United Way. The Tocqueville Society about how to handle the delivery of a clear title$9.2 when working the average member follow the balance like We current doesn’t challenges of the troubled sheet economy. from approximately million the government is WRA President Award celebrates and acknowledges with distressedpeople sales. or And in awarding our legalthe section the magazine, our board of know directors team, thethat WRAcanentered thatand you officer need resources help you city of of Milwaukee, where the foreclosure families, such as the Starks, have made athat major wewho offer articles touch on federal and state law andis awarding 2012the in strongclose financial shape. and you need them at little or no rateboth is currently 9.9 percent. HUD transactions, impact on the quality of life in Dane County through via its Neighborhood Stabilization Program, how they involve short salesfunds and foreclosures. As always, we cost. NAR has just released an all-new FHA Toolkit their exceptional service and commitment to the In reporting to our board last month, the membership which $4 on billion is being allocated to bring you the Best of the Legalunder Hotline thatalmost touches questions online for FREE to help you get clients the financing community. statistics of the WRA in 2012 will record about the same local and state governments for the redevelopment and answers about the topic at hand. This month, the material they need in a credit-strapped environment. It is size of membership as the organization had in 1997 - a little of abandoned and foreclosed houses. covers your questions about “as is” sales, sheriff’s sales, short one of the most comprehensive toolkits NAR has City Housing Authority Receives over 12,000 members. For the historians in the room, the WRA think you’ll find the feature article ever produced, and it’s available to all REALTORS® 100-Unit Grant sale offers and much more. I Sites: Not Just for Personal peaked in membership in 2006 with 18,632 members. But and our legal Milwaukee Journal Sentinel (09/25/08) Pabst, articles Georgia very useful and helpful as you practice real right now by visiting the link below. They also have Connections Anymore what is more important is that the WRA gained nearly 10,400 launched a new page called “NAR Helps You Navigate The city of Milwaukee’s estate. housing authority is due Minneapolis-St. Paul Business Journal (09/29/08)new Grayson, members between 2004 and 2006! In other words, we the Current Economy” where you can find dozens of Katharine to receive $6.7 million in federal Hope VI money While we’re talking about sales, we also have the July Home Sales practically doubled in size in that three-year period. great products and resources, like the FHA Toolkit, to build 100 new housing units. The 100 units will ® St. Paul, Minn.-based REALTORfrom Teresa Boardman Report this month, which showed substantial improvement be constructed in a 2.5-mile area and will include for free or at2008 a steep discount. Visit www.Realtor. Correspondingly, in the state of Wisconsin license real says Flickr, Facebook and other social networking year ago. rental And further 29 public housing and aaffordable units;on the topic of sales, our Monthly Sales org/NARHelpsYou for links to these great with programs estate renewals, there were nearly 30,000 people a real sites five make it to easy to meet people who might Tip writer Marcus Wally outlines ways avoid mistakenly nine affordable housing units for income-eligible and products. eventually become clients. While many professionals estate license. Today there are 20,000. practicing instead of practicing real estate. families; and 62 moderately priced,law open-market are using these sites to make business contacts condominiums. HUD Secretary Steven C. Preston The bottom Home line is Loans that theGoing WRA isStrong, down 6,515 members Albeit a and companies to conduct Next, areas that the WRA is excited about areuse twothem services that background comments, “Milwaukee’s housing authority has today compared toTighter, our high mark of 2006. The impact on that checksmembership or recruit new workers, many simply want Bit in Area we offer our members – the dental program and our demonstrated it has the leadership to lead and regarding dues, education income and other income sources withNotes peoplefrom whothe have similar interests. Wisconsin State Journal (10/17/08) Balousek, Marv benefit. Be suretoto connect look at our WRA revitalize neighborhoodsnew andzipLogix transform lives. According to Boardman, “The hard sell is is dead. It challenging, but the best part is that the leaders of the WRA section to read Cities like Milwaukee change and grow andabout needthe to REGIT Inc. dental coverage, exclusive to Despite the ongoing national credit crisis, property doesn’t work door-to-door, and it doesn’t work on were smart enough to pay off debt and save money to make revitalize housing to makeour sure many aren’t members. Andpriced in our Product Showcase this month, we talk professionals say mortgage money remains available social networks.” On Flickr, Boardman connected the reduction of membership less challenging. out.” Milwaukee is one about of a half-dozen our additionhousing to the zipLogix the new Digital throughout southern Wisconsin to home buyers withprogram, a fellow photographer whoInk™ eventually used her authorities nationwide todigital receive new Hope VI The digital signature is cutting-edge, signature software. withKeefe solidand credit. Ron will Steinhofer, manager of services to purchase a home. In the end, Rob his team have challenges grants. and it’s what consumers want. You should know how to use the Marshalland & itIlsley Bank’s home with fewer members will be moreregional expensive to belending a Digital Ink™ software, and it’sForeclosures part of your dues Push package – at noHigher, ® Rents group, states, “There’s plenty of money for home REALTOR , but the quality of agents and brokers coming Housing Study Delay Frustrates additional cost. I hope you getSqueezing the opportunity to use it. Low Income Familiesout of this challenging loans out there. It is slightly to qualify and changing timemore will difficult be for the Advocates Minnesota Public Radio (MN) (09/21/08) Olson, Dan than two or three years ago, but if you have a good Milwaukee Journal Sentinel (10/07/08) Williams, Scott better. Let’s move to our Public Affairs section. As Wisconsin takes a credit score, a good job and a down payment, money In Minnesota’s Twin Cities, a wave of home Two years after promising the Milwaukee breather from lastmetro month’s recall elections, Joe Murray writes I say thanks to Horning and his adds teamthat and banks my still are foreclosures has pushed more people into the rental is John available.” Steinhofer area’s first major housingabout studythe in three resultsdecades, and outcomes of the recalls. Mike Theo gives staff for another greatloans year, and hello programs to Rob Keefe apartment sector. The result is an intensifying making via such as Fannie Mae the Southeastern Wisconsin Planning us an Regional article about the mortgage interest reduction in light of the an exciting demand on Minneapolis and St. Paul’s rentaland housing andfuture. Freddie Mac. Furthermore, credit standards Commission (SEWRPC) is tax stillreform struggling to get the talks going on in Madison in Washington. And Tomrate is very low stock, soand much so that the vacancy remain about the same as they were six months ago, effort launched. Proponents hope the study will Larson writes a summary of the WRA’s current efforts to pursue and rents are on the rise. This, in turn, means lowserve as a catalyst for improving affordable housing meaning that qualified home buyers can get loans legislation intended to improve the working clarity offamilies zoningface variances income higher monthly rents opportunities throughout the city’s suburbs. But if they havemonth, the proper income verification. On the Looking forward to next andassemble expirations in Wisconsin.even And though even though the recalls areat unchanging their income hovers commissioners have yet to an advisory downside, banks have been less willing to make levels. Since 2005, Twin and Cities apartment the or legislature comes back in September andthe October, committee to oversee the over, research set a specific loans with higher loan-to-value ratios. In addition, vacancy rate has dipped 7 percent the survey. WRA will involved in policymaking then. We’llfrom keep you to closer to timetable for conducting the PhilbeEvenson, conventional financing without a down payment has 4 percent. Average monthly rents over that same updated on all of these developments. the commission’s executive director, said other issues indeed disappeared. However, 100 percent financing time span are up more than $25, rising to more keep getting in the way. The delays have frustrated is still available with Veterans Administration and Bill And let’s not forget the WRA’s 100th Annual Convention, than $850. The St. Paul-based Wilder Foundation housing advocates the most. Bethany Sanchez, ® reviewed income data for several Twin Cities Rural Development home loans. recently September 13-15, at the Kalahari Resort & Convention Center

wisconsin real estate magazine

september 2011

www.wra.org/wrem

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 Robert Keefe, Chairman-Elect rkeefe@keeferealestate.com

September is REALTOR® Safety Month

Renny Diedrich, Treasurer rdiedrich@coldwellhomes.com

Knowledge, awareness, and empowerment are the core components of the REALTOR® Safety Month campaign by the National Association of REALTORS® (NAR), aimed at educating REALTORS® to understand that the risks they face on the job can mean the difference between life and death.

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

William E. Malkasian

As part of the NAR’s efforts to keep REALTORS® safe, September is dedicated as the month to kick off safety efforts - but that’s just the start. To help remind REALTORS® to know the dangers they may face, to be aware of surroundings, and to be empowered with precautions and preparations to avoid risky situations, the NAR has developed an online REALTOR® Safety Resource Kit. This kit consists of useful safety material, tips and reminders, including:

Publisher

Robert Uhrina Managing Editor

Lauren Bizorik Editor

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

Free webinars on REALTOR® safety presented by industry experts and available throughout the year

•

Quarterly safety messages sent to Associations and brokers to share with members

•

Expansion of client safety materials and resources

•

Tips for customizing your safety strategy

With this REALTOR® Safety information, you can keep safety awareness top-of-mind with these resources brought to you be the NAR throughout the year. The NAR and the WRA want to help both REALTORS® and customers be safe in the practice of real estate. Let’s all work together and stay safe! To view the webinars and for REALTOR® Safety promotional handouts, artwork and more information, visit www.realtor.org/safety.

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.

WRA Member Benefits

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.

Dental and vision coverage are now available to WRA members! Just a few years ago, finding dental and vision coverage for an individual or family was a difficult proposition. Recently that has changed, and most major carriers now offer stand-alone dental plans at a reasonable cost – and some even offer vision.

Maintaining a healthy smile is not only important for you professionally, but it is also important in maintaining good health. Regular dental visits can prevent periodontal disease, which can increase your medical costs by as much as 20 percent compared to those with no such disease.*

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

Call or e-mail REGIT Inc. today to choose the plan that’s right for you. Call toll-free at (800) 537-9786 or send an e-mail to regit@regitinc.com. REGIT will provide you with all the details as well as rates and an application. These new benefits will leave you smiling!

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

•

*Journal of Periodontology, 2007

september 2011

news monthly wisconsin housing report

Home Sales Rise Substantially in July View all housing statistics at www.wra.org/housingstatistics

By David E. Clark, Economist, C3 Statistical Solutions

> WISCONSIN HOUSING STATISTICS MONTHLY ACTIVITY - JULY 2011

% Change

YTD-2011

YTD-2010

% Change

-23.8% 34.4% -5.9%

69,603 29,285 $131,500

85,576 32,824 $141,900

-18.7% -10.8% -7.3%

JULY-2011

JULY-2010

New Listings Closed Sales Median Sales Prices

8,482 5,102 $139,900

11,127 3,797 $148,650

Region

Median Price JULY-2011 JULY-2010

% Change

Existing Home Sales JULY-2011 JULY-2010

% Change

Southeast South Central West Northeast Central North

$152,000 $167,950 $129,950 $125,000 $107,000 $115,000

-8.6% -4.0% -7.1% -2.5% -13.7% -8.7%

1,751 1,058 586 853 281 563

36.8% 35.3% 34.4% 35.4% 7.7% 41.1%

$166,250 $175,000 $139,900 $128,250 $124,000 $126,000

s expected, the sales of existing homes in Wisconsin increased 34.4 percent over July of last year, and the median house price fell 5.9 percent to $139,900, according to data released by the Wisconsin REALTORS® Association (WRA). “We anticipated July was going to show very strong sales compared to last year when the federal homebuyers tax credit expired,” said John Horning, Chairman of the WRA Board of Directors. The federal tax credit expired in June of 2010 causing a substantial decline in home sales the following month. “Home sales this year follow a more typical seasonal pattern whereas last year sales were front-loaded into the first six months because of the tax credit,” said Horning. “That’s why the sales figures for April, May and June this year appeared so weak, and it’s one of the reasons they are so strong in July,” Horning said. All regions of the state had higher sales volumes in July, with most sales up more than 30 percent over last year. The strongest growth was seen in the north region, where home sales were up 41.1 percent compared to July 2010. “We continue to see the north leading the state in sales performance due in part to an improving second-home market,” said Horning. Home sales grew between 34.4 percent and 36.8 percent in the southeast, south central, northeast and west regions, but they were up a more modest 7.7 percent in the central region of the state.

Statewide

wisconsin real estate magazine

september 2011

1,280 782 436 630 261 399

The median price of existing homes dropped 5.9 percent over the July 2010 to July 2011 period. The smallest decline was seen in the northeast region where the median price fell 2.5 percent over the period, followed by the south central region which fell 4 percent. Median prices in the west were down 7.1 percent; they fell 8.6 percent in the southeast and declined 8.7 percent in the north. Finally, median prices dropped 13.7 percent in the central region of the state. “It’s difficult to say how much of the change in the median price results from the discounting of home prices in a soft economy and how much is a result of a shift in the mix of homes sold to smaller entry-level or vacation properties,” said WRA President Bill Malkasian. Nonetheless, housing affordability remains very high. Indeed, the Wisconsin REALTORS® Housing Affordability Index, which measures the percent of the median-priced home that a buyer with the median family income can buy, was at 217 in July, up from a revised figure of 202 a year ago. The current high inventory of homes available in the state combined with the Fed’s recent commitment to maintaining short-term interest rates near zero should keep mortgage rates low, assuming inflation remains in check. “Until our inventories moderate, there will continue to be excellent opportunities for first-time as well as trade-up buyers in this market,” said Malkasian. For more information, contact David E. Clark, Economist, C3 Statistical Solutions Office phone: (414) 803-6537 www.wra.org/wrem

techhottips

View more posts at www.techhottips.com

Technology Tips & Tools for the Real Estate Professional

Tech Hottips writers are Amy Chorew, a nationally acclaimed real estate technology trainer and Kim Wood, a Philadelphia-area REALTOR® involved in both real estate and technology coaching.

TWO EASY WAYS TO CREATE FACEBOOK ADS

learn details, but if you’d like the quick version, here it is:

Have you seen the advertisements on the right side of your Facebook profile? If you haven’t paid attention to them, watch how Facebook displays ads that are relevant to your recent conversations, page “likes” and clicks. If you set up your own advertising campaign, you tell Facebook the keywords by which you would like your ad(s) to appear. So if you have chosen “Wisconsin,” “house” and “moving,” for example, and a user posts a status update like “I am looking forward to moving to Wisconsin later this year,” your ad would likely appear in the sidebar when that person signs in to Facebook. You can be part of this targeted advertising campaign to promote your pages, business or yourself with either a Cost per Click or a Cost per Thousand Impressions Campaign. The Facebook Help Section is a good place to

CPC: Cost per Click •

Requires action by user – they have to click.

•

You pay per click.

•

Minimum of $.01 per click and $1 per day.

CPM: Cost per Impression •

No action required – user has the ad appear in front of them.

•

You pay per 1,000 times the ad is in front of a user in the sidebar of the page or profile they are viewing.

•

Minimum of $.02 per 1,000 and $1 per day.

Try it!

WHEN YOU NEED TO BE SLY Have you ever dialed a mobile phone number and said to yourself, “please don’t pick up, please don’t pick up” as it rang? Sometimes, you just want to leave a voice message and not chit-chat. Slydial allows you to dial directly to someone’s mobile phone voice mail. The person doesn’t even hear the phone ring. Try it out with the free advertising version by dialing (267) SLY-DIAL, and at the prompt enter the person’s mobile number you’d like to call. You’ll be connected to their voice mail. Slydial also has a paid option which is advertisement-free, and it offers various phone apps. I’ve heard some people say that they think Slydial is rude, but consider some of these situations:

•

You know someone is in a meeting or out on vacation and you’d rather not interrupt with a voice call but rather them be able to check a message when it’s most convenient.

•

You are preparing to get on an airplane with little time to talk, so why not leave a message?

•

The time of day you are calling is right on the edge of “do I call or wait” and you can’t seem to decide if you would win either by calling late or waiting longer to deliver the message.

•

A message might be too long for a text message, but not quite personal enough for a phone conversation.

I like knowing Slydial is available. I’ve personally used it about ten times in the last couple of years – but it does come in very handy.

ARE YOU A NOTE-TAKER? I am a note -taker. Taking notes seems to help me remember important details … as long as I remember to look at my notes. Living so much of my life at the computer or with my Android in my hand, it seems appropriate to take notes digitally. Evernote is a way to capture various information digitally and stay organized without notebooks and papers flying around. Information is stored in the cloud. You can capture images, text and clippings from the web. You can scan information into Evernote. You can create a text document. You can upload items from your mobile device into Evernote. What happens after you have information in there is what impresses me: each item is scanned by Evernote and is tagged appropriately - even handwriting gets picked up! This makes finding a particular document or item a lot easier by searching for tags. Try it!

wisconsin real estate magazine

september 2011

Title Tips for Distressed Sales By Debbi conrad

Distressed sales have unfortunately become a part of the landscape in these times of economic downturn. Transactions designed to avoid foreclosure or to sell properties that have been foreclosed are all too commonplace. REALTORS® have tried to assist these distressed sellers and work with buyers interested in purchasing these properties. These sales are often complicated, but one key focus in them all is delivery of clear title to the buyer. Short Sales When homeowner efforts to refinance, modify the loan or otherwise avert a foreclosure fail, many will attempt to sell their homes before the foreclosure runs its full course as a short sale. In a short sale, a reasonable sales price in the current market is not sufficient to pay the mortgage(s), other liens and expenses at closing. The seller must either pay additional money at closing to cover the shortage or negotiate an agreement with the lender(s) whereby the lender(s) accept less than the full amount owed. When listing a property that is a potential short sale or a property where foreclosure proceedings have commenced, prudent listing agents do their homework before the listing contract is signed and determine whether the owner will be able to provide clear title if a buyer can be found. Will there be enough money to pay all liens and encumbrances? Obtaining a search and hold from the title company and having the owner complete the WRA Listing Questionnaire Regarding Title Issues (page 22 at www.wra.org/ LU0903 and on ZipForm as WRA-QST) will help the broker and seller answer this question. The search and hold will show liens and encumbrances of record, while the questionnaire helps identify potential liens and problems that may soon impact title.

Lines 343-347 of the WB-11 Residential Offer to Purchase (2011) require the seller to provide a gap endorsement, provided the title company will issue the endorsement. If a gap endorsement is not available, the buyer may give written notice to trigger the Title Not Acceptable for Closing subsection on lines 353-359. While the intent of this provision is more to cause the parties to reach a mutually agreeable solution than to cause the offer to become null and void, that can be the result. This is a serious issue for the buyer, and intervening liens can be very expensive for all involved.

“When listing a property that is a potential short sale or a property where foreclosure proceedings have commenced, prudent listing agents do their homework before the listing contract is signed and determine whether the owner will be able to provide clear title if a buyer can be found.”

Filling the Short Sale Gap Buyers are at risk for any title defects which appear of record after the effective date of a title insurance commitment and before the buyer’s deed is recorded, otherwise known as the “gap period.” Some of the title defects that may appear of record during the gap period include

mortgages, deeds to third parties, lis pendens filings for foreclosures or other litigation, construction liens, federal tax liens and judgments. The actual risk to the buyer of an intervening lien may be greater in short sales or with REO properties because the owner or prior owner oftentimes just endured serious financial difficulties.

wisconsin real estate magazine

september 2011

Whether a particular title company will provide a gap endorsement in a particular transaction or for particular types of closings - such as short sales or REO sales - is basically a business risk decision for the title company. Prudent agents may wish to become familiar with which title companies in their market do not provide gap endorsements in certain types of transactions. If gap endorsements are not available, it would be wise to point this out to buyers so that they may discuss this with their attorneys.

Enforcing Subsequent Sale Restrictions In short sales, there typically is a contract between the seller and the lender specifying the terms and conditions of the lender’s agreement to release the mortgage on the property for less than what is owed

www.wra.org/wrem

wisconsin real estate magazine

september 2011

on the mortgage note. Often there are restrictions on any immediate resales of the property. For instance, in the Home Affordable Foreclosure Alternatives (HAFA) Short Sale Agreement, the lender and the seller agree that the offer will provide, “The Buyer agrees not to sell the property within 90 days of closing of this sale.” See pages 5-8 of the March 2010 Legal Update, “Uniform Short Sales,” at www.wra.org/ LU1003. This restriction might also be stated in the deed. Parties who assume this is not enforced are mistaken because lenders do ask title companies for title updates and may try to rescind the mortgage satisfaction if the property is resold before the restriction expires.

Deeds in Lieu of Foreclosure Gap endorsements likely will not be available in instances where the owner gives a deed in lieu of foreclosure to the lender. A deed in lieu of foreclosure occurs when a property owner in default on his or her mortgage decides to quitclaim the property back to the lender rather than attempt a short sale or go through the foreclosure process. When a deed in lieu of foreclosure is considered, the lender may work with the title company to determine the status of the title to the property because any mortgages, judgments or liens filed against the property or created by the borrower will likely remain against the property if deeded to the bank. Thus, a deed in lieu of foreclosure is generally used only when title is clear. If other liens have attached to the property, a foreclosure action becomes necessary because a foreclosure removes the liens of all lenders, creditors and other lienholders named as parties in the foreclosure complaint.

Title Reports for Sheriff’s Sale Buyers Just because the sheriff’s sale is part of a foreclosure process that involves both the court and the sheriff does not mean that title is necessarily clear. The sheriff’s deed is not a warranty deed – it is in essence a quitclaim deed. The sheriff’s deed passes the former owner’s title after barring all parties named in the foreclosure action holding liens and encumbrances on the property and barring any parties filing any liens after the lis pendens was filed with the register of deeds. Any priority liens and any liens that are not included in the foreclosure action will remain, and the property will be subject to any unpaid real estate taxes and assessments. Sometimes the mortgage being foreclosed is not the first lien – and buyers unhappily might learn there is still a mortgage in place. Therefore prospective sheriff’s sale buyers should contact a title company or an attorney to perform a title search before making any bids on the property.

wisconsin real estate magazine

september 2011

www.wra.org/wrem

See the description of the sheriff’s sale process at www.danesheriff. com/foreclosure_sales_info.aspx.

the fence, dog kennel, gazebo or other improvement they had their hearts set on because it violates recorded restrictions or easements.

Why Can’t the New Owner Fence in His Backyard?

How can a buyer know if they will receive a commitment with a Recorded Covenants Exception? Unfortunately there may be no indication until the title insurance commitment is delivered to the buyer and/or the buyer’s attorney. If the Recorded Covenants Exception language appears in Schedule B-II, the agent should point out the language and recommend that the buyer immediately discuss this with his or her attorney, who may decide to send it back to the title company for revision.

Most real estate purchasers assume when they receive a title insurance commitment that the title company first did a full search of various public records. But another approach has surfaced in Wisconsin where the title insurance company does not search for or list any easements or restrictions of record, and instead provides a coverage exception for “covenants, conditions and restrictions, if any, affecting title which appear in the public records; easements, if any, which appear in the public records or are shown on any recorded plat or certified survey map; reservations of mineral rights or mineral rights, if any, appearing in the public land records.” (Recorded Covenants Exception). While most consumers expect that the title company will search the public records for liens and encumbrances that negatively impact title to property they are purchasing and will list them in the title insurance commitment, this Recorded Covenants Exception is saying that the title company will not search for, or provide coverage for, recorded covenants, restrictions, easements and mineral rights. As a result, new property owners may be dismayed to later learn that they cannot build

wisconsin real estate magazine

september 2011

To prevent this sticky situation from arising, agents drafting offers to purchase may wish to add a requirement that any title insurance commitment include a full search for restrictions and easements currently in force with respect to the property. As an alternative, the offer may be drafted to require that the buyer be provided with copies of all binding easements and restrictions of record, which should trigger a full search and provide the buyer and his attorney with the opportunity to review covenant language and subdivision restrictions. Debbi Conrad is Senior Attorney and Director of Legal Affairs for the WRA.

legal

Before and After MARS Attacked

Relief from the MARS Rule for Short Sale Listing Brokers By cori lamont and Debbi conrad

n December 1, 2010, the Federal Trade Commission (FTC) published the Mortgage Assistance Relief Services Rule (MARS Rule), addressing the practices of persons or entities providing mortgage assistance relief services. MARS services include marketing or providing services to assist financially distressed consumers in obtaining modifications of their mortgage loans or other foreclosure avoidance help. Many of the MARS Rule disclosures were designed to protect homeowners against unreasonable promises and sharp tactics by those taking advantage of distressed property owners in trouble. While this disclosure language may be informative for a consumer working with a party assisting in loan modifications or other foreclosure relief strategies, it proved to be confusing and at times disruptive for real

wisconsin real estate magazine

september 2011

estate brokers working with sellers involved in short sale transactions. Sellers in short sales often struggle to comprehend the legalities of short sales, not to mention the sometimes seemingly illogical behavior of mortgage holders and servicers. They do not need the additional frustration of having to decipher cautionary language crafted for other scenarios. The warning appropriate for a proposed loan modification was awkward and did not fit well for a listing broker presenting the lenderâ&#x20AC;&#x2122;s short sale approval agreement. That is why the National Association of REALTORSÂŽ (NAR) has been in negotiation with the FTC for many months to try to alleviate this situation. And that is why the success of NAR in forging an agreement with the FTC to suspend enforcement of the MARS disclosure rules with regard to brokers in short sales is so exciting and important for all REALTORSÂŽ. www.wra.org/wrem

On July 15, 2011, the FTC announced that it will refrain from enforcing most provisions of its MARS Rule against real estate professionals who assist consumers in obtaining short sales from their lenders or servicers. Real estate professionals acting in their licensed capacity will no longer need to comply with most of the Rule’s requirements, including the required disclosures, advance fee ban and recordkeeping requirements. Under this agreement, the FTC will not enforce the MARS Rule against real estate professionals who are: 1.

Licensed and maintain good standing pursuant to state law requirements.

In compliance with state laws governing the practices of real estate professionals.

Assisting or attempting to assist a consumer in negotiating, obtaining or arranging a short sale of a dwelling in the course of securing the sale of the consumer’s home.

This agreement applies to both brokers and salespersons associated with the broker. So, if a salesperson assists a broker with a client’s short sale and meets the criteria listed above, the salesperson will also fall under the terms of the FTC’s agreement. Not all real estate professionals are off the hook under this agreement. The FTC will still enforce the MARS Rule against misrepresentations made by a real estate professional while assisting a consumer in negotiating or obtaining a short sale. The FTC considers a misrepresentation to be a misleading or deceptive act affecting commerce. For example, the FTC could take action if a real estate broker promised the consumer that the broker could obtain a certain price for a short sale; misrepresented the types of services that the real estate broker could provide; claimed an expertise in short sales when this is not true; or promised a consumer, without any basis for the statement, that the consumer would not have to pay any deficiencies in the sale of their property. A licensee who makes such a misrepresentation to a short sale client would likely no longer be in compliance with license law; consequently, the licensee would no longer be protected by the FTC agreement and would be expected to comply with all of the provisions of the MARS Rule, including the required disclosures. For that reason, REALTORS® need to be careful to make realistic statements to their clients and market their services accurately; failing to do either could be seen as a misrepresentation. Real estate professionals who provide mortgage assistance or foreclosure avoidance services, such as a short sale negotiation service or loan modifications, will need to comply with all of the requirements of the MARS Rule, including the disclosures. This includes the mandatory notice that must be included in all advertisements specifically marketing MARS to consumers, the Consumer-Specific Commercial Communication Disclosure that must be made in all communications to a particular consumer before the consumer enters into an agreement with the MARS provider, and the disclosure that must be made when any relief proposals are presented to the consumer. Those who must comply and make MARS disclosures should work with their attorney to draft the necessary documents to achieve proper disclosure under the MARS Rule. If a licensee wishes to refer a consumer to a short sale negotiation wisconsin real estate magazine

september 2011

specialist or another MARS provider, the licensee should proceed with great caution to avoid being seen as “arranging” the short sale negotiations. A licensee who “arranges” to have another person or entity conduct the MARS negotiations for a consumer is still required to comply with the MARS Rule. One possible way to avoid this problem is to offer the client a list of providers and allow the client to choose the MARS provider. Whether the real estate licensee is seen as arranging the transaction will be a factual determination. However, allowing the client to choose the provider and making it clear that the client is not required to use the listed MARS providers and may select another MARS provider should eliminate the need for compliance with the MARS rule. The FTC’s non-enforcement agreement should have the effect of resolving this issue for real estate professionals who are acting in their licensed capacity. The FTC did not have an opportunity to amend the Rule itself because the rulemaking authority for MARS switched to the Consumer Financial Protection Bureau (CFPB) effective July 21, 2011. While the CFPB and each state’s attorney general can still enforce the MARS Rule as written, NAR expects that both the CFPB and state attorneys general will follow the FTC’s lead. The CFPB is a new agency, and NAR believes that the agency will defer to the FTC since it was the federal agency that created the MARS Rule. The CFPB published a statement that said, “official commentary, guidance, and policy statements issued prior to July 21, 2011, by a transferor agency with exclusive rulemaking authority for the law in question … will be applied by the CFPB pending further CFPB action.” State attorneys general seeking to enforce the Rule will need to alert the FTC to these plans prior to filing any actions. If the FTC does not agree with the proposed state prosecution, the FTC can intervene in the state action and make its views about the action known to the court. All of this leads NAR to the conclusion that the FTC’s action will have the effect of staying the MARS Rule as the FTC as agreed. The Rule does not contain a private right of action for consumers who want to bring lawsuits for alleged violations of the MARS Rule. NAR played an integral role in the FTC’s recent announcement that it will not enforce certain provisions of the MARS Rule against real estate professionals aiding consumers in short sales. This announcement is a substantial victory for REALTORS®. NAR will continue to work on obtaining a complete resolution of this issue.

Additional Resources A full copy of the FTC’s announcement can be found at www.ftc.gov/ opa/2011/07/mars.shtm, and more information about the Rule is at www.ftc.gov/opa/2010/11/mars.shtm. NAR has information and background on the Rule at www.realtor.org/topics/mars. For those practices that require MARS disclosures, see the extensive information, including some sample forms from NAR at www.realtor. org/letterlw.nsf/pages/0211mars?OpenDocument&Login and www. realtor.org/letterlw.nsf/pages/0511marsq&a?opendocument&login (NAR password protected). Cori Lamont is Director of Brokerage Regulation and Licensing and Debbi Conrad is Senior Attorney and Director of Legal Affairs for the WRA.

Your Parents (and Broker) Taught You Better Than That

Getting Permission Before Viewing Properties

ecently, we have received a number of questions relating to a practice that raises both eyebrows and concerns. Frankly, this is a lesson that has become lost on some and a lesson that every child learns from his or her parents: asking for permission. On occasion, we as adults need to be reminded of the lessons from our past. The practice of going into listed properties without permission from either the owner or listing broker is unacceptable. In addition, a cooperating agent giving an unaccompanied buyer access to the property is inexcusable. I am told this practice is not limited to one community but rather is occuring throughout the state. Also I have learned that this practice is most common in bank-owned properties (REOs), foreclosures where the owners have vacated the home, vacant homes and new construction - basically, in properties where no one lives. The fact that no one lives in the property provides an opportunity for individuals to accommodate their own schedules as opposed to following protocol, and they are thus breaking the rules and potentially the law.

wisconsin real estate magazine

september 2011

By cori lamont

It has come to light that a majority of consumers, real estate licensees and owners believe REO properties and homes in foreclosure are excluded from rules and laws surrounding licensees and owners. They are mistaken because the applicable rules and laws are not suspended just because the property is vacant or bankowned. In general, REOs and foreclosures are treated the same as any other transaction. The only difference is who owns them (REO) and a legal process (foreclosure); beyond that, all of the same rules and laws apply as if it were any other type of transaction or owner. Let me highlight some examples of the most common misconceptions. REO properties are exempt from completing a real estate condition report; unless some other exemption applies, that statement is wrong. Also, the assumption that sellers of properties in foreclosure are not required to follow the federal lead-based paint law is incorrect. And, another example: short sale sellers do not have to make any disclosures if they are selling “as-is;” this is also incorrect as sellers must still disclose certain defects even if they are selling “as-is.” However, the most common misstatement I have heard is, “if it’s an REO or vacant foreclosure listing, agents can take buyers in at any time without permission of the listing company or seller.” www.wra.org/wrem

All real estate licensees must follow Wisconsin statutes and administrative rules. A company may place additional internal rules, also known as company policy, that agents are required to follow if they choose to work for that company. As a member of the Multiple Listing Service (MLS), you also agree to follow the rules and parameters set forth by the MLS. Lastly those that have chosen to be REALTOR® members must also follow the REALTOR® Code of Ethics.

MLS Review the MLS rules to determine the rules regarding authorization. Often there are MLS rules in place that offer the opportunity to file an action if the rule is violated.

CODE OF ETHICS Beyond the Articles dictating the ethical standards REALTORS® must follow, the Code of Ethics provides Standards of Practice. While a REALTOR® cannot violate a Standard of Practice, a complaint may cite a Standard of Practice to support a claim that the REALTOR® violated an Article of the Code of Ethics. Article 3 REALTORS® shall cooperate with other brokers except when cooperation is not in the client’s best interest. The obligation to cooperate does not include the obligation to share commissions, fees, or to otherwise compensate another broker. (Amended 1/95) If a REALTOR® chooses to provide access to the listed property on terms other than those created by the owner or the listing broker, arguably Standard of Practice 3-9 can also be cited to support a violation of Article 1. Standard of Practice 3-9: REALTORS® shall not provide access to listed property on terms other than those established by the owner or the listing broker. (Adopted 1/10) Article 1 When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve REALTORS® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, REALTORS® remain obligated to treat all parties honestly. (Amended 1/01)

STATUTES AND ADMINISTRATIVE RULES Wis. Stat. § 452.133 (1)(b) Duties to all persons in a transaction Licensees are required to provide specific duties to all persons in a transaction, regardless if there is a client or customer relationship. While there are seven duties owed to all parties in a transaction, “[the] duty to provide brokerage services with reasonable skill and care” clearly would be violated by the act of showing a property without permission or providing the buyer access to the property without accompanying them. Wis. Stat. § 943.13 Trespass to land - Yes, going onto the property

wisconsin real estate magazine

september 2011

“The practice of going into listed properties without permission from either the owner or listing broker is unacceptable.” of another without permission is technically trespassing. The fact that the property is a foreclosure or REO does not create a different outcome. Wis. Stat. § 943.15 (1) Entry onto a construction site or into a locked building, dwelling or room - Whoever enters the locked or posted construction site or the locked and enclosed building, dwelling or room of another without the consent of the owner or person in lawful possession of the premises is guilty of a Class A misdemeanor. Wis. Admin. Code RL § 24.03 (2)(b) - Licensees shall act to protect the public against fraud, misrepresentation and unethical practices. Such acts are a violation of RL § 24.03 (2)(b). Providing buyers access to property without the permission of the owner or listing broker is unethical practice. Lastly, remember when you go into these properties, you may not be alone. Safety should be concern whenever viewing a property. Unoccupied properties often provide a place for opportunistic individuals to take residency. Other established houseguests may include wildlife, squatters, impromptu visitors searching for treasure wishing to explore the property to collect goodies - for example, copper wiring - and finally environmental hazards, such as mold, wildlife deposits or methamphetamine residue from a short-lived meth lab. Cori Lamont is Director of Brokerage Regulation and Licensing for the WRA.

Short Sales &

Foreclosures 14

wisconsin real estate magazine

september 2011

www.wra.org/wrem

best of the legal hotline SHORT SALES Timelines A buyer is negotiating a short sale on a property. The buyer does not want to have the inspection until the seller has lender approval of the short sale. Can that be negotiated? Also, the broker believes the offer is not accepted until there is lender approval. Is that correct? Yes and no. Acceptance is defined at lines 23-24 of the WB-11 Residential Offer to Purchase (2011) as occurring when all buyers and sellers have signed the offer. The accepted offer may be subject to contingencies including the seller obtaining lender approval of a short sale. The parties may negotiate when timelines for inspections or any contingencies begin, whether from acceptance or from receipt of the lender’s short sale approval. The buyer may take the position that he does not want to incur expenses for inspections if the lender will not approve the sale, while the seller may want all inspections and contingencies to be met, thereby knowing the buyer will be bound if and when the lender approves the short sale. According to the home inspection contingency in the WB-11, the home inspection runs from acceptance. If a WRA short sale offer addendum SSO is used, the parties can choose to have the home inspection timeline begin upon lender approval using lines 25-27 of the WRA SSO.

Primary and Secondary Offers The seller accepted an offer subject to lender approval of the short sale. After the offer was submitted to the seller’s lender, another offer from a second buyer was presented to the seller. It is the broker’s understanding that the seller can submit more than one offer to the seller’s lender because it is a short sale and nothing is primary until the lender accepts an offer. If the first offer did not have any language in the offer stating that it was exclusive, can the broker submit the second offer as primary? Lender policies vary; some want only one offer submitted while others will accept multiple offers. Therefore the broker would be prudent to check with the particular lender before proceeding to provide more than one offer. It is very risky and ill-advised for a seller to accept more than one offer to purchase as a primary offer. Standard of Practice 1-7 provides in relevant part, “REALTORS® shall recommend that sellers ... obtain the advice of legal counsel prior to acceptance of a subsequent offer except where the acceptance is

wisconsin real estate magazine

september 2011

with tracy rucka

contingent on the termination of the pre-existing purchase contract.” Clearly the safest practice from the seller’s standpoint is to make subsequent offers secondary offers – with each one also subject to the approval of the seller’s lender for a short sale. The seller may be able to submit all of the offers to the lender at the same time for the lender’s consideration, depending on the lender’s policy. Although accepting all of the offers as primary is possible because they are all contingent upon approval from the same lender and the lender presumably is only going to approve one offer, it may cause the buyers and their agents to be misled - and could lead to multiple approved primary offers if communication errors are made by the lenders or agents and more than one buyer comes to believe the lender approved his or her offer. If a group of offers are all accepted as primary subject to lender approval, each individual buyer and agent may also believe that their offer is primary – at minimum all buyers must clearly understand that there is a “pool” of primary offers and the fact that any particular offer is accepted as primary means nothing – there is no advantage because they are all similarly positioned. It would be wise to alert all parties in writing that there are multiple accepted offers with the same bank approval contingency. However improbable, a bank could approve more than one offer - in that instance, the seller would be obligated to sell the property to more than one buyer. Accepting all of the offers as primary may also place the seller at risk of a breach of contract claim. Each of the offers is accepted with the parties agreeing to act in good faith and with due diligence to complete the terms of the contract. Any one of a group of multiple primary buyers could allege that the seller cannot in good faith attempt to negotiate a short sale to meet the terms of his or her contract, given there are multiple primary offers.

For further discussion of short sales and foreclosures , see the March 2010 Legal Update, “Uniform Short Sales,” at www.wra.org/LU1003, the March 2009 Legal Update, “Working with Distressed Sales,” at www.wra.org/LU0903, the July 2009 Legal Update, “Solving the Mysteries of Short Sales,” at www.wra.org/LU0907, and the January 2008 Legal Update, “Short Sales – A Risky Business,” at www.wra.org/ LU0801.

Foreclosures “As-Is” Sales and Inspections How can the buyer ask for a home inspection when the seller is saying that the property is in foreclosure and it is an “as-is” sale? An “as-is” clause alerts the buyer that he or she is responsible to determine the condition of the property being purchased, that is, have the property thoroughly inspected and tested. When the buyer is purchasing “as-is,” it is very important for the buyer to learn as much as possible about the condition of the property. Most buyers want a home inspection in an “as-is” sale. When a property is sold “as-is,” it generally means that the seller will not make property condition disclosures and will not cure defects. Sometimes sellers will make disclosures and might, if there are funds available, make repairs. In terms of buyer risk, if the buyer does not determine the condition of the property before the closing and closes the “as-is” transaction only to find defects later, the buyer will have limited ability to go back to the seller for any compensation. The inspection contingency provides a way for the buyer to get out of the transaction if the condition of the property is such that the buyer no longer wants the property. After the property is inspected, the buyer can decide whether to go forward or give a notice of defects, knowing that the seller may refuse to cure any listed defects, thus making the offer null and void.

Sheriff’s Sale The broker took a listing with the seller about a year ago. At that time, the broker had the title company perform a search and hold to see what liens and encumbrances were on the property. Now the broker has presented an offer and just found out there is a sheriff’s sale scheduled. What could have been done to prevent this? When listing the property, it is prudent to

wisconsin real estate magazine

sit down with the seller to determine their financial situation. It may be necessary to ask difficult questions about the seller’s obligations and status. If the seller thinks they will need to have a short sale, the sooner the broker and seller work together to get the seller’s financial information in order, the better. Given the length of many listings in the current market, it may be practical to review the seller’s position at least quarterly to avoid any unexpected changes in the seller’s status. It is possible for the seller to sell the

september 2011

house, subject to the short sale approval, until the court’s confirmation of the sheriff’s sale. The broker may work with the seller and the seller’s attorney to best position the seller to have a successful transaction.

Bankruptcy An agent has a listing where there is a pending foreclosure and now the sellers are going to file for bankruptcy. The property will be going to sheriff’s sale in seven weeks. What is the status of the listing?

www.wra.org/wrem

It may depend upon who the lender and loan servicer are. Fannie Mae and Freddie Mac loan servicers are not to reduce commissions on short sales unless the commission exceeds 6 percent. See the information in the March 2010 edition of the Wisconsin Real Estate Magazine online at www.wra.org/WREM/ Mar10/DistressedSales. Similarly with short sales under the Home Affordable Foreclosures Alternatives (HAFA) Program, the servicer cannot require, as a condition of approving the short sale, a reduction in the real estate commission agreed upon in the listing agreement (up to 6 percent). See the March 2010 Legal Update, “Uniform Short Sales,” online at www.wra.org/LU1003. The HUD short sale guidelines for FHA-insured loans also indicate that “HUD allows all reasonable cost of the sale including up to 6 percent sales commission, local/state transfer tax stamp and other customary closing cost.” See www. hud.gov/offices/hsg/sfh/nsc/rep/pfsfact.pdf.

Bankruptcy may offer relief to the distressed homeowner. Basic bankruptcy information is available online at www.uscourts.gov/ bankruptcycourts/bankruptcybasics.html and at www.wiwb.uscourts.gov/Bankruptcy_ Info.htm. The filing of a bankruptcy may stall or delay the foreclosure. Whether bankruptcy is a viable alternative to foreclosure is a question for the homeowner’s attorney. A homeowner that has filed bankruptcy may still be eligible to sell the home and for a short sale, provided the bankruptcy trustee

wisconsin real estate magazine

consents to the sale of the property. The agent may wish to confer with both the sellers and the trustee in bankruptcy to determine the status of the seller with respect to the home, the mortgage, and any possible sale in advance of the sheriff’s sale.

Commissions The property is listed at 6 percent and the seller’s bank is saying they will only pay a 4 percent commission for a short sale. Is this legal?

september 2011

Dealing with short sales is precarious because there are many pitfalls that may result in no closing or a closing that does not include the payment of the real estate commission. The agent cannot allow the fact that their commissions are not being paid in full to stop a transfer or closing. Unfortunately, there is little the agent can do to stop a lender from conditioning their approval of the short sale on the reduction of the commission if the lender or loan servicer is not subject to one of the programs mentioned above. The agent may wish to amend their listing contact with the seller to provide that “X” amount of the commission will be paid at closing and the remaining commission will be paid after closing. The agent may require the seller to provide a promissory note for the remaining commission due. However, this arrangement would need to be disclosed to the lender to comply with Wis. Admin. Code § RL 24.07(4), which requires written disclosure of side deals to lenders. Tracy Rucka is Director of Professional Standards and Practices for the WRA.

education BPO (Broker Price Opinion) October 25, 2011 WRA Headquarters, Madison Earn the Broker Price Opinion Resource (BPOR) Certification! Whether you are experienced at preparing broker price opinions (BPOs) or are new to the business, this new NAR certification course will provide you with the know-how to produce professional and accurate BPOs. With your BPOR certification, you’ll be able to prepare accurate BPOs, evaluate market tools for productive preparation of BPOs, and identify and weigh all factors influencing the creation of a useful valuation. Upon completing this one-day course, you’ll be required to view a free webinar, submit the BPOR application and pay a one-time fee to earn the BPOR certification. The course also meets the elective course requirement for the ABR designation. Submitted for continuing education credits.

Real Estate Marketing Reboot - ABR® Elective September 13, 2011 Wisconsin Dells Do you think your marketing strategies during the real estate boom still work today? Think again. It’s time for a real estate marketing REBOOT. In this one-day course, you will revisit marketing fundamentals, branding, relationship marketing with an emphasis on electronic tools, social media, blogs, Twitter, podcasts, really simple syndication (RSS) feeds, search engine optimization (SEO) and other technologies. Practical tips and examples of agents leveraging these tools in the field make this course a must for all real estate professionals. Visit www.wra.org/ conventiondesignations for more.

Real Estate Social Marketing Strategies for Success Both Online and Offline - CRS Elective September 14, 2011 Wisconsin Dells This course will teach you how to develop a social marketing plan that can turn fans and followers into real estate transactions. Turn social networking into a major profit center through Facebook, YouTube, LinkedIn and Twitter. In this course, you will learn how to harness the power of “thought leadership” and leverage your visibility and credibility with content-rich video. Visit www.wra.org/ conventiondesignations for more information on this course.

ABR® Course September 26-27, 2011 Do you like working directly with buyer-clients? If so, this is a course for you. You’ll learn how to represent buyer-clients with the same level of service sellers enjoy as well as ideas and methods for building your buyer representation business. Complete two of the three days required for the ABR® designation and fulfill nine hours of 2011-2012 Continuing Education with one course. Take advantage of the REBAC special discount of $30 off the registration fee! Visit www.wra.org/ABRcourses for more.

wisconsin real estate magazine

Wisconsin Dells Staging is receiving national attention as an established trend in real estate. Now is the time to learn how to involve staging in your business. This course is an in-depth study of the staging process designed to integrate staging and pricing and develop strategic marketing skills. Created by Martha Webb, author and producer of “Dress Your House for Success,” this course will help you take control of the staging movement. Building new skills to offer sellers a method of optimizing price and minimizing market time will add value to your services. Visit www.wra.org/conventiondesignations for more.

Conventional, HUD/FHA and USDA Rural Appraisals: UAD Standards Update And Home Inspection - From an Appraiser’s Perspective September 15, 2011 Wisconsin Dells Conventional, HUD/FHA and USDA Rural appraisals all require proficiency in home inspection. However, HUD/FHA and USDA Rural appraisals require a more in-depth examination of the subject property. With the new federal requirements outlined in the Uniform Appraisal Dataset (UAD), the ability to examine a property to rate the quality and condition based on new UAD guidelines is critical to providing a professional appraisal and avoiding mistakes or lawsuits. Visit www.wra.org/conventionAppCE for information.

CRS201 - Listing Strategies October 26-27, 2011

Northwoods Association - Woodruff

Positioning Properties to Compete in the Market (Staging) - CRS Elective September 13, 2011

september 2011

Co-Sponsored with Wisconsin CRS Chapter WRA Headquarters, Madison The Listing Strategies Course from the Council of Residential Specialists will help you identify the motivations and concerns of today’s sellers and help them close the deal. You’ll learn how to price effectively in the current market and get a faster sale, and you’ll also learn how to access scripts to work with clients and get their house sold at a fair price. More information is available at www.wra.org/CRS_overview.

www.wra.org/wrem

Course Schedule

Visit www.wra.org/CourseSchedule for full schedule. Sales & Marketing Management Date Course Location Thru 9/12

** Early registration applies two weeks prior to the start of the course. *** Wisconsin CRS members receive a $20 discount.

September 26-27, 2011

2-Day ABR Designation Course

Woodruff

Thru 9/25

After 9/25

$260*

$270* --

$290*

$110** $235**

$120 $245

$140 $265

*Deduct $30 from registration fee due to Special Offering by REBAC

October 25, 2011 October 26-27, 2011

BPO (Broker Price Opinions) Madison CRS201 – Listing Strategies*** Madison Co-sponsored with the Wisconsin CRS Chapter

Conference and Conventions Date Event/Course Location After 8/22 September 13-15, 2011 WRA Annual Convention Wisconsin Dells

ATD

September 13, 2011 September 13, 2011 September 14, 2011 September 13-14, 2011 September 13-14, 2011

ABR Elective: Real Estate Marketing Reboot CRS Elective: Positioning Properties to Compete in the Market CRS Elective: Real Estate Social Marketing Strategies for Success both Online and Offline Both CRS Electives - includes convention ABR and one CRS Elective - includes convention

Real Estate Continuing Education

Date

Course

Location

Price

2009-2010 real estate continuing education is still The available through On Demand, DVD and Self-Study Booklets: 1 – Listing Contracts Course 2 – Offer to Purchase Course 3 – New Developments Course Course 4 – Buyer Agency Agreements Elective A – Risk Reduction Elective B – 1031 Exchanges and Exchange Opportunities Elective C – Condominiums Elective D – Landlord/Tenant and Property Management Elective E – Financing Elective F – Broker Supervision

*September 13, 2011 *September 14, 2011 *September 15, 2011

2011-12 Electives C & D 2011-12 Courses 1 & 2 2011-12 Courses 3 & 4

Wisconsin Dells Wisconsin Dells Wisconsin Dells

Convention fee Convention fee Convention fee

Pre-License Available online! sales training program

Date Course Location Member price

$205 $205

$225 $225

$205

$225

$350 $350

$370 $370

*Register for full convention – attend all 6 courses (4 free with reduced fee for 2 courses)

September 21, 2011 September 21, 2011 September 22, 2011 September 22, 2011 September 23, 2011 September 28, 2011 October 4, 2011 October 6, 2011 October 6, 2011

2011-12 Courses 1 & 2 2011-12 Courses 1 & 2 2011-12 Courses 3 & 4 2011-12 Courses 3 & 4 2011-12 Elective A & D 2011-12 Elective C & D 2011-12 Courses 1 & 2 2011-12 Courses 1 & 2 2011-12 Courses 1 & 2

Madison St. Paul, MN St. Paul, MN Madison St. Paul, MN Madison Green Bay Ripon Appleton

800-279-1972 $27/m; $35nm 651-287-3921 651-287-3921 800-279-1972 $27/m; $35nm 651-287-3921 800-279-1972 $27/m; $35nm 920-739-9108 920-294-6850 920-739-9108

2011-12 Electives: Elective A – Short Sales & Foreclosures Elective B – Environmental Matters Elective C – Other Approved Forms Elective D – Financing Appraisal Continuing Education Date Course Location September 15, 2011 HUD/FHA & USDA Rural Appraisal Standards Wisconsin Dells Approved for Wisconsin Appraiser and Assessor CE; submitted for Michigan and Minnesota Appraiser CE October 12, 2011 Vacant Land Appraisal (3.5 hours) Rice Lake October 12, 2011 Unique and Complex Properties (3.5 hours) Rice Lake registration applies two weeks prior to October 14, 2011 Land Valuation – Getting It Right (3.5 hours)(AM) Wisconsin Dells Early the start of the course October 14, 2011 Appraising Waterfront & Lakeshore Property (3.5 hrs.)(PM) Wisconsin Dells October 18, 2011 7 Hour National USPAP 2012-2013 Update Madison October 19, 2011 Appraising 2-4 Family & Multi-Family Properties (7 hrs.) Appleton October 20, 2011 Foreclosures and Short Sales: Dilemmas and Solutions (7 hr.) Brookfield Submitted for Wisconsin Appraiser & Assessor and Michigan and Minnesota Appraiser CE Additional classes scheduled in November

QuickStart www.wra.org/QuickStartOnDemand

wisconsin real estate magazine

Oct. 3-6; 10-13, 2011 Oct. 31-Nov. 3, 2011

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

$325* $260*

Non-Member price $325* $280*

* Plus books

september 2011

product showcase

Reasons to Hire You!

zipLogix Digital Ink™

Educate Consumers About the Importance of REALTORS® With the WRA’s New Promo Kit

A New, Cutting-Edge Member Benefit

A necessity for your arsenal: a promotional kit of print tools to educate consumers why they should hire a REALTOR®. Designed with the consumer in mind and written by the WRA’s marketing department, your kit includes fifty (50) 4” x 6” postcards and an accompanying 11” x 17” poster for display in your office – both to promote why consumers should hire a REALTOR®. The postcards can be mailed, distributed, or even displayed at open houses, restaurants, coffee shops or other high-traffic areas. Postcards can be customized with your logo or mailing address in blank space provided on the back of the postcard. Why hire you? The Promo Kit lists these reasons with additional information: •

Using a REALTOR® is financially smart.

•

REALTORS® can help you find your dream home.

•

REALTORS® know your local market.

•

REALTORS® are required to take continuing education courses.

•

REALTORS® abide by a strict Code of Ethics.

•

REALTORS® ensure your closing is a success.

•

REALTORS® are invested in you.

•

REALTORS® help you determine how much home you can afford.

•

REALTORS are experts at bringing together buyers and sellers.

•

The REALTOR® “®” means better success in completing your transaction.

10REALTOR REASONS WHY YOU SHOULD HIRE A

TOP

Using a REALTOR® is a smart financial decision.

REALTORS® can help you find your dream home.

Using a REALTOR® makes strong financial sense. The median home sales price for a FSBO home is significantly less than a home sold through a REALTOR® , not including what you saved in marketing costs. FSBOs struggle most with price and often need to adjust. Many FSBOs stay on the market longer. A REALTOR® is the expert on your local market and can help you price your home right from the start.

REALTORS® are experts on real estate - one of the most important financial investments you’ll make. REALTORS® don’t just sell houses, they represent you. REALTORS® want you to find your dream home. They see hundreds of homes each year and know a good deal when they see it. This can help you avoid costly mistakes. So, if you’re in the market to buy or sell, consider hiring a REALTOR®.

REALTORS® know your local market.

Continuing education is a requirement.

REALTORS® have access to more market- and industry-related resources than someone who goes at it alone. REALTORS® have data on your local market to help you make an informed decision. REALTORS® also have contacts and their own trusted network of local affiliates they can recommend, whether it’s a mortgage banker, inspector or appraiser.

Every two years REALTORS® are required to take 18 hours of continuing education to maintain their license. This means they are trained and stand ready to help you anticipate and solve common issues you may encounter during your transaction.

REALTORS® ensure your closing is a success.

REALTORS® abide by a strict Code of Ethics.

Have you ever heard the old saying don’t sweat the details? That’s where a REALTOR® comes in. They make sure all your bases are covered before you reach the closing table. Whether it’s completing your forms accurately or making sure your home is marketed properly, a REALTOR® can ensure your transaction is completed successfully.

REALTORS® have agreed to abide by the National Association of REALTORS® Code of Ethics setting them apart from other licensees. The Code of Ethics is a code of social responsibility and professionalism that imposes duties on REALTORS® in their relationships with customers and clients. When working with a REALTOR®, you are working with a professional that is held to a high ethical standard.

REALTORS have a vested interest in the sale of your home and typically don’t get paid until a deal is closed. What’s more, REALTORS® pay out-of-pocket expenses for marketing, advertising, signage, gas and open houses – all of which help you sell your home with greater success. ®

11 111 1

REALTORS® can help you determine your buying power and borrowing capacity. With some basic information about your savings, income and debt, you may be surprised at what you can afford. REALTORS® can even help you find a lender that best meets your needs.

REALTORS® are the experts at bringing buyers and sellers together. Unlike people who sell as a FSBO, you don’t have to go at it alone. REALTORS® have contacts to help speed up your transaction. You’ll also get 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 REALTOR® speaks for itself.

Improving efficiency, reducing costs and eliminating delays are benefits of ZipLogix Digital InkTM that have generated great interest within the real estate industry. Digital signatures revolutionize the customer experience by offering your customers a truly paperless electronic process that can be trusted. Today’s tech-savvy customers are not interested in printing, faxing or shipping documents, or worse yet - driving to your location. The fully automated, straight-through processing enabled by digital signatures creates an additional competitive advantage all while reducing time, lowering costs and increasing compliance rates. Developed by the creators of zipForm, zipLogix Digital InkTM ensures that all of the document’s data and the digital signature are protected throughout the entire “signed, sealed and delivered” online process. Digital signatures permanently secure the identity of signers and the document’s content. The signer’s digital identity is referenced within the digital signature at the time of signing. Once a document has been signed, its integrity is permanently protected. Any attempt at changing the data or tampering with the signature(s) would automatically and visibly invalidate the document.

REALTORS abide by a REASONS strict Code of abide Ethics. by a REALTORS by a WHY YOU SHOULD HIRE A Ethics. of abide RS have agreed to abide by by a REALTORS Code TOP strict REALTO abide aa REASONSHIRE®A Ethics. byby ofREALTORS TORS the National Association of Code s. REAL bye strict abide to abid de Ethic agreed have of RS REALTORS cs. SHOULDS LTO Code YOU SON by WHY Code of Ethics, setting them apart from RS abide Ethi toabi REA ics. strict of agreed REALTORS of eother have Association REA National abide by by Cod to Eth of REALTORS t LTO TOP REALTOR REA e other ®A licensees. agreed ThetheCode REALTORS stric of have Cod from RS to abide RS by apart Association them ct ONDLDSHIRE setting REALTO National of aEthics, agreed theof Code is of REALTO stri d to abide ASSHOUL ion WHY have ORS other of Ethics code TOR from agree Associat REYOU ORS apart ®A social TORS REAL them of REALT National have SHIRE Code REALT setting the iation licensees. from Ethics, of REAL SHOU n other TORS apart Code ofThe Assoc TOP ON responsibility andof REAL althem other ciatiofrom YOU A REALTORS know your local market. E Nation setting AS ® Asso OR the code WHY a Code S is Ethics, HIR professionalism The of Ethics from other NR them apart licensees. Code of ALT RE National that ULD thesetting RE EA SHO Code and of SO g them apart The Ethics, Phave access responsibility s.ofcode social is athem REALTORS to moreY industry-related resources Alocal YOU Ethics licensee ofduties TO Code imposes on TO E ULD HIR® ofs, settin Ethic Code WH market. R ofcode and AL The y that your a is ® SHO es. have data thanREALTORS someone who goesknow at it alone. REALTORS professionalism Code responsibilit Ethics U Code Rcustomers of licensewith code social RE in their relationships of Theand YO LT O Yindustry-related ees. ability on PmarkethaveREALTORS isthat duties onTO your local toaccess help you make ismthem of responsi imposes licens WH marketR Ethics social more professional to ofclients. local resources and A a codeand isthat your REALTORS sthem Emore O. When sibility know onwith data informed decisions. Ethic RS have relationships respon their T in working duties ity and ofanalism alone. REALTORSL at it also professio REALTO imposes social goesR who nsibil with market. someone than that ted resources them A on sm local l respo with industry-rela have contacts and their ownP trusted network oftolocal clients. duties sionali Eyour relationships TO make that you helpR in their profes havetoaccess s customers , imposes youand aresocia REALTOR know them have data ket. your local market alism on onwith ®

REALTORS hips on them mar REALTORS TORS affiliates they can recommend, whether it’s assion duties with relatedl resource working relations at ®it alone. and esclients. alsomore profe When t.with REAL goesa mortgage REALTORS s with ina®their industryr loca impos decisions.who working professional rke data than someone nships ces customers banker, inspectorinformed or appraiser. w you ma sesclients. ® havetoaccess make ® kno adutie RS® have you and are ,high relatio rs with help oftolocal ps with al resour impo network REALTOrry-rela ted trusted their market own When inyou RS localRS that REALTOR isrces held tocustome aworking ® it alone. your REALTO have contacts and ontheir aonshi . s. relaticlients LTO also goes with indust loc ® have data areand who professional their a®working mortgage ers withcustom it’s a at REALTORS more w you ,inyou working whether tolocal ® make someone recommend, decisions. When REALTOR ORS lated resou you a kno ethical standard. thanREA affiliates they caninformed ® haveRS help with client REALT toaccess of are g and mers network , you a market a high industry-re ® have data professional toWhen Ra®workin it® alone. is held trusted custo ORS local that working with atmortgage own LTO appraiser. your REALTO REALT ontheir ing goes banker, nal to more TORS s also arewith REA contactsorand REALTO aRS make . REAL you it’sacces haveinspector nes.who ,professio a®work whether high aOR with ® have local ®than someo toWhen of ethical ® ® you are is held recommend, to help you it® alone working sional al thatstandard. REALT tnetwork is decision Using affiliates a REALTOR atREALTORS have they caninformed alsomake marke TORS trusted a ,profes TOR e goesORS a high own local REAL gtowith their REAL a mortgag your is held appraiser. profession you it’s REALT on a“R” thatstandard. workin ethical financially smart. ns.who arkvested interest contactsorand whether of local to help ® also banker, a ®high haveinspector The REALTOR end,one . with decisio ingto edsome than recomm work marketnetwo is held ge ® have a high TORS ethical thatstandard they caninform local ® REALTORS in sale of mortga r. trusted REAL athe affiliates your own istheir means success. is heldrd.to ® “R” of local The median sale on appraise er it’s ions. REALTOR a price ork r orand l standa that Using ts wheth REALTOR decis The ard. Wisconsin netw inspecto interest ® have ethica age ed vested d a your home and contac ® “R” mend, banker, mortg al standof inform REALTORS recom for afinancially FSBO home ishave smart. R REALTORS it’sinathe own truste her ethic ® “R” that 80 percent all homes success. REALTO ® is means theirser. The sale of interest® have The fact Association es they can Wisconsin don’t , whet typically TOR apprai ® “R” affiliat .REALTORS orand ® ctsR RS significantly less than a vested REAL ® “R” a REALTO success R shouldoftell are sold bymeans REALTORS contator Wisconsin REALTO The Using homes recommend price and r, inspec allLTO sale home ss. have R your percent median 80 get paid until a The that can Association ® fact banke Wiscons inSnsin The of REALTORS REA iser. succe sale smart. interest s percent a home sold through ally ®appra in the nsin homes tes theyTOR The allLTO ® their ess. you why to hirebymean one. Maybe it’s ORS have of tell isis closed. And, REALTORS a vested REALTOR ® s.Wisco REA Wisco don’t should ORSTORS home isaffilia 80 REALT ion typically FSBO homes succ deal ctor or that for afinanci REALTORS ces ®1 all fact The are sold and ofAssociation REALT t® have ns The Associat of interes home siation a REAL , Using not REAL a REALTOR ® suc youruntil ation tell homes er, inspe mea 80Wisconsin TORS all of industry knowledge perhaps their ability topercent hold should in the t. out-of-pocket that REALTORS price their bank a a sale t of tell ans it’s vested all home less than fact sale REAL Maybe ® should Assoc REALTORS get paid one. expenses for significantly hireby smarpay The st orwhy to percen me sold nt Associ The median and of 80RS Association Wisconsin including marketing costs. FSBOs cially typically R® is home perce their d intere that ® should tell d tell anaopen or you their are relationships REALTO sale your®don’t 80 fact finan Maybe hold isa REALTO vestehouse to it’s ® shoul the one. through ability The sold home REALTORS in REALTORS their their that hireby And,and marketing, open to a home are perhaps ORS it’s Wisconsin 1 orwhy FSBO closed. gas adon’t awith deal is®signage, for sold fact youWhatever until in ofknowledge industry Maybe paid REALT gsale and struggle most and their get hold The TORS one. by to Association Wiscons price smart. sale ®1price is help expenses their nsin REALTORS with professionals. theto hire ability typically sold S nsin the their REAL ®home for your notless than hold in trade are e it’s Maybe by toit’s perhaps median lly houses Wisco -R all that a REALTOR orwhy relationships REALTOR out-of-pocket The,Usin or their you one. pay ability Association significantly Wisco house sold Mayb LTO and knowledge ORS open anadon’t until their ion hire REALTORS ncia often stay on thecosts. market to hold are TORS hold to And, industry is one.ability paid REALT home to ly REA . reason, don’t worry about the details – Associat get perhaps closed. why fina Wisconsin FSBOs home is REAL or hire a dealwith ation ® ge your and opentypical you through the tohips marketing art relationships ability a FSBO Whatever your home including signage, gast expenses s their ®ng for or their marketing, for why professionals. a home trade RS REALTORS adon’t pricesell house with ®knowled perhap y sm Usi longer. A sold REALTOR you 1 can ps their AssociAssociation industry or an until saleiall lly REALTO n than ®1,price .aboutknowle leave that to a open REALTOR relations dge paid and out-of-pocke perha pay- all Association notless with – the Wisconsin media ors.their Whatever most or ® don’t details closed. And, success. thatishelp struggle a worry anc Thently significa house ry the ps open a REALTOR the professional is greaterhouses rnships andget deal forreason, ledge stypica open untiltrade relatio gasexpense fin help price your home indust REALTORS an onshi ORSwith home FSBOs Whateve signage, Wisconsin their – paid through or market ® try know costs. ® relati price nals. the the REALT on details ocket sold marketing, FSBO stay get the often a ver marketing with . ® Association house Wiscons sale And, about the inS nsin nsin their professio for the start. indus a home out-of-p – ever REALTORS REALTOR adon’t sell your home towith including that WhateWhat pay trade open e or leave 1an than REALTORS are ® TORS correctly from forreason, closed. gasexpens and open an worry help medi the. details es that REALTOR notless and ®hous sionals ,price - alldeal can – lsWisco REAL is Association The antly R®1 ORS TORS A REALTOR houses with als. details – ionWisco .about open longer. profes g,issignage, most REALT home signific success. an worry a REALTO Associat REALTOR h FSBOs greater the struggle trade adon’t REAL marketin ®about ationiation that towith FSBO ses closed.e, And, invested you. profe g costs. throug with leaveforreason, out-of. ssion ahome market and open ispocket t the detai AssociAssoc home RWisconsin the help on pay than for REALTORS your gasexpen worry marketin your trade staysold that sellin price deal help REALTO 1 and ®abou often ® - all a less ket don’t a home with to y , including open signag ® . ®1 that houses worry areting,out-o f-poc Association ®. not canghREALTORS cantl OR Wisconsin ,price with success. gas and leave reasonreasoton,adon’t OR start. marke signifi with REALT REALTOR Athe most FSBOs from greatersell pay all TOR Wisconsin correctly REALTORS home longer. throu a REALT struggle your that, help market signage, thecosts. ting - .eting on you. leave that that to a REALAssociation ®s are Wiscons inS nsin nsin staysold home home REALTORS marke 1invested ang ®1 , not ® your often sinhouse mark price and RS Wisco Wisco help success withthat help can REALTO REALTOR leave includi FSBO R price Association . ORS TORS greater TOR home all ion with REALTO t A REALT costs your es Wisconsin Associat REAL iation mostthe start. ® are sellinhous aleREAL from longer. eting you. with correctly 1 and s. d strugg Associ ation on the marke REALTORS Assoc TORS investe stayhome ing mark your r succes price often price your home REAL includ Association help et greatesell Wisconsin OR® can withstart. ® ss. REALT most ineryou. . A the REALTORS succeare gle from RS Wisconsin on the mark ®invested struglonger LTO stayhome correctly ® Wiscons inS nsin nsin Association REALTORS oftenyour TOR can REAgreat Wisco Wisco RS .are . in you REALTOR REAL help price r. Athe Association start. TORS ion ORS LTO sted REALT REAL iation Associat longe you inveREA your home Associ ation correctly from Assoc ed in help pricefrom the start. invest correctly

22 55 33 5555 33 33 44 444 4 1 2010 Profile Home Buyers & Sellers, National Association of REALTORS®

REALTORS® help you determine how much home you can afford.

REALTORS® are invested in you.

5 55 22 5 5 225

Reduce costs, save time and serve your customers better throughout the document signing process with zipLogix Digital InkTM, the WRA’s newest member benefit for digital signatures.

1 2010 Profile Home Buyers & Sellers, National Association of REALTORS®

Buyers & Sellers, 2010 Profile Home of REALTORS® National Association & Sellers, Home Buyers 1 2010 Profile of REALTORS® TM & Sellers, National Association Home Buyers 1 & Sellers, 2010 Profile of REALTORS® Buyers ® Association Home TM National 1 2010 Profile of REALTORS Association National

The REALTOR® “R” means better success in completing your transaction. The fact that 80 percent of all homes are sold by REALTORS® should tell you why to hire one. Maybe it’s their knowledge of the industry or the fact that they can accurately complete transaction forms on your behalf. Perhaps it’s as simple as their ability to hold an open house, or their relationships with trade professionals. Whatever the reason, don’t worry about the details – leave that to a REALTOR®.

Wisconsin REALTORS Association ®

2010 Profile Home Buyers & Sellers, National Association of REALTORS®

Wisconsin REALTORS Association ®

Your Promo Kit contains: TM

Wisconsin REALTORS Association ®

•

(1) 11” x 17” “10 Reasons to Hire a REALTOR®” poster

•

(50) 4” x 6” postcards designed for mailing and/or distribution

•

All shrink-wrapped and delivered to your door for $6.99 (plus S&H and sales tax)

Wisconsin REALTORS Association ®

In today’s economy, everything counts. Order your Promo Kit today! Purchase online at www.wra.org, or call the WRA at (800) 279-1972.

wisconsin real estate magazine

september 2011

If you’re ready to “go green” with the most reliable electronic signature system available, visit www.wra.org/DigitalInk for more information and learn how to get started using Digital InkTM!

www.wra.org/wrem

A conference designed specifically for Brokers, Owners and Managers!

December 7-8, 2011

Country Springs Hotel - Pewaukee, WI

Last chance

sign

Northern Exposure 2011 May 4, 2011

for wra

convention

www.wra.org/convention

september 13-15 WRA 2012 WINTER CONVENTION JAN. 25TH - 27TH

LAKE OF THE TORCHES RESORT AND CASINO - LAC DU FLAMBEAU

wisconsin real estate magazine

september 2011

wisconsin

dells

Realtor® sales tip

Practice Real Estate - Not Law When earning my license, one rule that stood out the most was to never cross the line from practicing real estate into practicing law. In the excitement of our practice, offering legal advice may be easy, but remember: we are not attorneys.

rticle 13 of our Code of Ethics speaks specifically to this fine line. The article states that REALTORS® “shall not engage in activities By marcus wally that constitute the unauthorized practice of law and shall recommend that legal counsel be obtained when the interest of any party to the transaction requires it.” We often find ourselves in this predicament, and critical to our success is that we have boundaries and stick to them. We must have confidence in referring customers and clients to attorneys for matters outside the scope of our licensure. Don’t worry about not knowing everything that’s why we all have our areas of expertise! For this month’s sales tip, I’ve outlined my five steps for never crossing the line into practicing law. Wis. Admin. Code RL § 24.06 forbids licensees from engaging in activities that constitute the unauthorized practice of law and Wisconsin real estate licensees should always encourage a consumer to speak with an attorney.

Tip 1: Never act casually when changing wording in a purchase contract. Any time I alter preprinted forms, I could be subject to practicing law. My Florida-issued license allows me to fill in blanks on previouslydrafted documents, but I am not allowed to create documents - I am only allowed to fill in blanks. Of course, the exception to changing the terms and conditions of preprinted contracts is when directed by and only by the client. Even if it’s only a few words, I never tamper with the preprinted portions of a contract unless permitted to do so or when directed by the client. Otherwise, I could be practicing law without a license.

wisconsin real estate magazine

september 2011

Wis. Admin. Code § RL 16.06(3) provides as follows: “A licensee may cross out provisions on approved form to reflect the agreement of a party to a transaction provided that the deleted provisions remain legible.” Therefore as per Wis. Adm. Code § RL 16.06(3), a Wisconsin licensee may cross out provisions on approved forms to reflect the agreement of the parties, provided the deleted language remains legible. Additionally, Wis. Admin. § RL 16.06(8) permits the standard state-approved (WB) forms may be modified to meet the intent of the parties. When using DRL-approved forms, REALTORS® should be aware that they’re prohibited from altering forms, and they either must place additional material in the blank lines provided on the forms or use addenda. Wis. Admin. Code § RL 16.06(1) prohibits the altering of DRL-approved forms – by placing blank lines containing inserted provisions between provisions of the approved form text or adding text in existing white spaces – in such a way as to create the appearance and implication that the changes are approved by the DRL. Licensees should use the lines provided or attach an addendum as authorized under § RL 16.06 (4) and (5) when additional provisions or language is desired to reflect the contractual intent of the parties.

Tip 2: Never tell a customer or client that they don’t need an attorney. In my state, Florida, we mainly close with title companies, and on occasion, I overhear agents tell customers that an attorney is unnecessary. Be careful with such statements. When I am asked whether or not an attorney is needed, I respond, “If you would like to have an attorney, you may certainly do so.” I never discourage anyone from obtaining legal advice; this is the clients’ choice and only their choice. www.wra.org/wrem

Wis. Admin. Code § RL 24.06 (2) prohibits Wisconsin real estate licensees from discouraging any person from retaining an attorney. And as we know, when you tell someone not to worry, they usually do worry. So delete the phrase “don’t worry” from your vocabulary!

Tip 3: Never interpret the meaning of the clause in a contract with your client. Resist the temptation to interpret contracts, and instead refer your client to an attorney. I remember attending one of my first education sessions covering the contract for sale and purchase, and to this day I can still hear the instructor explaining the difference between the words “means” and “says.” The instructor stressed the importance of your script reciting what the paragraph in question “says” - and not saying what the paragraph “means.” If I tell the customer “the paragraph means,” I am practicing law for which I don’t have a license. Instead with “the paragraph says the following,” I am repeating exactly what the language states. Practice your script on “means versus says” to ensure your language is not construed as legal advice. Wis. Admin. Code § RL 16.05 Legal advice and practice of law. (1) A licensee may not give advice or opinions concerning the legal rights or obligations of parties to a transaction, the legal effect of a specific contract or conveyance, or the state of title to real estate. (2) Notwithstanding sub. (1), a licensee may give a general explanation of the provisions in an approved form to the parties to a transaction at the time of completing the form or when delivering an approved form for the seller’ or buyer’s acceptance.

Tip 4: Never sign a document on behalf of your customer. Even though this may sound silly, agents actually do this. Signing a legal document - even with approval - is not permitted. The only instance where this would be acceptable is if you have a power of attorney (POA), and even then, the benefit to the consumer may not outweigh the risk to licensee. Signing a legal document on behalf of a consumer even with authority potentially provides a great personal risk of liability for a real estate licensee. Signing documents for parties is not an ordinary part of a broker’s authority as an agent, nor is it a good idea or practice for brokers to seek or accept this authority. In my 20 years of experience, I cannot remember ever signing a document on behalf of one of my buyers or sellers. Considering the rarity of this situation, don’t let anyone suck you into this trap. In fact, with technology today, there are certainly other ways to make sure that all documents, even at the last minute, are executed properly by the appropriate parties and not by the real esate licensees. In Wisconsin, the POA authority to sign for another should be given in writing, preferably notarized, with the fullest possible instructions from the authorizing party. When signing documents, the POA should comply with Wis. Stat. § 706.03(1), which provides that both the party’s name and the POA’s name must appear with an indication of authority.

Tip 5: Never write an addendum to the purchase contract. It’s less risky to include common contingencies into contracts, such as

wisconsin real estate magazine

september 2011

standard clauses, and then cross them out later if they don’t apply. But, forgetting to have a buyer or seller sign the lead-based paint disclosure can put you as the licensee in violation of federal law. A few more critical examples come to mind about writing an addendum. Failing to include certain addenda, suddenly needing them, and finally discovering that they are not part of the contract is a series of issues that no doubt causes unnecessary grief. Protecting the public is our top priority, and we cannot take our job lightly. That old saying comes to mind, “better to have it and not need it than to need it and not have it!” One solid example of that old saying is the appraisal contingency. The Florida contract does not have an appraisal contingency built in to the standard contact so I add this appraisal contingency addendum to all my offers - you just never know when this added protection will save the day and allow buyers to walk if desired. Sometimes it’s needed, sometimes it’s not. We are better off to have it and take out, than to not have it and become locked into a contract with no escape. Also, buyers may elect to pay cash, but drafting an offer contingent on bank financing does not preclude the buyer from paying cash at closing. I explain this to cash buyers. Wis. Admin. Code § RL 16.06(4) provides that a licensee may use a pre-prepared addendum containing provisions that relate to the information that would be filled in the blanks on a DRL-approved form, or that modify or supplant the optional provisions or contingencies set forth in the DRL-approved forms. An example might be the financing or inspection contingency in an offer to purchase. In practice, this type of addendum may be drafted by the broker or an attorney. A licensee may complete any fill-in-the-blanks or make selections when using this “optional information” addendum. Under § RL 16.06(5), a licensee may use a pre-prepared addendum, which supplants or alters the printed provisions of a DRL-approved form that are not optional. This is allowable only if the addendum is drafted by an attorney who is identified on the addendum and there are no blanks, fill-in provisions, options to select or multiple-choice provisions in the addendum - other than spaces for the signatures of the parties and for incorporating the addendum by reference into the offer to purchase or other DRL-approved form. The bottom line is that if an addendum rewrites provisions of an offer that are not optional, it must be drafted by an attorney. This “language modification” type of an addendum may not be filled in by the licensee other than signatures and incorporation provisions. Whether any pre-prepared addendum is appropriate for a specific transaction must be decided on a case-by-case basis. Although preprepared addenda are available, a broker must be discerning about when to use addenda. By following these five tips, not only will your success increase, but your peace of mind will provide extra energy to help you reach your goals for the year! 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 marcus@ newworldrealty.com.

legislative

History Making Recalls Complete T

By joe murray

he historic and expensive state Senate recall elections are over, for now. In the July issue of Wisconsin Real Estate Magazine, we raised the following question: Would the Kloppenburg–Prosser state Supreme Court election accurately predict the outcome in the nine August recall elections?

The answer is “yes” in five districts (Cowles, Darling, Olsen, Wirch and Kapanke), and “no” in four districts (Harsdorf, Hoplerin, Hopper and Hansen). In the April 2011 Supreme Court race, Prosser carried six of the nine recall districts (Cowles, Darling, Holperin, Olsen, Hopper and Hansen), came close to winning in two districts (Harsdorf and Wirch), and lost one district (Kapanke) by a large margin. On the right are the side-by-side results in the Kloppenburg–Prosser Supreme Court race and the nine Senate recall elections.

The Model

Hopper (R) Kapanke (R)

Winner By County Darling (R)

Wirch (D)

wisconsin real estate magazine

september 2011

Prosser % of Vote

57.4

57.8

Alberta Darling (R)

57.6

Sheila Harsdorf (R)

48.7

Jim Holperin (D)

55.3

Luther Olsen (R)

54.8

Randy Hopper (R)

53.4

Robert Wirch (D)

48.7

Dave Hansen (D)

52.4

Dan Kapanke (R)

42.3

The Wisconsin Democracy Campaign, a campaign spending watchdog organization, estimated that total spending in the nine state Senate districts fell in the $35 - $40 million range. Even if these numbers are on the high side, campaign spending by the candidates and third parties shattered every record that ever existed, and then some. For example, prior to this year’s race between Republican Alberta Darling and Democrat Sandy Pasch in the 8th Senate District, the old spending record in a state Senate race was $3 million. By comparison, the Darling– Pasch contest was estimated to cost in excess of $8 million. The Wisconsin Democracy Campaign estimated spending in all 115 state legislative races in 2010 at nearly $19 million. Recall spending was nearly double this figure.

•

Wisconsin recall voter turnout reached nearly 90 percent of November 2010 levels. With all the votes counted in the nine state Senate recall districts, voters turned out to vote at historic levels for mid-August elections. In eight of the nine recall districts, voters turned out in greater numbers than they did for the record-setting state Supreme Court race in April. The only district where the recall vote was lower than the Supreme Court race with 4,282 fewer voters was the race between Democrat Dave Hansen and Republican David Vanderleest in the 30th Senate seat in Green Bay. The Hansen–Vanderleest race was a non-competitive race for a variety of reasons.

Hansen (D)

Olsen (R)

% of Vote

Robert Cowles (R)

•

Holperin (D)

Cowles (R)

Senator

Recall Highlights

Prosser, the conservative candidate, received the majority of votes in the red counties, and the blue counties were carried by Kloppenburg, the liberal candidate.

Harsdorf (R)

www.wra.org/wrem

“Wisconsin recall voter turnout reached nearly 90 percent of November 2010 levels.” •

Using the April Supreme Court race as the turnout model for the nine recall districts, it’s clear that the unions and Democrats had their work cut out for them. Six of the nine recall districts were fought in “red” districts carried by Prosser in the April Supreme Court election. This made the task of Democrats picking up three Senate seats and flipping the majority difficult in spite of the massive amount of campaign spending and incredible getout-the-vote drive.

In the ongoing political wars that began in February with the collective bargaining issue, Round One (Supreme Court election) was won by Republicans/conservatives. Round Two (Senate recall elections) saw Democrats gain seats, but Republicans were the ultimate victors since they remain in the majority in the Senate. Round Three, the possible recall election against Gov. Walker, is yet to come. It looks like voters of all political persuasions may have to endure recall elections for a long time to come. Stay tuned. Joe Murray is Director of Political and Governmental Affairs for the WRA.

wisconsin real estate magazine

september 2011

Give Me a Break! Tax reform should not dilute the mortgage interest deduction

he recent bruising legislative battles over budget deficits and debt, both in Washington and Madison, have left most people feeling a bit discouraged, disenchanted and somewhat disgusted … not democracy’s finest moment.

The unsightly debt ceiling debate in D.C. ended with a self-executing train wreck planned for later this year, in the form of automatic spending cuts that will irritate both the right and the left unless a “supercommittee” derails it with a more permanent spending and taxing plan. So get mentally prepared for Round Two. By Michael theo

But this ugly political spectacle has also whisked up renewed discussions about the need for major tax reforms. While this debate will likely be equally ugly, it’s also important.

wisconsin real estate magazine

september 2011

www.wra.org/wrem

Any consideration of major tax reform inevitably involves talk of sufficiency about how much we and/or the economy can tolerate, and it also leads to talks of fairness regarding who should pay what and exactly on what. If lawmakers engage in a serious discussion about our nation’s tax code, they must consider the myriad of targeted tax breaks intended to invoke certain desirable behavior. One tax break they should not remove or reduce however is the mortgage interest deduction (MID). While many taxes influence the affordability of housing and the ownership of real property - like the real estate transfer tax, property taxes, special property-related assessments and fees, for example - the MID has long been the Holy Grail of tax policy from a REALTOR® perspective, and for good reason. Any significant changes to the MID, especially given this economy, could threaten any housing recovery, erode home prices and values, devastate middle-class wealth accumulation and hurt economic growth. The negative impacts of changes to the MID was the focus of recent forum in Washington, D.C., titled “Rethinking the Mortgage Interest Deduction,” sponsored by several think tanks including the Brookings Institute. There, NAR made a spirited defense of the MID, including the following highlights: •

Reducing or eliminating the MID is a de facto tax increase on homeowners who already pay 80 to 90 percent of the U.S. federal income tax. That share would rise to 95 percent if the MID is eliminated.

•

The MID does not benefit only the wealthy. Nearly two-thirds of those who claim the MID are middle-class earners, and 91 percent of people who claim the MID earn less than $200,000 a year.

wisconsin real estate magazine

•

Housing equity is a major source of funds for small businesses and thus any changes to the MID will greatly hamper their ability to create jobs.

•

MID facilitates homeownership by reducing the carrying costs of owning a home, making a real difference for hardworking middle-class families.

•

Eliminating the MID will lower homeownership rates. While we must not repeat easy credit mistakes that inflated homeownership rates of the bubble years, we also need to create the conditions for sustainable home ownership which have proven to provide numerous social benefits for families and communities.

•

Since it has been part of the tax code for over 100 years, it’s inaccurate to claim the MID caused the housing market

september 2011

bubble and is suddenly part of the deficit problem. •

Now is the worst time to discuss changing this homeowner incentive, running the risk of forestalling the housing market’s fragile recovery as well as the broader job market recovery.

As our state and nation debate long-term tax reform, it’s important for all of us to remember the importance of the mortgage interest deduction and to pass along the facts to friends, neighbors and colleagues, so that at least this part of the tax code, and all the benefits that result from it, remain intact. At least on this one, taxpayers should cry “give me a break.”

Michael Theo is Senior Vice President of Legal and Public Affairs for the WRA.

WRA Pursues Legislation to Clarify When Zoning Variances Expire

eal estate transactions are complicated enough without the increased confusion caused by the uncertain status of a zoning variance. To ensure that local governments, property owners and REALTORS速 have greater certainty about when a zoning variance expires, the WRA is seeking to clarify the law regarding the expiration of local zoning variances.

Background Variances are important land-use tools used by municipalities to grant relief to property owners on a case-by-case basis when current local zoning regulations placed unreasonable restrictions on the ability of such property owners to use and enjoy their property. For example, if a property owner wants to construct a deck or add an additional bathroom on the back of his or her house, and the current rear-yard setback requirement prohibits such an improvement, the municipality will often grant a variance and allow the deck or bathroom to be constructed if the impact on neighboring residents and the community is negligible. This practice allows property owners, whose lifestyles require more modern conveniences, to update their older homes rather than being forced to move to newer homes. Currently, Wisconsin law is unclear as to whether variances automatically expire after a certain period of time. Wisconsin courts have not addressed if and when variances expire in cases where a municipality has not expressly identified such a date either by ordinance or at the time of granting a variance. However, other states follow the rule that a zoning variance does not expire as long as the circumstances warranting the variance have not changed. The underlying rationale for allowing variances to exist without expiration is that the purpose of a variance is to allow a property owner to make reasonable use of his or her property and, thus, a variance should not expire unless the circumstances affecting the property have changed so that the property

wisconsin real estate magazine

september 2011

By tom Larson

can be used in the desired without the variance.

Proposed Solution To clarify the law in Wisconsin, the WRA is working with legislators to introduce legislation that would indicate that variances from local zoning ordinances run with the land and do not expire unless expressly stated by the local municipality on or before the date the variance was granted. Specifically, the legislation would state that a variance from a local zoning ordinance does not expire unless (a) the municipality granting the variances has expressly established an expiration date for variances by ordinance, or (b) the local board of appeals/adjustment that granted the variance establishes an expiration date at the time the variance was granted.

Why This Is Important to REALTORS速 While disputes over the validity of variances are not widespread, they do happen and often during the middle of transaction. Several REALTORS速 have been involved recently in transactions where disputes between the property owner and local government occurred over the validity of zoning variances. The disputes were eventually worked out, but not before significant delays and legal expenses were incurred by the property owner. Moreover, REALTORS速 need to be careful when marketing property that is subject to a zoning variance to make sure that the variance has not expired. For more information on this proposed legislation, please contact Tom Larson at tlarson@wra.org or at (608) 240-8254. Tom Larson is Chief Lobbyist and Director of Legal and Public Affairs for the WRA. www.wra.org/wrem

WHAT MAKES A CENTURY 21 AGENT? SWAGGER STRAiGHT oUT of THE old WEST CoMbiNEd WiTH THE dRivE of A Gold-MEdAl-WiNNiNG GYMNAST. PlUS SMARTS. ElECTRiC CAR SMARTS, NoT PAPER-CUT SMARTS. bECAUSE THAT’S No Good AT All. CENTURY 21 AGENTS. SMARTER. boldER. fASTER. ®

LEARN ABOUT FRANCHISING OPPORTUNITIES AT C21.COM © 2011 CENTURY 21 REAL ESTATE LLC. ALL RIGHTS RESERVED. CENTURY 21® IS A REGISTERED TRADEMARK OWNED BY CENTURY 21 REAL ESTATE LLC. AN EQUAL OPPORTUNITY COMPANY. EQUAL HOUSING OPPORTUNITY. EACH OFFICE IS INDEPENDENTLY OWNED AND OPERATED.

What is our WHEDA速 Advantage? Financing we needed for repairs on our new home.

our buyers can finance up to $10,000 in home repairs right into their WHEDA Advantage mortgage. From down payment assistance to affordable monthly payments to job loss mortgage protection and more, the WHEDA Advantage has everything first-time home

buyers need to realize their dream of homeownership. Discover the WHEDA Advantage! Income and purchase price limits apply and home buyer education is required. To learn more, go to wheda.com/Realtors/.

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