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Capital Area Realtor


The official newsletter of the Greater Capital Area Association of REALTORS®

January - February 2012

Inside This Issue

State of the 2 Association 3 GCAAR in the 3 Ask the 4 Women’s Council of REALTORS® ������page 5 GCAAR Emeritus Members ���������������page 5 Taxing 6 Message from Adrian Hunnings ��������page 7 Green 7 Lessons from 8 9 MC Market 10 DC Market Report.......................... page 12 Sentrilock...................................... page 12 Professional Sandards................... page 13 GCAAR Cares................................. page 13 Public 14 RPAC 16 Legal 17 Submit Story Ideas 18 18

USPS: 017-467

Volume 18, Number 1

Threat to Mortgage Interest Deduction Brings GCAAR Members to Legislative Day Skies were blue but potential storm clouds on the housing front brought GCAAR members to Annapolis for the Maryland Association of REALTORS®’ (MAR) annual Legislative Day on January 25. The day focused on Governor O’Malley’s recently released budget, which proposes limitations on total deductions for almost all taxpayers earning a six-figure income. Not only would the mortgage interest deduction (MID) and property taxes be reduced, but so would all other deductions. As real estate-related deductions together total almost 70 percent of total deductions for Maryland taxpayers, homeowners would bear the brunt of this tax increase. “Maryland homeowners are proportionately the biggest users of the MID in the country,” said Mary Anton, MAR CEO. Chair of MAR’s Legislative Committee Rick Ralls stressed, “we are going to need 100 percent call to action responses to state senators and delegates letting them know how important MID is to Marylanders.” MAR’s Director of Regulatory Affairs, Mark Feinroth

YPN 19

L- R: Harold Huggins, Pat Weed, Delegate Ben Kramer, Meredith Weisel, GCAAR Board Member Greg Ford, 2012 GCAAR President Bonnie Casper, GCAAR CEO Mike Moran, Carole Maclure, 2012 MAR Treasurer, 2008 GCAAR President Dennis Melby, Delegate Charles Barkley, GCAAR Board Member Tim Knobloch noted, “…the challenge will be helping the General Assembly find alternative sources of funds.” Vice President of Government Affairs Bill Castelli went on to discuss MAR’s other 2012 legislative priorities. He highlighted PlanMaryland, which will continued on page 2

Legislative Breakfast Garners Strong Showing from State the annual Legislative Breakfast. The standing-room and County Legislators

Greater Capital Area Association of REALTORS® 8757 Georgia Avenue, Suite 600 Silver Spring, MD 20910

A delegation of federal, state, and county legislators came to GCAAR’s Rockville office on January 9 for

crowd listened to Maryland Congressman Chris Van Hollen, Senator Roger Manno, County Executive Isiah “Ike” Leggett, and Montgomery County Council President Roger Berliner discuss the issues at the national, state, and county levels that may impact real estate this year and beyond. 2012 GCAAR President Bonnie Casper set the tone for the breakfast by outlining the association’s goals for the year. She emphasized the fact that Congress should “do no harm” to the real estate and housing industry in 2012.

L- R: Maryland Congressman Chris Van Hollen, GCAAR President Bonnie Casper and County Executive Isiah “Ike” Leggett Like Us on Facebook!

Maryland Congressman Chris Van Hollen thanked REALTORS® for their support, saying “you know the continued on page 2 Follow Us on Twitter! @GCAARNow


2012 January - February

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Bonnie Casper Speaks at State of the Market Press Conference Newly-elected GCAAR President Bonnie Casper joined fellow association leaders at the State of the Market Press Conference held at the National Press Club on December 14. Bonnie was joined by Karen Trainor, 2011

L-R: Alease Bowles, PGCAR; Karen Trainor, NVAR; John McClain, George Mason University; and 2012 GCAAR President Bonnie Casper

Northern Virginia Association of REALTORS® Chairman, Alease Bowles, 2011 President, Prince George’s County Association of REALTORS®, and economist John McClain from George Mason University. Bonnie gave a

Bonnie and Karen Trainor field questions

historical analysis of real estate market trends in DC and Montgomery County, MD over the past six years and ended her presentation with an appeal to national, state, and local legislators to “do no harm.”

L-R: WDCAR CEO Ed Krauze, GCAAR President-Elect Michael McGreevy, GCAAR President Bonnie Casper, GCAAR CEO Mike Moran, MD Government Affairs Consultant Meredith Weisel, GCAAR Board Member Greg Ford

Legislative Breakfast, continued from page 1 neighborhoods better than anybody,” and told the crowd that Congress recognizes that the economy cannot move forward until the housing industry is restored.

L- R: Peg Mancuso, Delegate Craig Zucker, Delegate Kirill Reznik, Delegate Susan Lee, Senator Roger Manno, GCAAR President Bonnie Casper, GCAAR President-Elect Michael McGreevy, Senator Jennie Forehand, Tim Knobloch, Delegate Bonnie Cullison, Delegate Charles Barkley

Maryland Congressman Chris Van Hollen Montgomery County Executive Ike Leggett reinforced the county’s commitment to education, saying education is a top selling point for any real estate transaction. “We will continue to make investments in education, transportation, all of those things to help to make Montgomery County a better place to live and work.

Legislative Day, continued from page 1 be one of the biggest issues in 2012 as it can possibly undermine local authority related to growth. Monitoring any legislation related to lead paint and septic systems will also remain high on MAR’s radar. The audience welcomed Keynote Speaker, Comptroller Peter Franchot, as he highly stressed the importance of stabilizing the housing market in Maryland. He assured REALTORS® that he did not support any proposals in the State Budget that limit the MID as it disproportionally

Speaking on behalf of the state legislators, State Senator Roger Manno told the crowd that balancing the budget was a top priority, and they were heading down to Annapolis to roll up their sleeves and get to work. County Council President Roger Berliner addressed the County’s priority issues for this year including the need for a comprehensive mass transit system and its inter-relationship with housing affordability and economic development; and what the County can expect from Annapolis this session.

weakens the hard working middle class. He ended his speech reiterating that to bring back Maryland’s economy full scale, housing must remain a TOP priority of the government. A number of Montgomery County‘s State Delegates and Senators joined members and staff at the legislative reception following the event where they learned about the topics of greatest concerns to Montgomery County homeowners. Delegates Jim Gilchrist, Charles Barkley, Ben Kramer, Sam Arora, and Senator Jennie Forehand were all in attendance. Images of this event are on page 3.

Capital Area Realtor®

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2012 January - February

A ssociation N ews 2012 Board of Directors

MAR Legislative Day Highlights:


Bonnie R. Casper

President-Elect Michael McGreevy


Gregory Ford


William H. Highsmith Jr. , JD, GRI

Immediate Past President

L- R: Harold Huggins, Tim Knobloch, Elley Kott, Shelly Murray, Delegate Charles Barkley, GCAAR President Bonnie Casper, Carole Maclure, GCAAR CEO Mike Moran, Dennis Melby

Chief Executive Officer

GCAAR in the News

Adrian Hunnings

Michael Moran


David Bediz Suzanne Des Marais Carter Ferrington Mynor Herrera Ellen Katz Tim Knobloch Elley Kott Emiliana Lobos-Kirker Margaret “Peg” Mancuso Obiora “Bo” Menkiti Gerard “Gerry” Occhiuzzo  Prabhjit Singh

2011 Distinguished Award Winners ad in the Current and Gazette newspapers January 25, 2012 issues


Arlene Braithwaite

Capital Area REALTOR® (USPS 017-467) is published six times a year by the Greater Capital Area Association of REALTORS®, 8757 Georgia Avenue, Suite 600, Silver Spring, MD 20910. Periodicals postage paid at Silver Spring, MD. Member subscriptions account for $10 of each member’s annual dues. Annual subscriptions are available to non-members for $25. Subscription inquiries may be sent to Capital Area REALTOR® at the above address. Copyright© 2012 by the Greater Capital Area Association of REALTORS®. All rights reserved. POSTMASTER: SEND ADDRESS CHANGES TO CAPITAL AREA REALTOR®, ATTN: GCAAR, 8757 Georgia Avenue, Suite 600, Silver Spring, MD 20910.

Brenda Small Prudential PenFed Realty 2011 Greater Capital Area Association of REALTORS® and Washington, DC Association of REALTORS® REALTOR® of the Year

Debbie Benkert Wells Fargo Home Mortgage 2011 GCAAR Affiliate of the Year

Incentives Upgraded in a Down Market The Washington Times December 15, 2011 “I wouldn’t say it’s a buyer’s market right now, it’s more like a normal market.” - Mynor Herrera, 2012 GCAAR Board Member

Pamela Wye TTR Sotheby’s Distinguished Properties 2011 GCAAR Rookie of the Year

The Greater Capital Area Association of REALTORS® makes no warranties and assumes no responsibility for the accuracy of the information contained herein. The opinions expressed herein do not necessary reflect the opinions of the officers, directors or staff of the Greater Capital Area Association of REALTORS®. The Greater Capital Area Association of REALTORS® accepts submissions of articles and photographs and remains the property of the Capital Area Association of REALTORS®. The publisher reserves the right of full editorial authority and to decline publication of any article not deemed proper. Deadline for all submissions, including cameraready advertising on disk or film, is the first of the month prior to publication. Reprint with permission only. Reprint permission may be obtained by contacting the Greater Capital Area Association of REALTORS® at 301.590.2000; via fax at 301.590.2248; or via e-mail at REALTOR® is a registered collective membership mark that identifies and may be used only by real estate professionals who are members of the National Association of REALTORS® and subscribe to its Code of Ethics. (301) 590-2000


Change Stresses Importance of Home Inspection for Buyers WTOP Radio January 10, 2012 The Greater Capital Area Association of REALTORS® (GCAAR) and the Northern Virginia Association of REALTORS® (NVAR) issued a revised contract for many home sales in Maryland, D.C. and Virginia, starting Jan. 1, 2012. Realtors Suggest Market Improvement Will Be Limited Until 2013 The Sun-Gazette December 16, 2011 The panel discussion was hosted at the National Press Club by the NVAR, the Center for Regional Analysis, Greater Capital Area Association of Realtors® and the Prince George’s County (Md.) Association of Realtors®.

Bobette Banks

Advertising Representative

L- R: MAR Leadership Academy March 2012 graduate Samar Caverly, Sharon Curtiss, Coastal Association, and Carlton Boujai, 2012 MAR President-Elect



Practical Prices Washington Blade January 19, 2012 “A home should be listed at its market value, perhaps just a hair more, in order to sell. And the truth is, most homes are usually pretty easy to value.” -David Bediz, 2012 GCAAR Board Member

Staging to Sell: Tips for Homes that Need a Little Sprucing Up The Washington Post November 30, 2011 “Staging a home is more important in a slower market. You’re competing with more properties, and if your home doesn’t present well in the photos, people will click right by.” - Adrian Hunnings, 2012 GCAAR Immediate Past President



Serving the Business Needs of OUR Professionals

2012 January - February

Ask the President Bonnie Casper 2012 GCAAR President Q. When I got my bill last year for dues it stated it was late on Dec 1. I don’t think that’s fair when the year ends Dec 31. -An agent from BethesdaA. Thanks, I looked into this and it’s for the dues year, not the calendar year, so yes, there was a late fee for December and a reinstatement fee in January. Actually we’re one of the latest Associations in dues billing . . . some start in August! Q. I was looking on your website to learn about the Association and I’m interested in joining the Board of Directors. How do I go about doing that? -A GCAAR memberA. One of my major goals for 2012 is leadership development. We are always on the lookout for members who are interested in getting involved, and we welcome new faces and new ideas. The Officers and Directors are selected by a Nominating Committee. The committee is charged with making sure that

Capital Area REALTOR®

a candidate satisfies the eligibility requirements as outlined in our Bylaws, and with soliciting nominees who represent the diversity of the Association. Candidates for the Board should have some prior experience working with the Association. I encourage you to start by joining one of our 14 committees. Applications for next year will be accepted in the fall 2012, and you’ll be notified when the process opens up. Some of the committees are more popular than others, so please consider applying for more than one! After you’ve spent some time with a committee you may want to move into leadership by agreeing to Chair a committee. Feel free to contact me for additional information or contact our CEO Mike Moran at (301) 590-2000. Q. Any plans to change from Sentrilock? My agents like the system and don’t want to change again. - A Manager from Adams MorganA. No, no plans in the foreseeable future. I like it too. I do want agents to know that batteries have a life and they need to check and see if their batteries need replacing, we’re having a number go bad. If it does fail take it to one of the GCAAR offices and they’ll replace it for a small fee. I think almost all the agents like the system, no small feat for an association our size. Bonnie Casper is 2012 GCAAR President, MAR, WDCAR and NAR Director. She can be reached at

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2012 January - February

Women’s Council of REALTORS ® Kicks off 2012 Season with Timely Tax Tips The Greater Capital Area Women’s Council of REALTORS® (GCA WCR) kicked off its 2012 meeting season with tax advice from Linda de Marlor, President and Owner of Tax-Masters, Inc. Linda covered tax basics, 401K strategies, short sales, and mortgage forgiveness. In addition, she explained how to get extra deductions by working from home and hiring family members, and the tax consequences of short sales when cancellation of part or all the debt may or may not be taxable. Linda also discussed what type of entity may be best for REALTORS®, specifically the pros and cons of forming an LLC, being a sole

proprietor, or becoming a corporation or partnership. GCA WCR showcases and promotes the achievement and impact of women in the real estate industry, the business arena, and broader community. Monthly meetings are held at the Norbeck Country Club in Rockville on the 3rd Wednesday of each month from 9:00 a.m. to 11:00 a.m. For information regarding membership and programs, please contact “Q” Armstrong at Need some additional tips on what you need to do to get your house in order this year? Make sure to read the article Taxing Times on page 6.

Linda de Marlor (R) draws from the door prize bag held by GCA WCR Board Secretary Elois Wiggins

GCA WCR 2011 Maryland Governor Silvia Rodriguez welcomes attendees

GCAAR Welcomes Emeritus Members! The National Association of REALTORS® Emeritus status is given to those REALTORS® who have 40 years of membership in the national organization. GCAAR is proud to congratulate the following members who have reached Emeritus status: Dennis Kosineski Nancy Maury Dean Noah Marcia Rabinoff John Radcliffe Claudia Smith, CRB Farid Srour Patrick Weed, CBR CRS SIOR

John Aravanis, GRI Thoma Bennetts, CBR CRS GRI Mary Lou Carta Jonathan Duffie, GRI Helen Hillstrom, CRB CRS GRI Harold Huggins, CCIM CPM CRB CRS GRI David Huston, CRB GRI Deanna Jackson

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* Actual Gold Star Sticker is used, not just a star graphic. Only 1 winner per issue. Winner must present the issue of CAR with the sticker to claim winnings. If no winner is identified by CAR’s next mailing, the winnings are forfeited.



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2012 January - February



For those of you who owns a corporation either a C-Corp or S-Corp, please pay yourself payroll through the year. The IRS virtually denied the practice using shareholder loan to draw money from the company. For S-Corp owners specifically, please pay yourself reasonable compensation to avoid potential IRS audit.


2% Reduction in FICA tax extended for two months. On 12/22/12 the Senate and House agreed to extend reduced FICA withholding for two months in 2012. Self-employment tax will be calculated at 13.3% instead of 15.3%. This reductions may be extended to 2012 whole year. Let us wait and see.


Capital gain/loss rate changes and reporting update. The favorable capital gain rate of 0% or 15% (which also applies to qualified dividends) will expire by the end of 2012 unless the Congress extends the rule. For those with brokerage accounts, you likely have been receiving correspondence during the year regarding the new requirements for brokers to keep track of and report cost basis along with sales proceeds on 1099-B forms starting in 2011.

Elizabeth Ye Zang, CPA Tax-Masters, Inc, Rockville, MD While the Job Creation Act of 2010 extended some expiring tax breaks and expanded others, some provisions of the law are set to expire in 2012 unless Congress extends them again. In light of this uncertainty, minimizing your taxes over the next few years will require careful planning and timely action, as well as a thorough understanding of both new and old tax-saving strategies. Here are some updates regarding tax strategies as well as new requirement of tax filing by the IRS: ·

1099 reporting updates. Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act-signed by the President April 15, 2011 essentially reverts to rules prior to Health Care Act and Small Business Act. Landlords are not required to issue 1099 forms. 1099 forms are required to be issued by business only for services but not products, individual and partnerships but not corporations of more than $600 payment per year. Sch. C filers who need to issue 1099 will have to answer two back-to-back questions asking if the owner is required to file 1099 forms, and if so, "did you or will you file" them? For business owners who answer "no" and are proved wrong later, it becomes easier for the IRS to assess a penalty of up to $500 per violation. The well-talked about 1099-K for credit card reporting requirement will be optional until the year of 2012.


Standard mileage rate. The IRS adjusted up business mileage rate again to 55.5 cents per mile for the year of 2012. The standard mileage rate for the year of 2011 was 51 cents from 1/1/2011 to 6/30/2011 and 55.5 cents from 7/1/2011 to 12/31/2011. A mileage log is necessary if you want to claim the auto deductions.


The Mortgage Debt Relief Act of 2007 is set to expire in 2012. It presently allows exclusion of up to $2,000,000 taxfree forgiveness of mortgage on monies used to buy, build or improve a primary residence.


Mortgage deductions of building your own house. If you or your client intends to build a house of your own, the IRS restated its position in 2011 as new home builders may deduct mortgage interest for residence under construction for up to 24 months if it becomes a residence when ready to occupy.


Section 179 of real property improvements. Real property improvement costs are generally ineligible for the section 179 deduction; however, for the year beginning 2011 (and 2010) your business can deduct up to $250,000 of qualified improvement costs including leasehold improvements, restaurant buildings and interiors of retail buildings.


Self-employed health insurance can no longer be deducted pre self-employment tax from the year of 2011 and beyond.


Small assets less than $100 can be expensed. On 12/23/2011, the IRS released 230 pages of temporary regulations of repairs vs. capitalize guidelines. Anything less than $100 unless it is inventory can be safely expensed.

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In conjunction with this requirement, you may have been making elections with brokers as to what cost basis defaults they will use on sales in your account (FIFO, specific identification, etc.). Brokers may not have historic cost basis information on assets purchased prior to this year, or transferred into an account from another source. Updating this historic cost basis information in your broker accounts now can ease the burden of gathering this information at tax time, and can give you better potential gain/loss. Information with which to make investment decisions, as well as help make sure your cost basis default elections are appropriate. ·

Foreign assets reporting is a hot topic in IRS this year. For tax years beginning after 3/18/2010 individuals must attach a disclosure statement if their "specific foreign financial assts" exceed certain specified amounts (form 8938) including depository or custodial accounts, securities issued by a foreign person, any interest in foreign entity, any other foreign financial instrument or contract that is issued by or has a counter party that is not a US person. This provision is separate from and often will require more information than now well-know foreign bank account information reporting, and failure to comply can have significant consequences.


$500 residential energy credit. If you have not enjoyed the full $1,500 residential energy credit before, you can still have a chance to claim up to $500 energy credit in your 2011 return.

The above is just a few ideas to get you think about your 2011-2012 taxes. Since 2012 is a general election year, we are closely monitoring new tax law changes. Please do not hesitate to contact us if you want more details as we are here to help you. ________________________________________________________ The Author, Elizabeth Zang, is a MD/VA licensed CPA, and has been working with local, regional and international accounting firms for eight years. If any comments or questions, Elizabeth can be reached by e-mail at

Capital Area Realtor®

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2012 January - February

Whose Voice Will Be Heard?

your business or on the ability of your clients to buy and sell real estate. Who do you want Congress to be listening to when it considers real estate policies? Is it Wall Street, or banks, or groups protecting their own budgets? Or is it real estate practitioners?

Adrian Hunnings 2012 RPAC Chair and GCAAR Immediate Past President

Please join me in supporting The REALTOR® Political Action Committee (RPAC). We need your participation and your financial support. When it comes to influencing public policy related to real estate issues, we want to be the voice that is heard most clearly.

Being a good citizen means getting involved in developing public policy, especially when the course of action under discussion happens to be in the area of your own expertise or of your greatest concerns. This includes voting. It includes giving financial support to candidates who will work toward advancing your agenda. It means joining and working collectively with likeminded individuals. Done in a peaceful, respectful manner, it is democracy at its best. This is why I have joined – and so strongly support – the National Association of REALTORS®, the Maryland Association of REALTORS®, the District of Columbia Association of REALTORS®, and the Greater Capital Area Association of REALTORS®. These are organizations at the federal, state, and local levels whose members are fighting for homeownership and private-property rights. However, this doesn’t mean that we have the same point of view on all subjects; we don’t. But we do have similar goals and similar views about how policies relating to real estate should be implemented by our government. There is no shortage of policy positions currently being debated which, if poorly implemented, could have a negative impact on

Green Resources Appraisals Going Green!

A new addendum, the Residential Green and Energy Efficient Addendum (Form 820,03), was released in September 2011 by The Appraisal Institute. For the first time, it allows appraisers to evaluate green features of a home in a standardized manner. The addendum consists of five sections: Energy Efficient Items; Solar Panels; Green Features; Location – Site; and Incentives – Amount of Incentives and Terms. Within each section is a further breakdown: e.g. Energy Efficiency provides options for insulation, water efficiency, windows, day lighting, appliances, HVAC, energy rating, HERS, utility costs, and energy audits; Solar Panels asks about age, energy production, and location; and Green Features addresses certifications and ratings. All sections allow for descriptive comments as well. Realtors® are encouraged to familiarize themselves with this valuable new tool! As the MRIS becomes increasingly reflective of energy efficient and other green enhancements (in existing homes as well as new construction), the ability of appraisers to accurately and consistently evaluate such features is critical. Please visit the Green Committee’s website,, for tools and additional resources. In addition, an article in the Winter 2012 issue of The Appraisal Journal will review the addendum in detail ($25/single issue for non-members).

SAVE THE DATE! GCAAR’s Green Committee will join the Rookie Committee to present a course on Green topics on April 11. Keep your eye out for more information via e-mail. We hope to see you there!

Have a question/comment on GREEN issues? Contact Green Committee staff, Katalin Peter, Esq. at



2012 January - February

Serving the Business Needs of OUR Professionals

Lessons from 2011 By Michele Lerner After experiencing the roller coaster ride of real estate for the past decade, local REALTORS® and brokers are ready to take stock of their transactions and move forward into 2012 armed with new knowledge. REALTORS® and brokers are aware of trends that could impact the local market in the coming year, such as problems with financing, appraisals and frustrated buyers. “One of the downsides to the market this past year has been the inability of big banks to dependably steward loans from application to closing,” says Paul Sliwka, president and principal broker of Central Properties in D.C. “We have started redoubling our efforts to make sure buyers have options. We recommend three or four regional and local competitors to the big banks so that our buyers have the ability to react and to change lenders quickly if necessary.” Steve Dean, a REALTOR® with Re/Max Allegiance in D.C., says he and his partner Eddie Rangel saw lenders sometimes pulling their commitment letters at the last moment. “Even when representing a seller, it remains important to know which lenders can perform when others cannot,” says Dean. “When the financing was falling apart on our listings, we were able to provide the buyer’s agents with loan officers who were able to perform miracles.” In one extreme case of a financing problem, Elizabeth Blakeslee, an associate broker with Coldwell Banker Residential Brokerage in Washington, D.C., says that an appraisal issue almost caused the buyer’s financing to fall apart, even though the borrower was only financing $150,000 of a $475,000 purchase. “The appraiser requested building permits for a decade-old basement kitchen,” says Blakeslee. “The permits couldn’t be found so the appraiser wouldn’t complete his report. Once the listing agent said she would provide the financing, the lender pushed the appraiser to provide the information needed for the loan. The lesson here is to always have a ‘plan B’ and to allow enough time to work with another lender if necessary.” Buying a foreclosure from a bank can be just as frustrating as arranging financing. “A client of mine won in a competitive multiple offer situation for a foreclosure, but then he tried to negotiate with the bank over the addendum to the contract,” says Morgan Knull, an associate broker with Re/Max Gateway in D.C. “The buyer had used an escalation clause and the bank had made a counteroffer within the range of that clause. After some back-and-forth, the bank simply revoked the contract and went on to another buyer.”

Capital Area REALTOR®

lasting impression.” While open houses can be valuable, Dean says some out-of-town buyers are buying with “virtual eyes”, not seeing the property until the settlement date. “In one case, the buyers relied on virtual tours of homes and sent friends to preview homes with us,” says Dean. “They used Google Maps to see streets, Skype to communicate with us, and DocuSign to sign all the needed paperwork. As our clients move into new communication methods, we have to be sure we’re moving with them or we’ll be left behind. We don’t remember when we last sent a fax.” Other issues in 2011 concerned appraisers and home inspectors. Blakeslee says she was listing a carriage house that still had rings on the walls for horses. An architect wanted to buy it and renovate it into a home, but it was difficult to find an appraiser who would value the place because there were no comparable properties. “Eventually, the buyer got a renovation loan and the loan amount was based on the finished value of the property,” says Blakeslee, “but for an unusual property it could be a good idea to talk to an appraiser before putting the house on the market. That would have eliminated some of the delay with this one.” Sliwka says that he has recently seen home inspectors scaring some buyers away from homes by presenting a darker-than-necessary portrait of the property’s condition. “Home inspectors are concerned about their liability so they tend to present the worst case scenario, which sometimes results in the buyers walking away from a perfectly reasonable property,” says Sliwka. “I recommend that agents explain to clients that the inspector is hired to give the worst case scenario. The buyers should ask about the actual likelihood of specific problems to occur.” On the seller’s side, Knull says he was shocked last year at a settlement where he was representing the buyer. “The sellers had clearly not seen the HUD-1 until the closing and were extremely upset because they had thought their profit from the home sale was simply the sales price minus their mortgage pay-off,” says Knull. “Although this seems crazy and the agent said he had gone over the listing agreement with the clients, they somehow didn’t realize they had to pay the Realtor® commission. In the end, the listing agent credited back his entire portion of the commission.” Knull says he makes a practice of creating a net sheet whenever an offer comes in on his listings so that the sellers clearly understand the commission structure and their other costs. “A net sheet is more tangible than a listing agreement,” says Knull. “I keep a copy for myself, too, so no one can ever say they didn’t understand.” A trend that Craig Kay, a REALTOR® with Re/Max All Pro in Rockville, says is likely to continue for several years is the short sale market.

Knull says the takeaway from this experience is that buyers rarely win arguments with a bank, so they should just accept an offer or decline it rather than try to negotiate. “Last year I ran into a lot of hard line buyers who expected rock bottom prices, but in most areas prices bottomed out a year or so ago,” says Tom Kennedy, president and CEO of Oz Realtors® in Laurel. “In 2012 we’ll see a lot more frustrated buyers because of the lack of homes at prices they can afford.” Kennedy says the best way to handle this is to make sure buyers are truly qualified and know their price range.

“There is so much inventory that has the potential for a foreclosure that Realtors® should be prepared to work out short sale transactions,” says Kay. “The banks are more willing to listen and REALTORS® need to put a plan in place to take sellers through the short sale process. Realtors® should be extremely clear and develop the trust of short sale sellers.”

Kimberly Casey, an associate broker with Washington Fine Properties in D.C., says that while her business grew in 2011, she believes everyone has to work harder to make the same amount of money. “Open Houses are very important,” says Casey. “You never know where your clients are going to come from and open houses are a great way to meet the neighbors and potential buyers. Engage with everyone who walks in the door and make a positive and

One of the best lessons for any year comes from Casey. “Treat other agents with respect, integrity and honesty,” says Casey. “This business is hard and clients are stressed out by home inspections, lenders, appraisals and more, but it is our job to manage the process and get the deal to close. It is vital that we treat each other well as hopefully we will be doing many, many deals with each other. Once you lose a person’s trust, you can never get it back.”

Capital Area Realtor®

Serving the Business Needs of OUR Professionals

2012 January - February

T echnology 6 Strategies to Turbo-Charge Your Website By Tricia Andreassen

With the arrival of a new year, now’s a great time to look closely at your website and evaluate what worked well in terms of bringing you the results you wanted as well as what didn’t work throughout the last 12 months. Tricia Andreassen, CEO and founder of Pro Step Marketing, recently highlighted ideas in an article at RISMedia about how to enhance your real estate Web site to make sure it’s serving as a lead generator for your business. Here are six strategies that you should incorporate into your website to hit the ground running in 2012. 1. Make sure you have a strong MLS search tool on the front page of your site. Having an interactive search tool where the visitor can choose a specific town, price range and even property type can be a powerful way to compel them to want to click-through and access listings. Having an IDX-integrated search on the home page eliminates the need for buyers or sellers to click-through three or four levels just to view homes. 2. Double check that you are the point of contact on every listing when the visitor searches the MLS. If you are driving people to the MLS search, don’t forget that the name of the game is lead generation. Make sure they can ask for more information easily, schedule a showing or even share the listing with a friend in a matter of seconds, all while positioning yourself as the point of contact and keeping an eye on the activity. 3. Have specialized buttons right on the front page so that visitors to your site can get information for what they are specifically interested

in. For example, take a look at and you’ll see buttons dedicated to one-level living and for properties close to the downtown area of Knoxville. 4. Have a built-in blog within your site. Notice that I didn’t say HAVE a blog as your website like blog. Instead, take the time to create a blog that can be integrated within your site. This way your website has components for lead capture through search engines and your blog is working to add content and build relevance for the search engines. Make sure your visitors have the ability to retweet your information as well as share it on Facebook and other social media channels. 5. Have social media-share features on every single page in your website. People want to see information and then they want to “like” it or share it on their Facebook wall or on their Twitter account. 6. Have built-in email campaigns so that you can easily send specific emails to targeted groups. For example, let’s say you come across a great foreclosure deal and you want to let your foreclosure buyer pipeline know about it. Have the tools so that you can email the entire group within moments to let them know about the new listing. Tricia Andreassen is the CEO/founder of Pro Step Marketing. For more information, visit Copyright© 2002 - 2012 Pro Step Marketing All Rights Reserved.



2012 January - February

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Montgomery County Market Report By Fred Flick, Ph.D., Consultant/Housing Economist

Fred Flick

The year 2011 ended on a low note, but still there are some reasons for optimism for the future. Based on the December MRIS stats, single-family homes and condominium and cooperative units had weaker sales unit volumes than for the previous year. Nevertheless, singlefamily prices showed modest appreciation. However, the down side is that condo/coop prices continued to fall during the year.

Prices in the single-family market have been rising since 2010. In 2011, the average and median prices were $515,161 and $405,000, respectively. In fact, the average appreciation rate has been outpacing general inflation. Compared to 2010, the single-family average price has risen 3.9%, with the median up 1.25%.

By the end of December (for both property types), year-to-date contracts (9,980) were down 7.9% from the end of 2010. Similarly, year-to-date settlements (9,436) declined almost 8.6%. At the end of the year, active inventory totaled 2,389 units for both types of properties. This was a 17% decline from the level at the end of 2010. For single-family home prices, the news was slightly more positive. By the end of the year, average and median prices increased. Unfortunately, average condo/coop prices declined over the year. We have been quite fortunate as the Washington, DC metropolitan area is one of the few metros seeing positive home price appreciation over the last few years. Single-Family Market At the end of 2011, year-to-date single-family contracts totaled 7,667 units and there were 7,263 property settlements. These figures were 9.1% and 10.2%, respectively, below the same statistics from a year before. Furthermore, active listings totaled 1,835 units, 10.5% below the singlefamily actives at the end of 2010.

As we would expect by the end of the year, December new active listings (433) dropped 9.4% from a year before. Active inventory totaled 1,835 properties – down 10.5% from the end of 2010. The December sales contract pace (485) equated to a 3.8-month absorption rate – up slightly from the third quarter rate.

While single-family sales overall were down from 2010, average and median single-family prices rose over the year. At the end of December, the average price for a single-family home was $515,161 and the median was $405,000. Compared to year-end 2010, the average appreciation rate was 3.9% and the median-priced house was going up at a 1.3% rate. Considering how some other metropolitan areas are faring, these results are not too shabby. Condominiums and Cooperatives Unfortunately, the condo/coop market maintained its sub-par performance through to the end of the year. At the end of December, year-to-date contracts totaled 2,313 units and were down 3.7% from December 2010. Similarly, settlements slipped 2.8% on 2,173 closed transactions. Condo/coop end-of-year price performance was similarly disappointing. By the end of December, the average price for the year had fallen to $238,441-- 3.6% below that of a year before. For the typical ‘middle’ unit, the year-end price was $190,000 -- down over 8% for the year. December Single-Family Market For December 2011 compared to December 2010, all of the standard unit sales measures were down. Sales contracts (485) were down 6% from a year ago; and, settlements (530) had declined 10%.

December Condominiums and Cooperatives Paralleling the single-family market, by the last month of the year, condo/ coop sales units were down compared to a year before. December sales contracts (156) dropped 16%; however, monthly settlements (184) were up over 17%. For the year, settlements (2,173) declined almost 3% and contracts (2,313) slipped nearly 4%. The condo/coop market continues to seek a bottom in both sales and prices.

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Accordingly, the news for condo/coop prices continues to be negative. Average and median prices were still trending down through the end of the year. By the end of 2011, the (year-to-date) average price was $238,441 -- down 3.6% from 2010. Similarly, the year-to-date median ($190,000) was down 8.2%. Mortgage interest rates have rarely been this affordable, yet consumer debt and job fears are keeping buyers on the sidelines.

The end-of-year condo/coop inventory reflects the overall demand weakness. By the end of December, total inventory (554) was down about 34% from a year ago; and, new listings (136) dropped 28%. At the December contracts pace (156), total actives equated to a 3.6-month absorption rate. This is similar to recent figures and possibly signals we may be moving toward some price stability. Three months is a “normal” benchmark and hopefully market price declines will flatten-out this year.

2012 January - February

back on its programs to buy long-term bonds, but it may have to reintroduce ‘quantitative easing’ if problems in Europe start causing a world recession. So far the government’s assistance for housing has been minimal and it is not clear any of their initiatives to refinance troubled mortgages have had much of an effect. The Obama administration is working on a program for mortgage principle forgiveness, but banks and other mortgage lenders are fighting it. Unfortunately, in the short-run, these types of initiatives will likely be only a modest help. A stronger, growing economy is what is needed, but that is still a long ways away. Mortgage Interest Rates Freddie Mac’s mid-January survey showed that fixed mortgage interest rates continue to be down 50 to 60 basis points from the third quarter. In this survey, the 30-year fixed-rate averaged only 3.88%. Also, 1-year adjustable-rate mortgages (ARMs) averaged 2.74% -- down from about 3.25% in mid-2011. Fifteen-year loans came in at 3.17% and 5/1-yr. ARMs were very affordable at 2.82%. The Fed’s policy of buying Federal debt and government-insured mortgage backed securities has helped to move mortgage interest rates downward. These are among the lowest rates ever seen and fees and points averaged less than one percentage point. Consumer Prices and Energy Costs The Consumer price index (CPI) was unchanged in December from November, but it rose 3 percent over the past year. The rise in the total CPI, due almost entirely to energy costs, had risen to almost 4% (annual basis) in September. Since then, it has come down significantly to the current annualized 3% rate. When we exclude food and energy this ‘core’ inflation rate works out to be about 2.2%. At the beginning of the summer the core rate was about 1.9% -- there has been some increase in core, but it is a number we can live with. Energy watchers are predicting a decline in the demand for energy in 2012, so we could see overall inflation coming down even more, later this year. Examining the key components of the annualized December measure: food prices rose 4.7%; housing shelter costs (mostly rents) rose 1.9%; and, apparel prices moved up 4.6%. Medical care services rose 3.6%, and medical care commodities were up 3.2% from December 2010. Energy commodities rose 10.6% -- gasoline was up 9.9% -- but fuel oil leapt 18%. Energy services (electricity and natural gas) rose only 0.8%, due mostly to the fall in natural gas prices.

Economic Policy and Interest Rates The Bureau of Economic Analysis’ final estimate for third quarter real economic growth came in at a weak 1.8%. Nevertheless, it was still up from 0.4% and 1.3% -- the figures for the first and second quarters, respectively. Moreover, the employment situation seems to be turning around. In December, the economy added 200,000 jobs and the national unemployment rate declined to 8.5% -- down 0.6 percentage points since August. There is also some good news on the housing construction front. New housing permits were 7.8% above the figure for December 2010; and, while most are for multi-family projects, single-family authorizations in December were only marginally below the levels of December 2010. In fact, total housing starts are up 25% from a year ago, with singlefamilies up about 12%. Total starts for all of 2011 were 3.4% above the total for 2010, so the construction market is rebounding. While the economy seems to be holding its own, Congress and the President are still fighting over economic policy with ridiculous disagreements over deficits, raising the debt ceiling, and any fiscal stimulus. Again, the only stimulus we have is the Fed. It has cut

While inflation has been rising at a slightly higher pace than the Fed would like (they prefer it to be somewhere in the neighborhood of 2%), there is little need for alarm. Consumer prices could easily decline a bit if Europe or China have significant recessions. The risk of Europe slipping into a period of negative growth is a convincing reason for pursing pro-growth and job-creation policies. The Bottom Line Montgomery County’s real estate markets this year should improve, even if the national economy grows at a slow pace. But, while single-family prices are rising, the condo/coop market remains weak. Condo/coop prices should stabilize this year. And there are indications that real estate should be better in 2012 that in 2011. The U.S. economy has avoided a double-dip recession, but is suffering from slow growth and still high unemployment. However, our economy is a lot stronger than those in the Euro zone or the U.K. -- the Fed has done well. It is likely that the Euro zone is already in a recession and that it will worsen. But the U.S. seems to be holding its own, albeit at a slow pace; and, we may not necessarily see another recession even if Europe or China has problems. So, don’t worry and have a great 2012 real estate year. Be glad that we are living in interesting times!



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2012 January - February

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DC Market Report By Fred Kendrick

The 2011 Washington, DC residential real estate market withstood uncertainty in the financial world, rigid credit guidelines, threats to the mortgage interest tax deduction and inventories of single-family homes, condominiums and cooperatives were at their lowest levels in six years. The end result was a 2% decline in sales from 2010, but with only 3.36 month supply of inventory at the end of Fred Kendrick 2011(compared to 6.2 months nationally) the DC real estate market remained one of the strongest in the country. Average and median prices were on the rise in 2011 (led by strong single-family sales), and with a healthy local and regional economy, the forecast is for continued growth in 2012 as we continue to struggle with a lack of inventory. The main obstacle to a more robust market in 2012 continues to be found in the mortgage industry. Tighter credit guidelines and higher down payment requirements are keeping many willing buyers on the sidelines. On the sellers’ side, many who purchased homes in and around 2005 still find themselves underwater (despite rising prices on the single-family side) and unable to sell without taking a loss. These obstacles are having the effect of keeping housing demand in check despite similar conditions during the boom of the mid-2000s (low rates and low inventory), which ironically is a positive effect for the market. Single-Family HOMES Sales of single-family homes in 2011 were down 3% from 2010, and 31% off the market high set in 2004, ending a two-year streak of yearover-year gains. The previous two years had seen end-of-year gains of 19% and 11% respectively. In 2011, the largest gains occurred in the upper brackets, with homes over $1.5 million up 15% over 2010. Sales of homes priced between $600,000 and $700,000 were up 13% and those priced from $800,000 to $900,000 up by 11%. This slight decline in sales after two years of positive movement is due almost entirely to the lack of inventory in the market. At the end of December, there were only 825 single-family homes available in the District of Columbia in the Metropolitan Regional Information System (MRIS), a 31% decline from the same point in 2010 and the lowest number of available homes since August of 2005. The effective inventory of 2.93 months at the end of December was typical of what was seen throughout the year. There was an average of 3.1 months of single-family inventory in 2010 without any month of the year exceeding four months of available inventory. At the end of the year, homes priced from $600,000 to $700,000 had an even lower effective inventory of 1.14 months, and homes priced between $800,000 and $1 million stood at 1.48 months. The demand for homes combined with the low inventory pushed single-family prices up in 2010, with average prices gaining 5% and median prices gaining 7% over 2010. This was the second consecutive year of price appreciation in this market after reaching the bottom in 2009. Note that despite the gains of the last two years, average prices are still 14% off the high average price point and 15% off the median high, both reached in 2007. Condominiums and Cooperatives Sales of condominiums and cooperatives remained virtually even from 2010 to 2011, with only a 0.4% decline. 2011 totals were off 6% from 2009 and off 36% from the high point set in 2005. For 2011, units priced under $150,000 were up by 43% over 2010, while units between $900,000 and $1 million were up 25%. The upper end of the condo/

Pay Your 2012 SentriLock Card Service Fees Your 2012 SentriLock Card Service fees are now due. SentriLock Card Service fees total $143.10 and are due February 23, 2012. SentriLock Card Services are available to members who have paid both SentriLock fees and 2012 REALTOR® Association dues. For your protection and security, SentriLock does not store your credit card data. Thus, they cannot automatically process your payment. You must pay via one of the methods listed below: 1. Login to the SentriLock website: and click on the “shopping cart” icon. This will allow you to securely pay online through their E-commerce network. 2. Next time you update your card via the card reader, click on the link provided. 3. Call their toll free number 1-877-EASY-606 (877-327-9606) to pay via telephone. Please have your SentriCard ready as you will need the number on it to make a telephone-based payment. Agents who have not paid Sentrilock fees by March 19, 2012 will have their SentriCard suspended and a reactivation fee of $50.00 plus tax will be added to the total amount due. Cards suspended can be immediately reactivated via payment to SentriLock, provided that all dues and fees to your primary REALTOR® Association are paid in full. If you have any questions, please contact SentriLock’s tech support department at 1-877-SENTRILOCK (877-736-8745).

Helpful Tips for Your SentriLock Batteries:

• Batteries placed in backwards, will void your warranty on your SentriLock box • Notify SentriLock when you replace batteries • Please pay attention to SentriLock e-mail alerts, especially ones notifying you when your SentriLock batteries are low • If you do not have an e-mail address on file with SentriLock, please contact GCAAR. SentriLock is the official lockbox provider of the National Association of REALTORS® and is also a proud partner of the REALTOR Benefits® Program.

co-op market fared the worst in 2011, with sales of units priced over $1 million down 18% from 2010. The inventory of available units at the end of December was 26% lower than a year ago and, like DC single-family homes, reached the lowest point seen in over six years. There was a noticeable decline in more affordable units in 2011 with 44% less available inventory under $200,000 by the end of the year. At the end of December there was 4.04 months of available condo/coop inventory, higher than the 2.93 months on the single-family side, but still technically a seller’s market. But with Urban Turf reporting 42 new condo projects in the pipeline for the upcoming year in the District, the market should change substantially by the end of 2012 with the strength and resilience of condo demand put to the test. Average and median prices of condominium and cooperative units each fell 2% from 2010 totals, but are only 3% off the top of the market reached in 2005. With new condo inventory typically at higher price points, it would not be surprising to see prices start to edge up rapidly in the second half of 2012 as these new units start to go to settlement.

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2012 January - February

P rofessional S tandards NAR 2012 Code of Ethics Updates The National Association of REALTORS® implemented the following changes to 2012 Code of Ethics and Standards of Practice which are highlighted below:

Article 1 – New Standard of Practice

• Standard of Practice 1-16 REALTORS® shall not access or use, or permit or enable others to access or use, listed or managed property on terms or conditions other than those authorized by the owner or seller. (Adopted 1/12)

Article 15 (amended)

• REALTORS® shall not knowingly or recklessly make false or misleading statements about other real estate professionals, their businesses, or their business practices. (Amended 1/12) • Standard of Practice 15-2 (amended) The obligation to refrain from making false or misleading statements about other real estate professionals, their businesses, and their business practices includes the duty to not knowingly or recklessly publish, repeat, retransmit, or republish false or misleading statements made by others. This duty applies whether false or misleading statements are repeated in person, in writing, by technological means (e.g., the Internet), or by any other means. (Adopted 1/10, Amended 1/12) • Standard of Practice 15-3 (amended) The obligation to refrain from making false or misleading statements about other real estate professionals, their businesses, and their business practices includes the duty to publish a clarification about or to remove statements made by others on electronic media the REALTOR® controls once the REALTOR® knows the statement is false or misleading. (Adopted 1/10, Amended 1/12)

Article 17 (amended)

In the event of contractual disputes or specific non-contractual disputes as defined in Standard of Practice 17-4 between REALTORS® (principals) associated with different firms, arising

GCAAR Cares Chosen to Support Maryland Home Makeover Project; Rebuliding Together® Back in April GCAAR Cares has been chosen by the Maryland Association of REALTORS® to support a Maryland Home Makeover project in Montgomery County, Maryland. Similar to Rebuilding Together®, volunteers are needed to paint the home of a homeowner displaced due to flooding, along with some yard work. Stay tuned for more

out of their relationship as REALTORS®, the REALTORS® shall mediate the dispute if the Board requires its members to mediate. If the dispute is not resolved through mediation, or if mediation is not required, REALTORS® shall submit the dispute to arbitration in accordance with the policies of the Board rather than litigate the matter. In the event clients of REALTORS® wish to mediate or arbitrate contractual disputes arising out of real estate transactions, REALTORS® shall mediate or arbitrate those disputes in accordance with the policies of the Board, provided the clients agree to be bound by any resulting agreement or award. The obligation to participate in mediation and arbitration contemplated by this Article includes the obligation of REALTORS® (principals) to cause their firms to arbitrate and be bound by any resulting agreement or award. (Amended 1/12) • Standard of Practice 17-2 (amended) Article 17 does not require REALTORS® to mediate in those circumstances when all parties to the dispute advise the Board in writing that they choose not to mediate through the Board’s facilities. The fact that all parties decline to participate in mediation does not relieve REALTORS® of the duty to arbitrate. Article 17 does not require REALTORS® to arbitrate in those circumstances when all parties to the dispute advise the Board in writing that they choose not to arbitrate before the Board. (Amended 1/12) It is the obligation of every REALTOR® to know the Code of Ethics and maintain the high standard of professionalism in Real Estate. You can download a copy of the 2012 Code of Ethics at the GCAAR website ( in the Ethics & Professionalism section, under Resources.

details on how to become a part of the GCAAR Cares Maryland Home Makeover Team. Speaking of Rebuilding Together®, mark your calendars for Saturday, April 28! GCAAR Cares is pleased to once again sponsor Rebuilding Together® in Montgomery County and Washington, DC for 2012. As the 2011 winner of the Maryland Association of REALTORS® Special Projects Award, GCAAR Cares continues its service to the community through Rebuilding Together® efforts. Go to to volunteer. Are you active in your community? Do you volunteer or donate to organizations to help those in need? We want to know! Tell us your story for a chance to be featured in the next issue of Capital Area REALTOR®. E-mail your story to Debbie Bell at



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2012 January - February

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P ublic P olicy Federal Legislative Update Stay up-to-date on NAR’s political activity and access all CALLS FOR ACTION through NAR’s REALTOR® Action Center at

Flood Insurance

On December 16, 2011, Congress extended National Flood Insurance Program (NFIP) authority through May 31, 2012. This latest extension was a part of H.R. 2055, a “megabus” appropriations bill to fund the federal government’s 2012 fiscal year. NAR will continue to press Congress to use the additional time to complete their work on a five-year reauthorization of the program (H.R. 1309). NAR believes in the need for a long term reauthorization in order to provide certainty and to avoid further disruption to real estate markets.

Maryland Public Policy Update Maryland General Assembly

The new legislative session began on January 11, 2012. For more information, including pertinent 2012 real estate legislation, visit the Government Affairs news section at

Maryland Association of REALTORS® 2012 Legislative Issues

Property Tax Reform Much of the disparities in property-tax liabilities between nearly identical properties results from the Homestead Property Tax Credit which caps the amount of the newly-assessed value subject to property taxes. A prominent member of the House of Delegates tax writing committee has indicated he is studying the property tax system and plans to offer legislation in 2012.

to help pay for wastewater treatment plant upgrades and septic grants. MAR continues to oppose the prohibition of septic systems in new subdivisions because of its harmful impact on growth and housing affordability. PlanMaryland The State of Maryland -- through the Department of Planning – is pursuing development goals for counties to meet in order to receive state funding. Though PlanMaryland is intended to redirect growth rather than stop growth, MAR is concerned that it will not have that effect. MAR has submitted input advocating that local planning decisions remain with local governments rather than the state. Several bills addressing PlanMaryland elements will be introduced this winter. Other Taxes The State of Maryland will wrestle with a nearly $1 billion deficit when drafting a new budget this session. Over the summer, legislators had briefings regarding the expansion of the state sales tax to certain services (real estate was not mentioned) as well as the issue of taxing internet sales. MAR expects a sales tax expansion bill to be introduced in the coming session. It is also clear that the Legislature will consider an increase in the gasoline tax too. Lead Paint This summer a great deal of time was spent deciding whether the State of Maryland should place new lead paint requirements on home sellers. One idea discussed included mandatory lead dust tests of all pre-1978 properties. In addition to the work of this group, the Maryland Court of Appeals overthrew a portion of the current Maryland lead paint program for rental properties. Although the court permitted the registration part of the law to stand, it ruled that the liability cap for property owners violated the Maryland Declaration of Rights. Now property owners and property managers who have spent hundreds of millions of dollars in the last 15 years to make properties safe, face unlimited liability if a child registers a high blood lead level in their property. MAR and a number of groups will be working with the Legislature this winter to address this unsustainable liability.

Foreclosures Government, industry, and nonprofit representatives participated in a Foreclosure Task Force and MAR expects legislative proposals to follow. The most likely reform affecting REALTORS® could be an expansion of the safe harbor for licensed real estate agents who assist clients applying for short sale approvals. It also appears likely that the existing requirement for mediation prior to foreclosure could be expanded to provide for an earlier mediation option.

Ground Rents The Court of Appeals poked the General Assembly in the eye again, ruling another one of their legislative enactments unconstitutional. This time the court found that the law abolishing a ground rent that was not registered with the state an unconstitutional taking of property. As a result, there is now no penalty for failing to register a ground rent. The Ground Rent registry was one of the most important provisions of the ground rent reform passed by the General Assembly because it gave everyone involved in real estate sales clear information regarding the ownership status of the property. Proper titling and disclosure require some kind of mandatory registration, and MAR will seek a solution to this.

Sustainable Growth and Septic Systems Last year, MAR vigorously opposed legislation that would have prohibited septic systems in new major subdivisions. That legislation was never voted on, and instead the Governor agreed to form the “The Task Force on Sustainable Growth and Wastewater Disposal.” Recommendations that may result are further restrictions and/or requirements for new and existing septic systems, means-testing for septic grants, and increased fees paid into the Bay Restoration Fund

Transfer Taxes on Foreclosed Properties As if real estate-owned (REO) property wasn’t hard enough to sell, the government sponsored entities (GSEs) have taken the position that as quasi-governmental entities, they cannot be taxed when selling foreclosed property they own. County governments deal with this problem in different ways. Some counties require the buyer of the GSE property to pay ALL of the transfer tax and recordation fees. Other counties require the buyer to pay only half of those charges and

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forgive the rest. MAR and the land title industry in Maryland will be seeking legislation to require one rule that buyers only pay half of these taxes rather than picking up the seller’s half as well.

Montgomery County Legislation The Council Session began on Thursday, September 13, 2011 and reconvened on January 17, 2012. The Council sessions are available via streaming through the County Web site at Zoning Text Amendment 11-08, Residential Zones—Accessory Commercial Kitchens Summary: An amendment to the Montgomery County Zoning Ordinance to: - Define a commercial kitchen; and - Add accessory commercial kitchen as a permitted land use in certain residential zones under certain circumstances. Zoning Text Amendment 11-06, Fenton Village Overlay Zone -Building Height Summary: An amendment to the Montgomery County Zoning Ordinance to: - modify building heights in the Fenton Village Overlay zone and the adjacent CBD-0.5 zone - generally amend the provision for building heights in the Fenton Village Overlay Subdivision Regulation Amendment (SRA) 11-02; Minor Subdivisions Summary: SRA 11-02 would allow a parcel to be combined with a building lot under the minor subdivision process, under certain circumstances. Bi11 39-11, Taxation Development Impact Tax –Exemptions Summary: Bill 39-11 would exempt the market-rate dwelling units in any development which consists of at least 25% affordable housing units from the transportation and school development impact taxes. For additional information please contact Meredith Weisel, Esq. at or Katalin Peter, Esq. at

DC Public Policy Update For additional information, please contact Ed Krauze, Esq. at or Katalin Peter, Esq. at WDCAR SPEAKER SERIES – Upcoming Budget Issues WDCAR held its first 2012 “WDCAR Speaker Series” with Deputy Chief and Director of the Mayor’s Office of Budget and Finance, Eric Goulet, regarding the District budget. Budget Director Goulet spoke in great detail about the District’s current budget situation and challenges ahead. Members were able to ask a wide variety of in-depth budget questions affecting the District and our industry. Key dates are for the Budget are as follows: • March 23: Mayor Gray’s proposed FY13 budget transmitted to the Council • April 30: Council committees begin to Mark-up Budget • May 15: Council vote on Budget Request Act and Budget Support Act • June 5: Second vote on the Budget Support Act

2012 January - February

Legislation Passed or Moving

Legislation not passed at time of publication may be subject to amendments. B19-8, “Delinquent Debt Recovery Act of 2011” Initially, this bill focused on centralizing the collection of delinquent debts owed to the District within the Central Collection Unit of the CFO, Office of Finance and Treasury. Unfortunately, during the course of the debate of introducer Councilmember Mary Cheh’s (D-Ward 3) mark-up and the subsequent passing at first reading on December 6, 2011, the bill established a lien for the payment of delinquent debts on REAL PROPERTY. Councilmember Cheh’s bill not only tried to attach this lien in the District, but jurisdictions outside the District as well. WDCAR immediately voiced concerns to Councilmember Cheh’s office and has been working with her staff, the attorneys on GCAAR’s Contracts and Clause Committee, as well as the Washington Land Title Association to address the issues related to REAL PROPERTY. Additionally, WDCAR sent a letter in opposition to the bill to each Councilmember. Bill 19-16, “Winter Sidewalk Safety Amendment Act of 2011” Proposes separate penalty schedules for residential and commercial property owners. Commercial property owners will be subject to the following fine schedule: (1) $125 for the first offense; (2) $250 for the second offense; and (3) $500 for each subsequent offense. A similar schedule will apply to residential property owners who will face fines ranging from $25 to $100.   All property owners will receive a warning prior to being fined.  Additionally, in order to afford property owners adequate time to clear any snow and ice, the District cannot fine owners more than once per day.   Bill 19-511, “Board of Ethics and Government Accountability Establishment and Comprehensive Ethics Reform Amendment Act of 2011” – Passed Final Vote/Reading December 20, 2011 Legislation introduced by Councilmember Muriel Bowser (D-Ward 4), which consolidates the 14 or more pieces of ethics legislation introduced last year. Most notably, it bars felons from serving on the Council or as Mayor, establishes a three-member panel Board of Ethics and Government that can issue fines, and empowers the Attorney General to prosecute elected officials accused of ethical misconduct. The bill also bolsters financial disclosure and conflict of interest laws, in addition to creating an independent commission that will be empowered to enforce a toughened code of conduct for elected officials and public employees. B19-656, “Medical Marijuana Cultivation Center & Dispensary Locations Temporary Act” Passed final vote/reading Feb. 7, 2012 Legislation that would limit the amount of Medical Marijuana and Cultivation Centers and Dispensaries in each Ward of the District. No more than 6 cultivation centers may operate in a particular ward, and no more than one dispensary may be registered to operate in any ward in which 5 cultivation centers have been registered to operate. B19-514, “The Neighborhood Spillover Parking Prevention Act of 2011” To give the Mayor authority to grant a property owner’s request to make a property ineligible for residential parking permits when a property does not have any residents at the time of the a request. B19-568, “The Pedestrian Protection Amendment Act of 2011 To require vehicles to stop before passing through a crosswalk when a vehicle in the next lane is stopped. B19-571, “The Pedestrian Safe Streets Speed Limit Amendment Act” To improve pedestrian safety and safe walking routes for seniors, children, and families by reducing the speed limit on local residential streets to fifteen miles per hour; and to amend Chapter 22 of Title 18 of the District of Columbia Municipal Regulations to reduce the speed continued on page 16



2012 January - February

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DC Public Policy, continued from page 15 limit on residential streets to fifteen miles per hour; and to allow the Mayor to opt-out on a block-by-block basis.


B19-649: “College Preparation Plan Act of 2012” To require that all students in Public High Schools apply to at least one post-secondary institution before graduating; to require that all Public High Schools instruct students on the application process, how to apply for financial aid; any relevant materials needed for parents; any other preparation courses necessary to streamline a transition to post-secondary education; to require OSSE to gather information on the number of students that actually attend a post-secondary institution; and to require that every student take the SAT or the American College Testing program (ACT) before graduation. Bill 19-512, “Age-in-Place and Equitable Senior Citizen Real Property Act of 2011” Would amend section 47-863 of the District of Columbia Official Code to increase the eligible gross adjusted income limit to $125,000 for the purpose of qualifying for a 50% deduction in computing real property tax liability; and to re-define the terms “household adjusted income” and “residence.” B19-564: “District Workforce and Business Fairness Act of 2011.” To amend the Small, Local, and Disadvantaged Business Enterprise Development and Assistance Act of 2005 to include additional requirements for eligibility as a certified local business and to provide for yearly inspections to ensure compliance. B19-565: “District of Columbia Worker Assistance and Gainful Employment Support Act” To expand the criteria of eligibility for participation in the Earn Income Tax Credit program, to increase public awareness of the program, and to establish Qualified Employee Training Tax Credit. B19-602, “Real Property Tax Assessment Evidence Clarification Act of 2011” To amend Chapter 13 of Title 16 of the District of Columbia Official Code with respect to real property tax assessment information that may be considered as evidence to estimate just compensation in eminent domain proceedings. B19-610: “District Resident Workforce Tax Incentive Act of 2011” To create a tax incentive for companies who conduct business in the District of Columbia and whose workforce is largely made up of District of Columbia residents, and to provide further tax incentives if those companies employ hard to employ residents.

Proposed Resolutions

PR19-505, “Housing Finance Agency Board of Directors Charles R. Lowery Confirmation” PR19-506, “Housing Finance Agency Board of Directors Jacques Patterson Confirmation” PR19-507, “Housing Finance Agency Board of Directors Leila M. Batties Confirmation” Hearings/Roundtables PR 19-453, “Chief Tenant Advocate of the Office of the Tenant Advocate Johanna Shreve Confirmation” PR19-474, “Historic Preservation Review Board Maria T. CasarellaCunningham Confirmation” PR19-475, “Historic Preservation Review Board Nancy Pryor Metzger Confirmation”

Thank You 2012 RPAC Investors!

Golden ‘R’ Bonnie Casper Carole Maclure Dale Ross

Crystal ‘R’ Fred Kendrick Jill Michaels

Sterling ‘R’

James Coley Suzanne Des Marais Edward Downs Brandon Green Harold Huggins Adrian Hunnings Ellen Katz Tim Knobloch Ed Krauze Dana Landry Alana Lasover Bo Menkiti Michael Moran Frank Pietranton Randy Rothstein Joy Siegel Frank Snodgrass Christopher Suranna Patrick Weed Edward Wood

Capital Club Wendy Banner David Bediz Jan Brito Lori Connor Gregory Ford Jeffrey Ganz Ricki Gerger Sally Hamidi Mynor Herrera Diana Keeling Elley Kott Judith Levin Kymber Lovett-Menkiti Katie Maclure Yolanda Mamone Peg Mancuso Kevin McDuffie Michael McGreevy Dennis Melby Vittorio Muzzatti Ruth Papuchis Bonnie Roberts-Burke Jason Sherman Prabhjit Singh Mo Snowden Kirsten Williams

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2012 January - February

Legal Hotline Call Summary By Chris Darby, Tom Muldoon and John Nalls of Counselors Title, LLC, and Pardo & Drazin, LLC, General Counsel Below are some questions answered on the GCAAR and WDCAR Legal Hotlines. The answers provided here are the opinions of the authors, are for informational purposes, and are only for GCAAR members. Neither Counselors Title, LLC, nor Pardo & Drazin, LLC is providing legal advice, but rather providing a general statement of law. No lawyer/client relationship is - or will be established as a result of the material which follows. Readers are encouraged to retain their own counsel for their specific questions. Answers may have been edited for formatting purposes.

Question: How long are condo docs good for? I thought resale certificates were good for 30 days but my client just received one dated June 2011 and I want to double check the timeline with you since none is indicated on the Condo Addendum. Answer: There is no specific provision in DC Code Section 421904.11 specifying how long a resale certificate is valid. What the statute does require is that the owner furnish to the purchaser, on or prior to the 10th business day following the date of execution of the contract of sale, “a copy of the condominium instruments and a certificate setting forth the following: (1) Appropriate statements pursuant to § 42-1903.13(h) and, if applicable, § 42-1903.15, which need not to be in recordable form; (2) A statement of any capital expenditures anticipated by the unit owners’ association within the current or succeeding 2 fiscal years; (3) A statement of the status and amount of any reserves for capital expenditures, contingencies, and improvements, and any portion of such reserves earmarked for any specified project by the executive board; (4) A copy of the statement of financial condition for the unit owners’ association for the then most recent fiscal year for which such statement is available and the current operating budget, if any; (5) A statement of the status of any pending suits or any judgments to which the unit owners’ association is a party; (6) A statement setting forth what insurance coverage is provided for all unit owners by the unit owners’ association and a statement whether such coverage includes public liability, loss or damage, or fire and extended coverage insurance with respect to the unit and its contents; (7) A statement that any improvements or alterations made to the unit, or the limited common elements assigned thereto, by the prior unit owner are not in violation of the condominium instruments; (8) A statement of the remaining term of any leasehold estate affecting the condominium or the condominium unit and the provisions governing any extension or renewal thereof; and (9) The date of issuance of the certificate.

As long as the information provided includes all of the items listed above and is the most current information available, the seller is technically in compliance with the requirement of the statute. The best practice, however, and the practice anticipated by the statute, is to order the certificate after the contract has been ratified so that you know the information is current. Section 42-1904.11(b) requires the unit owner’s association to furnish the certificate within 10 calendar days of receipt of a request, which should allow enough time to provide the certificate to the buyer within the 10 business day limit. Question: I have a question about the allowable number of people that can inhabit a one bedroom apartment that is a condominium. In the District, my understanding is that 2 adults + one child can occupy a one bedroom apartment. Is this regulation for rental properties only or does this extend to owner-occupied units in a condominium? I have clients who have 2 small children and are currently looking at one bedroom condos in Georgetown. This would be their primary residence legally, although they probably would be there mostly during the school year and travel elsewhere periodically. Are there any concerns I should be expressing to my client here? Answer: The answer to your question depends not upon the number of bedrooms but their size. Section 402.2 of Title 14 (Housing) of the DC Municipal Regulations requires that each room used for sleeping purposes by not more than one (1) occupant shall be a habitable room containing at least seventy square feet (70 ft.2) of habitable room area. Section 402.3 requires that each room used for sleeping by two (2) or more occupants shall be a habitable room containing at least fifty square feet (50 ft.2) of habitable room area for each occupant. Any person over 1 year of age is considered an occupant. Therefore, for 2 adults and their 2 children over 1 year of age to occupy one bedroom, the bedroom must contain at least two hundred square feet. This regulation applies to both rental and owner occupied housing.



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2012 January - February

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Q uiz

Foreclosures 1. As a general rule, foreclosed homes sell for less than their market value. Correct Answer: False Good deals are out there, but you can never assume that you’re getting a bargain simply because it’s a foreclosed property. In states where home prices have risen the most, foreclosed properties sell within 5 percent of their full market value, according to a study by First American Real Estate Solutions, a Santa Ana, Calif., company that maintains a national database of real estate data. Plus, homes that are discounted are often located in unstable communities, are poorly maintained, and require costly improvements — reasons why the prior home owners didn’t just sell the property before defaulting. Furthermore, the lenders that own foreclosed properties are usually prevented from accepting offers lower than appraised value, at least during the first several months that a home is on the market, says Richard Courtney who wrote a chapter on “Foreclosures: Fool’s Gold” in his book Buyers are Liars & Sellers are Too! (Fireside Books/ Simon & Schuster, 2006). 2. In most states, if you bid on a foreclosed property at an auction, you also may be bidding on tax liens and other debt accrued by the prior home owners. Correct Answer: True Before you bid on a foreclosed property at auction, make sure you know what debts are part of the package. Conduct a title search to determine if any liens or fees are connected to the property. You may discover that you’d be taking on the previous owner’s senior liens (or first mortgages); junior liens (second mortgages or additional claims against the property), or tax liens (unpaid property taxes), says Ralph R. Roberts and Joe Kraynak in their book Foreclosure Investing for Dummies (Wiley, 2007). 3. The housing boom masked the high number of home owners who’ve struggled with paying their subprime loans — and these home owners may now be at high risk of foreclosure. Correct Answer: True For many borrowers, strong house price growth increased the

amount of equity in their homes and made it possible for them to refinance their mortgages despite being behind on the monthly payments, according to the Center for Responsible Lending. As housing prices decline, subprime foreclosures will rise, the organization’s research says; fewer delinquent borrowers will have the equity needed to refinance their loan or sell their home to avoid foreclosure. 4. Homeowners who always pay their mortgage on time don’t need to worry about foreclosed homes in their neighborhood. Correct Answer: False Foreclosed properties can hurt the value of nearby properties and even have a negative effect on local crime rates, research shows. Municipalities also take a financial hit: In a study on foreclosures in Chicago, researchers found that each foreclosure cost the municipal government more than $30,000, according to a report by the Homeownership Preservation Foundation in Minneapolis. Even one foreclosure can decrease the value of the other homes within 1/8-mile by 1.44 percent, according to research by Dan Immergluck, associate professor of city and regional planning at Georgia Institute of Technology. That’s why the National Association of REALTORS® is encouraging practitioners to educate clients on smart borrowing options, with the goal of reducing the number of foreclosures and strengthening communities. 5. Homeowners can sidestep foreclosure by transferring the title of their home to a foreclosure rescue company for a year or two. Correct Answer: False Beware: This is a foreclosure rescue scam. As the number of foreclosures grows, so does foreclosure fraud, according the National Consumer Law Center in Boston. Home owners who are desperate to avoid foreclosure may be swayed by unscrupulous companies that promise “fast cash” and “equity funding.” Here’s how one common scam works: A company claims it will help troubled home owners avoid foreclosure if the owners sign over the title of their home for a year or two. As part of the agreement, the company says the owners can continue to live in the property and pay rent until they have the financial means to buy the home back from the company. However, once the company has the title, it sells the home to a third party,

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leaving the borrowers without a home or home equity. A handful of states have proposed or enacted legislation to deter foreclosure rescue fraud, such as by allowing home owners to more easily back out of the deal. 6 . Any buyer can purchase a HUD home (a home that’s in possession of the U.S. Department of Housing and Urban Development), as long as he or she has the money or can qualify for the necessary amount of mortgage financing. Correct Answer: True Anyone who has the money or can qualify for the necessary amount of mortgage financing can purchase a HUD Home. HUD acquires its properties through the foreclosure of mortgages insured by the Federal Housing Administration. But be sure you know the condition of the home before you submit your offer; HUD homes are sold “as is,” so you’ll need to cover the cost of repairs or other improvements to bring the property up to market standards. For more information and a listing of homes for sale, visit HUD’s Web site. 7 . Reading the public notices at your local county courthouse — including bankruptcy claims and death certificates — is not an effective method of locating foreclosed properties. Correct Answer: False Such legal notices are among the most effective tools that investors can use to find foreclosed properties, says Steve Berges in The Complete Guide to Investing in Foreclosures (AMACOM, 2006). From those documents, you can find the names of the owners and the property addresses. Another good way to generate leads: Advertise in newspapers, magazines, and other mediums to let home owners and fellow real estate professionals know you’re interested in buying foreclosed properties. 8 . Once homeowners default on three mortgage payments, the home automatically goes into foreclosure. Correct Answer: False Lenders are often willing to work out a solution other than foreclosure. Home owners should notify their lenders as soon as they know they won’t be able to make a mortgage payment. Depending on the situation, lenders may give home owners more time to pay off the loan, lower the interest rate, or add all the missed payments to the loan amount and then increase

Meet Your GCAAR Committee: Young Professionals Network (YPN)

The leaders of the future are building their networks today. GCAAR’s YPN helps them do it. The committee selects topics, speakers, and locations for quarterly events and solicits and secures sponsors. The committee meets monthly.

2012 Roster

Colin Johnson, Chair Koki Adasi, Vice Chair Andrew Adler Michael Altobelli

2012 January - February

the monthly payment to cover the larger loan. Home owners also may be able to make a partial payment or skip payments if they can show a reasonable plan to eventually catch up on their payments (this option is known as forbearance). Educate yourself and home owners with NAR’s brochure, Learn How to Avoid Foreclosure and Keep Your Home. 9 . In many states, owners of foreclosed homes can reclaim their property — even after someone else has already bought it — by paying off the loan along with any interest, taxes, and penalties. Correct Answer: True All sales are not final in states with mandatory redemption periods. The foreclosed-upon home owners can come back to redeem the property even after it has been sold. Mandatory redemption periods generally range from 10 days to a year after the sale. Experts advise buyers of foreclosed homes in redemption states to hold off on costly renovations during the redemption period in case the owner redeems the property. Only a nonredemption state will guarantee the property is yours following a sale. Otherwise, you’ll have to wait and see. 10. Lenders stand to benefit when home owners default on their mortgage. Correct Answer: False Foreclosures are costly and time consuming for lenders, too. It’s simply not in their best interest for a home owner to default on payments or lose a home to foreclosure. In fact, lenders would normally favor a short sale to a foreclosure because the bank’s financial loss will likely be far less. In a short sale, the lender often forgives some or all of the home owners’ debt that remains after the property is sold. 11. Once a bank takes possession of a foreclosed home, the previous owner is free of all financial obligations. Correct Answer: False The IRS can still come back to bite. Former home owners may still have to pay a tax on a portion of their mortgage loan after a foreclosure because the sale is technically considered income. NAR has been actively trying to eliminate this phantom tax since the mid-1990s. NAR argues that it’s unfair to impose tax on a phantom income when the seller lost the home to foreclosure and most likely doesn’t have money to pay the tax.

Judith Bowen Thomas Castagnola Cher Castillo Freeman Trinity Jennings Todd Lewis Anthony Mancuso Megan Markey Vittorio Muzzatti Mia Orantes Leonard Perry, Jr. Jerald Pigg Valerie Riggs Jason Sherman Kenneth Storck



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2012 January - February

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Source: Information included in this report is based on data supplied by MRIS and its member Association(s) of REALTORS, who are not responsible for its accuracy. Does not reflect all activity in the marketplace. January 1, 2010 – December 31, 2010. Information contained in this report is deemed reliable but not guaranteed, should be independently verified, and does not constitute an opinion of MRIS or Long & Foster Real Estate, Inc. ©2011 All Rights Reserved. Exclusive affiliate of Christie’s International Real Estate in select areas.


Capital Area REALTOR® Jan/Feb 2012  
Capital Area REALTOR® Jan/Feb 2012  

January/Feb 2012