Kentucky ®
SPRING 2019
A publication of Kentucky REALTORS®
The socially savvy broker Sub-agency agreements Flood Insurance America's First Vineyard Outdoor spaces The real cost of living
kyrealtors.com
KENTUCKY REALTORS® BOARD OF DIRECTORS Rip Phillips Lester Sanders Charles Hinckley Robin Roseberry Steve Cline Pamela Featherstone Barbara Flannery Mike Spicer Earleene Woods Bobby Hunton Elizabeth Monarch Barbara Curtis Sue Ann Collins Brenda Gooslin AnnElizabeth Delahanty Helen Fardo Karen Gross Mike Inman Brenda Loyal Dave Parks, Jr. Art Reed Libbi Taylor Donna Willoughby
President President - Elect Treasurer Treasurer - Elect Immed. Past President Senior V.P. Senior V.P. Senior V.P. Region 1 Director Region 2 Director Region 3 Director Region 4 Director Region 5 Director Region 6 Director Director-at-Large Director-at-Large Director-at-Large Director-at-Large Director-at-Large Director-at-Large Director-at-Large Director-at-Large Director-at-Large
01/19 – 12/19 01/19 – 12/19 01/19 – 12/19 01/19 – 12/19 01/19 – 12/19 01/19 – 12/21 01/19 – 12/20 01/19 – 12/19 01/19 – 12/19 01/19 – 12/20 01/18 – 12/19 01/19 – 12/20 01/19 – 12/19 01/19 – 12/20 01/17 – 12/19 01/19 – 12/21 01/19 – 12/21 01/18 – 12/20 01/18 – 12/20 01/19 – 12/19 01/19 – 12/20 01/17 – 12/19 01/19 – 12/21
Louisville Louisville Radcliff Crescent Springs Bowling Green Elizabethtown London Crestview Hills Murray Bowling Green Louisville Georgetown Florence Pikeville Louisville Richmond Owensboro Salvisa Owensboro Louisville Florence Lexington Louisville
502 - 459 - 5509 Rip@RipPhillips.com 502 - 420 – 5000 lsanders@semonin.com 270 - 401 - 7473 charles@networkrealtyky.com 859 - 393 – 8537 gorobinroseberry@gmail.com 270 - 783 - 4515 stevecline@stevecline.com 270 - 766 - 1201 pamfst@gmail.com 606 - 521 - 0671 barbflannery@yahoo.com 859 - 341 - 9000 Mike.Spicer@cbws.com 270 - 752 - 0077 earleene@murraykyhomes.com 270 - 783 - 4515 bobbyhunton@gmail.com 502 - 459 - 5509 elizabeth@elizabethmonarchgroup.com 502 - 867 - 4900 barb@bacurtis.com 859 - 283 - 0323 teamworkssac@gmail.com 606 - 433 - 9700 bgooslin@listwithaaa.com 502 - 459 - 5509 AESellsHouses@gmail.com 859 - 625 - 0500 helenfardo@bellsouth.net 270 - 684 - 2100 kgross@century21partners.com 859 - 351 - 9929 mike.inman@coldwellbanker.com 270 - 993 - 5233 bloyal001@gmail.com 502 - 897 - 3321 dparks@bhhspw.com 859 - 525 - 7900 areed@huff.com 859 - 608 - 7555 emilyejt@aol.com 505 - 558 - 5637 lucydonna@aol.com
REALTOR® POLITICAL ACTION COMMITTEE (RPAC) Robin Roseberry
Chair
01/19 – 12/19
Crescent Springs 859 - 393 – 8537
gorobinroseberry@gmail.com
KENTUCKY REALTOR® INSTITUTE (KRI) Pamela Featherstone
President
01/19 – 12/21
Elizabethtown
270 - 766 - 1201
pamfst@gmail.com
859 - 422 - 2000 502 - 459 - 5509 502 - 451 - 4107 502 - 897 - 3321 859 - 907 - 5013 502 - 554 - 9500
john@johngroft.com Rip@RipPhillips.com lb@brelandgroup.com dparks@bhhspw.com realtorjeffsmith@yahoo.com kathryn@athomeinlouisville.com
NATIONAL ASSOCIATION OF REALTORS® DIRECTORS John Groft Rip Phillips Lamont Breland Dave Parks Jeff Smith Kathryn Sotelo
Lexington Association 11/30/19 State President 11/30/19 State Director 11/30/21 Large Board Rep. 12/30/19 State Director 11/30/19 Large Board Rep. 11/30/19
Lexington Louisville Louisville Louisville Crescent Springs Louisville
DELEGATE BODY Steven Bagby Larry Baker Rick Baumgardner Michael Becker E. Billingsley Thomas Black Alfred Blevins William Bramble C. Lamont Breland Jim Broadwater Ron Brossart Tyrone Brown Greggery W Buchanan Bonnie Byerly J Don Cecil Linda Gibson Cecil Angela Clark Tony Clark Steve Cline
Monti Collins Sue Ann Collins Catherine Corbett Crystal Corrigan Jayne Cox Linzie Craig Greg Crase Barbara Curtis John Davis AnnElizabeth Delahanty Renee DeWitt Laura Disney Tara Dixon David Earls Marcie Estepp Helen Fardo Pamela Featherstone Stacey Fergerson William Fischer
W D Sha Fister Barbara Flannery Cindy Flynn Donna Foster Christopher Fox Logan Germann Doug Gibson Brenda Gooslin Donna Gordon-Willoughby Donna Gregorich John Groft Karen Gross Joe Guy Hagan Holly Hampton Susan Hatton Charles Hinckley Ashlie Hogan Alicia M Huff Ronald Hughes
Bobby Hunton Todd Hyatt Michael T Inman Cheryl Johnson Martin Jones Norman Jones Tanya Kaup Cheryl Lary Brenda Loyal Robert Massey John May Thomas S McCallie Ann McDonald Elizabeth Monarch Christie Moore Linda Moore Christine Morgan Becky Murphy Charlie Murphy
Joy Murphy Douglas Myers Kelley Nisbet Rosemary Nobles Paul Ogden Diane Palmer Dave Parks R.Rip Phillips Lisa Presley Arthur Reed Donnie Roberts Robin Roseberry Lester Sanders Claire Schenk Sandra Schennberg Jim Sewell Mary Anne Simmons James Simpson Jeffrey Smith
John Smither Kathryn Sotelo Mike Spicer David Stagner Karen Story Jennifer Swendiman Carl Tackett Devin Taylor Libbi Taylor Glenn Thomas Tom Thomas Angela Turner Tom Waldrop Kenneth Warden Nelson Weaver John Weikel Kathy Wolfe Earleene Woods
CONTENTS Volume 12, Number 1, SPRING 2019
A publication of Kentucky REALTORS® President | Rip Phillips Greater Louisville Association Keller-Williams Realty, Louisville President-elect | Lester Sanders Greater Louisville Association Semonin REALTORS®, Louisville Treasurer | Charles Hinckley Heart of Kentucky Association Network Realty, Elizabethtown Treasurer-elect | Robin Roseberry Northern Kentucky Association The Breland Group, Louisville CEO | Steve Stevens, CCE sstevens@kyrealtors.com Kentucky REALTORS® members should always send address changes to their local board/association first. Subscription rates: $10 per year (included in dues) for members, $25 per year for non-members. All articles represent the opinions of the authors and do not necessarily represent the opinions of Kentucky REALTORS® and should not be construed as a recommendation for any course of action regarding financial, legal or accounting matters by Kentucky REALTORS® and its authors. Reproduction prohibited without permission. Copyright© 2019. Kentucky REALTORS®, Inc. All rights reserved.
Address letters and inquiries to: Kentucky REALTORS® 2708 Old Rosebud Road, Suite 200 Lexington, KY 40509 TF 800.264.2185 T 859.263.7377 F 859.263.7565 www.kyrealtors.com email: kyrealtors@kyrealtors.com
IN THIS ISSUE
6 Sub-agency agreements 8 The socially savvy broker 10 Spotlight on: Flood Insurance 20 Nation’s oldest commercial winery back in operation in Kentucky
26 Beyond beautiful: Outdoor spaces 27 The real cost of living REGULAR FEATURES 4 REALTOR® News 5 14 18 22 24 25 28 30
President’s Message Legislative Update Education Local Association News By the Numbers Housing Stats CEO Message A Day in the Life of...
ON THE COVER Spring in Kentucky is captured in this photo of a statue of a child with her horse in a bed of tulips taken in East Lexington (Fayette County). If you would like to submit a photo for the magazine cover (Fall 2019 issue), send it to kyrealtors@kyrealtors.com. Photos must be high resolution and be Kentucky specific – landmark, destination, etc. SPRING 2019 | Kentucky REALTORS® | 3
REALTOR® NEWS Give back through leadership the state level
at
Are you interested in serving the real estate industry at the state level? Kentucky REALTORS® is seeking nominations for several leadership positions for 2020. The information regarding the openings, terms and voting information can be found on the website at kyrealtors.com/members/elections. The deadline for nominations is September 13th and elections will take place at the 2019 Annual Convention & Expo. If you need additional information or would like to discuss, please contact Julie Johnson, Director of Professional Standards and Governance, at 800.264.2185 or at jjohnson@kyrealtors.com.
Open Positions: President-Elect (1 position, 1-year term) Treasurer-Elect (1 position, 1-year term) At-Large Director (3 positions, 3-year term) Region Director for 1, 3 & 5 (3 positions, 2-year term) At-Large Delegate (3 positions, 3-year term) NAR Director (1 position, 3-year term) Senior Vice-president (1 position, 3-year term)
Kentucky REALTORS® announces
community service project for 2019
KYR is, once again, joining forces with the Salvation Army for a REALTOR Ring Day on December 6th. What began with two state REALTOR® Associations in 2010 has since grown into a nationwide effort coordinated between 30+ states across the U.S. making it one of the largest volunteer efforts in Salvation Army history. The event gives REALTORS® an opportunity to support a cause that is dear to them: housing. Kettle donations also fund additional Salvation Army programs such as food, rehabilitation and youth activities. And, best of all, the dollars raised at each kettle stay in the local community. In 2018 the statewide participation total for the first annual Kentucky REALTOR® Ring Day reached $13,102.75. This total is cumulative from nine different cities across the Commonwealth. Nearly half of the state-wide total came from Paducah, KY where a donation match brought the Paducah Board of REALTORS® area total to just over $6,000. The Salvation Army has been helping coordinate “Ring Days” for different organizations for years, but this event marked the first of its kind in Kentucky with REALTORS® as a focus. KYR staff members, as well as the staff of various local REALTOR® associations across the state, also participated in the event. Kettles were staffed at retail outlets where shoppers were greeted and invited to donate.
Affinity Partners As a benefit of membership with Kentucky REALTORS®, members are eligible to receive discounts and added value on business-related products and services from a number of leading industry partners. To learn more about each of companies listed, visit kyrealtors.com/discounts (log-in required).
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Award forms available for KYR top honors
Kentucky REALTORS® invites nominations of members (and local associations through the CSA) for the 2019 awards. These awards recognize members, through their commitment to the industry, who consistently demonstrate the practices that define the very meaning of the term REALTOR®. To learn more about each award, download a form from the KYR website at kyrealtors.com/members/awards. REALTOR® of the Year Award Deadline: Monday, June 3 Good Neighbor Award Deadline: Monday, June 3 Distinguished Service Award Deadline: Monday, June 3 Nat Sanders Education Award Deadline: Friday, August 16 REALTOR® Community Service Award Deadline: Friday, August 16
LeadershipKYR Class of 2019 This year’s class includes 11 members who will join the ranks of some of the most successful REALTORS® from around the state. The program leads participants through several retreats and provides skill development in leadership along with team-building exercises, goal setting, personal profile analysis, network building and improving communication skills. Here is a look at the Class of 2019:
Ron Brossart, Jr.
Janette DeWitt
Paula Elder
Bob Hammonds
Mike Mudd
Claire Schenk
Alicia Soldat
Jacob Suell
Tara Wilson
Andrew Wisdom
Kathy Wolfe
PRESIDENT'S MESSAGE
Nothing Impossible RIP PHILLIPS
2019 PRESIDENT OF KENTUCKY REALTORS®
“Impossible is just a big word thrown around by small men who find it easier to live in the world they’ve been given than to explore the power they have to change it. Impossible is not a fact. It’s an opinion. Impossible is not a declaration. It’s a dare. Impossible is potential. Impossible is temporary. Impossible is nothing.” — Muhammad Ali
K
entucky REALTORS® understand that we have the power to change! REALTORS® across Kentucky owe a huge THANK YOU to our many members who spoke with a resounding single voice to Kentucky lawmakers in Frankfort during the 30day legislative session. They heard you! Although there was only a short General Assembly, there were many successes.
Improving the Real Estate Industry One of the most significant pieces of legislation of the session for REALTORS® was a bill sponsored by the Kentucky Real Estate Commission (KREC) proposing changes to real estate licensing & renewal, professional liability, and improving consumer protections. Through collaborative work with the Commission, our team helped to ensure the bill’s passage. Licensing and renewal will now be a two-year process. A key provision and big win for KYR members is a reduction in the statute of limitations on liability claims from 5 years to 1 year, which aligns our profession with all others who are offered the same length of time. Other highlights of this important legislation include consumer protections through background checks when licensees re-activate. What wasn’t included in the bill? No fees have been raised, and there was no increase in continuing education requirements. An on-going goal of Kentucky REALTORS® is increasing the professionalism of the industry. One belief we hold is that much of this can come from having better educated licensees. This year, KYR will be doing research to determine if there is proof in this claim and we hope to do so in a way that supports the current objectives of the legislature in protecting consumers. I want to thank our staff and McCarthy Strategic Solutions for the endless hours put forth that led to our many legislative successes.
Serving KYR Members One of my goals as President and an on-going goal of the association, is that KYR remains committed to searching for cost-saving solutions for our members. In this case, we hope to address the cost of health care insurance which rises to the top of our members’ priority lists. We strongly supported
HB 396, a bill that allows for the first time in Kentucky, independent contractors to participate in Association Health Insurance Plans. The legislation passed and the door is now open for us to work with insurance providers to see if a viable and cost-effective insurance plan can be developed for the KYR membership.
A New Era of Collaboration Our CEO, Steve Stevens, began facilitating collaborative meetings with several Allied Real Estate professional counterparts to investigate the possibility of joining forces on several fronts – from legislative initiatives, to education and member services. We know that we are already a strong voice for advocacy, but with even greater numbers from other disciplines, there’s no limit to what we might accomplish. Likewise, we may also become a more desirable group to affinity partners like insurance providers and with recent legislative changes to allow reciprocal education credit between industries, opportunities may exist for expanded educational offerings from KYR to these groups.
A Bright Future for Real Estate on the Horizon Moving forward this year, things are coming together that could make 2019 another strong year for real estate. Inventory is giving early signs of increasing, interest rates aren’t rising as early expected, and the economy is strong. In strong financial times, so remains our membership. When times are good, we need to remember to reinvest in our businesses. Perhaps our investment will come in the form of insurance. RPAC will be conducting phone-a-thons to reach out to members about investing in our Political Action Committee. If you have given in the past, you probably know what a value RPAC is to our industry, so thank you! If you haven’t invested, please take the call and give! RPAC is by far the greatest investment you could make for the future of your industry.
Coming to a Community Near You! KYR staff and I will soon be on the road and I am looking forward to visiting as many parts of this great Commonwealth as possible. My goal is to educate and inform our membership about what we are and why we are here, and I hope we can energize members to be involved. After all, this is YOUR association and opportunities are plentiful. In just the first few months of this year, we’ve made great strides. It’s just the beginning! SPRING 2019 | Kentucky REALTORS® | 5
SUB-AGENCY AGREEMENTS BY JASON VAUGHN
What is sub-agency? A sub-agent is broadly defined as, “A person to whom an agent has delegated the performance of an act for the principal; a person designated by an agent to perform some duty relating to the agency. If the principal consents to a primary agent’s employment of a subagent, the subagent owes fiduciary duties to the principal, and the principal is liable for the subagent’s acts.” Black’s Law Dictionary (Abridged 9th Ed.). In the practice of real estate brokerage, when a principal broker enters into a listing agreement with the Seller an agency relationship is formed. In this relationship, the Seller is the principal and the brokerage firm is an agent of the Seller. The brokerage is permitted, with the Seller’s permission, to enlist the help of a licensee affiliated with a separate brokerage to sell the property. In this case, a sub-agency relationship would be created. In a relationship such as this, the subagent would owe the same fiduciary duty to the Seller as that owed by the listing brokerage. However, the Seller, and arguably the principal broker of the listing brokerage, would incur the same potential liability for the actions of the sub-agent as if he/she were affiliated with the listing brokerage.
What is necessary to enter into a subagency agreement? In order for sub-agency arrangements to work, the listing brokerage needs: 1) a valid listing agreement between the Seller and the listing brokerage, containing the Seller’s consent and any restrictions on the sub-agency relationship; 2) 6 | kyrealtors.com
permission from the sub-agent’s principal broker; and 3) a sub-agency agreement. First, the broker needs a valid listing agreement with the Seller, with the Seller’s consent and any restrictions on the sub-agency. Under Kentucky law, if a broker wishes to promote or advertise real property then the broker must enter into a written listing agreement with the Seller. 201 KAR 11:105 § 1(1). Pursuant to 201 KAR 11:250 § 1, listing agreements are required to include, among other things, special directions of the owner concerning limitations on showings and sub agency restrictions. 201 KAR 11:250 § 1(7). Essentially, the listing agreement outlines the scope of the agency relationship between the Seller and the brokerage. As previously mentioned, if a sub-agent is utilized the sub-agent becomes an agent of the Seller, despite the fact that the sub-agent is not affiliated with the listing brokerage. As such, the broker needs the Seller’s permission to use a sub-agent. The best way to do so is in the listing agreement because the listing agreement outlines the terms of the agency relationship. Further, if the Seller wishes to restrict the use of subagency in any way Kentucky law requires that those restrictions be set forth in the listing agreement. Id. Therefore, the listing agreement should also set forth the scope of the sub-agency arrangement. Second, the broker and the sub-agent need the permission of the sub-agent’s principal broker. Under Kentucky law, licensees are subject to sanctions for, “representing or attempting to represent a broker other than a principal broker, without the express knowledge and consent of the principal broker with whom the licensee is affiliated.” KRS § 324.160(4)(g).
Again, in the sub-agency scenario the sub-agent is not affiliated with the listing brokerage. However, as a sub-agent the licensee would be acting on behalf of the Seller. To do so without the knowledge and consent of the principal broker with whom the sub-agent is affiliated could subject the sub-agent to sanctions. To avoid sanctions, best practice is to obtain permission from the sub-agent’s principal broker. Finally, if the sub-agent wants to be paid commission for their assistance then there needs to be a written sub-agency agreement between the listing brokerage and the sub-agent. The statute of frauds requires a written agreement for, “any promise, agreement, or contract for any commission or compensation for the sale or lease of any real estate or for assisting another in the sale or lease of any real estate.” KRS § 371.010(8). Here, the sub-agent would be assisting in the sale of real estate and would expect a commission or compensation for his/ her assistance. For any commission or compensation agreement between the listing brokerage and the sub-agent to be enforceable it needs to be in writing.
agreement is executed. Also, Standard of Practice 16-12 requires sub-agents to disclose their relationship to potential buyers.
Conclusion
Even though sub-agency agreements seem to be permissible under Kentucky law, licensees need to be aware of the increased liability, and be diligent in their agency disclosures. Considerations before entering into a subagency agreement.
principal broker. Due to this increased liability, sub-agency relationships are disfavored and are not as common as they once were.
Even though sub-agency agreements seem to be permissible under Kentucky law, licensees need to be aware of the increased liability, and be diligent in their agency disclosures.
Under the National Association of REALTORS® Code of Ethics, (the “Code”), licensees also have a duty to disclose any sub-agency relationship. Standard of Practice 1-13 suggests that when entering into buyer/tenant agreements, REALTORS® must advise potential clients of, “any potential for the buy/tenant representative to act as a disclosed dual agent, e.g., listing broker, subagent, landlord’s agent, etc.” National Association of REALTORS® Code of Ethics, Standard of Practice 1-13. Standard of Practice 3-5 imposes a duty upon subagents to promptly disclose all pertinent facts to the principal’s agent before and after a purchase or lease
As noted in the first section of this article sub-agency increases the liability of the parties involved. The Seller is liable for the actions of his/her agents and the sub-agents, regardless of the fact that the sub-agent is not affiliated with the listing brokerage. Additionally, the principal broker of the listing brokerage arguably has the same responsibility to oversee the actions of the sub-agent, as though the sub-agent were affiliated with that
In sum, sub-agency agreements appear to be permissible under Kentucky law as long as 1) a valid listing agreement between the Seller and the listing brokerage, containing the Seller’s consent to a sub-agency relationship and any restrictions on the relationship; 2) permission from the sub-agent’s principal broker; and 3) a written sub-agency agreement. However, licensees need to be aware of the increased liability associated with such an arrangement prior to entering into one. Moreover, if licensees choose to enter into a sub-agency relationship the licensees need to be diligent to insure that they meet all of the necessary disclosure requirements.
Jason Vaughn is a lawyer with Vaughn & Smith, PLLC in Louisville and serves as legal counsel to KYR. The attorneys at Vaughn & Smith, PLLC constantly monitor the real estate industry as a whole, as well as any and all changes in the law that may affect it. They have intimate knowledge of commercial and residential real estate transactions and can utilize this base knowledge when representing their client's interests. This discussion should not be viewed as legal advice. Please consult your attorney.
SPRING 2019 | Kentucky REALTORS® | 7
THE SOCIALLY SAVVY BROKER
BY CARRIE LITTLE
E
very brokerage has the potential to be socially savvy. Technology for businesses is not difficult to learn. We just need to take time to learn it! Your brokerage, small, medium or large can compete in any market place. If you don’t believe it, let’s look at the change in technology and real estate. There used to be a time where I would say, you must be with a big brand to compete in this industry. My first years in real estate were at a large firm until 2017. Today, I run a boutique brokerage with 21 agents where we leverage technology to run the business.
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“It’s not necessary to change, survival is not mandatory” — W. Edwards Deming In 2001, the way we worked didn’t include social media and digital marketing. Lead generation included, to name a few: • Cold calling. • Door knocking. • Direct mail marketing - maybe a recipe or two. I could never wrap my head around the recipe postcard. • Email marketing was new, and agents weren’t sure how to use it for real estate. • I had a razor cell phone. I would only use it when I didn’t have. Landline. I never thought I would dump a landline for VOIP (voice over internet) • Farmed their own neighborhoods - I put out a monthly newsletter with doorknob bags every month, except the cold months. (This we still do to this day) • My friends and family were the key to my first year in real estate. Luckily most of them worked with me. • Advertising in the local real estate book and newspaper ads were one of the best ways to build brand recognition. Occasionally you might see an agent’s marketing on a shopping cart or on the back of the grocery store receipt. • How about faxing flyers? Did you do this? • We also worked by referral. Referral is still one of the best ways to generate leads. In the early 2000’s, my idea of using technology was creating my own newsletters, flyers and postcards. Each month, I placed a doorknob bag on every property in my subdivision. It took seven months before someone called me to sell their home. Everything works in real estate, but we must measure what works today. Today’s managing broker or broker/ owner can compete with simple changes in their businesses. How? Using social
media to build a following of agents that seek you for education in real estate. Giving away free content, makes you relevant and credible. If you watch the next generation, you will find that they are self-taught, information seekers, problem solvers and on-demand learners. Give the next generation what they want. The ability to learn on-demand. I recently interviewed my twin sister, Mina J. Blazy, a principal of a K-5 magnet school in California on how they learn. I was amazed to find out that kindergartners learn how to read, write and problem solve with technology. They already have an upper hand on technology. I am pretty sure when I was in kindergarten, we played, ate snacks and took naps. Technology is here to stay, so don’t be afraid of it. If kids are willing to click and learn from it, we can too. Give a kid an iPhone, Computer or Tablet and they will use it to learn. Give someone over the age of 50 a smartphone and they are more likely to use the browser icon for everything before using an app. What can your business do to compete? Start with a few social and tech upgrades. Or at least pick one. • Do you have an intranet or online tool to educate your agents? If not, consider Workplace Facebook. A social media tool that looks like Facebook, feels like Facebook, but was built for businesses. Build this platform and create collaboration among the office agents. Create an education section to train agents ondemand. Come to the office and learn or watch live from the comforts of home. You can add documents and so much more. • How about zoom.us? A great webinar platform that provides flexibility for training and meetings. Send your webinars directly to workplace where agents can always watch the replay. • Transaction management tools - If you are not paperless, start using
paperless tools to manage every transaction. • Build out your social media and create the I want to be a part of that brokerage concept. • Do you invest in the “Passer list”? I mail to agents in my marketplace three days a week with a flyer about my brokerage, then re-direct them back to my YouTube platform to learn about real estate. I tell future agents what many brokerages won’t tell them. Be different. It’s not just about recruiting but adding relevant content for the next gen agent. • Go live on Facebook and offer free education. Be that magnet company today. • Create ads to showcase your brokerage. For as little as $5.00 you can start advertising on social media. Boost your free education and watch your business grow. • Google Chrome Cast, Apple TV, Alexa, Next Camera’s, the Next Thermostat and smart technology also powers our office. Agents want help growing their businesses, so, show them how to grow it! You don’t have to give everything away, but give away enough to cause your phone, DM (direct messaging) and email to build a lead tool with inbound marketing. It works if you work it. Carrie Little is a Social Media and Digital Marketing Strategist for the Real Estate Industry. She speaks locally, at the State and National Level. Carrie has authored three Continuing Education courses for the state of Illinois. She will be teaching at the upcoming 2019 Broker Summit on April 23. To register, visit www. kyrealtorsinstitute.com SPRING 2019 | Kentucky REALTORS® | 9
F
looding is the most common and costly natural disaster in the United States, causing billions in economic losses each year. According to the National Flood Insurance Program (NFIP), 90 percent of all natural disasters in the United States involve flooding.
There is no coverage for flooding in standard homeowners or renters policies or in most commercial property insurance policies. Coverage is available in a separate policy from the National Flood Insurance Program (NFIP) and from a few private insurers. 10 | kyrealtors.com
Recent developments • NFIP risk rating reform: On March 18, 2019 the Trump administration announced plans to reform the NFIP with a shift to fully risk based pricing of flood insurance. FEMA said the program would begin to assess properties individually, using several variables such as hurricane rainfall, coastal surges and proximity to bodies of water, rather than applying a single formula for an entire flood zone. FEMA’s current system calculates rates based on whether a home falls in a designated flood zone, and since higher-valued properties are more likely to hit the $250,000 insurance cap, lower-value homes are paying proportionately more than higher-value homes. The reformed system would change that as well as potentially drive more flood risk into private reinsurance and risk markets. FEMA will announce the new rates on April 1, 2020, and it will implement the new system on October 1, 2020. • NFIP reauthorization: Congress must periodically renew the NFIP’s statutory authority to operate. In the unlikely event the NFIP’s authorization lapses, claims would still be paid but the NFIP would stop selling and renewing policies.
• On February 12, 2019, federal regulators announced a rule requiring regulated lending institutions to accept private flood insurance policies comparable to the National Flood Insurance Program. The rule takes effect on July 1, 2019. • Hurricane Harvey: Hurricane Harvey made landfall in Texas as a Category 4 storm on August 25, 2017 and then turned into the single biggest rain event in U.S. history. Harvey’s floodwaters have caused multiple deaths and billions of dollars in property damage in Texas. Harvey made a second landfall in Louisiana on August 30th. As of July 31, 2018, $8.8 billion in closed claims have been paid out to Texas and Louisiana flood insurance policyholders, according to FEMA. • NFIP Reinsurance: In September 2016, the NFIP began a reinsurance program to put it in a better position to manage losses incurred from major events by transferring exposure to reinsurers. • NFIP Catastrophe bonds: In August 2018, FEMA launched its first catastrophe bond to transfer risk from the NFIP to the capital markets, as reported by Artemis. It was the first catastrophe bond to solely provide reinsurance coverage for flood risks. FEMA originally sought $275 million of reinsurance protection from the FloodSmart Re Ltd. (Series 2018-1) issuance in July. Later, that amount had grown to $500 due to investor demand. FloodSmart Re, a Bermuda domiciled special purpose insurance vehicle, issued two classes of notes that were sold to insurance linked securities funds to collateralize underlying reinsurance agreements to cover a portion of the NFIP U.S. flood exposure. The transaction will cover NFIP losses from flood events that are directly or indirectly caused by a named storm event impacting the United States and also Puerto Rico, the U.S. Virgin Islands and the District of Columbia. • NFIP policies and premiums: The number of policies in force has been declining from the high point of 5.7 million in 2009 to 5.0 million in 2017. NFIP earned premiums rose 7.0 percent to $3.57 billion in 2017 from $3.33 billion in 2016. Flood loss payments totaled $8.7 billion in 2017, higher than the 2016 losses of $3.7 billion and less than the $9.5 billion in 2012, the year of superstorm Sandy. In 2005 loss payments totaled $17.8 billion, the highest amount on record, including losses from Hurricanes Katrina, Rita and Wilma. • Private flood insurance: Flood insurance had long been considered an untouchable risk by private insurers because they did not have a reliable way of measuring flood risk. In recent years insurers have become increasingly comfortable with using sophisticated models to underwrite insurance risk, and modeling firms are getting better at predicting flood risk. • In 2017 direct premiums written for private flood insurance totaled $589 million, up 57 percent from $376 million in 2016, according to S&P Global Market Intelligence. The number of private companies writing flood insurance increased to 33 in 2017 from 20 in 2016. • Low flood insurance take-up rates: The 2018 Insurance Information Institute Pulse survey found that 15 percent of
American homeowners had a flood insurance policy, up from 12 percent who had the coverage in 2016. A McKinsey & Co. analysis of take up rates for flood insurance in areas most affected by the three Category 4 hurricanes that recently made landfall in the United States — Harvey, Irma and Maria — found that as many as 80 percent of Texas, 60 percent of Florida and 99 percent of Puerto Rico homeowners lacked flood insurance. Some of the reasons cited for lack of coverage is that it is too expensive, that homeowners are not aware they don't have it; and that people underestimate the risk of flooding.
Background The National Flood Insurance Program: Before Congress passed the National Flood Insurance Act in 1968, the national response to flood disasters had been to build dams, levees and other structures to hold back flood waters, a policy that may have encouraged building in flood zones. The National Flood Insurance Act created the National Flood Insurance Program (NFIP), which was designed to stem the rising cost of taxpayer funded relief for flood victims and the increasing amount of damage caused by floods. The NFIP has three components: to provide flood insurance, floodplain management and flood hazard mapping. Federal flood insurance is only available where local governments have adopted adequate floodplain management regulations for their floodplain areas as set out by NFIP. More than 20,000 communities across the country participate in the program. NFIP coverage is also available outside of the high-hazard areas. The law was amended in 1969 to provide coverage for mud flows and again in 1973. Until then, the purchase of flood insurance had been voluntary, with only about one million policies in force. The 1973 amendment put constraints on the use of federal funds in high-risk floodplains, a measure that was expected to lead to almost universal flood coverage in these zones. The law prohibits lenders that are federally regulated, supervised or insured by federal agencies from lending money on a property in a floodplain when a community is participating in the NFIP, unless the property is covered by flood insurance. The requirement for flood insurance also applies to buildings that receive financial assistance from federal agencies such as the Veterans Administration. However, because the initial mortgage on the property is frequently sold by the originating bank to another entity, enforcement of this law has been poor. Legislation was enacted in 1994 to tighten enforcement. Regulators can now fine banks that consistently fail to enforce the law, and lenders can purchase flood insurance on behalf of homeowners who fail to buy it themselves, then bill them for coverage. The law includes a provision that denies federal disaster aid to people who have been flooded twice and have failed to purchase insurance after the first flood. Buildings constructed in a floodplain after a community has met regulations must conform to elevation requirements. When repair, reconstruction or improvement to an older building equals or exceeds 50 percent of its market value, the structure must SPRING 2019 | Kentucky REALTORS® | 11
be updated to conform to current building codes. A 2007 NFIP study on the benefits of elevating buildings showed that due to significantly lower premiums, homeowners can usually recover the higher construction costs in less than five years for homes built in a “velocity” zone, where the structure is likely to be subject to wave damage, and in five to 15 years in a standard flood zone. The Federal Emergency Management Agency (FEMA) estimates that buildings constructed to NFIP standards suffer about 80 percent less damage annually that those not built in compliance. How it works: The NFIP is administered by FEMA, part of the Department of Homeland Security. Flood insurance was initially only available through insurance agents who dealt directly with the federal program. The direct policy program has been supplemented since 1983 with a private/public cooperative arrangement, known as "Write Your Own," through which a pool of insurance companies issue policies and adjust flood claims on behalf of the federal government under their own names, charging the same premium as the direct program. Participating insurers receive an expense allowance for policies written and claims processed. The federal government retains responsibility for underwriting losses. Today, most policies are issued through the Write-Your-Own program but some non-federally backed coverage is available from the private market. The NFIP is expected to be self-supporting in an average loss year, as reflected in past experience. In an extraordinary year, as Hurricane Katrina demonstrated, losses can greatly exceed premiums, leaving the NFIP with a huge debt to the U.S. Treasury that it is unlikely to pay back. Hurricane Katrina losses and the percentage of flood damage that was uninsured led to calls for a revamping of the entire flood program. Flood adjusters must be trained and certified to work on NFIP claims. NFIP general adjusters typically re-examine a sample of flood settlements. Insurers that fail to meet NFIP requirements must correct problems; otherwise they can be dropped from the program. What's in a typical policy: Flood insurance covers direct physical losses by flood and losses resulting from flood-related erosion caused by heavy or prolonged rain, coastal storm surge, snow melt, blocked storm drainage systems, levee dam failure or other similar causes. To be considered a flood, waters must cover at least two acres or affect two properties. Homes are covered for up to $250,000 on a replacement cost basis and the contents for up to $100,000 on an actual cash value basis. Replacement cost coverage pays to rebuild the structure as it was before the damage. Actual cash value is replacement cost minus the depreciation in value that occurs over time. (Excess flood insurance is available in all risk zones from some private insurers for NFIP policyholders who want additional coverage or where the homeowner’s community does not participate in the NFIP.) Coverage for the contents of basements is limited. Coverage limits for commercial property are $500,000 for the structure and another $500,000 for its contents. To prevent people from putting off the purchase of coverage until waters are rising and flooding is inevitable, policyholders must wait 30 days before their policy takes effect. In 1993, 7,800 12 | kyrealtors.com
policies purchased at the last minute resulted in $48 million in claims against only $625,000 in premiums. Flood Risk: As with other types of insurance, rates for flood insurance are based on the degree of risk. FEMA assesses flood risk for all the participating communities, resulting in the publication of thousands of individual flood rate maps. High-risk areas are known as Special Flood Hazard Areas or SFHAs. Flood plain maps are redrawn periodically, removing some properties previously designated as high hazard and adding new ones. New technology enables flood mitigation programs to more accurately pinpoint areas vulnerable to flooding. As development in and around flood plains increases, run off patterns can change, causing flooding in areas that were formerly not considered high risk and vice versa. People tend to underestimate the risk of flooding. The highestrisk areas (Zone A) have an annual flood risk of 1 percent and a 26 percent chance of flooding over the lifetime of a 30-year mortgage, compared with a 9 percent risk of fire over the same period. In addition, people who live in areas adjacent to high-risk zones may still be exposed to floods on occasion. Since the inception of the federal program, some 25 to 30 percent of all paid losses were for damage in areas not officially designated at the time of loss as SFHAs. NFIP coverage is available outside high-risk zones at a lower premium.
National Flood Insurance Reform In 2012 the Biggert-Waters Flood Insurance Reform Act was passed in an attempt to make the federal flood insurance program more financially self-sufficient by eliminating rate subsidies that many property owners in high-risk areas receive. But in March 2014 Congress rescinded many of the rate increases called for by the Biggert-Waters Act. The new law reduced some rate increases already implemented, prevented some future increases and put a surcharge on all policyholders. The measure also authorized funds for the National Academy of Sciences to complete an affordability study. The 2014 law prevents any policyholder from seeing an annual rate increase exceeding 18 percent. It calls on the flood program’s administrator, the Federal Emergency Management Agency (FEMA), to “strive” to prevent coverage from costing more than 1 percent of the amount covered. In other words, if the policy offered $100,000 of coverage, the premium would not exceed $1,000. The 18 percent cap will result in refunds in some cases. Refunds began in October 2014. FEMA has a fact sheet on who is eligible for refunds. The law also reinstates a practice known as grandfathering, meaning that properties re-categorized as being at a higher risk of flooding under FEMA’s revised maps would not be subject to large increases. It also ends a provision in Biggert-Waters that removed a subsidy once a home was sold. People who purchased homes after Biggert-Waters became law will receive a refund. Many
NATIONAL FLOOD INSURANCE • As of June 30, 2018, there were over 75,000 paid losses from Hurricane Harvey and the average paid loss was $115,104. This compares with Hurricane Katrina which had 167,000 paid losses, at an average of $97,500 per loss. • In 2017 the average amount of flood coverage was $252,261, and the average premium was $707. • The average flood claim in 2017, the year of Hurricanes Harvey, Irma and Maria, was $91,735, up from $62,247 in 2016. • NFIP earned premiums rose 7.0 percent to $3.57 billion in 2017 from $3.33 billion in 2016.
lawmakers in coastal states were concerned that the higher cost of flood insurance would have a negative impact on the real estate industry. The subsidy will now be covered by a $25 surcharge on homeowners flood policies and a $250 surcharge on insurance for nonresidential properties and secondary (vacation) homes. According to data from FEMA, most current flood insurance policyholders (81 percent, or 4.5 million) pay rates based on the true risk of flood damage and so were not affected by BiggertWaters or the subsequent rollback. Properties most affected by the rate hikes were in high-risk flood zones; were built before communities adopted their first Flood Insurance Rate Map; were second homes; or are second homes that have not been elevated. Others affected include businesses and those who live in homes that have been repeatedly flooded. In June 2014 Florida enacted a law that encourages private companies to offer flood insurance. The legislation permits four types of flood coverage – a standard policy, which resembles National Flood Insurance Program coverage, and three enhanced policies. To encourage market growth, the law allows insurers to file their own rates until October 1, 2019. After that, rates will be subject to regulatory approval.
Flood Resilience Disaster resilience refers to the ability of communities to prepare for, recover from, and adapt to adverse events. Some of the best practices for community flood resilience recommended by the Environmental Protection Agency include: a comprehensive disaster recovery plan; green infrastructure techniques; land conservation in river corridors; restoring wetland vegetation; discouraging development in frequent flood areas; adapting flood resistant building codes; and coordinating with neighboring jurisdictions to implement a watershed-wide approach to storm-water management. Urban planners and engineers around the world are developing innovative flood solutions such as amphibious housing, porous roads and sidewalks, and use of satellite data for more frequent flood alarms. A 2017 National Institute of Building Sciences study found that for every dollar invested in riverine flood mitigation the return was $7 in cost savings.
Flood coverage in other countries The system in the United States is unique in that for the most part the government underwrites the coverage and private insurers act as administrators bearing no actual flood risk. In other developed countries, there are two basic methods of providing flood insurance. Under the first, the optional system, insurers extend their standard policy to include supplemental coverage for flood damage on payment of additional premium. The coverage tends to be expensive because only those most likely to be flooded, and therefore to file claims, purchase it, a situation known in the insurance industry as adverse selection. Among the countries with optional coverage are Germany and Italy. The other method is “bundling.” Under this system, flood coverage is combined with coverage for other perils such as fire and windstorm, thus spreading the risk of flood losses across a large geographical area and greatly increasing the percentage of the population covered for flood damage. Countries that have adopted this method include the United Kingdom, Spain and Japan. In addition, in some countries such as France and Spain there are government compensation programs for major disasters, including flooding, that take effect when the cost of a disaster reaches a certain level. In 2014 the United Kingdom launched Flood Re, a not-forprofit reinsurance organization to take on flood risks that primary insurers do not want. If an insurer calculates that the flood risk of a particular policy exceeds the flood premium, it will cede that risk to Flood Re. The insurer will pay the claim, then seek reimbursement from Flood Re. In all likelihood, Flood Re’s losses and expenses will exceed its premium. Additional funding will come from a levy raised from insurers by market share. SPRING 2019 | Kentucky REALTORS® | 13
LEGISLATIVE UPDATE RPAC continues to reach exciting new heights Each year, state associations are measured in 9 categories dealing with RPAC and Advocacy. In 2018 your Kentucky REALTORS met and exceeded each and every one of those goals and we are proud to announce that we have won the President’s Cup for the SECOND YEAR IN A ROW! Thank you to each and every volunteer and investor that helped us achieve this monumental goal! Kentucky joined sixteen other state Associations in winning the President’s Cup for 2018. The award will be presented during NAR’s Legislative Meeting and Trade Expo in Washington, DC from May 14-18. Let’s make it a three-peat!
Your RPAC Major Investors are engaged and avid when it comes to involvement in RPAC and the REALTOR® Party.
Golden R ($5,000 and above)
Al Blevins
Tony Clark
David Earls
Charles Hinckley
Mike Inman
Ann McDonald
Local Association President’s Cup Winners Central Kentucky Association of REALTORS® Eastern Kentucky Association of REALTORS® Henderson Audubon Board of REALTORS® Hopkinsville Christian County Board of REALTORS® Northern Kentucky Association of REALTORS® Owensboro Board of REALTORS® REALTOR® Association of Southern Kentucky Somerset-Lake Cumberland Board of REALTORS® The Heart of Kentucky Association of REALTORS®
A special thank you goes to our RPAC Investors! Kentucky REALTORS® is a member driven organization. It can go as you want it to go. Luckily, this association not only sees the value in investing in RPAC, but also the value of the American dream of homeownership and real property rights. We wanted to recognize those members that went above and beyond with their contributions to RPAC in 2018.
2018 RPAC Major Investors
30644
The number to text the word REALTOR to 30644 to sign up for the REALTOR® Party Mobile Alerts. By signing up, REALTORS® have a way to stay connected directly from their cell phone or tablet. Get information on finding your polling locations, election and primary voting day reminders and participate in Calls for Action.
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Guy Montgomery Charlie Murphy Sterling R ($1,000 and above) John Weikel
Nancy Allison Dennis Anderson Greg Back Rick Barker Mike Becker James Bramblett Lamont Breland Greg Buchanan Bonnie Byerly Daniel Carmack Linda Gibson Cecil Angi Cline Steve Cline Sue Ann Collins Catherine Corbett Anne Hart Cornett Jayne Cox Barb Curtis Sallie Davidson AnnElizabeth Delahanty Brad DeVries Lois Ann Disponett Myrna Downing Kristy Dugan Merle Edmiston Helen Fardo Barbara Flannery Larry Freels Brenda Gooslin Donna GordonWilloughby John Groft
Emily Hacker-Todd Deni Hamilton Jeff Harrison Joseph Hayden Stephen Heartsill Daryl Hibbs David Hill Ashlie Hogan Mary Ann Hollon Ron Hughes Bobby Hunton Todd Hyatt Bobbie Johnson Norman Jones Tanya Kaup Connie Lawson Brenda Loyal Amanda Marcum Bonnie Mays Rue McFarland Tucker McAlpin Trey McCallie James McKee Jeanie McKinley Jonah Mitchell Elizabeth Monarch Becky Murphy Joy Murphy Kelley Nisbet Paul Ogden Mike Parker Judie Parks Dave Parks
Janet Perkins Rip Phillips Nita Allen Charlene Rabold Laura Rice Nancy Robertson Robin Roseberry Lester Sanders Jan Scholtz Kathy Sears Trish Segrest Jim Sewell Mary Anne Simmons Joseph Simms Jim Simpson Tim Smith Mike Spicer Steve Stevens Jen Swendiman Carl Tackett Libbi Taylor Greg Taylor James Tinsley Rusty Underwood Kenneth Warden Matt Weaver Debbie Williams Danny Willis Janie Wilson Kathy Wolfe
On February 13th over 200 REALTORS® from across the Commonwealth traveled to Frankfort to meet with legislators and make their voices heard.
2017 President’s Circle Investors Finally, we’d like to recognize our President’s Circle participants. The President’s Circle is a special group of REALTORS® who contribute directly to REALTOR®-friendly candidates at the federal level. The President’s Circle Program supports REALTOR® Champions—members of Congress who have made significant achievements in advancing the REALTOR® public policy agenda. The President’s Circle Program allows REALTORS® to contribute beyond RPAC dollars and increase the strength of the REALTOR® voice on Capitol Hill. Our President’s Circle Members are: Al Blevins Tony Clark Steve Cline Lois Ann Disponett David Earls Charles Hinckley Mike Inman
Guy Montgomery Charlie Murphy Paul Ogden Mike Parker Carl Tackett John Weikel
2018 RPAC Hall of Fame Inductee The Hall of Fame recognizes dedicated members who have made a significant commitment to RPAC over the years by investing an aggregate lifetime amount of $25,000 or more. Joining the Class of 2018 National Association of REALTORS®’ RPAC Hall of Fame is Al Blevins. Hall of Fame Induction Ceremony will occur during the May 2019 REALTORS® Legislative Meetings & Trade Expo, held in Washington, D.C. As a Hall of Fame member, a plaque bearing your name will be displayed on the rooftop of the Al Blevins NAR building in Washington, D.C.
Jess and Carolyn Kinman Award The Jess Kinman Award is the highest legislative honor presented by Kentucky REALTORS®. The award is named in honor of Jess Kinman, a former Kentucky REALTORS® president and REALTOR® of the Year, who passed away in 2007, and his wife Carolyn, who worked for many years at the Legislative Research Commission and General Assembly. The Kinman Award is presented to a member of the General Assembly, whose involvement in the legislative and political arenas has left an indelible mark on all those who have known or worked with him or her. This award recognizes REALTOR® Champions who go above and beyond the normal call of duty to support the American Dream of Homeownership. This year’s recipient certainly fits the description of a REALTOR® Champion. In 2018, our recipient sponsored 3 of Kentucky REALTORS®’ priority bills. He worked with our members to understand our concerns and feedback, and he always took our calls. This year’s recipient keenly understands our issues, not only as the Chair of the House Licensing and Occupations Committee, where most of our key bills move, but also as a REALTOR® himself. We are proud this year to present the Jess Kinman award to someone who has worked tirelessly on our behalf, our friend and colleague, Representative Adam Koenig. SPRING 2019 | Kentucky REALTORS® | 15
LEGISLATIVE UPDATE Legislative Update Kentucky REALTORS® knows that homeownership and investment in commercial real estate have positive impacts on neighborhoods, communities, and the overall vibrancy of the Kentucky economy. Kentucky REALTORS® advocates for policies that increase access to the American Dream of homeownership by promoting growth, attracting new jobs and talent, and encouraging positive community development. Kentucky REALTORS® serves as the voice and the champion of its 11,000 members that live, work, and invest in every corner of the Commonwealth. Throughout this legislative session, Kentucky REALTOR®’S Quick Response Team (QRT) was hard at work deliberating on which bills KYR should support during this session. As new bills were filed, the QRT had to consider if a bill advanced the REALTORS ® the three legislative priorities: Enacting Comprehensive Tax Reform, Protecting and Advancing the Real Estate Industry, and Driving Growth and Economic Prosperity. Overall, the QRT voted to support 10 pieces of legislation that the QRT felt advanced those priorities.
• Enacting Comprehensive Tax Reform
Kentucky REALTORS® advocates for tax policy that encourages growth and development but believes that tax reform measures should not place a disproportionate burden on homeowners and the real estate industry. Kentucky REALTORS® believes that good tax policy should encourage homeownership, not deter it.
• Protecting and Advancing the Real Estate Industry
High standards for both REALTORS® and the agencies that regulate them ensure that long-term success of the real estate industry. Kentucky REALTORS® supports regulatory reform that removes undue burdens on the real estate industry while also pushing for policies that ensure the highest level of integrity and expertise for its members.
• Driving Economic Growth and Prosperity
Economic development is vitally important to economic stability and growth in our state. Kentucky REALTORS ® supports legislative efforts that attract new investment and new talent to the Commonwealth, and that enhance support and development of existing resources that increase Kentucky’s livability.
KYR Supported Legislation HB 436 (Bridges, R):
Our team worked closely with the Kentucky Real Estate Commission on this important measure. This session, KYR was seeking to “raise the professionalism” of the industry and we feel like this bill accomplishes that goal. This bill, makes changes to the licensing and renewal from annual to biennial, reduces liability on licensees by bringing Kentucky’s real estate professionals in-line with other professions by reducing the statute of limitations from
89%
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89% of Kentucky REALTORS® are registered to vote. This is 10% higher than the number of American's registered to vote nationwide.
80 REALTORS
®
ONE Senator and Representative
Kentucky Realtors serves over 11,000 members, which translates to about 80 REALTORS® for every Senator and Representative in the Kentucky General Assembly.
5 years to 1 year for professional liability claims, and contains new consumer protections by requiring inactive licensees to have criminal background checks when re-activating their license.
HB 396 (Bowling, A):
As health insurance costs continue to rise, fewer and fewer small businesses and independent contractors have private insurance coverage. This important measure could help stop that trend by conforming Kentucky tax code and insurance laws to allow independent contractors to participate in association health plans, aligns state tax law to match federal tax law to avoid unexpected tax issues for AHPs in the future, and removes unnecessary extra definitions, and allows fully insured AHPs to be treated like large employers for setting base rates.
SB 114 (McGarvey, M):
This important piece of legislation would allow notaries to perform online notarization for real property transactions making closing faster and more convenient for the parties who may be in different locations at the time of closing. Backed by the National Association REALTORS, this bill will make the closing process simpler and more efficient for consumers.
HB118 (Tipton, J):
This bill would prohibit an occupational licensing authority from suspending or revoking a license it issued because the licensee is in default or delinquent on a student loan or workconditioned scholarship. Additionally, it encourages a person who is in default or delinquent in the payment of a student loan to contact the appropriate student loan servicer to establish a voluntary pay agreement for the student loan. The short title of the bill is the “Keep Americans Working Act of 2019”.
SB89 (Alvarado, R):
This bill would allow a local government to provide for the abatement and decontamination of any property where a methamphetamine contamination notice has been posted. Additionally, the bill would require notice and a hearing prior to the decontamination of any property where a methamphetamine contamination notice has been posted and that a local government may place a lien on the property for costs related to the enforcement of the ordinance and decontamination of the property. Additionally, the QRT voted to oppose one bill and monitor 31 bills this legislative session.
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EDUCATION Kentucky REALTOR® Institute licensing Program
Pre-
www.kyrealtorinstitute.com > Pre-licensing In order to meet the needs of today’s student, KRI is offering the entire 96-hour pre-licensing program online. This newly revised course is available 24/7 and can be taken at your own pace. All the materials and resources needed to get started in real estate are included in the $679 price.
Online Courses www.kyrealtorinstitute.com > Courses > Online Education KRI offers a wide selection of online education, with both local and national instructors. You will find courses covering both law and elective CE, PLE Hours, and Ethics. The newer courses are video based putting the instructor right in front of you – it’s just like being face to face. Courses are available to you 24/7 and can be taken at your pace – all you need is a computer and internet access. The deadline for receiving credit is December 31 so sign up now and complete before the end of the year!
Code of Ethics Requirement Reminer Code of Ethics training requirements are now two year cycles. A new two-year cycle began January 1, 2019. The deadline for this cycle is December 31, 2020. The GRI 100 course currently covers the COE Requirement. Additionally, KRI offers multiple online courses that can satisfy your CE, as well as your Code of Ethics requirement.
Post-Licensing Education (PLE) www.kyrealtorinstitute.com > Post-License Post-licensing Education (PLE) law went into effect on January 1, 2016, which requires all new licensees to take 48 hours of approved PLE courses within two years of license activation. KRI has you covered as all 6 GRI courses (GRI 100-600) satisfy the 48 hours of PLE requirements. KRI also offers a variety of online PLE courses. Coming Soon - 48 Hour Online PLE Packages For more information on PLE requirements, please visit www. krec.ky.gov > Education > Post-License
Graduate Realtor Institute Designation
(GRI)
www.kyrealtorinstitute.com > GRI The GRI program has been redesigned to meet the needs of today’s real estate professional including one day courses and a full year’s worth of CE per course. The courses also counts for broker credit and PLE credit. With GRI, you can build your business and expand your knowledge through courses that offer specific training in key areas of real estate. And, you will increase your network of real estate professionals that can assist in generating leads and referrals from across the state. Get started now on the most popular national designation in real estate.
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2018 GRI Recipients: Mackenzie Peavler Anna-Marie Hyatt Bree Snow Anthony Wheeler Cindy Payne Ty Smith Brittany Marchetti Angela Turner Chrissy Lally Sandra K. Schennberg Sarah Dukes Patricia Nadim Jason Hayes Alison Kawaja Angelia Fry Wendy Bartley Laura Braboy
Linda Ramsey Christie Moore Lori Kimble Michelle Moore Alicia Soldat Adam Borders Jean Stuart Jamie Young Jaime Abell TImothy Roberts Carol Smith Bennett Reynolds Rhonda Yates Noelle Noth Alissa Doan Stephen Virgo Keith White Betsy Garant
Rita Polzin Starr Nalley Susan Baldwin Deborah Morgan Jeffrey Garner Stephanie Hunter Scott Hack Danielle Elmore Justin Reesy Pamela Stilz Nancy Allison Carol Carter Mina Taheri Susan Stewart Robin Duke Timothy Mattingly Brian Chism Cory Miller
KRI Scholarships Available www.kyrealtorinstitute.com > scholarships KRI Trustees award scholarships on an annual basis to enhance real estate professionalism and knowledge by providing quality educational services and programs for the real estate industry and the public. KRI makes scholarships available to members who want to obtain the GRI designation as well as provide scholarships to Kentucky residents (members and non-members) who wish to pursue a career in real estate.
Scholarship Deadlines:
Pre-licensing Application Deadline: May 31st, 2019 GRI Application Deadline: May 31st, 2019 College Application Deadline: March 29th, 2019
2019 Scheduled GRI Courses Local Board/Location: Greater Louisville Association of REALTORS® Lexington-Bluegrass Association of REALTORS® REALTOR® Association of Southern Kentucky Henderson Audubon Board of REALTORS® Kentucky REALTORS® Northern Kentucky Association of REALTORS® Greater Owensboro REALTORS® Association Hopkinsville-Christian & Todd County Association of REALTORS® The Heart of Kentucky Association of REALTORS®
Course Calendar http://www.kyrealtorinstitute.com > calendar
CE/CORE & GRI Courses Available: 2019 Broker Summit
The Brown Hotel
4/23/2019
8:00 am–5:00 pm EST
Various
GRI 200: Risk Reduction (Elizabethtown)
Heart of Kentucky Association of REALORS
5/2/2019
8:30 am–5:00 pm EST
Jennifer Fields
GRI 500: Contracts (Florence)
Northern KY Association of Realtors
5/8/2019
8:00 am–5:00 pm EST
Harry Borders
GRI 400: Finance (Louisville)
Greater Louisville Association of Realtors
5/16/2019
8:00 am–5:00 pm EST
Jeff Ratanapool
GRI 600: Business Systems & Technology (Bowling Green)
REALTOR® Association of Southern Kentucky
5/29/2019
8:00 am–5:00 pm CST
Heidi Fore
GRI 300: Competitive Market Analysis (Lexington)
Lexington Bluegrass Association of REALTORS
5/30/2019
8:00 am–5:00 pm EST
Larry Disney
GRI 200: Risk Reduction (Lexington)
Lexington Bluegrass Association of REALTORS
6/5/2019
8:00 am–5:00 pm EST
Jennifer Fields
CRS: How Social Media Can Ruin Your Business
Hampton Inn & Suites/Owensboro Convention Center
6/11/2019
8:30 am–5:00 pm CST
Marki Lemons
GRI 500: Contracts (Bowling Green)
REALTOR® Association of Southern Kentucky
6/20/2019
8:00 am–5:00 pm CST
Harry Borders
Bootcamp: GRI 100 (KYR Office - Classroom & Webinar)
Kentucky REALTORS®
7/23/2019
8:00 am–5:00 pm EST
Jason Vaughn
Bootcamp: GRI 200 (KYR Office - Classroom & Webinar)
Kentucky REALTORS®
7/24/2019
8:00 am–5:00 pm EST
Jennifer Fields
Bootcamp: GRI 400 (KYR Office - Classroom & Webinar)
Kentucky REALTORS®
7/25/2019
8:00 am–5:00 pm EST
Jeff Ratanapool
Bootcamp: GRI 500 (KYR Office - Classroom & Webinar)
Kentucky REALTORS®
7/30/2019
8:00 am–5:00 pm EST
Harry Borders
Bootcamp: GRI 600 (KYR Office - Classroom & Webinar)
Kentucky REALTORS®
7/31/2019
8:00 am–5:00 pm EST
Heidi Fore
Bootcamp: GRI 300 (KYR Office - Classroom & Webinar)
Kentucky REALTORS®
8/1/2019
8:00 am–5:00 pm EST
Larry Disney
ANSI Measurement- Residential Square Footage Guide
Greater Owensboro REALTOR Association
8/14/2019
9:00 am–12:00 pm CST
Larry Disney
Real Estate Mortgage Fraud and Questionable Practices
Greater Owensboro REALTOR Association
8/14/2019
1:00 pm–4:00 pm CST
Larry Disney
Professional Standards for Every Agent
Madisonville Community College
8/15/2019
9:00 am–12:00 pm CST
Jason Vaughn
Scared Straight How to Avoid the Disclosure Lawsuit
Madisonville Community College
8/15/2019
1:00 pm–4:00 pm CST
Jason Vaughn
GRI 600: Business Systems & Technology (Florence)
Northern KY Association of Realtors
8/21/2019
8:00 am–5:00 pm EST
Heidi Fore
GRI 100: Ethics & Law (Louisville)
Greater Louisville Association of Realtors
8/21/2019
8:00 am–5:00 pm EST
Jason Vaughn
GRI 300: Competitive Market Analysis (Hopkinsville)
Pennyrile Electric Community Room
8/21/2019
8:00 am–5:00 pm CST
Larry Disney
GRI 200: Risk Reduction (Bowling Green)
REALTOR® Association of Southern Kentucky
8/22/2019
8:00 am–5:00 pm CST
Jennifer Fields
2019 Legal Broker Summit
Embassy Suites by Hilton Lexington/UK Coldstream
8/29/2019
8:00 am–5:00 pm EST
Various
GRI 400: Finance (Florence)
Northern KY Association of Realtors
9/11/2019
8:00 am–5:00 pm EST
Jeff Ratanapool
GRI 300: Competitive Market Analysis (Elizabethtown)
Heart of Kentucky Association of REALORS
9/11/2019
8:30 am–5:00 pm EST
Larry Disney
GRI 600: Business Systems & Technology (Louisville)
Greater Louisville Association of Realtors
9/18/2019
8:00 am–5:00 pm EST
Heidi Fore
GRI 100: Ethics & Law (Bowling Green)
REALTOR® Association of Southern Kentucky
9/19/2019
8:00 am–5:00 pm CST
Jason Vaughn
CRS: Top of Mind Techniques to Boost Your Brand
Marriott Griffin Gate
9/23/2019
8:30 am–5:00 pm EST
Kim Cameron
GRI 500: Contracts (Lexington)
Lexington Bluegrass Association of REALTORS
10/14/2019
8:00 am–5:00 pm EST
Harry Borders
GRI 400: Finance (Bowling Green)
REALTOR® Association of Southern Kentucky
10/17/2019
8:00 am–5:00 pm CST
Jeff Ratanapool
GRI 600: Business Systems & Technology (Owensboro)
Greater Owensboro REALTOR Association
10/30/2019
8:00 am–5:00 pm CST
Heidi Fore
SPRING 2019 | Kentucky REALTORS® | 19
America's First Vineyard Nation’s oldest commercial winery site discovered after Kentucky land purchase
Y
BY LESLIE MERTZ Contibuting writer to Good Fruit Grower
ears of research and a good helping of serendipity led to the exact location of the first commercial vineyard and winery in the United States, and it wasn’t in Virginia or California, but in Kentucky, a state known far more for tobacco and bourbon than wine. As fate would have it, the original vineyard and winery are on land purchased by a history buff who is now on a mission to make sure his state’s place as the founder of the U.S. wine industry is not overlooked again. Owner Tom Beall with close friend and business partner Bobbye Carpenter have invested hundreds of hours documenting the past and have also restarted the vineyard, going so far as to track down and replant the same variety of historic grapes that were on the site more than two centuries ago. They hope to commercially bottle the first wine from those grapes this fall. “It will be neat to say, ‘This is what started the industry in this country,’” Beall remarks. Both former police officers, Beall and Carpenter had never grown grapes or made wine before this endeavor, which is called “The First Vineyard” and located in a picturesque, secluded spot overlooking the Kentucky River. When asked why they decided to revive the old vineyard and winery, Carpenter simply said, 20 | kyrealtors.com
“How could you not? How could you know it’s the first vineyard and not start it again if you love history?” The story of The First Vineyard is peppered with a litany of prominent early Americans (see “The rich history of The First Vineyard” on Page 64), but the main character is Swiss immigrant John James Dufour. After arriving in America in 1796, Dufour spent nearly two years scouting for a vineyard location before settling on this site in central Kentucky. “A bunch of things made this property unique, and one of the biggest was that there was a busy shipping port right there on the river,” Beall said, pointing down beyond his rows of terraced vines. “With the port, Dufour could put his wine on a flatboat that would take it to New Orleans, and from there, to anywhere in the world.” In addition, the property had a well-suited, south-facing slope that could be terraced to prevent erosion and augment water absorption, as well as geology that featured a sandstone cap over limestone. The sandstone was ideal for drainage, and the underlying limestone could be excavated and used for fences and buildings. For grapes, Dufour tried a wide variety, but focused on two: a white grape he called Madeira and a red he called the Cape Grape. The First Vineyard soon began producing Madiera and Cape wine for commercial sale. It also supplied cuttings from its vines to the group of shareholders (called “subscribers”) who contributed to the venture with the idea that they could go on to establish their own vineyards and wineries. Unfortunately, 1809 brought a severe freeze to the vineyard and ravaged the plants, and The First Vineyard closed soon after.
After purchasing this property along the Kentucky River for its scenic beauty, Tom Beall (above) learned that it was the site of the first commercial vineyard and winery in the nation. PHOTOS BY LESLIE MERTZ
The First Vineyard’s significance in launching the wine industry in America faded and then disappeared completely as the property was bought and sold in the ensuing years. Fast-forward to 1994: Beall purchased the property for its scenery. “I was planning to just put an A-frame out here and come out on the weekends to sit and look out over the river,” he says. Before he got around to building the A-frame, he got some news from neighbor Don Graham, who is a wine aficionado. Graham had come across a copy of a newly published book called Indiana Wine: A History. In the book, authors James L. and John J. Butler determined that the first U.S. commercial vineyard and winery was located somewhere in Kentucky, but with only a rather vague description and map of the site, they couldn’t determine the exact location. Graham, however, immediately recognized the site, and notified Beall that it was located on his property. “Once we heard this, Bobbye and I wanted to re-establish it with the original grapes,” Beall recalls. He eventually learned that Madeira at the time was a generic name for numerous different grapes, so the exact variety still remains a mystery. The Cape Grape, however, turned out to be the Alexander, a variety that is an accidental hybrid of a European vinifera and the indigenous American Vitis labrusca. With no luck finding the Alexander, Beall was beginning to think it was extinct. As a last resort, he reached out to the U.S. Department of Agriculture’s germplasm repository in Geneva, New York. The repository not only had two Alexander vines, but also agreed to send Beall 40 cuttings. “Of those 40, 37 of them lived,” Beall relates. “We’ve been taking cuttings of them every year since to propagate a few more,” he said. The winery hopes to bottle this year. “We think we
can get at least 250 bottles of Kentucky Alexander.” Besides the thick-skinned and sweet Alexander grape, The First Vineyard grows three additional varieties — Norton, Diamond and Concord — and produces a collection of wines under the J.J. Dufour label. Annual production totals about 6,000-8,000 bottles. The new Kentucky Alexander will be the seminal wine Beall releases under The First Vineyard label (pending TTB approval of the label). “We wanted The First Vineyard label on the Kentucky Alexander, because that was the original grape from the original vineyard,” Beall explains. Now 71, Beall doesn’t know how much longer he will be able to continue to run the vineyard and winery. He hopes someone who appreciates its significance will step up to keep it going as a working operation and potentially construct a museum to showcase the important and rare historical documents he and Carpenter have accumulated, as well as some of the artifacts they have discovered on the property. With a look out over the vines and the river valley, he said, “This is where the wine industry started. Right here. If you would have asked 100 people where the first commercial vineyard and winery was, 99 of them would have said California or the East Coast, but it’s Kentucky. This is too unique and too important to forget again.” Leslie Mertz, Ph.D., is a long-time freelance science writer based in Gaylord, Michigan. SPRING 2019 | Kentucky REALTORS® | 21
LOCAL ASSOCIATION NEWS Local boards/associations are encouraged to submit information for this section. Pictures must be at least 300dpi. Send all association news to pdelrio@kyrealtors.com.
Greater Owensboro Board of Realtors gives back The Greater Owensboro Board of Realtors recently found three opportunities to give back to its community! The first event consisted of local Realtors® and Affiliates serveing food at the Ohio Valley Council Homeless Resource Fair. They represented the Owensboro Realtor® created non-profit “Aid the Homeless”. In partnership with local transit services, 200 FREE bus passes were handed out. Second, a chili cook-off served as a fundraiser for the Realtor Political Action Committee. Along with enjoying all of the entries, GORA raised $2,875 for RPAC. Well done!
Home Realty was our REALTOR® Office winner
Chris Beaty with Jagoe Homes was our Affiliate Winner.
Finally, at their first General Membership Meeting on Feb. 26th Tyler Shookman was named GORA’s REALTOR® of the Year. Shookman has been a realtor since 2013 and was the top producing agent in the L. Steve Castlen office the last four years, where he cultivated an online presence for the real estate company. Along with serving on the Board of Directors for the Greater Owensboro Realtor Association and Aid the Homeless, he has raised nearly $30,000 through the Puzzle Pieces Lip Sync Battle and the Boulware Mission’s “Dancing with the Stars,” both of which earned him a People’s Choice Award. Shookman is set to serve as president of Aid the Homeless in 2020.
Louisville still in the Top25 of Realtor.com list of hottest zip codes After analyzing 32,000 ZIP codes based on the time it takes properties to sell and how frequently homes are viewed in each ZIP code, the top zip codes in the country were identified. The hottest ZIP codes for 2017 are the ones that appeal to millennial preferences, illustrating the power of millennial gravitation toward affordable suburbs with local “it” factors such as hiking trails, great restaurants, and nightlife. The largest generation in U.S. history, millennials seem to be driving the market in many ways and helped Louisville’s 40220 zip code score a hotness factor of 95.8 percent ranking it #23 on the list. 22 | kyrealtors.com
NKAR charity donation NKAR through its Affiliate Council chooses a Charity from nominations submitted by the members to support each year. The Council sponsors events (Meet & Greets, Golf Outing, etc.) for the membership and the proceeds from those events are donated to the Charity. A representative from the Charity attends all of the events and gets to share their mission with the attendees.At the REALTOR®/
Old Kentucky Home Board of Realtors for receives service award Congratulations to the Old Kentucky Home Board of Realtors for receiving the REALTORS® Community Service Award for a medium size board at the State Convention in Louisville. They celebrated at the installation Dinner in December- where we recognized Brent Long with this years’ President’s Award- for outstanding service to the President and the Board of REALTORS. 209 KYR President Rip Phillips installed Steve Bagby as their 2019 President. This award is due to their many efforts in the local community.
AFFILIATE Breakfast in December, members can place donations in baskets on the tables to help round out the total donation presented to the Charity. It’s a great way to show our support for our local communities! This year NKAR donated $10,150 to New Perceptions, Inc. New Perceptions is a not-for-profit organization that provides children and adults with intellectual and/or developmental disabilities and other barriers with services to reach their maximum potential.
Project School Supply took on a partner this year with the FOP joining forces with the OKHBOR making their school drive even more effective than ever. This outreach program has forged some connections that help them to help families all year long with beds, mattresses, furniture, etc. They also raised over $4,000 to help rebuild the Talbott Amphitheater after it was shut down by the state because of needed and overdue repairs. This was just one of several sources of money for this project – but their efforts contributed and were appreciated by those in charge of the renovation. SPRING 2019 | Kentucky REALTORS® | 23
BY THE NUMBERS
The Kentucky REALTORS® Legal Hotline is designed for members, who are brokers or broker designees, to have direct access to a qualified attorney who can provide information on real estate law and related matters. Further, the program is intended to provide legal preventative maintenance to all Kentucky REALTORS® members and, through them, the public they serve. The Kentucky REALTORS® Legal Hotline is offered through the law offices of Vaughn & Smith, PLLC. It is not intended to replace legal counsel. It is intended to provide member brokers and/or their designee access to a qualified attorney who can provide information on real estate matters.
625 15 13
The total number of questions submitted by principal brokers or their designees since the Legal Hotline was founded.
The average time (in hours) for your question to be approved by KYR Staff.
Percentage of cases submitted that consist of questions regarding contracts.
Questions to the Hotline are submitted in writing through the KYR website.
Responses from Vaughn & Smith, PLLC are given by phone. The attorney may only speak to the requesting Broker. Any communications with other staff or agents is not permitted.
2015 24 24 | kyrealtors.com
Year the Legal Hotline was started
Hours or less – The time it typically takes for an attorney to contact you regarding your question.
HOUSING STATS
Kentucky’s real estate market remains robust in Q1 2018 homes sales came just shy of surpassing 2017’s record breaking number of total units sold. It was a strong finish where even markets that experienced significant decreases in volume saw their second or third highest all-time finishes. The big question, now, is will the momentum continue? Kentucky home sales in February soared six percent over the 2018 number. Units sold reached 3,323 which is the highest level since 2016 and sets a record for February. So, at first glance the outlook is good. However, with larger numbers of homes selling early in the year, the rebounding inventory numbers from late 2018 will take a hit. Rising sale prices may continue to moderate the number of units sold and slowly boost inventory as the year progresses into the spring buying season. As in January, the median home price again rose by 7% in February. The figure topped out at an all-time high for February at
$127,700. The 2018 figure last year was just over $119,500. Rip Phillips, President of Kentucky REALTORS®, said that the January slowdown and subsequent boost in inventory was short lived. “The fact remains that there is great demand for homes right now. A boost
in inventory will likely meet with a spike in sales figures shortly thereafter”, he said. “The really great news is that the economy seems not only stable, but strong. It’s a great time for investment in the housing sector since businesses are expanding and hiring causing unemployment to plummet.”
2017 VS 2018 Board/Association
# Sold 2017
# Sold 2018
Sold %
Median Price 2017 Median Price 2018
Median Price %
Ashland Area Board Central Kentucky Association Eastern Kentucky Association Greater Louisville Association Greater Owensboro Association Heart of Kentucky Association Henderson-Audubon Board Hopkinsville-Christian Board Kentucky-Barkley Lakes Board Lexington Bluegrass Association Madisonville-Hopkins Board Mayfield-Graves Board Murray Calloway County Board Northern Kentucky Association Old Kentucky Home Board Paducah Board Pennyrile Board REALTOR® Association of SKY Somerset-Lake Cumberland Board South Central Kentucky Association
901 554 615 17607 1496 2590 357 457 501 13354 503 304 359 6858 678 909 254 2659 1116 433
1076 571 715 17243 1586 2523 383 422 480 12785 576 358 378 6934 649 950 284 2715 1110 511
19% 3% 16% -2% 6% -3% 7% -8% -4% -4% 15% 18% 5% 1% -4% 5% 12% 2% -1% 18%
97470 126045 86450 171854 128858 146920 129092 118156 117817 159211 101942 85231 140392 156120 145600 136792 121573 157118 115819 116996
107300 131367 87933 180920 133192 155563 134798 117321 113225 169345 103967 82069 135240 168638 159375 137383 111510 164217 130879 124896
10% 4% 2% 5% 3% 6% 4% -1% -4% 6% 2% -4% -4% 8% 9% 0% -8% 5% 13% 7%
Totals
52505
52249
0%
$127,973
$132,457
4%
SPRING 2019 | Kentucky REALTORS® | 25
Beyond Beautiful
utdoor spaces are increasingly becoming an extension of the home. A recent study conducted by the Outdoor Power Equipment Institute (OPEI) indicates the majority of Americans (nine out of 10) say it’s important to have a landscape at their home. According to study results, the majority of Americans have a yard comprised of grass (86%), trees/bushes/shrubs (80%), pavers/cement/bricks/patio (51%) and landscaping rocks/gravel (see more about the study here: http://www.livinglandscapesmatter.com/wp-content/uploads/OPEI_American-Living-Landscape.png).
Here are the top four ways family yards and other living landscapes add value to a property and extend the usefulness of a home for your buyers.
Curb appeal Curb appeal is an important factor in determining overall property value. Studies show that improving overall curb appeal, which includes a beautiful lawn and landscape, can boost property values by as much as 17% (source: Texas Tech University).
Saving green with green Living landscapes impact monthly electric bills. According to the Urban Forest Coalition, 100 million mature trees around U.S. residences save approximately $2 billion annually in energy costs. In fact, strategically placed trees can save up to 56% on annual air conditioning bills. In the wintertime, evergreens that block winter winds can save 3% on heating costs (source: U.S. Department of Agriculture, Forest Service). Cumulatively, eight average-sized front lawns can provide the cooling equivalent to air-conditioning for 18 homes (source: Alliance for Water Efficiency).
26 | kyrealtors.com
Trees are tops The value of trees goes beyond perception and preference and right into the pocketbook of your clients. According to the International Society of Arboriculture, each front yard tree adds 1% to a homeowner’s sale price, while large specimen trees can add as much as 10% to property values.
Expanding living space During warmer months, yards become outdoor family rooms and are increasingly important to families who want a safe, inviting place for their kids and pets to play. Merging indoor and outdoor environments to increase living space is trending, making outdoor living space important for home buyers.
All of this is priceless, whether your clients are looking for a new place to call home or are just settling in to their new property. For more information, including infographics and fact sheets to share with your clients, visit www.SaveLivingLandscapes.com.
®
UNCOMMON KNOWLEDGE
THE REAL COST OF LIVING
W
hen you hear ‘cost of living’, what immediately pops into your mind? Most people would say …inflation. However, this is only part of
you paid PLUS what you could have earned by investing the money had the technology costs not been incurred. The long-term loss of wealth surrounding this simple fact is staggering. the picture. When you take money off of your balance When you hear ‘cost ofbyliving’, "Inflation", as measured changeswhat in the immediately sheet to buy the new and improved, that Consumer Price Index is frequently identified money pops into your mind? Most people would say is …no longer available for things as the only factor that affects you total cost like college expenses, retirement or other of living. While inflation certainly impacts financial opportunities. your cost of living today and into the future, 4. Product wear and tear there are actually six factors that must be considered when determining your increase Every new item you purchase has a lifetime in the total cost of living. and has been built to someday have to be replaced. Daily shingles, carpets and nearly 1. Underestimating inflation certainly impacts your cost of living today and into everything else you purchase. When these It is true that inflation does cause six prices be replaced, it is likely they will the future, there are actually factors items that need musttobe to rise over time. Even at low levels, over be replaced at higher prices due to inflation. considered when determining your increase in the long periods of time, inflation can have Where in your financial or retirement plan total cost of impact living.on even the best a devastating have you set aside money for replacing worn laid financial plans. Think about this... a out items? Where will the money come from? 3% annual increase to inflation can steal Product wear and tear isn’t something you approximately 50% of the value of an asset or only face in the future. It impacts you each cash flow over 25 years. How would it feel if and every year and can impact your ability to your retirement account, 401(k), mutual fund save for the future. or life insurance policy was cut in half today?
™
Unexpected life events cannot be predicted and there isn’t a limit to how many surprises can happen over a lifetime. Every time the unexpected happens, without careful planning, the impact can be catastrophic to your overall financial well-being. One or two unexpected life events can wipe out a lifetime of good financial decisions. All of these six economic forces together, create substantial obstacles in wealth building and enjoyment as it makes up your Real Cost of LivingTM.
So, what can you do to get ahead of rising costs?
To gain real control of your financial future, the best thing to do is develop a healthy world-class savings habit by committing to live your life on 80-85% of what you make. By saving at least 15 to 20% of your annual gross income, you can better avoid risk and be more prepared to absorb the Real Cost of 5. Improved time. Even at low levels, over long periods of time, lifestyle 2. Taxes Living – now and in the future. Another factor is human nature.Think It’s natural of all the things in your life today that didn’t The cost of living is affected by all types of to want things like new cars, nicer trips or a In the absence of good savings habits, the a few years ago.... cars that park themselves, taxes – not just federal income taxes. Other bigger home – an overall better life.exist However, only way to deal with these six economic smartphones, curved televisions. taxes to consider include state income tax, as an improved lifestyle is realized waterproof and needs factors is to chase high rates of return, which local income tax, property tax, Social Security are met, new needs take their place. Technology is advancing at a rapid pace and as a typically entails high risk. By becoming a tax, and How Medicare tax. Additionally, thereretirement are The cycle never ends as newer cars are years. would it feel if your account, result the things you currently own are being made many overlooked taxes that you have to factor world-class saver, the pressure of high returns created, clothing styles change, or as friends 401(k), mutual fund or life insurance policy was cut obsolete. These are all ofand theallow things you didn’t in such as sales tax, driver’s license fees, and family have a bigger home or a nicer can be avoided you to lower your even in half today? inheritance taxes and even dog license fees! vacation. As lifestyle improves, it becomes a know you needed but can’t live without. risk while stillnow enjoying high rewards. All of these taxes add up and you also have new part of the total cost of living. No matter how prepared you think you are, to take into consideration changes to tax rates Living a great lifestyle is desirable, but is it The cost of buying and know thenwhat replacing and you just never the future holds. and the creation of new taxes that don’t yet sustainable? At some point, you will leave the workforce and stop receiving a paycheck. Will technology exist. upgrading is preparing not limited what the The first step in for ato solid financial the retirement plans you put in place provide future is tosays. beginIt’s withthe protecting todaypaid and price tag of an item price you 3. New technology the lifestyle you have been accustomed to, or building a strong foundation for whatever PLUSinwhat – Think not just income taxes. tohave be forced to go backwards of allfederal the things in your life todayOther that taxes will you the you could have earned by investing tomorrow may bring. costs not been the money had the technology didn’t exist a few years ago.... cars that park way you live?
1. Underestimating inflation
3. New technology
2. Taxes
consider include state income tax, local income
themselves, waterproof smartphones, curved incurred. The long-term loss of wealth surrounding tax, property tax, Social Security tax, and6.Medicare Unexpected life events televisions. Technology is advancing at a rapid Guardian, its subsidiaries, agents, and employees this simple fact is staggering. tax. and Additionally, there overlooked pace as a result the thingsare youmany currently Life taxes is not a straight line and is often full do not provide tax, legal, or accounting advice. own being made These are as all of surprises that you can’t predict. There thatare you have toobsolete. factor in such sales of tax, driver’s Consult your tax, legal, or accounting professional the things you didn’t even know you needed is always the possibility of an unexpected license fees, inheritance taxes and even dog license regarding your individual situation. Trademarks of but now can’t live without. life event such as parent care costs,to anbuy the new and improved, that money is no fees! The Guardian Life Insurance Company of America The cost of buying and then replacing and unexpected job loss, natural disasters or a for things college expenses, (Guardian) are used like with express permission. child’s education that costs more orlonger lasts available upgrading technology is not limited to what ©2018 Guardian longer than expected. the price tag of an item says. It’s the price All of these taxes add up and you also have to take
into consideration changes to tax rates and the Content for this article was provided by Lifetime Financial Growth, LLC, the providers of KYR’s member affinity program, WealthSteps. To creation of new taxes that don’t learn yet exist. more, visit the Discount Programs page at kyrealtors.com. SPRING 2019 | Kentucky REALTORS® | 27
CEO'S MESSAGE
Fearless Optimism Do you have it in 2019?
STEVE STEVENS, CCE
CEO – KENTUCKY REALTORS
O
ur economic activity has been strong on both the state and national level for the last couple of years. We’d had three consecutive years of recordsetting sales from 2015-2017, so when we heard that 2018 was expected to be “down”, I don’t think we listened. Turned out, we almost broke another record. The question always is, will the next year be just as good or will the trend of successive positive years end? Lots of factors and conditions affect economies, but if it is true that a factor driving them (and sometimes markets) is the attitude of people, then my message is for us to press forward with fearless optimism. I hope your vision is of continued growth and higher sales numbers. Granted, too much optimism can be a bit dangerous and being overly-optimistic shouldn’t blind you. Consistent optimism is, however, necessary for entrepreneurs and people like you who are in business to flourish. So, what is fearless optimism? Fearless optimism is a step above casual optimism, and it can take different forms. Our main focus should to apply it to business, but before doing that, I want to give you a vivid example that should help clarify the term. It is easy for me because I have seen it very close to home. Consider my son Logan, who had a successful career as a Division I collegiate diver. I consider Logan the embodiment of a fearless optimist and here’s why: One of Logan’s best events was platform diving. I was in awe of anyone able to perform at ANY level in this sport just for their sheer nerve. It was more amazing if they had accomplished ability. In Logan’s case, there is little explanation for his activity and results if not for fearless optimism. How else would you be able to climb 10 meters (33 feet), throw yourself off, sometimes backwards and blindly, do an amazing amount of twisting and turning before hitting “hard” water if you didn’t expect a beautiful entry and positive outcome? The alternative is landing flat on your back or stomach and if that was your main focus, there would be no way you’d ever attempt it! Fearless optimism understands there might be a bad outcome, but the risk is worth the reward. 28 | kyrealtors.com
Being in business comes with its own set of fears. Entrepreneurs are often viewed as being somewhat fearless. Despite this, many often fear of failing, or have the fear of disappointing others, and the fear of uncertainty and of what might lie around the corner. Richard Branson, founder of Virgin investment group which comprises approximately 400 different operations, is often considered one of the most fearless business people in modern times. His aunt bet him that he couldn’t learn to swim during a family vacation. After failing during the trip, his family was driving home, and he asked his father to pull over. He jumped into a river, swam and won the bet his father had made. Branson’s philosophy has always been one of risk taking. He says: “You don’t learn to walk by following rules. You learn by doing and by falling over”. When asked, other leaders have given their thoughts on what it takes to be fearless: “Don’t let the unknown throw you off your game” – David Daneshgar, co-founder of BloomNation “Make your passions pay off” – Ruth Zukerman, co-founder of Flywheel Sports “It’s okay to take a risk – it just might be worth it” – Bruce Poon Tip, founder of G Adventures “Never make uninformed decisions” – Angela Lee, founder of 37 Angels “Plan early so you can pursue your future with confidence” – Kate White, former editor, Cosmopolitan Magazine “Giving back should be part of your plan” – Mayer Dahan, CEO of Dahan Properties Like fearless people, organizations should also strive to be fearless. Author Amy Edmondson says, “Achieving high performance requires having the confidence to take risks, especially in a knowledge-intensive world. When an organization minimizes the fear people feel on the job, performance – at both the organizational and the team level – is maximized.” I like that for how I want us to approach our work for you and on your behalf as an association. My hope is that we can apply these ideas and principles at Kentucky REALTORS, and you will do the same in your individual real estate businesses. If so, our boundaries may be limitless.
MORE THAN AN AGENT
We believe actions speak louder than words. But in case you want to see the words that hold us to those actions, we’ve got a whole Code of Ethics, too. It’s 8 pages based on honesty, integrity, and trust that’s exclusive to REALTORS.®
REALTORS® are members of the National Association of REALTORS®
SPRING 2019 | Kentucky REALTORS® | 29
A DAY IN THE LIFE OF...
a REALTOR® serving in the state legislature
Rep. Randy Bridges How many years have you been in real estate? Almost 20 years! I obtained my associates license in 2000 and my Brokers license in 2011. What did you do before real estate and how did you make the change? I grew up working for my dad who was a plumbing contractor. I also worked in Grocery stores and eventually a chain of convenience stores. In 1986 I partnered with a high school friend and purchased two convenience stores. Together we opened several more convenience stores and a truck stop. In the mid 1990s I sold my interest in our stores and launched a real estate investment and development company, RB Property Management, Inc. That led to obtaining my real estate license and eventually becoming a broker and Partner in REMAX Realty Group where I am today. I still own and operate my Development Company as well. What are a few of the highlights you’ve experienced since you started in real estate? One of my greatest honors was serving my fellow Realtors as the President of The Paducah Board of Realtors for 2014 & 2015 and being named Realtor of the Year for our board in 2015. The other honor is serving as Kentucky State Representative and working on protecting our profession at the state level. You were recently elected as 3rd District State Representative. What made you decide to run for office? The desire to serve the citizens of my community and our Commonwealth, to promote economic development, and move our state forward! What does a typical day look like for you when the general assembly is in session? 30 | kyrealtors.com
I’m up at 5 AM to make it to the Capitol cafeteria. This is where the biggest deals are sometimes worked out! Committee meetings begin at 8 AM and run every 2 hours. The general session starts at noon and usually winds up between 4:30–6:00PM. Evening receptions usually take place each beginning around 5 PM and will run until about 8-9 PM. Often, legislators will go to dinner to continue discussions. What has been most surprising to you to learn about the way the state legislature works? Up until a bill is passes into law, changes can be made. This means your voice can be heard! What an initial bill starts out as, can be much different than the resulting legislation. Your House Bill 436, which dealt with issues related to the real estate industry, was well received during the general assembly. Are there any issues you would like to see addressed next? I would like to see additional education requirements added to raise our industry’s professional standards. Outside of running your business, what is your favorite pastime? Spending time with my grandchildren. I have twin grandchildren that live in my area and two that live 3 hours away so having to time to travel and be with them is crucial. I also enjoy serving my community through our church. What is the best advice you have ever received? Be yourself! Never try to be something you’re not. Be strong and stand firm in your convictions and beliefs but do it through patience and humility. This is an area I must work on daily.
2019 KYR Convention & Expo Marriott Griffin Gate Resort & Spa Lexington, KY September 24-26
Visit kyrealtors.com for details
2019
BROKER
SUMMIT
Tuesday, April 23
Louisville, KY • The Brown Hotel Elevate Your Business
...the only statewide broker training event in Kentucky. Key objectives for the event: -Savy social media techniques -Your legal questions answered, top legal issues in KY -Legislative issues that can impact real estate and how elections play a role -2019 mortgage trends and financing options for clients -Learn about the hot issues in real estate -Running a sucessful virtual team -E&O coverages and things not covered by your insurance -Understanding ethical dilemmas with advertising & social media use -Networking and idea exchange
Registration includes all materials needed as well as morning refreshments and lunch Early Bird Registration (before 3/23) - $129 Regular Registration fee - $159 Walk-in Registration fee - $179 Attendees will receive 8 hours of GRI credit, 6 hours of CE (3 law) & 8 hours of broker credit (pending approval) Lunch is included in registration! (a $45 value)
Call 800.264.2185 for more details.
Register online @ bit.ly/2019BS
Bruce Aydt
Carrie Little Other Speakers Include: Rip Phillips John McCarthy Pam Featherstone Jason Vaughn H.E. Corder, II Jeff Ratanapool Heather Becker Cindy Grissom
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The Boom Team
Special thanks to our sponsors!