Kyrealtorfall17 by Kentucky REALTORS

Kentucky ®

FALL 2017

A publication of Kentucky REALTORS®

Tighten it up

Protecting your online privacy 10 biggest threats facing real estate Don’t make a “confidential” mistake Does your investment property still measure up

kyrealtors.com

CONTENTS Volume 10, Number 2, FALL 2017

A publication of Kentucky REALTORS® President Mike Becker Northern KY Association President-elect Steve Cline REALTOR® Association of SKY Treasurer Rip Phillips Greater Louisville Association Treasurer-elect Lester Sanders Greater Louisville Association 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 nonmembers. 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© 2017. 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: hcooper@kyrealtors.com

IN THIS ISSUE

0 Protecting your online privacy 1 20 10 biggest threats facing real estate 26 Does your investment property still measure up

REGULAR FEATURES

4 REALTOR® News 5 6 14 19 22 24 25 28 29 30

President’s Message Tools You Can Use Legislative Update Education Local Association News By the Numbers Housing Stats CEO Message Up to Code A Day in the Life of...

ON THE COVER Cover photo submitted by Abbe Kasirosafar with Coldwell Banker West Shell in Crestview Hills. The bridge shown connects Kentucky and Ohio and is a pedestrian only bridge that stretches 2,670 feet (1/2 a mile) across the Ohio River. Go to the KYR Facebook page (facebook.com/kentuckyrealtors) – please like the page if you haven’t already – locate the cover photo and comment with the name of the bridge (either the formal or popular name) for a chance to win a free online course with Jason Vaughn, courtesy of the Kentucky REALTOR® Institute (KRI). If you would like to submit a photo for the magazine cover contest (Spring 2018 issue), send photographs to kyrealtors@kyrealtors.com. Photos must be high resolution and be Kentucky specific – landmark, destination, etc. FALL 2017 | Kentucky REALTORS® | 3

REALTOR® NEWS Step up and serve at the state level Are you interested in serving the real estate industry at the state level? Kentucky REALTORS® is seeking nominations for several leadership positions for 2018. The information regarding the openings, terms and voting information can be found on the website at kyrealtors.com/elections. Nominations can come from the floor and elections will take place at the 2017 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)

KYR Member Survey Results KYR recently completed a comprehensive member survey to gain a better understanding of the membership demographics, as well as to receive feedback to gauge the effectiveness of the association. Here are a few interesting facts about the KYR members:

information with legal issues, education and market data topping the list. • Over 56 percent of members say they contribute to RPAC, 45 percent say they have taken a course with KYR/KRI (over 70 percent still prefer classroom courses), and over 35 percent saying they have attended a KYR event, meeting or training in the past two years. • While 54 percent of respondents don’t hold a designation, the most popular is the GRI with over 25 percent holding that designation. CRS and ABR are tied for second at over 14 percent. Almost 33 percent of respondents plan to pursue a designation or certification in the near future with 54 percent saying GRI is on top of their list. • Almost 35 percent of respondents plan to get a broker license in the future. • More than 88 percent of members use Facebook with around 55 percent using LinkedIn (down from 61 percent in the previous survey), 34 percent on Twitter and 31 percent watching YouTube. Over 32 percent use Instagram, the largest percentage gain of any platform (up from 24 percent in the previous survey). • Healthcare and Zillow were two of the biggest issues mentioned that are affecting business.

• Almost 73 percent of the membership define their role as a sales agent while over 18 percent are brokers or broker owners. The third largest categories are appraiser and property manager with around 2 percent of members. This is practically unchanged from the previous survey. • More than 88 percent of members practice residential real estate, with less than 3 percent saying they deal in commercial and property management. • The largest percentage of members, at around 31 percent, say they have been in real estate 20 or more years with almost 19 percent saying they have been practicing 2 years or less (in the previous survey, only 13 percent had been in the business for 2 years or less). • Around 87 percent of members say they will be practicing real estate in the next 3-5 years (previous survey indicated 92 percent) while almost 74 percent say they work in real estate full time. • The majority of the membership, at 59 percent, are women and the average age is 54.5 years old (compared to the national average of 53). Among all members, a 41-50 hour work week is the standard at 24 percent of respondents. • Members overwhelming prefer email communications from KYR at over 93 percent and the majority of members, at almost 78 percent, say they receive just the right amount of

Kentucky REALTORS® staff spent time at the Lexington Boys and Girls Club

Kentucky REALTORS® staff spent time at the Lexington Boys and Girls Club for the Day of Service on August 10 and helped clean and organize the entire facility and their transport vehicles. Staff scrubbed the bathrooms, cleaned the entire gym and bleachers, organized each of the classrooms, and washed every window in the place. In addition, staff delivered school supplies that were donated at the KYR Summer Business Meeting and by the Central Kentucky Association of REALTORS®. Thanks to everyone across the state who gave time, money or supplies to help this organization.

OUR 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).

4 | kyrealtors.com

PRESIDENT'S MESSAGE

Reflecting on my year

he year has moved along quickly and perhaps too quickly, but it has been filled with fun and many successful projects to which I’m glad I was a part!

board three exceptionally talented individuals. Nicole Knudtson has been hired as our new Education Director, Megan Dorris as Office Manager and Pamela Gregory as Government Affairs Director. If you have not met these talented and delightful staff, I hope you do so soon. They are already making a tremendous impact on our organization. Going into this year, I had several goals for my term as your President. Chief among them was to improve the function of the REALTORS® Political It has been a long road to get where we are today Action Committee (RPAC) and the Kentucky and I think it is important to look back to where REALTOR® Institute - KRI (formerly the Kentucky our organization has been over the past 5 years MIKE BECKER Real Estate Education Foundation or KREEF). Each 2017 KENTUCKY REALTORS® to fully appreciate it. To say the road has been of these have already made great strides toward PRESIDENT full of interesting twists and turns would be an enhanced performance. In fact, RPAC is tracking understatement because during the past five years toward its third consecutive Triple Crown Award from NAR which we lost a CEO, hired a CEO, sold our headquarters building, moved recognizes our performance in reaching our goals for fundraising to temporary headquarters, lost another CEO, bought a new office and engagement. A special thank you goes to Mike Inman, the 2017 building, moved again and finally hired a new CEO. Talk about RPAC chair, for his leadership of the RPAC Trustees and their work in unsettling! making needed improvements. Through it all, Kentucky REALTORS® (KYR) persevered and it now The LeadershipKYR program is thriving, with a record number appears we are on a straight path forward. The past year however, of participants this year. Members who complete the program was not completely without curves. Our leadership and membership consistently say it’s the best thing they’ve done to become familiar focused on the administrative and legislative process that was with the real estate industry and their Association. Many strong undertaken to re-organize the Kentucky Real Estate Commission and lasting friendships are also developed when you participate. If (KREC). We were actively involved in ensuring this was done to the you haven’t considered applying for this outstanding program, you benefit of real estate licensees and the industry. We helped the state should for 2018. avoid some miscues, as well as to assist the legislature in the final We are also boosting our Young Professionals Network (YPN) by passage of the re-organization through active member involvement reaching out and bringing them together at our state meetings. More in Frankfort. programming is envisioned for them in the future. If you have an Earlier this year, we navigated through changing the name of the interest in getting involved with this group, please reach out to KYR association that followed a national trend across state and local real staff and let them know. estate associations. We dropped the word “Association” from our At this writing, our convention is only a short time away. We official name, becoming Kentucky REALTORS® - or KYR for short. are very excited to be having the first-ever combined convention A re-branding followed our name change which has offered a crisp with the Ohio Association of REALTORS and the networking will and fresh look for our association. be outstanding for every member who attends. My thanks to the As many of our local Associations know, we started the new year Convention Committee and staff who began working on this event completing the final leg of our KYR Road Show, a multi-city tour about 18 months ago. I know it will offer tremendous learning, fun which took us to 16 of our 21 local boards. This initiative allowed KYR and a memorable experience. I look forward to seeing everyone to travel to the far corners of the state, and everywhere in between, to there. educate members and the media about our organization’s strategic I am asked occasionally if I would do this job again and I think initiatives, legislative priorities and deliver messages about what the the better question is - “Would they have me again?” It’s something Association is doing for the membership. It was a real pleasure for to ponder, but I am thoroughly enjoying my term and appreciate all me to meet so many of our members along the way. the support I’ve received. The year is not yet completed and I still Our CEO, Steve Stevens, has brought forth new ideas to move the have a couple irons left in the fire. There’s still time left to make them happen, so let’s keep moving forward and bringing excellence to our Association forward, but one of his biggest accomplishments has been industry. cultivating new staff. Since the latter part of 2016, KYR has brought on

MIKE BECKER

2017 PRESIDENT KENTUCKY REALTORS®

FALL 2017 | Kentucky REALTORS® | 5

TOOLS YOU CAN USE New Member Benefits: Offrs, Taxbot, Office Depot, Tickets at Work www.kyrealtors.com/discounts (login required) As a benefit of membership with Kentucky REALTORS®, association members are eligible to receive discounts and added value on businessrelated products and services from a number of leading industry partners. Here are the latest partners to be added to the lineup: Kentucky REALTORS® can take advantage of a 50% discount with Taxbot, an expense tracking system designed to save THOUSANDS every year. Sign-up now and you also receive a 14 day risk-free trial. Sandy Botkin, a CPA, Tax Attorney, and former trainer for the IRS developed Taxbot with REALTORS® in mind! There are HUGE tax advantages for your business and Taxbot teaches you how to keep more of what you earn! In fact, our relationship with Taxbot gives REALTORS® access to Sandy Botkin’s strategies and tax information. Some of the features offered by Taxbot are the ability to track your mileage with integrated GPS, taking pictures and storing receipts on your phone and cloud storage for all your records. Taxbot even integrates with your bank or credit card and searches for deductions you might be missing. With the program, you also have access to a full training library of strategies for lowing your taxes by thousands of dollars a year! Taxbot guarantees to save at least 20 times your investment in your first 30 days or your money back! Offrs brings Kentucky REALTOR® members a lead generation and marketing product that will revolutionize their business. Offrs does this using smart data and analytics that predict future listings and provide verified seller leads back to you. Using a proprietary algorithm to identify who is most likely to list their home for sale next, they have predicted over 70% of home sales throughout the United States. Members receive an all-in-one pricing structure for an entire suite of tools available through Offrs. Enter code "kyrmember" when purchasing to take advantage of your special pricing. Office Depot can help grow your bottom line by cutting hundreds of dollars in expenses from your balance sheet. The Office Depot Member Advantage program, free to Kentucky REALTOR® members, brokerages and Associations, gives you access to the power of a $110 million group purchasing program, the result of which is a very aggressive pricing structure on items you use the most. Each time you make a purchase with Office Depot, you receive substantial savings like these but you have to signup with a free account first: Save up to 55% on 500+ items that members purchase most often, including special discounts on ink and toner, appliances and even home and office furniture. Free next day delivery on orders over $50, with the ability to shop instore or online. Members get deep discounts on Copy & Print services including 2.5¢ black & white, 22¢ color copies and 40% off finishing services every day! Kentucky REALTORS® is pleased to partner with TicketsatWork giving you access to exclusive savings on Kings Island tickets as well as other theme parks, movie tickets, hotels, tours, Broadway and Vegas shows & more. Be sure to visit often as new products and discounts are constantly being added! As a member, take advantage of these exclusive offers and learn about all the other programs offered through KYR. 6 | kyrealtors.com

Learn about a neighborhood Want to know more about a neighborhood? The free walking app Walc shows you what you’ll actually see on a jaunt, rather than the nondescript compass directions used for every other directional app, most of which are designed for drivers. Simply enter a potential address into Walc, add a destination, and take a leisurely stroll in a neighborhood. The app uses physical landmarks and visual cues to guide you on your walk - like do you turn right at the Starbucks or left at Chipotle? Walc also has a hands-free “pocket” mode, allowing you to leave your phone in a coat or bag and listen to directions as you look around, instead of staring at a screen.

Create listing videos in minutes HomeFlik makes it easy for real estate agents to create edit-free, professional-style videos of property listings and surrounding neighborhood communities to instantly share through social media, email, and text. You can choose a music selection from the sound library that sets the tone of the home. Then, starting with the introduction shot, give a brief description of the home including all the features typically highlighted like the address, price, number of bedrooms and bathrooms, square footage, and any other features that make the home special. From there, you can move through other required shots of rooms and features before previewing and saving. The app requires no editing after saving the shots and the cost is only $4.99 for lifetime use (another $4.99 removes the watermark). It’s currently only available for iOS.

Mobile usage report results from RPR Realtors Property Resource® (RPR) announced the results of its recent 2017 REALTOR® Mobile Usage Report, a survey that shows the way members use mobile devices in their everyday businesses. According to the study, client communication and housing research top the list of mobile activities REALTORS® rely on most throughout the course of each workday. Those tasks are made possible through the growing availability of mobile technologies in the real estate marketplace such as apps. This mobile access to property data and the ability to instantly communicate that information to consumers, has transformed the way REALTORS® conduct business. Here are the key findings from the report: • 72 percent of REALTORS® use a mobile device more than three hours a day. Almost 18 percent say they are connected over eight hours each day. • An overwhelming majority - 96 percent - of REALTORS® agree that using a mobile device to access housing data saves valuable time during the work day. • 89 percent of all REALTORS® surveyed indicated that they often use a mobile device to communicate with clients. Other popular activities included researching housing data (72 percent), financial calculations (44 percent), prospecting (34 percent), and client presentations/home showings (26 percent). • 87 percent of REALTORS® agree that clients prefer to receive new housing alerts, market activity reports and more sent directly to their mobile device. Free Webinar: 10 ways to earn more business than your competition with RPR - Monday, November 13 Register now at www.kyrealtors.com/rpr

Future of real estate marketing The digital landscape for the real estate market seems to be moving at the speed of light. Forward thinking years into the future is a must as marketing channels, programs and the overall industry changes. According to the latest Imprev’s Thought Leader Survey, which specifically asked “real estate leaders to predict the state of marketing in 2022,” was to discern between channels that are considered “passing fads” and those that “have the potential to revolutionize the industry.” Here’s the top takeaways as assembled by the Real Daily:

Airdog ADII is a follow-drone that kicks butts and takes names Drone photography is becoming increasingly commonplace in the real estate biz, most notably due to their ability to capture dramatic, sweeping shots of a property and its surrounding location from a bird’s eye view. The latest technology from Airdog ADII offers a hands-free, all-terrain camera that follows you in action anywhere you go. Using the “follow-mode,” you can create video tours without the need of a manual remote, which allows for highlighting features of the property through a custom perspective. This drone features waterproof, weather resistant construction, meaning you’ll be able to capture scenes in every season.

Beware of real estate scams Scams are present everywhere, but it seems like real estate is being targeted more than ever now that the market is in full swing. There have been national scams focused on phishing with mortgage closings, attachments sent from a fake Gmail account of a client and fake invoices from made up real estate associations. Now, another phishing scam is making its rounds that claims to be from the National Association of REALTORS®. A broker recently received a text message claiming to be from NAR and accusing her of sending “racist texts and emails.” The text message demanded she pay a $1,345 fine. The FBI recommends that anyone who receives a similar scam text take the following steps: • Report the incident to the FBI IC3 web site. • If you suspect that any phone numbers or contact information were obtained due to a breach of a computer system, alert your IT department or consult an IT specialist to scan your systems and make sure that you are free from malware. • Real estate professionals who clicked on a link in the text should promptly follow up with an IT specialist to ensure that their device is free from malware. • You can follow up with the FBI after filing the IC3 report with your local field office.

When it comes to current marketing technology, over 40 percent of those surveyed believe that mobile apps, social media and videos will be most important five years from now. Print advertising (both targeted and in mass) are expected to be obsolete, with only 3 percent of those surveyed believing in its long-term viability. Thirty-three percent of those surveyed believe it only works for brand marketing; another 17 percent believe it is dead altogether. What is a little less expected is that display advertising falls into that lower tier as well; just three percent of those surveyed believe it will continue to be a viable marketing strategy. When it comes to emerging technology, five stand out as most important in the future: • • • • •

Predictive analytics (74%) Big data (72%) Marketing automation services (67%) Artificial intelligence (50%) Augmented reality/3D tours (46%)

Follow Kentucky REALTORS® on Facebook and Twitter KYR has posted its Twitter feed and Facebook page link on the home page of its website (kyrealtors.com) so members and consumers can follow all the things going on with the association. Keep up with all things KYR on a real-time basis – legislative updates, industry news, business tips and much more! Or you can visit the pages directly: facebook. com/kyrealtors or twitter. com/kyrealtors.

FALL 2017 | Kentucky REALTORS® | 7

Don’t make a

“confidential” mistake

EALTORS® constantly deal with confidential information. They do it so often that when a REALTOR® sees another real estate agent disclose what they believe to be confidential information, they can often become quite apoplectic. However, they may be mistaken about their belief, and their reaction may be totally inappropriate. For example, imagine the following hypothetical situation: Jennifer is representing her buyer in a transaction to purchase a home that is being listed by David. They work as agents in two different brokerages. David and Jennifer have worked together in the past, and both would probably say they have a good working relationship. After viewing the property with her client, Jennifer writes up an offer for her client. However, Jennifer’s client warns her that he is very concerned about the possibility that the seller might use the buyer’s offer to get other parties to raise their offers. Jennifer tells him that he is right to be concerned about that, because it is a “seller’s market right now.” She satisfies his concerns by telling him that when she makes the offer, she will stamp each and every page “CONFIDENTIAL.” Moreover, when she sends the offer to David, she adds an additional cover page that states the following: “The terms of this offer are CONFIDENTIAL. Neither the existence of the offer nor its terms shall be disclosed to another person or party.” 8 | kyrealtors.com

When David received the offer, he immediately went to his seller and asked him if he could share it with other potential purchasers. When the seller asked why, he responded by saying “we can use this to get everyone else to increase their offers.” The seller was concerned because of the “confidential” language. However, David told him it was “meaningless.” The seller trusted David, and agreed to let him share the offer with other prospective purchasers. Within 24 hours the seller accepts an offer from a different purchaser, who saw Jennifer’s client’s offer and then raised his by an additional ten percent. Jennifer subsequently finds out that David shared her client’s “confidential” offer and, along with her Broker, files an ethics complaint with the Kentucky REALTORS®. Her client, equally upset, files suit against the seller and David claiming that they breached the confidentiality agreement. Are you able to guess the result? Well, if you think Jennifer is about to have a bad day, you are right. Jennifer made a classic mistake. She believed that by marking her offer as “confidential” she somehow created an agreement between the buyer and seller that the seller would not talk about the offer or its terms. However, in order to have an “agreement,” both parties must actually agree. When Jennifer sent her “confidential” offer to David, the seller had not agreed to keep it confidential. Merely calling an offer “confidential” does not make it so. Jennifer could have avoided this situation by sending a confidential agreement to David, for him and his seller to sign, which would make the offeror, the offer and the offer terms confidential. However, she would have had to do this in advance of sending the actual offer. If David and his client agreed to sign it, then she would truly have a confidentiality agreement upon which her client could rely. Her failure to do this left her client vulnerable and his offer

WINNER FOR

CELEBRATING

YEARS-IN-A ROW

YEARS

In order to have an “agreement,” both parties must actually agree.

subject to being used as a tool to increase the seller’s sale price. Thus, the buyer’s suit against David and his seller will fail. Moreover, Jennifer has her own ethics problem, because she probably violated Article 1 of her code of ethics. It states the following: When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve REALTORS® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, REALTORS® remain obligated to treat all parties honestly.

We’re

Again

2013-17 Area’s Largest Originator by Volume (Business First) Century Mortgage Company

20 YEARS OF MAKING DREAMS COME TRUE.

EXPERIENCE THE DIFFERENCE WITH CENTURY’S GOLD KEY EXPERIENCE

Monica Bohn Chief Executive Officer monica@centurymortgage.com

Jeff Ratanapool Chief Operating Officer jeff@centurymortgage.com

When interpreting this provision, the National Association of REALTORS® created Standard of Practice 1-13. It states the following: When entering into buyer/tenant agreements, REALTORS® must advise potential clients of …. 5. the possibility that sellers or sellers’ representatives may not treat the existence, terms, or conditions of offers as confidential unless confidentiality is required by law, regulation, or by any confidentiality agreement between the parties. (Adopted 1/93, Renumbered 1/98, Amended 1/06) It does not appear that Jennifer advised her buyer of the possibility that the sellers may disclose this information to third parties. Thus, she is probably in violation of Article 1. A very bad day for Jennifer, indeed.

Bryan Wiegandt President, Century Mortgage bryan@centurymortgage.com

Marla Guillaume President, Century Lending marla@centurylending.net

Brad Robinson Chief Financial Officer brobinson@centurymortgage.com

www.CenturyMortgage.com Equal Housing Lender. All rights reserved. ©2017 Century Mortgage Company d/b/a Century Lending Company, NMLS 3925. This is not a commitment to lend. Information provided by Business First, March 18, 2016. Key logo is a registered servicemark of Century Mortgage Company.

FALL 2017 | Kentucky REALTORS® | 9

TIGHTEN IT UP 10 things you need to do immediately to protect your online privacy

BY JUANITA McDOWELL

rivacy is an increasingly rare commodity these days. Just search for yourself on Intelius.com and take note of the information the website is handing out about you for free. For a significant amount of pocket change, one can uncover the real scoop â&#x20AC;&#x201D; a true testament to the fact that our personal information is worth something to legitimate businesses as well as criminals.

10 | kyrealtors.com

Today’s REALTORS® are faced with an ever-increasing number of privacy and safety concerns for multiple reasons. For advertising purposes, REALTORS® often publish pictures and personal details as well as sometimes reveal location information unknowingly. Secondly, they rely heavily on technology - such as computers, smartphones or tablets - that can be hacked if preventative measures are not in place. In addition, there are transactions, such as short sales, that require REALTORS® to collect and store the same information that data criminals seek. And herein lies the problem. For many of us, words like “spoof” and “phish” - that relate to receiving bogus emails - are not part of our everyday lexicon, nor do we want them to be. But the time has come for everyone in the real estate industry to get educated in this digital economy. “Knowledge and awareness” is the name of the game or the consequences can be devastating. A few unsuspecting real estate professionals in different parts of the country have realized the painful truth in this reality. They were victims of what is now referred to as the Wire Fraud Scam. While this scheme has played out in several different ways, it leads to the same downfall: a hacker successfully attacked. In a nutshell, an agent receives wiring instructions from a closing attorney, unaware that Hacker Joe has placed himself in the middle of transmission and changed the routing account information in the email before it gets forwarded to the buyer. On the receiving end, the buyer complies with the instructions, and in doing so, makes a 20 percent deposit into Hacker Joe’s account.

Time to tighten it up

In light of the wire fraud example and a growing number of other scams pervading the real estate industry, a review of some key privacy guidelines and rules is in order. Consider taking the following actions to protect your privacy and secure your data. Did you know? Most people give Facebook their real first and last name, city of birth and birthday. This information can be used to guess the first five digits of a social security number. Security experts recommend that you adjust the “year” of birth.

1. The first step: online self-assessment Your first step to online privacy and protection is to know what information you already have online. When was the last time you Googled yourself? What websites are sharing information about you? What private information are you storing on your computer? These are only a few of the questions you need to answer to begin your self-assessment. If you find highly confidential information - such as images of your signature or your social security number - on any website, you can request a removal from Google and other search engines. Simply do a

search using the phrase “removing content from Google” for directions on how to do this.

2. Stop using public Wi-Fi networks Hackers who creep into public Wi-Fi networks are hoping that you didn’t receive the all-important memo years ago that began with “never use a public Wi-Fi network.” If you failed to heed this warning, you need to realize that you are wide open to potential hackers who insert themselves into the line of communication in order to harvest your account passwords and read your email. If you think a hacker had to go through extensive training to learn how to do this, think again - think Google and YouTube. Video tutorials are readily available online that demonstrate how easy it is to do this. There are other spots where a virtual agent might work or conduct business, such as a coffee shop, which is an ideal place for a hacker to set up a fake network. Even worse - if you stay on such a public Wi-Fi long enough, a hacker can take complete control of your computer. Protect yourself and don’t take the bait. Use a Virtual Private Network (VPN). Service providers like Private Internet Access (PIA) charge a nominal fee per month to encrypt your data so hackers cannot see it. Tunnel Bear also is a VPN service provider with a free option up to 500MB. Action item: Go to the “settings” app in your smartphone and make sure you are not automatically connecting to Wi-Fi networks. Did you know? Antivirus programs protect your PC and VPNs secure your Internet communication, rendering your data useless to hackers.

3. Adhere to strict email security rules Chances are good that you have received a phishing message in your inbox. This message appears urgent and comes from a known source such as FedEx or a bank in your area, when in fact it’s a scam designed to get your attention, to persuade you to click on a link in the email and enter your personal details. Never click on the link - you could download a virus that affects everyone on your network. Beware of a suspicious email from someone you know. Unfortunately, your friend’s email contact database could have been hacked. If in doubt, pick up the phone and call them. Lastly, if sensitive financial data is being sent over the Internet, use email encryption. Most VPNs have this feature. If you are not using a VPN, Info-encrypt.com is another option for you. This free, Web-based service easily secures your email, and it does not require installation on a PC. You can also find videos on YouTube that explain how to encrypt an email in Gmail or Outlook. For large real estate firms, there are enterprise options from HP Securemail and Hushmail.com. FALL 2017 | Kentucky REALTORS® | 11

4. Perform a Facebook privacy checkup The number one place that people voluntarily relinquish their right to privacy is a social network. Remember once on the Internet always on the Internet, so do not post anything you would not share with the world - forever. Most of Facebook’s one billion users do not realize that every time they update their Facebook timeline or profile, search engines are immediately notified and soon index this new information. Action item: If you do not want other search engines to link to your Facebook timeline, visit your settings and select “privacy” from the left column. Under the “who can look me up?” section, look for the question “do you want other search engines to link to your timeline?” Click “edit” and change this setting to “no.”

5. Clear your browser history and cookies Cookies are tiny pieces of code that websites attach to your computer to store information about you and your activities on their website. Cookies remember your preferences and can save you a good bit of typing. However, if you are trying to tighten up your online privacy, it is good practice to clear your cookies and delete your browser history on a regular basis.

6. Password-protect your hardware This is a simple but important requirement for your computer and mobile devices. For your mobile devices, fingerprint recognition is a great security option. Those who oppose this option argue, “But I trust my family and coworkers.” To be clear, requiring authentication is necessary in case your laptop or mobile device is lost or stolen. In addition, make sure you use strong passwords — not the simple fourdigit passcode — for your devices. And for online applications, use only passwords that contain a combination of uppercase letters, numbers and symbols.

7. Consider two-factor authentication for business-related applications There’s another way to ensure your accounts are never hacked, and that involves the use of two-factor authentication. Accounts such as Google, Facebook, Evernote and Dropbox give you this option, just to name a few. In this way, you will need your smartphone as well as your account password to log in. 12 | kyrealtors.com

8. Practice mobile safety Did you know that a picture taken on your smartphone with location services turned on embeds GPS metadata into the photo? With proper software, someone can pinpoint your exact location, including latitude and longitude coordinates. Keep it simple and disable location services if you know you will be uploading a digital picture to the Web. Other mobile safety precautions include: Keep your operating system up to date: New updates address bug fixes and also keep your device safe from the latest virus. Add an image on your phone’s lockscreen that has your phone number or email. If your device is lost but found by a good Samaritan, they will be able to contact you if you provide an alternative phone number or email.

9. Mask your IP address When you land on a website, you leave a footprint in the form of IP information. Your IP address gives a website owner, at the very least, your location and service provider. By using an IP masker, this will not be the case.

10. Get notified if your name is mentioned online If your name is ever mentioned on a public page online, you might want to know. You can know by going to www.google. com/alerts. Make sure you have a Google alert set up with your first and last name in quotations, for example: “Sue McMaster,” The quotations tell the search engine to keep the string of words together. If you are logged in to your Gmail account, the email will be delivered to this address. If you prefer that it be sent to another email, log out so it will prompt you for this email address.

Conclusion

As a REALTOR® serving the public, maintaining online anonymity is a major challenge. With daily advances in technology, it is hard to go anywhere online where our information is not being tracked or accessed. The solution is not to avoid the digital landscape, but to exercise caution and remember these important guidelines to ensure that you will not compromise your privacy and therefore your safety.

Juanita McDowell is a real estate technology speaker and trainer who presented at the KY and OH REALTOR® Convention & Expo this year. She travels the country teaching a course she designed entitled, “Tighten it Up! Data Security, Privacy and Safety for REALTORS®.” Learn more about Juanita at www.juanitamcdowell.com.

Be in business for yourself, not by yourself. With Support. Stay on top of your game from day one, with our comprehensive, ongoing training programs. Impress your clients using our full suite of marketing & sales materials. Keep your sales goals on track with our business planning tool & office support activities.

Looking for a change? Ready to take your career to new heights? Join our team. Call your local Weichert® office today or 800-301-3000, or visit jobs.weichert.com. © 2017 Weichert Real Estate Affiliates, Inc. Weichert® is a federally registered trademark of Weichert Co. All other trademarks are the property of their respective owners. REALTORS® is a federally registered collective membership mark which identifies a real estate professional who is a Member of the NATIONAL ASSOCIATION OF REALTORS® and subscribes to its strict Code of Ethics. Each WEICHERT® franchised office is independently owned and operated.

FALL 2017 | Kentucky REALTORS® | 13

LEGISLATIVE UPDATE A clear message for the special session The state legislature adjourned in April, but Governor Matt Bevin has promised to call legislators back to Frankfort before year’s end for a special session focused on reforming Kentucky’s pension system and tax code. While the scope and timeline of the special session are still taking shape, one thing is certain: REALTORS® must speak with one loud, clear voice and tell the legislature to keep the American Dream of homeownership accessible and affordable for all Kentuckians. Governor Bevin has said he does not intend to reform Kentucky’s troubled pension system on the backs of its taxpayers, but new and increased sources of revenue will inevitably be a part of the discussion. As the state seeks out these sources of revenue, every provision will be on the table, including a tax on services and changes to the mortgage interest deduction. Taxing professional services would result in harmful effects on Kentucky’s housing market. Many licensed professionals would be forced to pass the tax off to consumers in the form of increased costs for services provided. The combined effect of taxing all the professional services involved in purchasing a home would price many potential buyers out of the market, and it would be especially detrimental for first-time homebuyers. Just as important as fending away a tax on services is protecting one of the greatest tools for promoting homeownership: the mortgage interest deduction. MID allows 1.2 million Kentuckians the opportunity to own their own home. Capping or eliminating this deduction would have a significant negative impact on the housing industry, and constructive tax reform should encourage home ownership, not discourage it. Now is the time to speak with your legislators and let them know our message is clear: oppose a tax on services and protect the mortgage interest deduction. For more resources and talking points, please visit www.kentuckyhomesmatter.com.

Pamela Gregory joins Kentucky REALTORS® as Director of Governmental Affairs Kentucky REALTORS® (KYR) announced that Pamela Gregory has been hired as the Director of Governmental Affairs. Pamela comes to KYR with an extensive background in managing various aspects of advocacy, governmental relations and outreach. Gregory was previously the manager of the Southeastern Region for the U.S. Chamber of Commerce based in Atlanta, GA. She supported congressional and public affairs for eight southeastern states: Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, Tennessee and Virginia. The mission of the Southeastern Regional Office is to develop and maintain the region’s legislative, political and grassroots resources to achieve the U.S. Chamber’s public policy goals. Pamela joined the Chamber directly from the U.S. Global Leadership Coalition. There, she served as the Southeast regional outreach manager and built relationships and coordinated all aspects of the coalition in Georgia, North Carolina, South Carolina and Tennessee. Previously, she spent more than five years in outreach roles for former Sen. Jim DeMint (R-SC) and Sen. Tim Scott (R-SC). Gregory holds a Bachelor of Science degree from the College of Charleston. “The breadth of Pamela’s expertise in governmental relations and from working for one of the nation’s strongest business advocacy organizations is the perfect fit to help KYR achieve its legislative and political involvement goals.” said Steve Stevens, CCE, KYR’s CEO. “We look forward to having her take us to a new level of member engagement at KYR.” 14 | kyrealtors.com

A family’s most important investment Home ownership helps build long-term wealth and net-worth. The money you spend builds personal equity and provides the opportunity to own a home free and clear by the time you retire.

Home ownership benefits Kentucky’s economy

71% of Kentuckians own homes. That translates to 1.2 million home owners. For every two homes sold, one job is created, and each purchase generates as much as $60,000 in economic activity.

Home ownership helps Kentucky communities Home owners create safe, strong and stable neighborhoods for their families. Home owners are more likely to get involved in community groups and to vote. Children of homeowners do 23% better in school.

Kentucky voters support state programs that make home ownership more accessible and affordable

• 70% Support state income tax deductions for the interest paid on home mortgages and property taxes. • 65% oppose the expansion of a sales tax to include select real estate and other professional services. • 62% say that eliminating the state mortgage interest deduction would have a negative impact on the housing market in Kentucky.

If tax reform detrimental to home ownership is enacted, the average home owner will pay $5,000 more in taxes.

30644

Is the number to text the word REALTOR 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. Of the 10,500 members of Kentucky REALTORS®, the goal is to hit 17% overall participation. Currently, Kentucky has 73% of the goal.

Federal Update The clock is ticking on NFIP reauthorization Flooding is Kentucky’s most costly natural disaster, and unless Congress takes steps to reauthorize the National Flood Insurance Program (NFIP) before it expires on September 30, homeowners across the Commonwealth could be at risk. The NFIP was created to provide incentives for communities to rebuild to higher standards and steer development away from flood zones. In exchange, communities gain access to flood maps, mitigation assistance and subsidized insurance to prepay for future damage and recover more quickly from flooding. The NFIP was last up for reauthorization in 2008. There were 18 short term extensions and a two-month shutdown before Congress finally reauthorized the program in 2012. With nearly 22,000 policies in force across the Commonwealth, Kentuckians cannot afford to live through another shutdown. NAR President William Brown believes that expiration would deal significant damage to current policyholding property owners, as well as threaten property sales and the broader housing market. He issued this cautionary statement: “When the NFIP expired in 2010, over 1,300 home sales were disrupted every day as a result. That’s over 40,000 every month. Flood insurance is required for a mortgage in the 100-year floodplain, but without access to the NFIP, buyers simply couldn’t

get a mortgage or vital protection from the No. 1 cause of loss of property and life: flooding.” As September 30 nears, NAR has been working closely with the House Financial Services Committee on significant improvements to the 21st Century Flood Reform Package. The improvements include an issue central to REALTOR support of this plan: the commitment to retaining “grandfathering,” which is a policy that protects homeowners from significant rate increases when a flood map changes. The most recent draft will also limit proposed increases to fees and rate hikes that policyholders faced under previous iterations of the legislation. These are positive steps forward, and they have allowed NAR to support the package. Tell Congress that the time to act is now: • Urge the House of Representative to bring up and pass the 21st Century NFIP Reform Package (includes seven bills) at the first opportunity. • Urge the Senate to amend S. 1751, introduced by Chairman Crapo (R-ID) and Ranking Member Brown (D-OH) to include access to private market insurance, as well as make mapping and other key reforms to strengthen the solvency of the NFIP

TAKE THAT ROBOTS

THEY SAY ROBOTS WILL REPLACE US. BUT NO ROBOT HAS THE SAVVY AND SWAGGER OF A CENTURY 21® AGENT, BACKED BY A GLOBALLY-CONNECTED SUPPORT NETWORK. ROBOTS DON’T HAVE THE MOST RECOGNIZED NAME IN REAL ESTATE.* AND THEY’RE NOT THAT GREAT AT LEAD GENERATION,

UNDERSTANDING CLIENTS’ NEEDS, OR ENVISIONING THE FUTURE. ROBOTS SERIOUSLY LACK IMAGINATION.

Find your path at C21.com ©2017 Century 21 Real Estate LLC. All Rights Reserved. CENTURY 21® and the CENTURY 21 Logo are registered service marks owned by Century 21 Real Estate LLC. Century 21 Real Estate LLC fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. Each office is independently owned and operated. *Study Source: 2016 Millward Brown Ad Study.

FALL 2017 | Kentucky REALTORS® | 15

LEGISLATIVE UPDATE EPA releases rule to withdraw WOTUS Fulfilling a portion of an executive order by President Donald Trump, the EPA and the U.S. Army Corps of Engineers have released a proposal to rescind the Waters of the United States rule that expanded federal jurisdiction under the Clean Water Act. The proposal published in the Federal Register on Thursday, July 28 would nix the 2015 WOTUS rule and reinstate the definition of the streams and wetlands subject to federal oversight under the act that existed prior to its finalization. The publication of the proposal constitutes the first part of a two-step process to meet the Feb. 28 executive order directing the rule’s review. The second step will be “a separate notice and comment rulemaking that will consider developing a new definition” for the extent of federal jurisdiction under the act, say the EPA and the U.S. Army Corps of Engineers in a prepublication copy of the proposed rescission. The embattled regulation was stayed by the 6th Circuit Appeals Court in October 2015. The rule’s opponents have said it defined federal jurisdiction too broadly and granted undue control to the government.

CFPB final rule clear on ability to share closing disclosures In July, the Consumer Financial Protection Bureau (CFPB) released the final rule amending the “Know Before You Owe” (KBYO or TRID) mortgage disclosure rule. As advocated for by NAR, the final rule

Mike Inman 16 | kyrealtors.com

clarifies the ability to share the Closing Disclosure (CD) with third parties - a victory for real estate professionals nationwide. The final rule highlights an existing exception within the Gramm-Leach-Bliley Act (GLBA) and implementing Regulation P that allows lenders to share the CD with third parties. The CFPB recognizes the CD as a “record of the transaction,” which is “informative to real estate agents and others representing both the consumer credit and real estate portions of residential real estate sales transactions.” The CFPB notes that CD sharing is permissible to the extent it is consistent with GLBA and Regulation P and is not barred by applicable state law. The final rule will be effective 60 days from publication in the Federal Register.

NAR urges FCC to maintain net neutrality In July, NAR filed comments with the Federal Communications Commission urging the agency to maintain the 2015 Open Internet Order. This order creates rules establishing network neutrality. The FCC has proposed rolling back those rules and is currently seeking public comment. Net neutrality requires that broadband networks be free of restrictions on content, sites, or platforms. Networks should not restrict the equipment attached to them, nor the modes of communication allowed on them. Finally, networks should ensure that communication is not unreasonably degraded by other communication streams. Net neutrality is important to small businesses like REALTORS® who depend on open internet access every day to run their businesses and serve their customers.

Why I invest in RPAC: I invest in RPAC because I believe in home ownership. RPAC works to promote home ownership by educating our members, the public and our legislatures about the values of home ownership; advocating on local, state and national levels for home ownership and our profession; and countering the political actions that might work against home ownership or the real estate profession. If not for RPAC, just in the few years I have been an investor, I firmly believe we would have lost the Mortgage Interest Deduction, lost the 30-year fixed rate mortgages, lost the National Flood Insurance Program, and most likely would be paying a sales tax on all services in a real estate transaction, including our commissions. RPAC is working on your behalf even when you aren’t thinking about these potentially harmful issues.

Thank you to KYR RPAC Major Investors (Through August 30) Golden R

Sterling R

Alfred R Blevins*

Guy Montgomery**

Charlie L Murphy**

Betty A. Schutte

Nancy L. Allison Greg D. Back Michael H. Becker Greggery W. Buchanan Lisa Bush Daniel Carmack Don Cecil Tony Clark** Steve K. Cline Sue Ann Collins Jayne Cox Judy Craft William D’Andrea Sallie Davidson David Alan Earls* Merle R. Edmiston Barbara Bowling Flannery

RPAC’s Major Investor Program consists of an elite and passionate group of REALTOR® investors who partner with NAR to shape the political future of the real estate industry. Members of the Major Investor Program are eligible to participate in the RPAC Recognition Program, with specific benefits and accolades that acknowledge their support of RPAC. With a minimum annual investment of $1,000, there are four levels within the RPAC Major Investor Program: Sterling R, Crystal R, Golden R and Platinum R. Two additional programs exist at the national level and include higher levels of contributions. The President’s Circle is an influential group of REALTORS® who contribute directly to REALTOR®-friendly candidates at the federal level. This program supports REALTOR® Party Champions – members of Congress who have made significant achievements in advancing the REALTOR® public policy agenda. The President’s Circle

Becky Murphy Kelley Nisbet Paul J. Ogden* Nita Phillips-Allen Charlene F. Rabold Robin Lee Roseberry Mary Anne Simmons Joseph E. Simms Carl M. Tackett** Harrell N. Tague James K. Tinsley Rusty Underwood Jennifer Haubner-Voires Matt Weaver Danny R. Willis Janie Wilson *President’s Circle **President’s Circle and Hall of Fame

Program allows REALTORS® to contribute beyond RPAC dollars and increase the strength of the REALTOR® voice on Capitol Hill. The Hall of Fame recognizes dedicated members who have made a significant commitment to RPAC over the years. To learn more about these programs or how RPAC works for you, contact Pamela Gregory, Director of Governmental Affairs, at pgregory@kyrealtors.com. Contributions are not deductible for federal income tax purposes. Contributions to RPAC are voluntary and are used for political purposes. You may refuse to contribute without affecting your membership rights. Seventy percent (70%) of each contribution is used by Kentucky REALTORS® to support state and local candidates and 30% is sent to National RPAC to support federal candidates and is charged against your limits under 2 U.S.C. 441a.

Brenda Gayle Gooslin John A. Groft Elaine Hangis Jeff Shane Harrison Stephen Heartsill Daryl A. Hibbs Miranda Hinchman Charles Hinckley Ronald E. Hughes Norman Jones Michael T. Inman* Connie C. Lawson Brenda Loyal Amanda S. Marcum Rue O. McFarland Jerry McMahan** Ann D. McDonald** James W. McKee

joinremax.com FALL 2017 | Kentucky REALTORS® | 17

Hit your target: Easify® your business

TERRY WATSON, PRESIDENT, EASIFY INC.

s you’re setting goals for the coming year, I have one I’d like you to consider: not making people think. And by that I mean, let’s make things effortless for your clients in 2017. After all, your economic outlook is in direct proportion to the effort required of those who do business with you. If you’re making things unnecessarily difficult, clients will go elsewhere. So, think effortless in 2017. Why? We detest working with companies, brands and marketers that insist on unnecessary complications and processes. Think about your last call with the cable company – how many times were you transferred? How often were you put on hold? How many times were you asked the exact same question? This is incongruent with great customer service. Take a look at your processes, your website, different aspects of your business plan and your content strategy. Ask yourself: • How can I make this easier? • Where can I reduce steps? • How can I opt out of the irrelevant?

Why you need to simplify and Easify® My company is called Easify®. I like to say that to Easify® is to reduce the steps, eliminate the unnecessary and reduce the time required, in order to reduce decision-making stress and effort. Remember: the shortest distance between obscene profits and financial embarrassment is rooted in the ratio of thought versus effort. Make this your mantra! Companies that implement this process are not just profitable; they are safe guarded from economic fluctuations – just look at Apple, Redbox, Zappos, 18 | kyrealtors.com

Amazon, Southwest Airlines and Nordstrom, to name a few. We buy books at Amazon because it’s easy. We shop at Nordstrom because returning an item is a nonissue. If potential customers can go elsewhere and get the same service or product with less toil, they will leave you like you have garlic breath.

How to Easify® your business Start by asking yourself, how can I make X, Y and Z easier for my clients? Where are the pain points? Examine your entire business, from your marketing efforts to the way you work with customers throughout a transaction. Things to look at to Easify® the process: • What are your processes, and where can you streamline? • Is your phone number on every page of your website? • Is your website providing useful information and easily searchable? • Is your contact information on your social media channels? Let’s tackle, for example, your website. It’s pretty common to have a contact button – but this means that your potential clients have to click through to a separate page from the menu. Instead, consider adding your phone number to the upper right-hand corner of every single page on your website. This

eliminates that extra step to get them on the phone with you. Does your Facebook business page have a phone number listed? You would be surprised how frequently this isn’t the case. What if I were to click the “About” button on your page – will I find your contact information? Again, surprisingly few people do this. Ensure you have proper contact information where prospective clients are most likely to search for it – always. Another process to look at is when you meet with a prospect in person. Do you immediately give them a list of mistakes to avoid and frequently asked questions, or do you let them stumble through the transaction and learn on the fly? Are your prospects aware of potential costs up front, or do you provide a “pop” disclosure? Simplify and streamline. Your customers will thank you for it!

Terry Watson is the “AHA guy”, who makes people, companies and organizations large and small aware of the conscious and unconscious ways they sabotage their businesses and their lives. He presented at the KY and OH REALTOR® Convention & Expo this year.

EDUCATION Save time and money with 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, ethics and even the Core course. Many new courses are video-based, putting the instructor right in front of you. Courses are available on any device 24/7 and can be taken at your pace. The deadline for receiving credit is December 31, so sign up now and complete before the end of the year!

Already have your GRI designation?

Get started in a real estate career 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 entirely online. All the materials and resources needed to get started in real estate are included in the $599 price.

GRI covers all 48 post-licensing hours www.kyrealtorinstitute.com > GRI 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 with all 6 GRI courses (GRI 100-600) offered to satisfy the 48 hours of PLE requirements. Once you complete the 48 hours, to earn your GRI, you would only need 24 additional

KRI Scholarship Recipients The KRI Trustees award scholarships on an annual basis as a way to meet its mission – 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 to provide scholarships to Kentucky residents who wish to pursue a career in real estate. Scholarship winners for 2017 were:

Angela Turner

Kimberly Bridges

GRI graduates can take any of the GRI courses again at a discounted rate - $50 per course, get a refresher on the content and still get the CE credit for each course. This is a good way to knock out the annual CE requirements.

Calling all potential instructors KRI is looking for new real estate instructors. If you are interested in teaching, you should attend the Train the Trainer program on October 25 in Louisville. This training will help prepare you to create and teach a course, as well as how to engage with adult learners. If you can’t attend, don’t worry, there are other options to view the program. For more information and to RSVP for your spot at the training, please email nknudtson@kyrealtors.com.

For a complete classroom course schedule or to register visit www.kyrealtors.com/classes.

GRI Scholarship Winners

www.kyrealtorinstitute.com > Scholarships

Tonja L. Adams

elective hours. For more information on PLE requirements, please visit www.krec.ky.gov > Education > Post-License. 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 (they also count for broker credit). With GRI, you can build your business and expand your knowledge through courses that offer specific training in key areas of real estate, 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.

Tonja L. Adams Angela Turner Kimberly Bridges Mackenzie Peavler

Pre-license Scholarship Winners

Mackenzie Peavler

Derrick R. Noe Shanna Sheperson Miranda M. Sergent

Derrick R. Noe

Shanna Sheperson

Miranda M. Sergent

FALL 2017 | Kentucky REALTORS® | 19

Biggest threats facing real estate

lobal uncertainty and political polarization are the top issues facing the housing industry in 2017 and 2018, according to The Counselors of Real Estate’s annual list of the Top 10 Issues Affecting Real Estate. The list was compiled using feedback from 1,100 real estate advisers from around the world who met at a recent CRE conference.

Many of the issues are interconnected and reflect disruption in the economy and multiple real estate sectors, says 2017 CRE Chairman Scott Muldavin. “Despite this unsettling environment, opportunity remains embedded in every issue on the list,” the CRE report notes. Here are the top 10 issues cited in the report.

1. Political polarization and global uncertainty “Uncertainty about changes to trade, travel and immigration policy threaten cross-border investing, hospitality properties, retail, and manufacturing supply chains, among other effects,” the report notes. “Rising interest rates and retail inflation will make middle-class homeownership that much more difficult. Longer-

20 | kyrealtors.com

term implications could be much more severe, as polarization prevents long-term fixes to issues such as infrastructure, affordable housing, local and state pension liabilities and education.”

2. The technology boom An unprecedented wave of commercial real estate technology innovations are expected to change

the way real estate is bought, sold and managed. Investments in commercial real estate tech startups hit $2.7 billion in 2016. About 1,600 of these startups now exist worldwide. Robots, big data, autonomous vehicles and online retail are also expected to have a major impact.

3. Generational disruption “Boomers’ and millennials’ divergent views of where they live,

work, and play increasingly impact the property markets,” the report notes. “The generations are crossing paths everywhere: in the workplace, in housing, and at the local bar and grill, intersecting and sharing spaces despite their often disparate priorities when it comes to the built environment.”

4. Retail disruption “The trend toward transforming retail into ‘experiences’ continues to develop and is offsetting shrinkage in the physical bricks-and-mortar consumergoods platform,” the report says. “‘Experiential’ retail drives customer traffic to a more diverse and highly participatory environment targeted to a variety of age groups and interests. This sector has transitioned into a kind of ‘Omni Channel’—encompassing e-commerce, reduced or repurposed physical elements, and a host of previously unforeseen spaces, both physical and virtual—with a current emphasis evolved from bricks-andmortar shopping to the timely, efficient transfer of goods from source to inventory to consumer.”

5. Infrastructure investment The private sector is directing significant funds to infrastructure projects, recognizing the need and long-term rewards of investing in roads, bridges, tunnels, ports and airports. Investors now oversee $376 billion in U.S. infrastructure dollars. “It is clear that the need for infrastructure investment is critical,” the report says. “The movement of goods, which involves everything from ports to airports to warehouses to roads, highways and railroads, is further straining an aging and highly vulnerable interior framework. Add to this the need for pipelines, electricity transmission, and water distribution, and the immediacy of infrastructure needs becomes even more pronounced.”

6. Housing disparity

9. Immigration

“Safe, decent, affordable housing has been shown to have a stabilizing effect on urban economies, crime and public health,” according to the report. “A current lack of inventory has generated a spike in home prices and, as a result, declining affordability for many home buyers, particularly those in lowerincome sectors. A critical disparity exists between housing needs and housing supply.” The report cites a growing affordability gap and limited availability of housing in locations with significant job growth, such as major cities and coastal regions.

As the Trump administration seeks to enact more restrictive immigration laws, some housing leaders are growing concerned about labor shortages in homebuilding. Demographers note that immigrant groups are a source of household formation. “New immigrants tend to rent, boosting demand for multifamily housing, especially in gateway cities,” according to the report. “Recent surveys suggest that immigrant populations aspire to own homes and to move relatively freely from cities to suburbs and back in the search for employment. Labor mobility and homeownership rates will be constrained by limiting immigration.”

7. Threats to the middle class In 2007, the average middle-class income was $57,403. Now it hovers below inflation-adjusted levels from nearly two decades ago at $57,909. These income levels have yet to return to their prerecession highs, and stagnant income growth will continue to press on the middle class.

8. Emerging role of healthcare in real estate The nation spends more than $3 trillion each year on healthcare costs— about $10,000 per person—which is double the average for developed countries worldwide. “The real estate industry has emerged as a major player to cost-effectively improve people’s health,” the report notes. “Building occupants are increasingly demanding that the space they inhabit be designed, constructed and operated in ways that advance positive health outcomes.” A growing focus on healthy buildings is emerging, as people spend about 90 percent of their time indoors. Research from the Mayo Clinic shows that healthcare contributes 20 percent to maintaining people’s health, while environmental and behavioral factors account for 40 percent.

10. Climate change The National Oceanic and Atmospheric Administration released a report this year that shows sea level rises are expected to more than double from 2013 forecasts—to between 6.6 and 8.6 feet by 2100. “While a potential rise of sea level may seem far in the future, NOAA also estimates that annual frequencies of disruptive and damaging flooding would increase 25-fold with only a 14-inch increase in local sea level rise,” according to the report. “Major cities such as Miami, New York, New Orleans, Tampa and Boston are projected to have the most costly problems, with South Florida and most coastal areas all exposed to differing levels of sea rise risk and cost. The implications of potential sea level rise and related flooding on real estate values is positioned to explode due to dramatic increases in the volume and accessibility of information on the consequences of sea rise.” Reprinted from REALTOR® Magazine Online, June 2017, with permission of the National Association of REALTORS®. Copyright 2017. All rights reserved. As adapted from “Political Polarization, Global Uncertainty Top CRE 2017-2018 Top 10 Issues Affecting Real Estate List,” The Counselors of Real Estate (June 14, 2017).

FALL 2017 | 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 hcooper@kyrealtors.com.

Hopkinsville Christian & Todd County Association HCTCA members and affiliates participated in the August 10 Day of Service for the local Boys & Girls Club. In addition to donating school supplies, members signed up for one of two shifts and provided an afternoon lunch consisting of corn dogs and tater tots for both elementary and high school kids. HCTCA provided the dessert and drinks and had so many desserts donated the club was able to serve them the next week. Members and affiliates, along with State Representative Walker Thomas, welcomed the kids at the door and helped stock and serve the lunch to students. In total, the group served 150 kids and the group was covered in the local newspaper.

Old Kentucky Home Board OKH President Jerry Janes was invited to participate in a July press conference with Senator Rand Paul who is working to provide better health insurance rates through association plans. Jerry was able to provide valuable information about the REALTOR® Insurance Marketplace that is offered to NAR members and how important the issue of health insurance is to independent contractors and other small businesses. Senator Paul was very complimentary and appreciated the information that the OKH Board was able to deliver. In addition, the OKH Board completed its Project School Supply for the first time. With a short turnaround and the knowledge from fellow REALTOR® Bobby Hunton of Bowling Green, the Board collected more than $1,000 and over 1,300 pounds of school supplies to be distributed to the city and county Family Resource Centers to be given out to area school children. The Board was also able to collect new and slightly used school uniforms and provide beds to five local children who were in need of these for their homes.

Lexington Bluegrass Association The Community Education committee within LBAR is thrilled about their new project for middle school aged children. In the 2017-2018 school year, LBAR will be donating $500 to all public middle schools in the Association’s 22 county jurisdiction. These funds are to be used for educational purposes, specifically educational field trips. Additionally, this is the 10th year that LBAR will be donating a book to all public elementary school libraries. Spaghetti in a Hot Dog Bun has been selected as the 2017-2018 book. These contributions to the elementary and middle schools 22 | kyrealtors.com

in our region is part of the Association’s involvement in the public schools in the Bluegrass region. The project is part of LBAR’s goal to become involved with the area’s school systems in innovative ways that will positively shape the future of our community’s children. In June, the Young REALTORS® of the Bluegrass (YRB) hosted their first ever Days of Giving. Over 100 REALTORS® donated their time over two days to seven local nonprofit organizations including Habitat for Humanity, Hope Lodge, Green House 17, The Nest, All God’s Children, Lighthouse Ministries and the Ronald McDonald House. Projects at these locations ranged from serving meals to painting bathrooms and outdoor maintenance. For two straight days, volunteers at Habitat for Humanity removed the carpet, vacuumed, prepped for paint, painted the entire home including walls and ceilings, and cleaned up the yard for an elderly woman with COPD recovering from a recent hospitalization. This new event allowed the YRB to continue their focus on community service and making a positive impact in the Bluegrass community.

Murray Calloway County Board The Murray Calloway County Board is excited to announce the purchase of a new office building, located in downtown Murray. This is especially exciting since it is the first time in the Board’s nearly 60-year history to own a building. Although there are a few updates to the building being planned, the new office is already proving to be much more convenient and useful to the membership.

Greater Louisville Association GLAR will be hosting its Fall Week of Service for members to volunteer and give back to the community where they live and work. Fall projects are focused for this year on young adult and older youth homelessness in our community. Members will be volunteers for projects at Volunteers of America and Boys and Girls Haven PreIndependent Living. In addition, GLAR is very excited to have a newly designed web presence. The new site has so many great features including dedicated REALTOR® and consumer pages, live statistics, calendar of events and classes, news and easier ways to stay connected with all things GLAR. Check it out at www.LouisvilleRealtors.com.

Eastern Kentucky Association EKAR has one Boys and Girls Club in its area, the Harlan County Boys & Girls Club, which serves youth between the ages from six to 18 years old. Members of the Association donated school supplies and backpacks which they delivered to the Cawood Ledford Clubhouse in Harlan. Due to the efforts of the Association, 54 of the 91 youths which it serves were provided free school supplies and backpacks for the new school year. During the drop-off, members were provided with an guided tour and of the facility, met the staff and shown all the activities and services provided to the club.

Paducah Board In May, several PBOR members volunteered at the Lowertown Arts and Music Festival, a regional two-day celebration of art, music, food, beer and wine that takes place in the Lower Town Historic Arts District near Downtown Paducah. Board members volunteered to serve as gatekeepers at one of the intersections during the festival. In addition, PBOR presented a $250.00 check to the local Oscar Cross Boys and Girls Club to assist with purchasing recreational items for the club. Executive Director, Bjarne Hansen, informed the board they were in urgent need of games and sports equipment for the club so the donation will help them purchase some of that needed equipment.

Henderson Audubon Board HABR presented KYNDLE, the Kentucky Network for Development, Leadership and Engagement, a donation to support their Economic Initiative Ignite2021. KYNDLE provides economic development and industrial recruitment leadership for the citizens, businesses and governments of Henderson, McLean, Union and Webster counties in northwestern Kentucky. It also serves as the chamber of commerce for Henderson County while supporting the efforts of chambers in McLean, Union and Webster counties. HABR was a supporter of Opportunity 16 from inception and they have now committed to continue support through 2021. In the last 18 months, KYNDLE has help create a total of 354 new jobs in the area.

KYR provides support to flood affected areas When a major disaster strikes, the REALTORS® Relief Foundation (RRF) has one goal: to help families who have endured unimaginable loss and offer assistance to help them get back on their feet. The RRF is currently coordinating efforts for relief in the gulf coast cities and in the greater Houston, Texas area due to the unprecedented flooding left by Hurricane Harvey. For many years, Kentucky REALTORS® have generously stepped up to assist with challenges – both in-state and across the country. The KYR Board of Directors took action and have contributed $10,000 to the RRF to support the current efforts. Several local associations across the state are doing the same. If you can help provide support, the RRF is a good place to consider giving since 100% of all the funds donated go to disaster relief causes. Reports are that financial support is most needed in the area and funds contributed will be distributed to the state and local REALTOR® associations to use for those with housing-related issues in the affected areas. To donate online, visit nar.realtor/rrf.

Wiseman appointed to the Kentucky Real Estate Commission Shirley Wiseman, a real estate broker, appraiser, builder and developer in Lexington and member of Kentucky REALTORS® (KYR), was appointed by Governor Bevin as a Commissioner with the Kentucky Real Estate Commission (KREC). Her term runs through June 15, 2020. Other gubernatorial appointments include: Brian O’Rear, H.E. “Beaver” Corder and Michelle Diane Penque have been appointed to the Kentucky Board of Home Inspectors. O’Rear, of Fisherville, is the owner of HomeTeam Inspection Service. He shall represent home inspectors and serve for a term expiring June 21, 2020. Corder, of Science Hill, is a contract auctioneer for Ford Brothers Auctioneers and REALTORS®. He shall represent the public and serve for a term expiring June 21, 2020. Penque, of Cold Spring, is senior business project analyst at Greater American Insurance Company. She will represent the public at-large and serve for the remainder of an unexpired term ending June 21, 2020. Edward Cornelius Tong has been appointed to the Real Estate Appraisers Board. Tong, of Owensboro, is self-employed. He shall represent the public and serve for a term expiring May 9, 2020.

Lexington is 5th best-run city in the U.S.; Louisville 10th, new ranking says Lexington is the fifth best-run city in the United States, according to a new analysis from WalletHub that crunched a lot of economic, health, crime and other data and then factored in how much the city spends per resident. When compared to 150 of the country’s largest cities, Lexington was the fifth best in operating efficiency, according to the data. Kentucky had a good showing in this study as Louisville was ranked 10th. After evaluating the cities to get their quality of city services scores, WalletHub used the cities’ total budget per capita to determine final rankings. So, Lexington and Louisville residents get their money’s worth, according to this study.

Kentucky’s annual homeless count released by KHC The Kentucky Housing Corporation (KHC) released the results of the 2017 K-Count, a “point-in-time” count of homeless Kentuckians living on the streets, in emergency shelters, or other temporary housing programs in the Balance of State (BoS), which includes 118 counties outside of Fayette and Jefferson, during a single night. The count, conducted in January, identified 4,025 men, women, and children experiencing homelessness across the state. LouisvilleJefferson County identified 1,034 persons, Lexington-Fayette County identified 1,051, and the BoS identified 1,940. Of the 1,940 reported in the BoS, 27 percent were unsheltered, 55 percent were in emergency shelters, and 18 percent were in transitional housing programs. Among youth, age 24 or younger, 135 identified as unaccompanied, which means they were living without an adult member of the household age 25 or older and without a child in their care. Among the same age group (24 and under), 42 persons identified as parenting youth, which means they have at least one child in their care and are living without an adult member of the household age 25 or older. FALL 2017 | Kentucky REALTORS® | 23

BY THE NUMBERS The percent of those who don’t own their homes who say they expect to purchase a home within the next five years, according to a survey by Gallup. The likelihood of buying a home in the foreseeable future, however, both for homeowners and renters, is 63.6 percent, unchanged from 2016.

Homeowner equity increased by $766 billion over the last year, the largest increase since Q2 2014, according to CoreLogic CEO Frank Martell.

According to the NAR 2017 Commercial Member Profile, commercial agents saw an 11 percent jump in income and 19 percent increase in transaction volume in 2016 compared to 2015. This translates into median sales transaction volume of $3.5 million, up from $2.9 million in 2015. Just 7 percent of commercial members surveyed reported not having any transactions, down from 8 percent the year prior.

The homeownership rate was 63.7 percent in the second quarter of 2017, the U.S. Census Bureau reported. That marks nearly a full percentage point increase from a year ago. Last year, the homeownership rate had plunged to a 50-year low of 62.9 percent.

According to the Fannie Mae’s Home Purchase Sentiment Index (HPSI), the percent of homeowners who have significant equity (more than 20%) in their homes today. 24 | kyrealtors.com

49%

72.3% $766 billion

10.7% 11% & 19% 5.64 million

63.7% 35% 78.8%

According to the latest Survey of Consumer Expectations Housing Survey by the Federal Reserve Bank of New York, 72.3 percent of renters “prefer” or “strongly prefer” to own a home rather than rent one, and 55.9 percent view homeownership as “a good investment”- findings that dismiss a commonly held notion that they have become averse to homeownership as a result of societal shifts.

Sales of brand-new homes, which builders can’t seem to put up fast enough, are expected to jump 10.7%, from 560,000 in 2016 to 620,000 this year, according to NAR. They’re expected to rise an additional 8% in 2018, to 670,000 sales.

In 2017, the total number of sales of existing homes is expected to rise about 3.5%, to 5.64 million, according to the midyear forecast from the National Association of REALTORS®. The group predicts that existinghome purchases will rise an additional 2.8% in 2018, to 5.8 million. Nationally, NAR predicts prices will jump 5% in 2017 and an additional 3.5% in 2018.

More than one-third (35%) of first-time buyers and 44% of first-time sellers indicate they chose their real estate company based on its reputation, while 24% of first-time buyers and 17% of first-time sellers made their selections based on recommendations, according to the J.D. Power 2017 Home Buyer/Seller Satisfaction Study.

HOUSING STATS

Kentucky home sales remain strong in 2017 Sales and prices increase for the first six months of the year In the first six months of 2017, Kentucky’s real estate market remained strong in every category tracked. Total home sales continue to exceed the totals seen through the same period in 2016 with an increase of 4.6 percent, from 24,786 in 2016 to 25,934 in 2017. Housing inventory for the first half of 2017 reached a cumulative 6-month low of 4.32 months, down 17.4 percent from the time frame in 2016 when inventories were 5.23 months. Days on market also hit a record low for the first half of the year, dropping to 122.7 days from 140.3 in 2016, a decrease of 12.5 percent. “The market is very active with the homes available going very quickly if they are priced correctly,” said Mike Becker, president of Kentucky REALTORS®. “Supply is certainly low, but homes continue to move once they come up for sale.” The median price over the first half of the year increased 2.3 percent from 2016 reaching $123,601 (from $120,808). This pushed the total volume of all home sales to almost $4.7 billion through June. In June, total home sales hit 5,494 which was an all-time high for the month, increasing 1.6 percent over June 2016. The median price for the month reached $133,698 which was another record month, the highest it’s ever been for a single month in Kentucky. This resulted in only the third time that total sales volume broke $1 billion

in a month (June 2016 and May 2017) but this month set a new record at $1.08 billion. On the national front, home sales slipped in June by 1.8 percent due to a lull in contract activity over the past three months although home prices increased 6.5 percent. The decline in home sales, according to Lawrence Yun, chief economist for the National Association of REALTORS®, were due to the low housing supply and price growth experienced across much of the country. He added that the demand for buying a home is as strong as it has been since before the Great Recession and the good news is “sales are still running slightly above last year’s pace despite the persistent market challenges.” “I am encouraged by the overall performance of Kentucky’s housing market in 2017,” stated Becker. “Housing starts are up, nationally, compared to a year ago. In the southern states, which includes Kentucky, single family housing starts are up over the same period in 2016 by more than 10 percent. As these homes are completed, the market should be stimulated with a ripple effect of sellers moving up, and creating a greater availability of homes on the market. Coupled with interest rates that continue to hold below 4%, we look forward to a strong finish for the year.” Kentucky REALTORS® is one of the largest and most influential associations in Kentucky. Founded in 1922, Kentucky REALTORS® represents more than 10,400 REALTORS® who are involved in all aspects of real estate, including residential and commercial real estate brokers, sales agents, developers, builders, property managers, office managers, appraisers and auctioneers. To view housing statistics for the state, visit housingstats. kyrealtors.com.

JANUARY THROUGH JUNE (6 MONTHS) Board/Association

# Sold 2016

# Sold 2017

Sold %

Median Price 2016

Median Price 2017

Region One Greater Owensboro Association 730 704 -4% 124775 127408 Henderson-Audubon Board 214 172 -20% 117792 121550 Hopkinsville-Christian Board 214 227 6% 117133 112917 Kentucky-Barkley Lakes Board 212 212 0% 97392 101942 Madisonville-Hopkins Board 233 245 5% 102133 103783 Mayfield-Graves Board 151 152 1% 87035 68263 Murray Calloway County Board 162 192 19% 126667 126917 Paducah Board 369 415 12% 129517 130017 Region Two Central Kentucky Association 288 279 -3% 112975 117050 Heart of Kentucky Association 1172 1290 10% 132867 142892 Old Kentucky Home Board 300 332 11% 126667 144350 REALTOR® Association of SKY 1154 1351 17% 139750 152983 South Central Kentucky Association 188 220 17% 116500 118158 Region Three Greater Louisville Association 8134 8452 4% 156063 168475 Region Four Lexington Bluegrass Association 6234 6540 5% 152150 156075 Region Five Northern Kentucky Association 3212 3419 6% 153442 152033 Region Six Ashland Area Board 446 463 4% 87258 94525 Eastern Kentucky Association 222 303 36% 105717 81125 Madison County Board 567 284 -50% 138892 141083 Pennyrile Board 138 130 -6% 111879 122521 Somerset-Lake Cumberland Board 446 561 26% 100375 111750 Totals 24786 25943 4.7% 120808 123610

Median Price % 2% 3% -4% 5% 2% -22% 0% 0% 4% 8% 14% 9% 1% 8% 3% -1% 8% -23% 2% 10% 11% 2.3%

FALL 2017 | Kentucky REALTORS® | 25

BY TOM LUNDSTEDT, CCIM

he purpose of this article is to give a friendly whack upside the head to people who own rental property. You probably made a good investment when you first bought the property. But have you owned it too long?

Depending on how long you’ve held your property, it might not be a good investment anymore. I didn’t say not a good property; I said not a good investment. Read on to find a simple way to determine if your property is still measuring up. You may be in for a surprise! First, let’s quickly review the four financial benefits of owning investment real estate: 1. CASH FLOW: After you pay all expenses and loan payments, cash flow is the money left over. 26 | kyrealtors.com

2. PRINCIPAL REDUCTION: The loan is paid down with money collected from tenants. 3. INCOME TAX SAVINGS: IRS rules allow property owners to take depreciation deductions, which shelter the cash flow and principal reduction. Any leftover depreciation creates a paper loss, which, in many cases, can be used to shelter other income — such as salary from your job. 4. APPRECIATION: Over time, the property increases in value.

These four benefits are powerful! You earn tax-sheltered cash flow, your tenants buy you the building, you get to tell the IRS you’re losing money, and all-the-while, the property goes up in value. What a country! So why am I challenging you to reconsider whether your property is still a good investment? Simple! Your “return on equity” is probably low — and getting lower by the year! Let me show you an example. Don’t get all tangled up in the numbers. Just concentrate on the big picture and how it applies to you.

Return on equity drops from 18 to 7 percent Assume you bought a rental house 16 years ago for $70,000. You invested $10,000 and borrowed the rest. Your goal is to retire in another 15 years and use the rental house to provide retirement income. (A great plan!) So, how good was your investment 16 years ago? Let’s total your benefits. Assume the cash flow, principal reduction and tax savings added up to $1,800 that first year. You were earning 18 percent ($1,800 divided by $10,000) on your investment. Not bad. Plus the rental house was appreciating. You’re an investment genius! Fast-forward 16 years to the present. Let’s assume the following: Your yearly cash flow has increased to $5,000 and the principal reduction is $2,000; a total of $7,000 — just from the first two benefits! In addition, let’s assume the net value of your rental house has appreciated over the years so it’s now worth $120,000 and your loan has been paid down to $40,000. However, because you’ve owned the property so long, the depreciation deductions (assume they’re $3,000) are no longer enough to shelter the $7,000 of cash flow and principal reduction. That leaves $4,000 of unsheltered (taxable) income. Instead of saving tax, you have to pay tax. If you’re in a 35-percent bracket, (combined federal and state), you pay $1,400 tax. So, your benefits from the rental house now look like this: $5,000 cash flow, plus $2,000 principal reduction, minus $1,400 tax paid. A total of $5,600. It’s no wonder you consider yourself an investment genius if you measure the $5,600 against your original $10,000 investment: that’s a 56 percent return. But that’s where most people go wrong!

Your original investment has nothing to do with today’s rate of return! Your investment is not the amount you originally invested years ago. You’ve got way more than $10,000 “tied up” today! Your investment is the amount you could get out of the property if you sold it today. That’s called your “net equity.” Over the past 16 years, your property has increased in value and your mortgage has been paid down. The current difference between the property’s net value (after selling expenses) and your mortgage balance is $80,000. In other words, if you sold the property today, you could walk away with $80,000. However, if you keep the property, in effect you’re re-investing the $80,000 into the property. Now, how does your investment look?

Not so good. You’re earning $5,600 in benefits on an $80,000 investment — that’s only 7 percent! What if a REALTOR® called you up and said, “I’ve got a great real estate investment for you. You’ll earn a measly 7 percent.” You’d hang up on them! Well, you already own it! If you wouldn’t buy a property like that, why would you continue to own it? What if you did this instead? Use your $80,000 equity as the down payment on a different property — one that produces 18 percent again? With that down payment you could probably afford a $400,000 rental property. Once you’ve owned that property for a few years, your equity will have grown again (and your rate of return fallen), so you repeat the process. The goal is to maintain the highest possible rate of return, which will make a huge difference in your future wealth. You’ll maximize your wealth by wisely moving your equity from your current property to another as soon as your rate of return would be greater in the next property. Just for fun, take out your calculator and figure how much money you’d have in 15 years if you leave the $80,000 invested at 7 percent. Then calculate what $80,000 invested at 18 percent grows to in 15 years. I could give you the answer but you might not believe me — check for yourself…it’s gigantic!

Three ways to move your equity Here’s a key point. If you decide it’s time to “move your equity,” be sure to explore all your options. There are three common ways to move equity: 1. SELL: You could sell your current property and buy another. The problem with selling is you have to pay capital gains tax. 2. REFINANCE: You could refinance your current property and use the loan proceeds to buy another property. The problem with refinancing is you’re probably not able to borrow the entire $80,000 equity. 3. EXCHANGE: The third, and best, way to move your equity is to exchange. Exchanging allows you to move your entire $80,000 net equity to another property without paying tax. It’s wealth building’s most powerful tool. So, what does this all mean? Well, if you own rental property, congratulations. Your investment brilliance shines brightly. However, the longer you own that property your glow begins to fade. The wise thing to do is reevaluate your property every year. In essence, make the decision to “re-buy” the property. As soon as the rate of return on your equity could be higher in another property, it’s time to take action. Tom Lundstedt, CCIM, is known as the funniest investment and tax guy in America! His programs for residential and investment real estate have entertained and enlightened more than 2,500 audiences from sea to shining sea. He’s a former Major League Baseball player whose striking combination of humor and real-world examples makes powerful subjects spring to life. He presented at the KY and OH REALTOR® Convention & Expo this year.

FALL 2017 | Kentucky REALTORS® | 27

CEO'S MESSAGE

How contagious are you?

STEVE STEVENS, CCE, IOM CHIEF EXECUTIVE OFFICER

o, how tasty is the way we communicate?” and “How can we make our communication tastier?” These were the opening remarks of Dr. Jonah Berger who I had the good fortune to hear very recently at an organizational conference. His statements were both curious and thought provoking, since I’d never heard a reference to communication as being “tasty.” Berger, who is a professor at the Wharton School and is the author of the New York Best Seller “Contagious,” (a book I’d recommend all REALTORS® check out) made me think a lot about how well you and I are doing in making sure those who are “interested” in us are being turned into “advocates” of our organizations. After all, research shows that word of mouth generates more than TWICE the sales of traditional advertising. Perhaps it is what I least understand along the communication continuum which makes it worthy of further study. Interestingly, according to Berger, even with all the hype around our use of social media, only 8% of the word of mouth we seek is being delivered online. As much as we talk about our “social media strategies,” social media is a technology that only helps us deliver our message, but is not “strategy.” This means we need to understand how to harness the power of “offline” word of mouth and perhaps it will become our new strategy. Dr. Berger outlines six principles of “contagiousness” in his book that help to explain why things catch on through what he terms “social epidemics.” I don’t have the space to outline all of them here, but I want to take note of a few of what I believe are keys to success:

Principle 1: Social Currency As we all consider what we’re selling – whether it is the outstanding service you want to provide to your potential customers or the service KYR wants to offer to its members – we should ask ourselves how others look 28 | kar.com

when they talk about us and how can we make others look "good" sharing our stuff. Being relevant, providing value and making others feel special will influence others to do the work for us.

Principle 2: Triggers If I start the phrase: “Peanut butter and _________” you can easily fill in the blank. Triggers refer to the use of words or images that stimulate a response and help us to create “remarkability” of our organizations. Now that I know what a trigger is, I want to know what a good PB is to go with my J that will be the connection or “trigger” for you to think about my organization.

Principle 5: Practical Value People like to pass along useful information and by nature, try to be helpful to others. I think REALTORS® are great at this! The point not to be missed in this principle is that people not only value this kind of information – they SHARE IT! This can become contagious and having your organization connected to helpful information can help your name go viral. What we learn through “Contagious” is that creating a social epidemic requires more than marketing. There’s a secret science behind word-of-mouth and social transmission. We would all like to get better at helping information spread and “Contagious” can help to explain why stories are spread, e-mails get forwarded or videos go viral. Perhaps these principles will help your name appear in more listings across the Commonwealth!

UP TO CODE Ethics requirement gets an update Post this on your bulletin board so the new deadline does not sneak up on you. In 2014, the National Association of REALTORS®’ Board of Directors approved mandatory biennial education on the Code of Ethics for REALTOR® members beginning January 1, 2017. This policy replaces the previous policy mandating Code of Ethics training every four years. Effective January 1, 2017, through December 31, 2018, and for successive two-year periods thereafter, each REALTOR® member of the association (with the exception of REALTOR® members granted REALTOR® Emeritus status by the National Association) shall be required to complete ethics training of not less than two (2) hours and thirty (30) minutes of instructional time. This requirement will be satisfied upon presentation of documentation that the member has completed a course of instruction conducted by this or another association, the State Association of REALTORS®, the NATIONAL ASSOCIATION OF REALTORS®, or any other recognized educational institution or provider which meets the learning objectives and minimum criteria established by the NATIONAL ASSOCIATION OF REALTORS® from time to time. REALTOR® members who have completed training as a requirement of membership in another association and REALTOR® members who have completed the New Member Code of Ethics Orientation during any two (2) year cycle shall not be required to complete additional ethics training until a new two (2) year cycle commences. Failure to satisfy the required periodic ethics training shall be considered a violation of a membership duty. Failure to meet the requirement in any two (2) year cycle will result in suspension of membership for the first two months (January and February) of the year following the end of any two (2) year cycle or until the requirement is met, whichever occurs sooner. On March 1 of that year, the membership of a member who is still suspended as of that date will be automatically terminated. (Adopted 1/01, Amended 11/08, Amended 11/2016) Ethics courses will be offered by the Kentucky REALTOR® Institute and by local associations throughout the state to assist members in completing the training (many of the courses will also count for annual CE credits). Check the KYR calendar at kyrealtors.com which includes class dates and locations.

Professional Standards Scholarship Recipients www.kyrealtors.com > Legal > Pro Standards Scholarships KRI is pleased to announce the 2017 recipients of the Professional Standards Training Scholarships. Pam Featherstone, a member of the Heart of Kentucky Association and Lester Sanders, a member of the Greater Louisville Association and Kathy Ballard, a member of the Old Kentucky Home Board were selected to attend the NAR Professional Standards Seminar in Chicago, IL. As part of the scholarship, each winner receives up to $1,500 to cover meeting expenses. NAR has conducted this seminar at least once a year for decades and the program has been overwhelmingly well received by all who attend. “I was looking forward to attending this training and I was not disappointed. It is amazing the depth of knowledge and helpful information that was afforded to those in attendance. The training was intense and the pace went extremely well. For anyone involved in Professional Standards, I highly encourage you to apply for the scholarship. The group was held at around 70 attendees, which easily allowed for participation from everyone. Changes and the reasoning behind the process was explained in detail, which allowed for a greater level of understanding. It was a wonderful experience.” Pam Featherstone, Elizabethtown “A special thank you for the scholarship and opportunity to attend the training. I must admit that I was not sure what to expect based on conversations from past attendees. I understood that it was long, in depth and possibly a bit intimidating. So, I went in with my eyes wide open. The seminar was all that I expected. The session presented a great opportunity to network with other attendees from around the country and work through various situations that all agents could face. The discussions were engaging and challenging. I recommend this seminar for anyone involved with professional standards as the training is essential to know as much as possible about the process. Lester Sanders, Louisville

2016 Ethics Complaints filed in Kentucky Number of ethics complaints filed with KYR: 16 Most frequently cited Articles: 1, 2, 3, 9 and 16

Ethics violations found: Article 1 (three times), Article 2 (one time), Article 9 (one time)

Complaints sent forward to ethics hearing: 6

Complaints held in abeyance pending outcome of filed legal action: 2

Complaints withdrawn: 1

Complaints forwarded to the local association for processing: 1

Ethics hearings held: 5

Complaints dismissed: 7

FALL 2017 | Kentucky REALTORS® | 29

A DAY IN THE LIFE OF...

a YPNer, RPAC Major Investor and LeadershipKYR member

Alicia Huff, Lexington, Bluegrass Partners Trust Realty How many years have you been in real estate? 10 years You own your own brokerage. When did you start that and what motivated you to take that step? I have been a broker and owned my own company for 4 years. I knew from the start of my career that I would own my own firm someday. What did you do before real estate and how did you make the change? When I first moved to Lexington, I started working for real estate appraisers as an office manager. I took interest in that job and learned a lot from them. They told me I would be crazy not to get into real estate because they thought I would be so good at it. When I was pregnant with my first child I thought this would be the perfect opportunity to take the leap so I would have flexible hours and be able to work nights and weekends. That turned out to be the farthest from the truth since this is an around the clock job but I have loved (almost) every minute of it. What was the one thing that helped propel your real estate career forward when you first started? I actually got off to a pretty good start right out the gate and had my first closing my first month in the business. I was a go-getter and worked very hard to get business and keep my clients satisfied. However, when the market turned, so did my business and I really struggled. I had a lot of activity but one deal after another would fall apart due to buyer financing. I had pretty much made the decision to get out of the business to find a “real job” as I called it at the time, but thankfully I had an amazing broker who wouldn’t allow it. She believed in me and motivated me to stick with it. She even invested a lot of time and resources to help me succeed. Together we flew to Colorado to take a Ninja Selling course and that was the biggest motivator of my career. My mindset changed, my attitude changed, and so did my confidence. I came back to the Bluegrass a new agent ready to dominate the market. And as a result, my sales increased 2400%. Seriously. My broker and I set an insanely optimistic goal and I worked hard and achieved it. What are a few of the highlights you’ve experienced since you started in real estate? I have worked for some of the best brokers and with some of the best agents in the business. My favorite moments have been helping my family members buy homes and helping my Haitian friend buy a home who thought that moment would never come having grown up in some of the poorest conditions imaginable. Going to conventions are big highlights as well, because it has given me the opportunity to network and lead me into the leadership roles that I am now in. I have been elected as Treasurer and now President of The Million Dollar Club as well as a board member of our local association. You are heavily involved with the Young REALTORS® of the Bluegrass, the local YPN chapter in Lexington. What is your role in that group and how does it benefit you and your clients? I have been on the

30 | kar.com

committee for a few years now. We work together with the common goal to educate our members, grow our networking relationships and give back to the community in amazing ways. We are the hardest working group of 20 to 30 year olds that I have ever had the pleasure to meet. In 2016, we raised $4,000 for non-profits, supported 140 Angel Tree children, volunteered 320 hours, and educated 300 REALTOR® members. You are also part of the current LeadershipKYR class. Has that program had an influence on you and what should other agents know about LKYR, especially anyone considering applying? I am so grateful to be involved with this leadership class. I have been influenced positively by everyone I have met - they are amazing agents, brokers and business owners from across the state who all have the same common goal to learn, to build relationships, to become leaders and to send/receive referrals to each other. I have heard so many wonderful stories from everyone in past leadership classes whose careers have been forever changed by this. I strongly recommend it to anyone who is even remotely interested in learning about all the happenings on a state level and/or are interested in getting involved in any way. What’s your biggest joy in real estate? I enjoy helping first time homebuyers and agents in my brokerage. On one hand, the homebuyers give me so much joy because their excitement is a continual reminder of why I am in this business. On the other hand, I get to mentor my agents and help them daily achieve their goals and watch them grow to be productive and happy in their careers to build the lives they want. You are a contributor to RPAC. Why did you decide to give? I am a Major Investor in RPAC and, simply put, I understand how important it is for the future of our business. I encourage all agents to get involved. What’s the next goal you hope to achieve? I would say I have a pretty strong desire to run for a higher office in our association. Maybe President. Outside of business, what is your favorite pastime? Three of my favorite things are watching my sons on the baseball field, being that crazy (super supportive) mom cheering for them in the stands, travelling, and also going on mission trips. I have been on 3 trips to Haiti and with the help of an amazing donor, was able to build my sponsor child a home this past summer for her and her 7 family members. What is the best advice you have ever received? The best advice came from Lamont Breland when he said, “One thing to remember, is you are never truly ready to get into leadership. You will never know all you need to know. What is important, is that you know who to ask when the situation arises.”

Proud Sponsor of the 2017 Annual Convention

You can depend on HomeTeam for a faster, more efficient home inspection every time. Unique to home inspection companies, HomeTeam brings a team of inspectors onsite. Each team member focuses on his or her area of expertise, which keeps us efficient and saves you time. HomeTeam provides a full narrative report with photos utilizing our advanced cloud-based software, so that informed decisions can be made quickly and with confidence. We invite you to experience the difference the team approach makes.