June 2013 — Wisconsin Real Estate Magazine by Lauren Bizorik

Real Estate Wisconsin

A Publication of the Wisconsin REALTORSÂŽ Association

magazine June 2013 Vol. 29 No. 9

What the Buyer Can't See

Industry professionalism An update on the WRAâ&#x20AC;&#x2122;s efforts.

Understanding inspectors Forging positive agent/inspector relationships.

It keeps going and going No, not the bunny ... the Wisconsin housing market!

Property tax freeze by C or i

Keep it frozen.

FOCUS

Radon: Let Them Inspect, Not Test.

ont am L

contents

15 12 4 7

June 2013 | Vol. 29, No. 9

Raising the bar

Enhancing professionalism in Wisconsin real estate.

More positive sale growth!

Wisconsin home sales keep going and going …

12 Hotline Q&A REALTOR® sales tip Working with inspectors 24 15 Property tax freeze Product showcase 26 18 Common inspection contingency questions and answers.

Learn about zipForm® videos, the clause library and more.

As the market heats up, so does competition.

An update on WRA lobbying efforts.

Convention Photo Contest Is Back! Now in its second year, the convention photo contest is here once again and is full of new features! New and improved contest features include the wra.org upload center for your photo submissions, Facebook voting, final voting at the convention, new prizes, and more! The submission period is going on now. Visit www.wra.org/ photocontest for complete rules and details and to submit your entries into the contest.

Cover Story The topic of home inspectors related to testing is a daily discussion on the WRA’s Legal Hotline. What happens when radon is included in the inspection contingency in the 2011 WB-11 Residential Offer to Purchase? Should it be there? If so, how do you move forward? Learn about these answers and more — so you’re not caught off-guard when radon seeps into your next transaction’s offer to purchase.

WIREALESTATEMAG • JUNE 2013

How understanding inspectors can help you in your practice.

A Message from the President by Mike Theo

Raising the Bar

WIREALESTATEMAG • JUNE 2013

EALTORS® have long sought to raise the bar of professionalism in our industry. Our Code of Ethics — which celebrates its 100th anniversary this year — is founded on this principle and includes this phrase about REALTORS®: “They identify and take steps, through enforcement of this Code of Ethics and by assisting appropriate regulatory bodies, to eliminate practices which may damage the public or which might discredit or bring dishonor to the real estate profession.” Throughout the WRA’s recent strategic planning process, members asked that the WRA do more to improve and enhance professionalism in the real estate industry as well as better inform the media and the general public of these efforts and improvements. Toward this goal, the WRA’s proactive legislative agenda this year includes three bills that will do just that. These bills were approved by the board of directors at their May meeting in Madison and are in the process of being drafted and introduced in the legislature. The first bill would require two years of supervised, transactional experience before a real estate salesperson is allowed to obtain a broker’s license. To become a broker under current law, one need only to take 72 hours of both sales and broker pre-license education, get a passing score on each exam, and then they are set to go. Wisconsin is the only state in the country that does not require licensees to have some professional experience prior to obtaining a broker’s license and managing other licensees. With the increasing complexity of today’s real estate transaction, hands-on sales experience is essential for a broker. By requiring two years of documented salesperson experience within the last four years, brokers will gain the experience

“… Members asked that the WRA do more to improve and enhance professionalism in the real estate industry as well as better inform the media and the general public of these efforts and improvements.” they need to protect themselves, the employees and agents of the company, and most importantly, the public. The second bill to enhance our profession creates specific standards for when a convicted felon may obtain and keep a Wisconsin real estate license. Under this proposed legislation, a new applicant will not qualify for a real estate license in Wisconsin if he or she has any felony conviction, in state or elsewhere, in the last five years, starting from the completion of their sentence — including confinement and any supervision. Once the individual becomes eligible to apply for a license, they must undergo a background check, at their expense, then stand before the Real Estate Examining Board (REEB)

and discuss their individual circumstances. The REEB will have the discretion of whether or not to grant a license. The final bill to advance professionalism creates a regulatory framework for out-of-state real estate licensees who provide brokerage services related to the sale or purchase of real estate located in Wisconsin. This bill would require out-of-state licensees (OSL) to enter into a written cooperative agreement with a Wisconsin broker if they want to provide brokerage services while physically in the state. The legislation is intended to address the consistent complaint from in-state licensees that buyers and sellers are at risk because OSLs lack an understanding of Wisconsin laws, especially as to the use of state-approved forms. The new law would allow OSLs to physically enter Wisconsin and provide brokerage services but only if they have a written cooperative agreement with an instate broker that outlines the OSL’s duties. Currently, 26 states operate in a similar fashion. The new law would give in-state brokers the choice to have two voluntary options — a referral fee arrangement or a written cooperative agreement. Under the cooperative agreement option, in-state brokers set the parameters as to the OSL’s brokerage services. Combined with our recent past efforts to increase the hours of continuing education to maintain a license in the state, the WRA is responding to members’ calls for raising the bar of professionalism in real estate in Wisconsin. In so doing, we are better protecting the public and celebrating the centennial of our REALTOR® Code of Ethics in a direct and meaningful way.

real estate inside the wra

Real Estate Wisconsin

magazine

2013 REALTOR® Children Scholarship Winners

Editorial Staff: Publisher: Michael Theo Editor: Lauren Bizorik Senior Designer: Ashley Breneman Managing editor: Robert Uhrina

The Scholarship Committee of the Wisconsin Realtors Foundation recently awarded its annual REALTOR® Children Scholarships. The scholarships are awarded on the basis of the individual’s scholastic achievement, leadership ability and service to his or her school and community. Eligible applicants must be children of REALTOR® members in active standing with the Wisconsin REALTORS® Association for the past three consecutive years prior to the scholarship application.

WRA Executive Committee: Renny Diedrich, Chairman Steve Lane, Chairman-Elect Dan Kruse, Treasurer Paul Schieldt, Vice President Peter Sveum, Vice President K.C. Maurer, Vice President Erik Sjowall, Vice President

The recipients and their REALTOR® parents are: Jade Austin (Deanna Austin), Osseo Courtney Ewert (Glen Pretti), Mount Horeb Julie Gokhman (Inna Gokhman), Mequon Austin Grade (Michelle Neshek-Grade), Appleton Jake Haefner (Sandra DeLisle), Dousman Austyn Potterton (Keric and Andrea Potterton), Dodgeville

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

Beth Ryan (Scott Ryan), Onalaska Rose Spice-Kopischke (Rebecca Spice), Wauwatosa Brianna Wheeler (James Wheeler), Green Bay Ryley Zastrow (Kyle Zastrow), Rhinelander The foundation congratulates these recipients and their parents and wishes them the best in their future endeavors!

Distinguished Service Award Applications Now Available In 1985, the Wisconsin REALTORS® Association board of directors established the Distinguished Service Award, with its purpose to provide recognition to those REALTORS® who have provided many years of leadership and distinguished service to the association. All current members, local association executives and employees of the Wisconsin REALTORS® Association with at least five years membership or employment are eligible. Application deadline is June 28, 2013. Applications are available on the WRA website at www.wra.org/DSAaward. Congratulations again to the 2012 DSA recipients:

Rob Keefe WHR Group Employee Relocation, Pewaukee

Barb McGill Greater Milwaukee Association of REALTORS®

Della Rancourt Wisconsin REALTORS® Association, Madison

WIREALESTATEMAG • JUNE 2013

Contact Information: 4801 Forest Run Rd., Suite 201 Madison, WI, 53704-7337 608-241-2047 • 800-279-1972 e-mail: editor @ wra.org website: www.wra.org

Chairman's corner by Renny Diedrich

Mid-Year Review

his month’s featured topic in the magazine is home inspections. As we all know, a home purchase is typically the largest investment a person will make. The median sales price in Wisconsin is currently $138,000, and why anyone would spend such a large amount of money without an inspection is an inconceivable thought. As my father always said, “that is penny wise and pound foolish.” The home inspection is one of the most important contingencies in the offer to purchase. There is so much to learn about a home, no matter if it’s someone’s first purchase or 10th purchase. As real estate professionals, we should be encouraging buyers to get the opinion of a professional home inspector. And as listing agents, we should be encouraging sellers to engage home inspectors early in the listing process, which goes a long way to reveal potential trouble and gives the seller a chance to remedy issues proactively. It puzzles me why this practice is not very common. Imagine how much less stress you would experience in a transaction with a seller-initiated inspection. And who couldn’t use less stress these days?!

WIREALESTATEMAG • JUNE 2013

Capitol Hill visits

In May, the WRA leadership team, along with many other members, attended the 2013 Midyear Meetings in Washington, D.C. We had a full agenda of meetings with Wisconsin’s two senators and our representatives. The WRA and the National Association of REALTORS® prepared a host of issues to discuss with the members of Congress. The first issue involved the preservation of the FHA Home Loan Program. Clearly this is an extremely important program in our state as well as in the rest of the country. We cannot afford to allow Congress to impose additional costs or qualification burdens on consumers. The second issue was preserving

“As real estate professionals, we should be encouraging buyers to get the opinion of a professional home inspector.” homeownership tax policies. As you know, we currently have the home mortgage interest deduction, property tax deduction and capital gain exclusion for the sale of a principal residence. If these tax provisions were eliminated, the value of a home would likely decrease by an average of 15 percent. The housing market is finally seeing a recovery, and homeowners can’t afford this negative impact on property values. And the third issue was restructuring the main secondary market players, Fannie Mae and Freddie Mac. Without the secondary market, interest rates would be higher, making homeownership less affordable and less attainable for many Americans. If you think this might not be high on your priority list, simply refer to the situation with commercial real estate loan markets and consumers trying to obtain jumbo loans. And the final issue to discuss during our Capitol Hill visits was enlisting the support for the Consumer Mortgage Choice Act. Several provisions in the Dodd-Frank legislation need to be clarified or corrected. Let’s take a closer look at the numbers to understand why these topics are so critical. When a home is sold in Wisconsin, for example, the breakdown of numbers looks like this: • $13,689 of income is generated from real estate-related industries.

• $5,647 is spent on consumer items such as furniture, appliances and paint services. • $3,254 is spent on remodeling within two years of a home purchase. In 2011, 73 percent of home purchases were FHA-insured loans in the state of Wisconsin. And in 2010 in Wisconsin, 65 percent of homeowners used the mortgage interest deduction, and 85 percent of homeowners used the property tax deduction. Perhaps these numbers help you understand why these issues are so important to all homeowners!

Technology tip I attended a panel discussion about technology at a NAR convention a few years ago. I asked one of the panelists, Nobu Hata, fellow REALTOR® and now NAR employee, about what cloud storage system I should learn and use. Nobu responded, “Google owns the world … embrace it!” So I took the challenge and embraced it. I love using Google — I love the calendar, maps, YouTube and more. And Google is adding features all the time. I love the ability to store documents in the cloud and access them from any device. I can’t tell you how many times my cloud storage has saved me or made me more productive. I can create or upload documents into Google Docs and access the data anytime, anywhere. Sharing documents, spreadsheets and pictures is easy by sending a link rather than all those large annoying attachments in e-mails. Give it a try. You’ll love it! And, Google Drive is my favorite “f” word: “free”! Enjoy. :-)

Renny Diedrich, WRA Chairman

wisconsin monthly housing report by David Clark

Home Sales and Prices Continue Healthy Growth in April WISCONSIN HOUSING STATISTICS MONTHLY ACTIVITY — April 2013 Statewide APR 2013 APR 2012 % Change YTD 2013 YTD 2012 % Change New Listings 12,210 11,862 +2.9% 38,759 41,469 -6.5% Closed Sales 5,863 5,367 +9.2% 18,199 16,413 +10.9% Median Sales Prices $138,000 $128,000 +7.8% $130,000 $121,121 +6.5%

isconsin existing home sales jumped 9.2 percent in April 2013 compared to April 2012, representing 22 straight months of positive sales growth in the state. Median prices climbed by a solid margin, growing 7.8 percent over the past year to $138,000, according to the most recent statistical report released by the Wisconsin REALTORS® Association (WRA). “This is a solid but sustainable pace of sales,” said Renny Diedrich, chairman of the WRA board of directors. This continues the modest growth established in the first quarter of the year nationally in which sales were up 9.8 percent, as well as for Wisconsin, where revised figures show that sales rose 11.7 percent compared to first quarter of 2012. “It looks like the first quarter trends are continuing into the prime selling period of the year, which is very encouraging,” Diedrich said, noting that in a typical year, about 60 percent of Wisconsin home sales take place between April and September. Five of the state’s six regions experienced positive growth in sales, with two regions up in the neighborhood of 20 percent. Specifically, the West region saw its sales grow 20.9 percent in April 2013 compared to that same month in 2012, and sales were up 18.5 percent in the South Central region over that period. The Northeast region grew at 8.6 percent, the North was up 5.3 percent,

higher-end homes are moving more quickly than they have in the past,” he said. View Online Despite increasing prices, housing in the state remains very affordable. The Wisconsin View all of the housing statistics at Housing Affordability Index shows the www.wra.org/housingstatistics. percentage of the median-priced home that a buyer earning the median family income can afford to buy, given the available 30-year and the Southeast increased 4.5 percent fixed-mortgage rate and down payment of comparing April 2013 relative to April 2012. 20 percent. The index stood at 255 in April, Only the Central region saw its sales decline, which is similar to its level of 258 in April with a modest reduction of 2.2 percent. 2012. By comparison, the U.S. Housing Median prices increased 7.8 percent in Affordability Index reported by the National April compared to April 2012, after rising Association of REALTORS® (NAR) was at 9.3 percent in March, again compared to 197 in the first quarter of 2013, and NAR predicts that the national index will fall to the same month in 2012. “We’re seeing 114 by the end of 2014. “We’re still quite strong upward price pressure statewide a bit more affordable than the national and across all regions,” said Michael Theo, level, but affordability will slip if prices and WRA President and CEO, who pointed to mortgage rates rise,” said Theo. “This is the a number of factors on both the demand time to enlist the help of an experienced and supply sides of the market. “On the REALTOR® to get the most value out of a supply side, unsold inventory has fallen by market that is clearly heating up,” he said. more than 9,000 homes over the last year, and on the demand side, very favorable David Clark, Ph.D, is a professor of economics at mortgage rates have gotten some buyers Marquette University and serves as a consultant off the fence and into the market over to the WRA in the analysis of existing home the last few months,” said Theo. He also sales data as well as in the preparation of the suspects that the tight inventory of entrymonthly Wisconsin Housing Report. For more level homes is helping to fuel the upper information, contact Clark at C3 Statistical Solutions, 414-803-6537. end of the market. “We’ve been hearing from REALTORS® that trade-up buyers are having very little problem selling their existing homes, which helps explain why

WIREALESTATEMAG • JUNE 2013

Median Price Existing Home Sales Region APR 2013 APR 2012 % Change YTD 2013 YTD 2012 % Change Southeast $149,900 $135,000 +11.0% 2,157 2,065 +4.5% South Central $169,500 $157,500 +7.6% 1,269 1,071 +18.5% West $132,850 $120,000 +10.7% 630 521 +20.9% Northeast $120,000 $116,000 +3.4% 1,032 950 +8.6% Central $115,000 $100,950 +13.9% 311 318 -2.2% North $105,060 $100,000 +5.1% 461 438 +5.3%

What the Buyer Can't See

FEATURE

by Cori Lamont

Let Them Inspect, Not Test

When radon seeps into the inspection contingency

here is no doubt that discussion surrounding the inspection contingency keeps the WRA legal hotline attorneys, managing brokers and agents busy in daily practice. Typically the debate surrounds the use of notice versus amendment, the definition of defect and the right to cure. However, the dialogue lately HAS TAKEN ON a new tone to include the topic of testing.

Testing versus inspection Before evaluating each scenario, we must first make the distinction between testing and inspection as they relate to the offer to purchase. For ease of use, all line references made within this article are to the 2011 WB11 Residential Offer to Purchase. The preprinted inspection contingency in the offer to purchase (lines 410433) provides three opportunities: 1. A home inspection by a Wisconsinregistered home inspector. 2. A separate inspection of any named

property component, if included. 3. Any follow-up inspections recommended in a written report by one of the above. The preprinted inspection contingency clearly states on line 410, “This contingency only authorizes inspections, not testing (see lines 395-409).” Lines 395-409 define both tests and inspections; and within the definition of inspection, the offer specifically states that an inspection does not include an appraisal or test other than testing for “leaking carbon monoxide, or testing for leaking LP gas or natural gas used as a fuel source, which

are hereby authorized.” In addition, testing is defined on lines 398-399 as “the taking of samples of materials such as soils, water, air or building materials from the Property and the laboratory or other analysis of these materials.” The offer makes a very clear distinction between an inspection and a test. Therefore, if the offer does not include a separate testing contingency, then a buyer is not permitted to conduct any test unless the offer is amended or the test is one of those enumerated within the definition of inspection.

WIREALESTATEMAG • JUNE 2013

eSSENTIALLY, the conversation breaks down into two scenarios — both of which throw radon testing incorrectly into the realm of the inspection contingency.

feature

seller as to the buyer’s proposal to have a radon test or any other testing, the inspection contingency is not the appropriate venue in the offer to address such matters. In addition, when the parties are negotiating testing, it is advised to determine what specific testing will occur to avoid any confusion or dispute in the future. It is also important to note that the ability to conduct follow-up inspections (but not testing) is limited to those inspections recommended in writing by an authorized inspector. The blanks at lines 413 and 414 should be used only to list the specific components of the property that will have specific inspections and should not, without other modifications to the contract, refer to testing.

Scenario B The offer makes no mention of a radon test. During the home inspection, though, the buyer decides, either after a discussion with the home inspector or on their own, that they would like to have a radon test. Therefore, the home inspector leaves a radon test canister behind at the property without the seller’s consent. What now?

WIREALESTATEMAG • JUNE 2013

When radon testing and the inspection contingency converger

Scenario A In the blank lines of the testing contingency, the offer presented to the seller includes a radon test or language that provides for any other follow-up inspection or test recommended by the home inspector. What now? The listing agent who receives an offer that includes a radon test, or language to the effect of a test recommended by the home inspector, should immediately suggest to the seller that a counteroffer needs to remove the language referencing radon testing or any testing from the home inspection contingency. The seller may wish to include a testing contingency specific to radon in that same counteroffer as well. Whatever the decision of the

When an offer does not authorize testing and the home inspector leaves a radon canister or some form of radon test behind at the property, the seller should remind the buyer that the offer to purchase does not grant the buyer, or his home inspector, authority to test for radon. Both the listing broker and seller may contact the Department of Safety and Professional Services regarding the unauthorized activity of the home inspector. Arguably, unauthorized testing constitutes trespass. In addition, the canister or other form of radon test should be removed promptly upon discovery, preferably by the seller — not by the listing agent. If the radon test equipment goes unnoticed by the seller or the listing agent, the biggest issue may still be on the horizon — the radon test results show 4.0 picoCuries (pCi/L) per liter of air, or better known as active levels of radon in the property. Because the test was conducted without authorization and tests are not within the scope of the home inspection, the results are arguably not the basis for a notice of defects per the home inspection. The parties should consult with legal counsel for advice regarding their rights under the terms of the offer. Because home inspectors are required to identify all conditions that the inspector has knowledge of, the home inspector must report the conditions discovered during the inspection, conditions disclosed by the seller, and conditions disclosed by test results. Unless permission is granted, sellers do not have to allow tests. In this case, the radon test was not approved, and the seller did not have to allow it to be conducted. Given that the test has been conducted, and the results have been included in the inspection report, the seller should consult with legal counsel to determine what effect the unauthorized test has on buyer’s rights under the inspection contingency. The key for future transactions is to ensure that the parties and the home inspector are aware that radon tests are not permitted unless specifically authorized by the seller.

Avoiding scenarios A and B Prior to writing the offer, your job is to encourage the buyer to have a discussion with a home inspector. This discussion should surround which tests, if any, the buyer may like to reserve the right to have. However, the majority of buyers typically do not even know which home inspector they would like to hire, let alone reaching out to one prior to writing the offer. If the buyer decides that radon is a concern and would like to reserve the right to test for radon, an agent should include a separate radon testing contingency. The note on lines 403-405 cautions: “Any contingency authorizing testing should specify the areas of the Property to be tested, the purpose of the test, (e.g., to determine if environmental contamination is present), any limitations on Buyer’s testing and any other material terms of the contingency.” A testing contingency should specify who will conduct the test, when and where it will be conducted, what standards will trigger the buyer’s ability to request remediation or terminate the offer, and whether the seller will have the right to cure. Essentially, the contingency should address who, what, when, where, how, cost and what will happen if not. The February 2013 Legal Update, “Contract Law Drafting Pointers,” found at www.wra. org/LU1302 is a great guide on drafting. According to EPA estimates, one in every 15 homes nationwide has a radon level at or above the recommended radon action level of 4 picoCuries (pCi/L) per

liter of air — therefore it is no surprise that a buyer may want to have a radon test. According to Wis. Admin. Code § REEB 24.03(2)(c), licensees are expected to

“Whatever the decision of the seller as to the buyer’s proposal to have a radon test or any other testing, the inspection contingency is not the appropriate venue in the offer to address such matters.” be knowledgeable regarding laws, public policies and current market conditions on real estate matters and advise the buying or selling public based on these factors. Do keep in mind that radon is a radioactive, non-discriminatory gas. Testing is the only way to know if radon is a concern with any specific property. If there is known incidence of high levels of radon in a particular community,

neighborhood or geographic area, an agent from that market area would be prudent to inform the buyer and recommend the buyer consider negotiating an offer with a radon testing contingency. The WRA’s Addendum A includes a testing contingency, in addition a great deal of REALTOR® board-created addenda have a preprinted radon test contingency. However, after discussion with the buyer, the buyer may wish to set their own specific standards in a radon test contingency. For instance, a buyer may want to detail in the contingency how much radon is too much radon in order for them to accept the property. Moreover, the buyer may want to have a mitigation system installed when the radon test level is 2 picoCuries (pCi/L) per liter of air rather than the EPA-recommended action level of 4 picoCuries (pCi/L) per liter of air. And while the buyer is free to propose terms in the offer acceptable to buyer, the seller is also free to refuse or counter the proposed terms. However, we all know that any and all testing, including radon, should not seep into the inspection contingency. For more information as to the preprinted inspection contingency, review the following in the Wisconsin Real Estate Magazine, “Uncovering the Truth: Inspection Contingency” found at www. wra.org/WREM/Apr11/UncoveringTruth, and the November 2009 Legal Update, “WB-11 Residential Offer to Purchase — 2010 Edition” at www.wra.org/LU0911. Cori Lamont is Director of Regulatory Affairs for the WRA.

WIREALESTATEMAG • JUNE 2013

FEATURE

best of legal hotline by Tracy Rucka

Best of the Legal Hotline: Home Inspection Contingency Notice or Amendment? The Legal Hotline receives calls, almost daily, about the home inspection contingency. The following questions and answers relate to the choices that the parties must make regarding the Inspection Contingency in the WB-11 Residential Offer to Purchase.

WIREALESTATEMAG • JUNE 2013

Remember the flowcharts we used back in school? Using a flowchart like the one on the next page can help explain the home inspection contingency to consumers and may help answer the frequently asked questions about how the contingency works. Because each choice made has an impact on the next choices available, the most important thing for brokers to keep in mind is that the broker gives an explanation of the choices and potential outcomes, and the parties then decide which path to take.

The following questions and answers presume the parties are using the Inspection Contingency without modification in the WB-11. Should the buyer include an inspection contingency? When drafting an offer, the broker will discuss the value of inspections of the property. It is especially important for the buyer to know the property condition if the property is being sold “as-is.” Should the buyer include any component inspections? There are three types of inspections per the offer: 1. The home inspection conducted by a Wisconsin-registered home inspector. 2. Component inspections included at lines 413-414. 3. Any follow-up inspections resulting from recommendations of the home inspector or component inspectors. At the time of the offer, the buyer may choose a home inspection and specify component inspections; whether or not any follow-up inspections will be necessary will be determined after the buyer obtains the

inspector(s)’ written reports. Does the buyer want to include any testing? The home inspection contingency is exactly that — an INSPECTION contingency. The contingency does not include any references to testing at lines 413-414. See Cori Lamont’s article, “Let Them Inspect, Not Test,” on page 8. Any request for testing must be included in additional provisions or in an addendum. Should the seller have the right to cure? Yes or no? When negotiating the offer, this decision is left to the buyer who can “kill the deal” after the home inspection. If the buyer wants the right to terminate based on the discovery of defects by an authorized inspector, the buyer should negotiate for no seller right to cure. Otherwise, the offer may include a seller right to cure, giving the seller the choice to cure defects or allow the offer to become null and void. What if the inspection is not conducted by an authorized inspector? Brokers should not allow any persons to conduct inspections or tests who are

not authorized to do so per the contract. If it is determined that the buyer engaged an unauthorized inspector, the buyer may not use that inspection as the basis to deliver a notice of defects. If time allows, an authorized inspection may be conducted, or the buyer may request an amendment to extend the inspection contingency. Can the buyer have followup inspections? After receiving the report, the buyer must decide whether to conduct any follow-up inspections recommended by the inspector. These inspections are at the buyer’s expense. This is not an invitation to conduct testing! If a home inspector suggests testing — but no testing contingency is included in the offer — the buyer may ask the seller to amend the offer to include a testing contingency even though the seller is not required to agree and authorize tests at this point in time. Do any of the inspection reports contain defects, and are they “defects” as defined in the offer? Everything listed in a home inspection report may not be a “defect” as defined in

best of legal hotline

GO TO CLOSE

DO NOTHING*

OFFER IS NULL AND VOID

YES

NOTICE*

ATTEMPT TO AMEND*

YES

ATTEMPT TO AMEND*

DO NOTHING*

NO DEFECTS

DEFECTS

NO RIGHT TO CURE

HOME INSPECTION CONTINGENCY RIGHT TO CURE DEFECTS

ATTEMPT TO AMEND*

YES

SELLER ATTEMPTS AMENDMENT

SELLER ELECTS TO CURE

YES

SELLER ELECTS NOT TO CURE OFFER IS NULL AND VOID

YES

GO TO CLOSE * Deliver A Copy of Inspection Report

DO NOTHING*

WIREALESTATEMAG • JUNE 2013

GIVE NOTICE OF DEFECTS*

DO NOTHING*

NO DEFECTS

best of

WIREALESTATEMAG • JUNE 2013

legal hotline

the offer. The offer states that the buyer may give a notice of defects. As stated on lines 182-184: “DEFECT: ‘Defect’ means a condition that would have a significant adverse effect on the value of the Property; that would significantly impair the health or safety of future occupants of the Property; or that if not repaired, removed or replaced would significantly shorten or adversely affect the expected normal life of the premises.” The buyer may seek legal counsel if there are questions as to whether any item is a defect as defined in the offer. Does the buyer have to give the seller copies of the inspection report(s) if there are no defects? Yes, per line 407: “Buyer agrees to promptly provide copies of all inspection and testing reports to Seller.” This obligation is independent of the decisions the buyer makes about the content of the report. Has the contingency time lapsed? If the date on line 421 has passed, the buyer has waived the right to provide a notice of defects and should prepare to proceed with the transaction to closing. The buyer’s other option is to ask the seller, in an amendment, to extend the time frame. When negotiating and setting up inspections, the goal is to allow enough time for the initial inspection and any follow-up inspections as well as time for the parties to consider all options. If there is still time … ! The million dollar question! Notice or amendment? After considering alternatives as well as the buyer’s objectives, the buyer must decide between a notice or amendment. This is when the broker can review the buyer’s position in the flowchart to offer the buyer options, letting the buyer decide which path to take. No right to cure: A written inspection report by an authorized inspector listing defects as defined in the offer gives the buyer multiple choices: 1. Do nothing regarding the inspection report and move forward to prepare for closing. In this situation, the buyer must still give the seller a copy of the inspection report.

2. Deliver a notice of defects with a copy of the report thereby making the offer null and void. The buyer may attach a WB-45 Cancellation Agreement and Mutual Release (CAMR) form to facilitate obtaining the seller’s signature and authorizing disbursement of the earnest money. 3. Deliver an amendment. This is the ideal option if the buyer wishes to negotiate purchase price, wants items repaired and/or replaced in a certain manner, or would like to ask the seller to do something regarding the items that are not defects as defined in the offer. The broker may explain that the seller can either agree and move forward with the transaction or reject the buyer’s proposal outright or may come back with an alternate amendment. The amendment is not a notice of defects and does not terminate the offer. Right to cure: A written inspection report by an authorized inspector listing defects as defined in the offer also gives the buyer multiple choices when the seller has the right to cure: 1. Do nothing regarding the inspection report and move forward to prepare for closing. In this situation, the buyer must still give the seller a copy of the inspection report. 2. Deliver a notice of defects, identifying the defects to which the buyer objects along with a copy of the report. This triggers the seller’s election to cure, at which point the seller has multiple choices: a. Do nothing, elect not to cure, and the offer will become null and void after 10 days. b. Give a written notice electing not to cure, and the offer will become null and void upon delivery. c. Give written notice of an election to cure — then cure the defects according to the offer. d. Deliver an amendment to the buyer to attempt to renegotiate. Any such amendment must contain language withdrawing the buyer’s previously delivered notice, otherwise the offer will become null and void after the seller’s 10-day window to elect to cure if the seller does not deliver notice of election to cure.

3. Deliver a notice and amendment simultaneously. Although this is a viable option, it tends to cause confusion, and if not executed carefully, may have unintended consequences. An amendment used in this manner should contain language withdrawing the notice of defects if the seller agrees to the amendment to avoid the offer unintentionally becoming null and void if the seller does not deliver notice of election to cure. The offer doesn’t talk about the buyer or seller offering amendments — can they still use them? Yes, the offer lays out the bare bones of the contingency and does not prevent the buyer and seller from renegotiating by amendment. This is an option even if there are no defects in the offer in the inspection reports. Should the broker refer the parties to legal counsel? Brokers cannot engage in the unlicensed practice of law. Therefore it is competent practice to refer the parties to legal counsel with their legal questions. If there is a question as to whether an item is a defect, that is the time for the attorneys to get involved, likewise if the buyer conducts unauthorized inspections or tests. Where can the broker obtain more information about the use of the home inspection contingency? Comprehensive coverage of this issue and various strategies can be found in two issues of the Legal Update: August 2004 Legal Update, “Effective Home Inspections,” at www.wra.org/LU0408 and the October 1999 Legal Update, “Home Inspections,” at www.wra.org/LU9910. Tracy Rucka is Director of Professional Standards and Practices for the WRA.

WRA Legal Hotline The Legal Hotline is a members-only service in which WRA members can submit a real estaterelated legal question and receive information and feedback from WRA legal department staff. Have a question? Visit www.wra.org/Hotline to fill out the online question form, or call 1-800-7994468. Not a WRA member? Visit www.wra.org/Membership to learn more.

legal

Working with Home Inspectors

legAL

by Debbi Conrad

Walking on the roof is optional!

First, the basics: inspect the foundation A “home inspector” is an individual who is paid to conduct a home inspection. A “home inspection” is a process by which a home inspector examines the observable systems and components of improvements to residential real property that are readily accessible. A “home inspection report” is the written opinion of a home inspector regarding the condition of the improvements and the mechanical and structural components of residential property that contains no more than four dwelling units.

Wisconsin home inspectors must be registered with the Department of Safety and Professional Services (DSPS). They must pass a national and a state examination to become registered and must attend continuing education to renew the registration every two years.

Customizing the home inspection: inspect the awnings and shutters too please There is no approved home inspection report form. The home inspector is required to inspect those improvements,

installed systems and components listed in Wis. Admin. Code § SPS 134.03, and only if they are present on the property at the time of the home inspection and readily accessible. However, the buyer and the home inspector may agree to customize the list of components and items inspected. For example, the home inspection rules do not require home inspectors to inspect items not permanently attached like carpeting as well as washers, dryers, refrigerators, freezers, stoves and ovens. However, home inspectors may be willing to test basic appliance operation upon request — for example, if the stove burners get hot. For some other items, like the chimney or the furnace, the buyer may

WIREALESTATEMAG • JUNE 2013

When it comes to a successful residential purchase, it is rare when a home inspector does not perform a key role. Having the buyer receive an independent assessment of the condition of the property is invaluable. Sometimes agents may be heard to complain that some home inspectors are too picky or not clearly identifying whether an observed condition is or is not a “defect” as that term is used in the offer to purchase; but perhaps what is really happening is that the home inspector and the rules he or she must live by are simply misunderstood.

legal

purposes of a home inspection, is a condition or occurrence that is generally recognized by a competent home inspector as significantly reducing the functionality or structural integrity of property components or systems, or posing a significant health or safety risk to occupants of the structure and improvements. Any time a home inspector does not follow the rules and provide a proper inspection report, he risks discipline by the DSPS. Read on for one story from the annals of the DSPS disciplinary decisions.

“Stuck” by the stucco: one home inspector gone wrong

wish to engage an appropriate expert, such as a chimney sweep or a furnace contractor, and in turn ask the home inspector to exclude the chimney or the furnace from the home inspection.

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Required report elements: components, systems and items

Agents are often frustrated because the inspection report results do not neatly plug into the inspection contingency provisions in the offer. This happens because the standards that the home inspectors are required to use are not perfect matches. The home inspector will provide information about the condition of various property components but does not give the buyer a list of items that are defects for purposes of the inspection contingency. While some parties might prefer that, it is the buyer’s judgment, and not the opinion of the home inspector, that determines what goes on any notice of defects that the buyer might choose to give. The home inspector must note any component, system or item that, if not repaired, will have a significant adverse effect on the life expectancy of that component, system or item, and list any material adverse facts that a home inspector has knowledge of or has observed. A “material adverse fact,” for

In one case, the home inspector was tricked by a Permanent Wood Foundation (PWF) covered with stucco so that it would look like poured concrete. He inaccurately reported that the basement of the house was poured concrete. The only significant problem noted was the presence of mold in a corner of the basement. The home inspector accepted the seller’s explanation that any mold in the basement would have been caused by a pipe that burst the previous winter but had since been repaired. After closing, the buyer was informed by a neighbor that the house originally had a limestone foundation that had washed out and later was replaced with a “plywood” foundation. The buyer then had another home inspection performed and subsequently filed a complaint with the DSPS alleging that the original home inspection report had been deficient. The DSPS investigator visited the property and took pictures and obtained information from the second home inspector, the listing broker and the appraiser. • The good news for the home inspector was that the DSPS concluded that his failure to detect the PWF disguised as concrete was not a violation of applicable standards. However, other issues turned up during the course of the investigation. • The home inspector reported that the deck attached to the house was “treated wood.” The investigator and second inspector found that the deck was poorly constructed and unsafe: it was not level, did not have poured footings, the railing was not attached properly, and was attached to the house by only a few lag bolts. The lack of sound construction violated Wis. Admin. Code § SPS 134.03(5)(a)5., which requires a home inspector to observe and describe the condition of “Decks, balconies, stoops, steps and porches including railings.” • The home inspector made no comment about the furnace exhaust vent. The investigator and second inspector found that the furnace exhaust vent was only a few inches above the ground — not in accordance with manufacturer specifications — and could thus be covered by snow, infiltrated by water, or entered by rodents. This violated § SPS 134.03(9)(a)1 & 4., which requires inspection of the heating system including the heating equipment and distribution systems, and exterior surfaces of chimneys, flutes and vents. • The home inspector was unable to inspect the attic because the access door was painted shut and he was unable to open

legAL

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

Recommended reading • The August 2004 Legal Update, “Effective Home Inspections,” at www.wra.org/LU0408, includes a list of mandatory and optional home inspection services, and a list of components and services that a buyer may wish to add or subtract from the home inspector’s inspection assignment. • The standards of practice for a home inspector are listed in Wis. Stat. §§ 440.970 - 440.975 at docs.legis.wisconsin.gov/ statutes/statutes/440.pdf and Wis. Admin. Code § SPS 134 at docs.legis.wisconsin.gov/code/admin_code/sps/professional_ services/131/134. • NAR Field Guide to Home Inspections at www.realtor.org/field-guides/ field-guide-to-home-inspections. • “Let’s Ask the Inspector — Even If You Know the Difference Between a Ground Rod and a Two Gang, Avoid Acting Like a Home Inspector” in the March 2011 REALTOR® Magazine at www.realtormag.realtor. org/news-and-commentary/commentary/article/2011/04/lets-askinspector.

WIREALESTATEMAG • JUNE 2013

it without using a knife or other implement to cut around the edge, which is not required by the rules. But he gave confusing information in his inspection report — apparently guessing at some items and indicating they were acceptable, rather than saying the interior of the attic was not inspected. This violated § 134.03(11)(a)1. & 2., which requires a home inspector to observe and describe the condition of “insulation in unfinished spaces” and “ventilation of attics and foundation areas.” • The home inspector reported that the family room walls were “paneled — signs of mold-like substances, would recommend further test by qualified person.” The second inspector found several other areas in the house that had signs of mold as well. This violated § 134.03(8)(a)1. & 6., which requires a home inspector to observe and describe the condition of walls, ceilings and floors, and signs of water penetration into the building or signs of abnormal or harmful condensation on building components. • The home inspector reported electrical service in the house to be 100 amps, but it was only 60 amps. This violated § 134.03(7) (a)4., which requires a home inspector to observe and describe “Amperage and voltage ratings of the service.” Based on these and other violations, the home inspector’s license was suspended for 30 days and he was ordered to pay over $1,000 in costs. Home inspectors are regulated by the DSPS, and complaints may be filed at dsps.wi.gov/Complaints when home inspectors do not abide by the applicable regulatory standards.

product showcase

by Nichole Mickelson

Short, User-Friendly Instruction Available ... Really!

WIREALESTATEMAG • JUNE 2013

When you’re frustrated with technology because something isn’t working correctly, sometimes the last thing you want to do is troubleshoot the problem yourself. The terminology used in troubleshooting documentation can sometimes be so technical that you may feel you need an IT specialist to translate! ZipLogix, the makers of zipForm®, have created user-friendly troubleshooting and educational tutorials. Not only can you find training and troubleshooting information through the zipForm® website — under the “Support” tab — you can also find it through the “Help” tab in your zipForm® program. Whether you are a new or seasoned zipForm® user, check out the how-to videos and other training documentation available, and you’ll probably learn something new in just a minute or two! Digital Ink: How-to documentation: support. zipform.com/digitalink/support.asp How-to videos: www.ziplogix.com/ training/trainingcalendar.asp. zipForm®: How-to documentation: support. zipform.com/zf6/zf6support.asp. How-to videos: support.zipform. com/zf6/6_videos.asp. ZipForm® how-to videos range from creating a new transaction in zipForm® to using the strike-out feature to changing your company information. Each video clip is just a few minutes in length.

Savvy Home Buying Tactics A mortgage is an essential element of what, for most of us, is one of the most significant monetary and anxiety-ridden decisions we ever make in our lives: a home purchase. Because of this, the core of Savvy Home Buying Tactics targets home purchase, mortgage acquisition and lender

financing. Rather than providing a broad discussion of finance, the book contests assumptions long held unchallenged, scrutinizing old beliefs regarding mortgages and processes regarding prepayments, refinancing and supplementing retirement with debt. Chronologically, author Thomas Dussault details resourceful ways to get through the purchase of a home, and he describes a sequential process for a stress-free closing, a concise review of mortgage computation, mortgage financing and refinancing. Look to Savvy Home Buying Tactics for inside information and tactical advice for making the best financing decisions! For more information or to order, go to www.wra.org/pub2755.

drafting ideas when standard forms need to be modified to reflect the intent of the parties. The Wisconsin Real Estate Clauses current edition has new clauses and many revised clauses from the previous edition. For more information or to order, go to www.wra.org/pub280.

Zip Tip: Clause Library

Wisconsin Real Estate Clauses Let’s be honest … there’s no such thing as a standard real estate transaction. Each is specialized in its own way, requiring customization of the language used in the required forms to complete the transaction. The WRA’s Wisconsin Real Estate Clauses book and zipForm® 6 Clause Library are the most convenient ways to learn how to add language to a standard form, tailoring it to your unique transaction. This is the “go-to” resource for

The zipForm® 6 Clause Library is the electronic version of the Wisconsin Real Estate Clauses Manual. How does it work? Simply select the clause you would like to use from the library. The clause is automatically inserted into the document, with no additional typing necessary! Purchase the Clause Library directly through your zipForm® 6 account by clicking on the zipForm® store icon under the “Help” tab. Step-bystep PDF instructions with screenshots can be found at www.wra.org/zipform. zipForm® 6 Standard (desktop) users: www.wra.org/zipClauseStandard. zipForm® 6 Professional (online) users: www.wra.org/zipClausePro.

Nichole Mickelson is the Products Coordinator for the WRA.

WIREALESTATEMAG • JUNE 2013

education

WRA Education and Events Whether your goal is to become a real estate sales licensee, enhance your career with a designation, or renew your license with continuing education, this section offers you the key information you will need.

Interested in Becoming a Wisconsin Home Inspector? Home Inspection Master Curriculum (120-hour course) This all-encompassing curriculum provides you with the knowledge base you need to successfully begin your home inspection career. It Includes the following technical modules: Interiors, Exteriors, Electrical, Insulation & Ventilation, Structural, Plumbing, Roofing Systems, HVAC, and Garages. It also includes a module on business practices in the home inspection industry and module exams to test your knowledge. This course is approved for 120 hours of ASHI and NAHI membership renewal credits.

Home Inspection Fast Track Curriculum (60-hour course) Includes the following technical modules: Interiors, Exteriors, Electrical, Insulation & Ventilation, Structural, Plumbing, Roofing Systems, HVAC, and Garages. It also includes a module on business practices in the home inspection industry and module exams to test your knowledge. This course is designed for individuals with experience in a construction-related field. This course is approved for 60 hours of ASHI and NAHI membership renewal credits. For additional information about home inspection licensure, courses and more, visit www.wra.org/ homeinspectorinfo.

Upcoming CRS Electives Hudson, Wisconsin

July 15-19; 22-24, 2013 — Madison

September 25, 2013 — At Home with Diversity

To obtain a real estate license in the state of Wisconsin, you must first complete 72 hours of approved education courses, such as the WRA Sales Pre-license Course, and next, you must pass the state-administered exam. The WRA will offer an eight-day accelerated 72-hour sales program this summer in Madison. For more information, visit www.wra.org/SalesPL.

This course addresses issues regarding fair housing, cultural differences and diversity, and you’ll learn how to develop professional and sensitive guidelines for working with people of different cultures. Earn the At Home With Diversity certification as well as eight CRS elective credits with this one-day course. Instructor: Eric Kodner, CRS.

WIREALESTATEMAG • JUNE 2013

September 26, 2013 — Working in the Cloud and Top Secrets of Outlook E-Marketing Strategies

Real Estate Sales Pre-license

With access to all your files all the time, this course will teach how to utilize cloud technology so you’ll never be caught again missing critical information! And you’ll become an Outlook guru with learning the ins and outs of using Outlook for real estate. Earn six CRS elective credits with this course. Instructor: Mark Porter, CRS. Both courses will be held at the Phipps Center in Hudson, Wisconsin. Courses are co-sponsored by the Minnesota CRS Chapter, the Wisconsin CRS Chapter and the Wisconsin REALTORS® Association. Courses have been submitted for Minnesota and Wisconsin CE.

Broker Pre-license Course August 12-15, 19-22, 2013 — Milwaukee Real estate broker? Yes — that can be you! Mark your calendar for the eight-day Broker Pre-license Course in Milwaukee this August. This course satisfies the DSPS requirements for broker license education and will aid in preparation for the state-administered broker exam. Content includes topics such as contracts, consumer protection, duties to other brokers, alternative transfers, business ethics, business management, and much more. Completion of the Broker Pre-license education, passing the broker exam and receiving the broker’s license fulfill the 2013-2014 continuing education requirement. Visit www.wra.org/BrokerPL for more information.

WRA CE Schedule Visit www.wra.org/CourseSchedule for full schedule and details. Conferences and Conventions Date September 15-16, 2013

Event/Course WRA Annual Convention

Location Wisconsin Dells

Real Estate Continuing Education Date July 24, 2013 August 6, 2013 August 7, 2013 August 8, 2013 August 14, 2013 August 21, 2013 August 22, 2013 September 4, 2013 September 11, 2013 September 15, 2013 September 16, 2013

Course 2013-2014 Course 4 2013-2014 Course 4 2013-2014 Courses 1 & 2 2013-2014 Courses 1 & 2 2013-2014 Courses 3 & 4 2013-2014 Electives A & D 2013-2014 Courses 3 & 4 2013-2014 Elective A 2013-2014 Electives A & D 2013-2014 Elective C 2013-2014 Courses 1 & 2

Location Sheboygan Racine Madison Brookfield Madison Madison Madison Racine Brookfield Wisconsin Dells Wisconsin Dells

Price Call 920-457-7908 Call 262-884-7833 $27 member/$35 non-member $27 m/$35 nm $27 m/$35 nm $27 m/$35 nm $27 /$35 nm Call 262-884-7833 $27 m/$35 nm Register for convention Register for convention

Real estate (classroom) classes are approved for 3 hours of Minnesota Real Estate CE. Course 1 qualifies for Agency Law and Fair Housing and Elective D qualifies for Agency Law.

Pre-License Date July 15-19; 22-24, 2013 Aug 12-15; 19-22, 2013

Course Sales Pre-license Course Broker Pre-license Course

Location Madison Milwaukee

Member N/A $325

Non-Member $325* $345*

ATD $345* $365*

*Plus books

HAVE A PROFESSIONAL GROWTH SPURT

JUNE 24th - JUNE 27th

Invest in Your Greatest Asset

Invest in yourself by getting your CRS designation. Free webinars June 24-27 will give you a sample of CRS educational programs. Local networking events in Milwaukee, Madison, Fox Valley and Eau Claire offer a chance to meet local CRS members and get your questions answered on how to attain your designation. DISCOUNTS ON JOINING AND REINSTATING YOUR CRS RUN ALL MONTH. DETAILS ON ALL EVENTS WILL BE POSTED ON WISCONSIN CRS FACEBOOK PAGE.

WEBINAR: The Five Irrefutable Rules for Listing Success Join Rich Sands, CRS and discover how to unleash your listing business and catapult it to the next level.

WEBINAR: Planning for Profit

WEBINAR: Call Me, Maybe?

WEBINAR: Why the Cloud Rocks

Chandra Hall, CRS will teach you the formulas and systems that will allow you to plan for profit and treat your business like a business.

James Nellis II, CRS will share lead conversion strategies and tools that will help make your phone ring from both buyers and sellers.

Discover the top 5 reasons to bring your business in the cloud from Mark Porter, CRS. For more info, e-mail WisconsinCRS@gmail.com.

WIREALESTATEMAG â&#x20AC;˘ JUNE 2013

Complimentary Webinars

IT TO THE W I S C O N S I N R E A LT O R S ® A N N U A L S TAT E C O N V E N T I O N

REGISTRANT ONE INFORMATION:

 Check here if you are an Association Executive Name __________________________________________ Firm name __________________________________________ Address ________________________________________ City ______________________ State _____ Zip____________ Phone (W) ( ) ________________________________ (H) ( ) ________________________________________ E-mail address ____________________________________ WRA member # _______________________________________

SEPTEMBER 15-16, 2013

*TWO-FER CONVENTION SPECIAL: Register one WRA member for one full convention pass at regular price and register a second WRA member at a special introductory price. See details at www.wra.org/Convention. Your second guest must be a member of the WRA who has NEVER attended the annual convention or has NOT attended in the past five years. Limit one discounted registration per order. Register using this form or by visiting www.wra.org/Convention. After you have registered, you will receive a promotion code. Give this promotion code to a WRA member and tell that member to visit the website to register and take advantage of the discounted pricing.

Kalahari Resort and Convention Center 1305 Kalahari Dr. | Wisconsin Dells, WI 53695 Phone: 877-253-5466 or 608-254-5466

TWO-FER: 2nd WRA MEMBER INFORMATION:

Room Rates Standard: $109 I Royal African Suite: $179 Release Date: August 16, 2013

Name __________________________________________ Firm name___________________________________________ Address ________________________________________ City ______________________ State _____ Zip _____________ Phone (W) ( ) ________________________________ (H) ( ) _________________________________________ E-mail dddress ____________________________________ WRA member # ________________________________________

Kalahari Resort I Wisconsin Dells, WI

WWW.WRA.ORG/CONVENTION Hotel information:

(An additional $20 per room will be charged for the night of Sept. 14)

To see a complete list of overflow hotels, visit www.wra.org/ConventionHotel

WRA Member and/or Affiliate Before 7/31 Before 8/15 After 8/15  1-Day Pass (Sun., Mon.) circle one $59 $69 $79  Full Convention Pass $89 $99 $109  TWO-FER: 2nd WRA Member* $45 $55 $65  Unlicensed guest $30 $30 $30 Name of unlicensed spouse or guest:____________________________________________.

ATD $99 $129 $85 $50

Non-Member

ATD

• Chairman’s Reception I Sept. 15 I 6:00 p.m. – 7:00 p.m.

$129 $169

• Icebreaker Party I Sept. 15 I 8:30 p.m.

Before 7/31

 1-Day Pass (Sun., Mon.) circle one  Full Convention Pass

$89 $129

Before 8/15 After 8/15 $99 $139

$109 $149

Included in Registration Fee: • Real estate CE I Three courses included in full convention pass. Must register in advance. First come, first served. • Opening Session I Sept. 15 I 4:00 p.m.

Event Fees – Per Person: Real Estate Continuing Education — select up to three CE courses included for free in your full convention pass!

Golf (9/15) .................................................................................$98 Trapper’s Turn Golf Club  Member One  Member Two

 Elective C: Wisconsin Property Management I 9:00 a.m. – 12:30 p.m. I Sept. 15  Course 1: Wisconsin Listings I 8:30 a.m. – 12:00 p.m. I Sept. 16  Course 2: Wisconsin Offers I 1:00 p.m. – 4:30 p.m. I Sept. 16 Appraisal Course — 9/16/2013 WRA Appraisal Section Member  Class only  Class w/ Convention

Before 7/31 Before 8/15 After 8/15

ATD

Two-Fer Pricing

5k Run/Walk (9/15) Adult participants 16 and over...........................................$25 Ages 10–15............................................................................$10 Under 10............................................................................*Free

$109 $119

$119 $129

$129 $139

$149 $159

 2nd WRA Member* .....$74

CRS/CRB Luncheon (9/16) ........................................................ $22  Member One  Member Two

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

$119 $129

$129 $139

$139 $149

$159 $169

 2nd WRA Member* .....$84

 Special Services: Check here if you require special needs to attend. Attach written description of needs.

Appraisal Non-Member  Class only  Class w/ Convention

$129 $139

$139 $149

$149 $159

$169 $179

CANCELLATION POLICY: The WRA reserves the right to cancel courses if not filled. Cancellations must be made in writing prior to September 15, 2013 and will be refunded, minus a $25 administration fee. Registrations cannot be transferred from person to person. *Race participants under 10 years of age may purchase a race t-shirt for $10 and must pre-register. All other race participants automatically receive race t-shirt when pre-registering by Aug. 26. Race t-shirts not guaranteed day of race.

Payment Register by mail: WISCONSIN REALTORS® ASSOCIATION 4801 Forest Run Road, Suite 201 Madison, WI 53704-7337

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

membership resources

Exclusive Member Benefits As a WRA member, you can enjoy discounts on products and services to enhance your business.

Eclient Contact: Collect, Organize, Relax

he market is getting busy, and so are you! Do you feel like you’re swimming in a sea of clients, with big waves and strong winds, making it hard to stay afloat? Calm the wild seas of marketing with Eclient Contact! Developed by WRA member benefit website partner, RealEstateHomepages.com, Eclient Contact is a a drip e-mail management system that makes both managing your e-mail contacts and generating leads from e-mail marketing easy. With Eclient Contact, you’re able to collect names, e-mails and phone numbers directly from your website — or import your already existing contacts — and enter them into your Eclient Contacts list. Easily separate these contacts into categories for dedicated e-mail campaigns where you can quickly and efficiently keep in touch to help your clients through the buying and selling process. For $19.95 a month, the Eclient Contact service includes dozens of predesigned templates, graphics and themes for occasions like holidays, selling and buying tips, and more. You can receive Eclient Contact bundled with your RealEstateHomepages.com website or as a stand-alone plugin for

any other website. Why miss reaching clients through this powerful marketing medium? With EClient Contact, you can harness the power of Web marketing. Visit www.EclientContact.com or call 800-280-6926 to learn more or to sign up for a free trial.

Member Benefit Programs Office Supplies

Business Furniture

Shipping Discounts

Save on office supplies with Wisconsin-based Office Supplies 2U (OS2U). OS2U’s mission is to be the single-source premier supplier of business products. For more information, contact Bob Brooks at 608-441-8900, ext. 26, or by e-mail at bobb@os2u.com. Visit OS2U online at www.os2u.com.

Emmons Business Interiors (EBI) has marketed and distributed quality office furnishings across Wisconsin since 1940. Through several statewide locations, EBI provides quality new, used and refurbished office furniture products. Also available are interior design services, installation, and project and moving management. For more information, contact Tod Dean at 800-324-1691 ext. 424 or by e-mail at todd@ebiweb.com. Visit online at www. ebiweb.com.

WRA members currently enrolled in the UPS Savings Program must re-enroll to take advantage of this new exclusive offer. Just take a few minutes to fill out the short application form available at www.savewithups.com/enroll. To enroll, use promo code NCR308. If you have any questions, call UPS at 800-325-7000.

Call long distance and save with AMI Communications! Enjoy low rates with no monthly fee, no time-of-day restrictions, and no term or volume commitments. AMI also offers teleconferencing and toll-free service. Call AMI at 800-253-3202 or visit www.ami.net.

Health, Dental & Life Insurance Save on health insurance premiums with REGIT Inc. without compromising coverage. REGIT’s program provides access to customizable insurance plans to meet your needs. Call 800537-9786 or visit www.regitinc.com.

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

Errors & Omissions Program Pearl Insurance, the WRA-endorsed carrier for errors and omissions (E&O) insurance, offers insurance designed specifically for the real estate industry and the risks you face. Pearl provides coverage for claims of regulatory complaints, personal injury, lockbox liability or allegations of discrimination. For more information and a free quote, call 800-2898170 or visit www.pearlinsurance.com. Learn more at www.wra.org/exclusivegroupbenefits. If you have questions about one of the WRA member benefits, contact Debbie Thacker at dthacker@wra.org or by calling 800-279-1972.

WIREALESTATEMAG • JUNE 2013

Long-Distance Program

realtor sales tip by Marcus Wally

Is Now the Time to Sell?

WIREALESTATEMAG • JUNE 2013

Across the nation, things are finally looking good. Although values are still below their peak, inventories are at record lows. The number of existing homes on the market has dropped 25 percent from last year and is sitting at its lowest level since 1999. Houses are selling faster, the median number of days on the market is shrinking, and consumer confidence is building. And for the real estate professional, competition is getting stiffer and stiffer. Here are my tips to remain at the top of your game as the market heats up.

Adjust your sights to the market Real estate relies heavily on statistics, and to be top-notch, you must know local numbers. A successful transaction begins with you reminding your clients to set aside what they might have received for a sale back in 2006 and instead focus on home sales today. Top-of-mind awareness in five areas is your main focus: price changes, sale inventory, competition from foreclosure, average time it takes a home to sell, and the gap between selling and listing prices. Today, well-priced homes are selling, while those priced unrealistically languish for months.

Don’t reach for the stars Greed doesn’t work! Pricing too high will force the property to sell for far less than if it were priced correctly from the start. As you know, the largest viewing audience is always at the start of a new listing, so it’s critical to price correctly out the gate. Once a property is overpriced, both buyers and agents are likely to move the listing to the sidelines. Missing the market is perhaps the worst mistake you can make — and rarely financially mendable.

Irresistible Internet Make the Internet work for you. Most buyers and agents now start their search online, making Internet marketing an important component in a solid marketing strategy. For many years, I took my own pictures with my digital camera. Recently, though, I hired a professional to handle this aspect of my marketing. I recommend you do the same! For maximum impact, start with the picture that is going to tell the best story about the property. Make sure a photo of the curb appeal is followed by the living room, kitchen, backyard, and master bedroom and bathroom. Another important factor with Internet house-hunting is price. I recommend that you price a property at a round number. Since most buyers tend to search in $25,000 or $50,000 increments, you can maximize your exposure by pricing this way, thus ensuring the property shows up frequently in search results.

Realtor Sales Tip

Weigh multiple offers carefully

Clean up your act

For both sellers and agents, it’s easy to get excited and overconfident when a property receives multiple offers. Price tends to become the only focus. I recently lost two sales because the listing agents were not well-versed in handling multiple offers. In fact, one listing broker asked me how to handle the situation, and I was one of the brokers who had submitted an offer! After giving this listing broker my advice, he then did the exact opposite of my advice: to reject all the offers and ask for highest and best from each. The home remained on the market for quite a while since potential buyers who had submitted solid offers — one even full-price cash — felt alienated. Perhaps a buyer putting down substantially more cash and/or waiving all inspections are factors that should be given as much weight as the offer price. And since real estate is in a recovery mode, pay close attention to appraisals. If a buyer is willing to guarantee the purchase price, perhaps it is a smart idea to entertain taking a lower sales price. Remember to always let the seller make these decisions. And as far as a low appraisal goes, commit to returning appraisers’ phone calls and be willing to share your knowledge in order to overcome a low appraisal. Real estate is about teamwork! We need them as much as they need us.

Even when homes are selling briskly, properties must remain well-kept and attractive. A property should be inviting in order to get a bite. Make sure that the listing does not look shabby or crowded. Touching up paint, cleaning the carpet and removing unnecessary furniture to make the home look larger are all good ideas. Remove outdated window treatments and spruce up the home’s drive-by curb appeal to encourage visitors. I encourage sellers to take a look at other homes currently for sale so they can visualize their home through a buyer’s eyes. With the real estate market again gaining momentum, your competition is gaining momentum! And you can find success in this market by becoming strong at listing homes. After all, listings are the lifeblood of real estate!

Marcus A. Wally, MBA, is an active REALTOR® in St. Augustine, Fla. He is the founder and broker of New World Realty, which also manages the coaching and facilitation of education classes around the world. Marcus earned his MBA from the University of North Florida in Jacksonville. He can be reached at 904-669-1081 or at marcus@newworldrealty.com. Learn more about him at www.newworldrealty.com.

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WIREALESTATEMAG • JUNE 2013

Bill brings with him over 30 years of mortgage lending experience in the Madison area. His dedication to first class customer service and consistent communication has proven why he has built so many long-term customer relationships throughout the years. Deborah comes to Shelter Mortgage with over 20 years of experience in the real estate industry as well.

legislative by Tom Larson

Message to Legislature: Hold the Line on Property Taxes As the 2013-15 state budget process enters into the final stages, property taxes will be one of the key issues debated. While a statewide property tax freeze is currently in effect, some legislators are looking to ease restrictions to allow spending increases by local governments, K-12 school districts and/ or technical colleges. Because an increase in property taxes could be detrimental to housing recovery, the WRA has been advocating for a continuation of the property tax freeze and recommending that any increase in funding for schools or local government come from additional revenue sources.

WIREALESTATEMAG • JUNE 2013

Background

Wisconsin relies heavily on property taxes to fund education and local government. In fact, property taxes are the primary funding source for schools, technical colleges and local governments. Each dollar of the property tax is allocated to these different governmental units in the following manner: • 45 percent to K-12 schools. • 7 percent to technical colleges. • 23 percent to cities, villages or towns. • 19 percent to counties. • 5 percent to special districts (for example, sewer, sanitation, lake protection). Homeowners pay 70 percent of the total tax burden while commercial property owners pay 20 percent and all other property owners, including farmers, pay 10 percent.

This heavy reliance on property taxes to fund schools and local governments has made Wisconsin among the highest property tax states in the country. According to the Wisconsin Taxpayers Alliance, Wisconsin’s property taxes are the 9th highest in the country, while our income tax (12th) and sales tax (35th) rankings are lower. In Wisconsin, the total amount paid in property taxes, $10 billion, is approximately equal to the amount paid in income taxes, $6 billion, and sales taxes, $4 billion, combined. Despite already high property taxes, Wisconsin property taxes increased significantly over the last decade. From 2000 to 2010, property taxes reportedly increased 27 percent, with relatively high increases in 2009, up 2.8 percent, and 2010, up 4.2 percent. In response to the growing property tax burden, Wisconsin lawmakers, as part of the 2011-13 state budget, enacted

a property tax freeze to provide some relief to homeowners and other property owners facing both declining real estate values and significant annual increases in property taxes. Wisconsin’s property tax freeze controls property tax increases by freezing local property tax levies and allowing those levies to increase only by the value of any new construction. Also, local governments may exceed these levy limits if the taxpayers in the community authorize spending increases through a referendum. The property tax freeze has saved Wisconsin families and businesses hundreds of dollars each year. According to the Wisconsin Taxpayers Alliance, the property tax freeze has held property tax increases under 1 percent on average across the state. Based on the median value home, which is $158,000, the average homeowner saved over $300 per year due to the property tax freeze.

legislative

212 N. 71st St. Milwaukee, Wisconsin 53213-3744 (262) 424-8814 Office (414) 837-4470 Fax

Why the property tax freeze should be maintained

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

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When meeting with lawmakers to encourage a continuation of the property tax freeze, the WRA emphasized the following: Increases in property taxes could slow the housing recovery: Across the state, the real estate market is showing positive signs of improvement — the number of sales and prices are increasing, while the inventory and the number of foreclosures on the market are decreasing. Most importantly, consumer confidence in the real estate market is finally coming back. Raising the cost of housing and real estate through higher taxes is precisely the wrong thing to do at the wrong time. Wisconsin’s overall economy will not recover until Wisconsin’s real estate markets recover. Higher property taxes will make housing less affordable and make it more difficult for Wisconsin families to buy or stay in their homes: Higher property taxes will hurt struggling families trying to buy or stay in their homes and will prevent businesses from growing or locating in Wisconsin. Elderly homeowners on fixed incomes will be among the hardest hit. For every $1,000 increase in the cost of a home, hundreds of families are priced out of the market in each community. According to a study prepared by the National Association of Home Builders, a $1,000 increase in the price of a home will price out of the market 370 families in Green Bay, 429 families in Madison, 193 in Eau Claire, and 1,068 in Milwaukee. Allowing local communities to exceed the state levy limits through referendum has worked: While the property tax freeze places strict limits on increases to local property tax levies, local governments may exceed those limits if they get permission from the property taxpayers through a referendum. In November 2012, 38 referendums went before voters in school districts across the state, and 27 of the referendums, or 71 percent, passed, totaling almost $232 million. This shows that property taxpayers are willing to pay higher taxes in cases where they think the money is being used wisely. Adequate funding for schools and local services is important, but placing a greater burden on property taxpayers is not the answer: As REALTORS®, we know the importance of good schools and strong local communities to homeowners and a successful real estate market. However, property taxes already pay their fair share, and it is time to reconsider how we fund our schools and our local communities. While these are difficult decisions, we are committed to working together with you to find solutions. The WRA will continue to work closely with lawmakers to control property tax increases so that housing and other real estate remains affordable. However, knowing that the property tax freeze is not a long-term solution to controlling property tax increases, we will also encourage lawmakers to look at alternative funding sources for our schools and local governments. For additional information on the property tax freeze, please contact Tom Larson at tlarson@wra.org or at 608-240-8254.

legislative by Joe Murray

Who Will Challenge Walker in 2014? Milwaukee Mayor Tom Barrett tried to defeat Scott Walker twice and lost. Former Dane County Executive Kathleen Falk has run for statewide office three times, twice for governor, and lost. Herb Kohl has retired, and Russ Feingold was defeated in 2010. With the exception of newly elected U.S. Senator Tammy Baldwin, the big-ticket Democratic bench may be a little thin.

WIREALESTATEMAG • JUNE 2013

o the big question is who will step into the ring in 2014 and run against recall-tested GOP Gov. Scott Walker? The answer today is: we don’t know. By my count, there are 10 potential candidates who have not formally declared themselves in, or out, of the race. One could argue this list of candidates is simply too big, but it does make the guessing game more interesting. These potential gubernatorial candidates have their individual strengths and weaknesses, but all share two common features: they’re all men and most are current or former politicians. Only one potential Democratic candidate on this list is a businessman: Kevin Conroy of Madison. The bottom line: Democrats are struggling to come forward with a candidate they believe can beat Scott Walker. They tried

and failed to defeat him in the 2012 recall election, and this elevated his standing among conservatives across the country. The combination of Scott Walker’s national profile, proven fundraising ability and deep grassroots support will likely keep many potential challengers on the sidelines. In alphabetical order, here’s a look at the list of 10 individuals whose names have surfaced as potential Democratic gubernatorial candidates in 2014. Some potentials have been mentioned more than others, but all have political credentials that qualify them for this list. Joe Murray is Director of Political and Governmental Affairs for the WRA.

legislative

Chris Abele

Peter Barca

Occupation: Milwaukee County Executive Age: 46 Family: Married with two children Residence: Milwaukee Background: Philanthropist and investor. President and CEO of the Argosy Foundation. Strengths: Business background. Milwaukee County political base. Potential self-funding candidate. Weaknesses: Elected in 2011, limited political experience. Ongoing fights with Milwaukee County Board members and public employee unions.

Occupation: Wisconsin State Representative Age: 57 Education: Bachelor’s degree, UW Milwaukee. Master’s degree in public administration, UW Madison. Family: Married with two children Residence: Kenosha Background: Wisconsin state assembly, 1985-1993. U.S. Congress, 1993-1995. U.S. Small Business Administration. Wisconsin state assembly, 2009-present. Strengths: Extensive political experience. Southeastern Wisconsin political base. Small business administration background. Leadership role over collective bargaining fight in 2011. Weaknesses: Lack of fundraising ability. Long and extensive voting record. Lost congressional seat in 1994.

Kevin Conroy

Jon Erpenbach

Russ Feingold

Ron Kind

Occupation: Marquette University Law School visiting professor Age: 60 Education: Bachelor of Science degree, Oxford University. Juris doctor, Harvard Law School. Family: Divorced with two children Residence: Middleton Background: Practicing attorney. Wisconsin state senate 1982-1992. U.S. senate 19932011. Strengths: Name identification. National fundraising ability. Immediate front-runner status. Weaknesses: Lost Senate seat in 2010.

Occupation: Wisconsin State Senator Age: 52 Education: Attended UW-Oshkosh Family: Divorced with two children Residence: Middleton Background: Assembly and Senate communications director. Radio personality. Truck driver. Strengths: Extensive political experience. Well-known opponent to collective bargaining bill. Media background. Dane County political base. Weaknesses: Extensive voting record over time. Lacks fundraising ability.

Occupation: Member of Congress Age: 50 Education: Bachelor’s degree, Harvard University. Master’s degree, London School of Economics. Juris doctor, University of Minnesota. Family: Married with two children Residence: La Crosse Background: County prosecutor and congressional staffer. Strengths: Extensive political experience. Fundraising ability. Agriculture advocate. Weaknesses: Lacks statewide name recognition. Moderate voting record in Democratic primary.

WIREALESTATEMAG • JUNE 2013

Occupation: President and CEO of Exact Sciences in Madison Age: 46 Education: Bachelor’s degree, Michigan State University. Juris doctor, University of Michigan. Family: Married Residence: Madison Background: President and CEO of Third Wave Technologies. Intellectual property litigator. Strengths: Successful business background. Potential self-funder. Blank political slate. Weaknesses: Lack of political experience and name identification.

legislative

Chris Larson

Occupation: Wisconsin State Senator Age: 32 Education: Bachelor’s degree, UW-Milwaukee Family: Married Residence: Milwaukee Background: Business manager and Milwaukee County Board Supervisor 2008-10. Strengths: Milwaukee County political base. Position as Minority Leader in Senate. Weaknesses: First term in Senate. Lack of statewide name recognition.

Tom Nelson

Occupation: Outagamie County Executive Age: 37 Education: Bachelor’s degree, Carleton College. Master’s degree in public administration, Princeton University. Family: Single Residence: Kaukauna Background: Wisconsin state assembly 2005-2011. Strengths: Legislative and county executive experience. Fox River Valley political base. Statewide campaign experience. Weaknesses: Not from Milwaukee or Dane County.

Mahlon Mitchell

Occupation: President, Professional Firefighters of Wisconsin Age: 36 Education: Bachelor’s degree in public administration Family: Married with two children Residence: Fitchburg Background: Firefighter Strengths: Statewide name identification from recall election. Dane County political base. Union affiliation. Weaknesses: Losing recall election in 2012.

Joe Parisi

Occupation: Dane County Executive Age: 52 Education: Bachelor of Arts, UW-Madison Family: Married with two children Residence: Madison Background: Former Dane County Clerk. Wisconsin state assembly 2005-2011. Strengths: Dane County political base. Weaknesses: No statewide campaign experience.

WIREALESTATEMAG • JUNE 2013

OME

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