Illinis REALTOR® Magazine/July

LEGAL UPDATE: The Future is Here

Legalities of Drones and Surveillance Equipment

JULY 2014

THE VOICE FOR REAL ESTATE IN ILLINOIS

TURNING

RENTERS

INTO

BUYERS Tips for Building a Winning Real Estate Team

How to Help

Boomerang Buyers

+ PLUS

Showing the Power of R Building Homes for Habitat for Humanity

September 4-6, 2014 CHICAGO www.illinoisrealtor.org/fallconference

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#GameOnIAR

THE OFFICIAL PUBLICATION OF THE ILLINOIS ASSOCIATION OF REALTORS速

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Innovative

Big Data

Mobile

Green

MREDLLC.com 630-955-2755 help.desk@MREDLLC.com MREDLLC.com/training 630-799-1439 training@MREDLLC.com IL_REALTOR_July2014_FINAL.indb 2

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CONTENTS JULY 2014

Departments 5 President’s Message: Giving light to advocacy 7 What’s Online: 2013 Annual Report, education webinars, member benefit discounts, IAR Multicultural Summit 8 Quick Takes: At a Glance: Honoring the 30 Under 30, the impact of student debt, avoiding rental scams 10 At the Capitol: IAR Capitol Conference and Illinois Housing Leaders Conference 12 Legal Update: The Future is Here: Legalities of Using Drones and Surveillance Equipment in Your Real Estate Business

Cover art: pinkypills, elwynn and Brues/ Shutterstock.com

27 RVOICE: Home Rule and what it means to you 28 Power of R: REALTORS® pitch in on Habitat builds 29 Homefront: Meet the 2014 REALTOR® of the Year, Pat Callan 30 Commercial Corner: Placemaking and its role in commercial practice 32 Market Watch: IAR’s Faststats resource 34 REALTOR® Community: Spring Conference, mortgage burning, IAR’s LinkedIn company page

ILLINOIS ASSOCIATION OF REALTORS®

THE VOICE FOR REAL ESTATE IN ILLINOIS

Features

15

Turning Renters into Buyers

21

Build a Winning Real Estate Team

24

Return of the Boomerang Buyers Working with those who lost their homes and are ready for a new beginning

Sept. 4-6, 2014 • Chicago www.illinoisrealtor.org/fallconference

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Your NAr MEMbErship Now bENEfits CLiENts, too.

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As part of the REALTOR Benefits® Program, Liberty Mutual Insurance has been NAR’s exclusive partner for auto insurance for more than a decade. The latest product of that partnership, the Liberty Mutual Auto Insurance Referral Program™, lets you help your clients get the same exclusive savings on their auto insurance that is available to you. It’s also the same high-quality coverage recommended by NAR and available to you through the REALTOR Benefits® Program, so your clients and your reputation will be well protected.

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PRESIDENT’S MESSAGE Phil Chiles | ABR, CRS, GRI, SRES, 2014 IAR President Being called an ambassador has a nice ring to it.

The name evokes images of foreign postings, exotic food and quiet, behind-the-scenes diplomacy.

This year at the Illinois Association of REALTORS®, the term is associated with making sure bad policy doesn’t hurt your business or your clients’ dreams of buying property.

In October, I launched IAR’s 1,000 Points of Light program to get more people involved in the REALTORS® Political Action Committee (RPAC).

By the end of May, 174 Illinois REALTORS® had signed on to take part in recruiting 10 fair share givers each. So far, nine people have fulfilled their pledges, and many more are close to their goal.

REALTOR® issues get attention from policymakers. Elected officials know our members vote and have a vested interest in making sure the American Dream of property ownership is attainable for our clients.

RPAC plays a key role in our success by making sure our voice doesn’t get crowded out on real estate policy issues.

If you haven’t heard from an ambassador, don’t let that slow you down from supporting RPAC. Go to www.RPACnow.com and make a contribution today. A fair share donation is $20, but many REALTORS® have seen the value of the program and donate much more.

If you have agreed to be an ambassador or are one of the many REALTORS® who have already said ‘yes’ to an ambassador, thank you.

Your support helps keep our industry strong.

Best regards,

Nine people had completed their goal to recruit 10 new fair share members as of June 2, 2014.They are:

Andrew Cook Kristie DeBrun Robert Dohn Coldwell Banker- Campo Realty Inc. Coldwell Banker Residential Honig Bell Pawnee Schaumburg Morris

#PowerofR

www.illinoisrealtor.org/1000pointsoflight (login required)

Casey Meyers Berkshire Hathaway HomeService Woodstock

Piero Orsi RE/MAX Showcase Gurnee

Deb Prodehl Coldwell BankerHonig Bell Homer Glen

www.RPACnow.com DISCLAIMER: Contributions are not deductible as charitable contributions for federal income tax purposes. The Illinois REALTORS® Political Action Committee (RPAC) collects contributions from members of the National Association of REALTORS® (NAR) for political activities. A portion of each contribution will be used for state political activities; at least 30% will be used for federal campaign purposes. The federal portion will be charged against an individual’s federal contribution limits under 2 USC 441a. Contributions are VOLUNTARY and refusal to contribute does not affect membership rights. A member may contribute more or less than the suggested amount. A copy of our report filed with the State Board of Elections is (or will be) available on the Board’s official website www.elections.il.gov or for purchase from the State Board of Elections, Springfield, Illinois.

Dan Wagner Inland Real Estate Group Oak Brook

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Frank Wehrstein Ginger Westin Dickerson & Dickerson & Nieman Nieman Rockford Rockford

ILLINOIS REALTOR® July 2014

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Weichert puts it at your fingertips. ®

At Weichert, Realtors®, we are constantly innovating, developing resources to propel your career to a giant leap forward. Here are a few that may interest you:

Technology – Independent Research ranks Weichert.

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Leads – The Weichert Lead Network® provides a one of a kind, instant response experience for online house-hunters and provides local Weichert sales associates with live leads through a personal handoff.

Support – Weichert® University is available, on demand, offering hundreds of courses to fit your schedule. These are supplemented with webinars, live training, and skill sessions, to keep you out front.

If you are committed to making this your best year yet in real estate, tap into Weichert. Our offices continue to look for outstanding sales associates who have the drive to be the best. Call your local Weichert office today or 800-301-3000. We’d be glad to explain all Weichert can do to move you forward.

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The Way Forward Information about Weichert franchises is available on www.weichertfranchise.com or by calling 800-533-9007. *Experian Hitwise Most Popular “Websites in Business and Finance – Real Estate” ranked by view share, 8/13. ©2014 Weichert, Realtors®. Weichert® is a federally registered trademark owned by Weichert Co. All other trademarks are the property of their respective owners. REALTOR® 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. This advertisement is not an offering. An offering can only be made through a Uniform Franchise Offering Circular and in states where authorized. In New York State, an offering can only be made by a prospectus filed first with the Department of Law of the State of New York. Such filing does not constitute approval by the Department of Law. If you are presently under contract with a real estate franchise, please disregard this solicitation.

OUR ADVERTISEMENT HAS NOT BEEN REVIEWED OR APPROVED BY THE CALIFORNIA DEPARTMENT OF CORPORATIONS. ANY COMPLAINTS CONCERNING THE CONTENT OF THIS ADVERTISEMENT MAY BE DIRECTED TO THE CALIFORNIA DEPARTMENT OF CORPORATIONS at www.corp.ca.gov.

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Illinois Association of REALTORS THE VOICE FOR REAL ESTATE IN ILLINOIS

®

What’s Online

2014 IAR Officers

2013 Annual Report

President Phil Chiles, ABR, CRS, GRI, SRES pchiles@thegroup.com

Read all about the Illinois Association of REALTORS® 2013 highlights and accomplishments of last year. The 2013 annual report has a special focus on the association’s advocacy efforts. Also included are statistics, a timeline of the year’s events and a breakdown of the mortgage timeline for the IAR headquarters (paid off after just seven years!)

President-Elect James M. Kinney, ABR, CRB, CRS, GRI jim.kinney@bairdwarner.com Treasurer Mike Drews mdrews@dossrealtors.com

Download a copy of the report at www.illinoisrealtor.org/annualreport

Immediate Past President Michael D. Oldenettel, CRS, GRI mikeo@remax.net

Chief Executive Officer Gary Clayton, CAE, RCE Editor Jon Broadbooks Senior Editor Stephanie Sievers

•

Graphic Designer Katie Grant

Download your member benefits guide at www. illinoisrealtor.org/ memberbenefits

For advertising information contact Arlene Braithwaite, 410-772-0820, arlenetbg@comcast.net The ILLINOIS REALTOR® (ISSN 0744-221) is published four times a year during the months of January, April, July, and ­October by the Illinois Association of R ­ EALTORS®, Post Office Box 19451, Springfield, Illinois 62794-9451.

Periodical postage paid at Springfield, Illinois and at additional mailing offices. Postmaster: Send address changes to: The ILLINOIS REALTOR®, Post Office Box 19451, Springfield, Illinois 62794-9451, 217/529-2600.

Opinions expressed in any signed articles of the ILLINOIS REALTOR® are those of the author and do not necessarily represent the opinions of the Illinois ­ A ssociation of REALTORS ®. Advertising of product or services does not imply endorsement.

Advertising rates are available at www.illinoisrealtor.org or on request. ­Annual dues of every REALTOR®, ­REALTORASSOCIATE®, and Affiliate member of IAR includes $3 for a one-year subscription to the ILLINOIS REALTOR®.

Volume 51: Number 3 Copyright © 2014 Illinois Association of REALTORS® All rights reserved. www.illinoisrealtor.org www.yourillinoishome.com e-mail: IARnews@iar.org blog: www.IARbuzz.com

Like us on Facebook.

Join us on LinkedIn. Follow @ILREALTOR and @ILREALTORmag on Twitter.

Subscribe to YouTube.com/illinoisrealtor

Weekly Connection e-newsletter and IARbuzz.com blog

Education Webinars

www.illinoisrealtor. org/sites/illinoisrealtor. org/files/Education/ webex-courses.pdf Take the courses you need without ever leaving home with the IAR Licensing & Training Center’s interactive webinar series. IAR offers a variety of webinars taught by top instructors Annette Akey, Norm Willoughby and Lynn Madison throughout 2014. Find one that fits your schedule and register online at https://iar.webex.com

Download the most up-to-date forms, brochures, manuals and guides FREE for members, www.illinoisrealtor.org/ downloads

Member benefit discounts IAR members have great benefits such as: •

Legal tools, free forms and contracts

•

www.illinoisrealtor.org

•

Effective REALTOR® lobbying program at the city, county and state levels

•

CE that fits your schedule + an excellent GRI program

•

Downloadable consumer brochures

•

Member discounts including discounts to conferences

Multicultural Summit:

www.illinoisrealtor.org/ latinofactor Make plans now to attend the 2014 IAR Multicultural Summit,The Latino Factor: Global Opportunities in Your Own Backyard.

•

Housing market stats and forecasts

The event will be held from 9:30 a.m. to 1:30 p.m.

Sept. 4, 2014 at McCormick Place West in Chicago.

•

Illinois REALTOR® magazine

Registration and more details coming soon.

ILLINOIS REALTOR® July 2014

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QUICK TAKES At a Glance: Today’s REALTOR® Wonder how you compare with the typical REALTOR® in terms of income, transactions and experience? The 2014 National Association of REALTORS® Member Profile breaks down the numbers. Overall, the median gross income of REALTORS® rose 9.6 percent to $47,700, sales volume jumped for the third year in a row and the average age dropped from 57 years to 56 in 2013.

Other profile highlights:

57% of REALTORS® are female 9% work for a firm that was

bought or merged in the last two years

16% have at least one personal assistant

22% of residential brokers had at least one commercial transaction

80% are independent contractors with their firms

46% of residential brokers had a transaction involving foreclosure

42% had a transaction involving a short sale

78% said real estate is their only profession

82% are certain they will remain

in the business for two more years

Nation’s Older Population to Double Over Next 20 Years The Baby Boomer generation continues to shape U.S. cultural trends, this time in the “graying” of the nation. By

the year 2050, the U.S. senior population (those 65 and older) is expected to reach 83.7 million, nearly double its size in 2012, according to the U.S. Census

Bureau. Learn more about working with this demographic by earning the Seniors Real Estate Specialists® (SRES) designation.

Find information at www.seniorsrealestate.com

Feinstein and Thomson Named to 30 Under 30

Congratulations to Illinois REALTORS® Casselyn Feinstein, of ERA Team Feinstein LLC in Hinsdale, and Rebecca Thomson, of @properties (formerly with Jameson Sotheby’s International Realty) in Chicago, on being named to REALTOR® Magazine’s 30 Under 30 Class of 2014.

Feinstein

Thomson

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Is Student Debt Delaying Homeownership?

Student Debt Has Steadily Increased % share

$ Trillions

1.200 1.000

Student loans (in trillions)

10%

% share to total household debt

8%

0.800

6%

0.600 4%

0.400 0.200

2%

0.000

0% D3:Q1 D3:Q3 D4:Q1 D4:Q3 D5:Q1 D5:Q3 D6:Q1 D6:Q3 D7:Q1 D7:Q3 D8:Q1 D8:Q3 D9:Q1 D9:Q3 10:Q1 10:Q3 11:Q1 11:Q3 12:Q1 12:Q3 13:Q1 13:Q3

Long-term, a college degree can mean more financial opportunity. But in the short-term, high student loan debt can mean graduates are pushing off the idea of buying a home. Student debt is now second only to mortgage debt in terms of overall household debt. Student loan debt of $25,000 reduces borrowing ability by about the same amount, according to NAR research.

Graph: National Association of REALTORS® Source of data: FRBNY, HHD_C_Report _2013Q3

14% The percentage of U.S. vacation homes purchased in the Midwest in 2013.

Overall, vacation home sales in the U.S. were up 29.7 percent compared to the year before. (Source: NAR’s 2014 Investment and Vacation Home Buyers Survey)

BE ON THE LOOKOUT FOR RENTAL SCAMS! IAR Legal Services cautions REALTORS® to be aware of potential rental scams that involve their sales listings being posted on craigslist.org and other websites as rental listings when they are not for rent at all.

Such scams try to dupe people who respond to the fake ads out of money.

If you believe this has happened to you, or you want to learn more in order to prevent it from happening, go to www. craigslist.org/about/scams. This site offers helpful tips for recognizing different scams and provides contact information for various agencies that investigate these situations. If you believe you or someone else is in danger of physical harm, always start with a call to the local police.

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AT THE CAPITOL Julie Sullivan | Assistant Director, Legislative and Political Affairs

ILLINOIS REALTORS® SHOW THE POWER OF R IN SPRINGFIELD Hundreds of Illinois REALTORS® showed their commitment to private property rights and the real estate industry by attending the IAR Capitol Conference and Illinois Housing Leaders Conference in Springfield.

Some of the top legislative issues on their agenda: •

Support for a joint legislative initiative of IAR and the Illinois State Bar Association to reform the provisions of the Illinois Condominium Property Act that require incoming buyers of foreclosed condos to pay six month’s worth of the regular assessments, past due assessments, unlimited attorney’s fees, and other fines, fees and costs. The bill was sent to the governor May 22.

•

Protecting REALTORS’® ability to do broker price opinions. The association’s membership sees this as a very fundamental part of the real estate transactional process. The bill was unanimously approved May 30.

•

Support for an executive order issued March 31, 2014 which establishes a Division of Real Estate.

Members sought support for the initiative signed by Gov. Pat Quinn, which had been a longstanding goal.

Gov. Pat Quinn announces the new Welcome Home Illinois program at IAR headquarters.

IAR President Phil Chiles at the Illinois Housing Leaders Conference. Photo/Terry Farmer

IAR staff and members discuss legislative issues.

Photo/Terry Farmer

Illinois Housing Leaders Conference keynote speaker Shari Olefson.

Photo/Terry Farmer

The Illinois Housing Leaders Conference panel, “Working with Boomerang Buyers,” featured Terry W. Clemans, Bernie Miller, Mary R. Kenney and Sharon Gorrell. Photo/Terry Farmer

Hundreds of Illinois REALTORS® (left and right photos) attended the housing conference and IAR Lobby Day in Springfield. Photos/Terry Farmer

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ISSUES TRACKER Stay up-to-date on which bills are dead or alive at www.IARactioncenter.org Learn more about the issues and find additional coverage from the 2014 IAR Capitol Conference at www.illinoisrealtor.org/capitolconference

IAR staff and leadership during legislative visits.

Photo/Terry Farmer

Fox Valley REALTORS® met with local legislators on industry issues.

Buses unloading at the Capitol.

REALTORS® meet with House Republican Leader Jim Durkin, R-Western Springs. Photo/Terry Farmer

Rockford Area REALTORS® at the State Capitol.

IAR staff and the leadership team meet with House Majority Leader Barbara Flynn Currie, D-Chicago. Photo/Terry Farmer

IAR GAD Kyle Anderson talks with Rep. Wayne Rosenthal, R-Forsyth.

Sen. President John Cullerton, D-Chicago, meets with REALTORS®. Photo/Terry Farmer

Illinois Young Professionals Network (YPN) at the Capitol.

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LEGAL UPDATE Elizabeth A. (Betsy) Urbance |

IAR Legal Hotline Attorney; Associate, Sorling Northrup Attorneys

THE FUTURE IS HERE Legalities of Using Drones and Surveillance Equipment in Your Real Estate Business Q I am a real estate broker and I would like to

incorporate the use of drones into my practice by taking aerial photos using them. Is it correct that so long as I fly my drone below 400 feet above the ground, I should be free to do this?

A Not so fast. First, let’s clarify what is meant when discussing drones. The colloquial term “drone” is being used to describe what the Federal Aviation Administration (FAA) refers to as an unmanned aircraft system (UAS). FAA has very clearly stated that UASs, or drones, are covered by federal regulations and must not be flown without the proper authority.

This is true whether the drone is used for “recreational, hobby, business or commercial purposes.” (Busting Myths about the FAA and Unmanned Aircraft – Update; www.faa.gov/news/ updates/?newsId=76381 (March 7, 2014). In fact, FAA says it is “responsible for air safety from the ground up.” (Id., Myth #3). So, if a real estate broker wants to fly a drone to photograph his listed property from the air, this activity is under the FAA’s jurisdiction. His commercial use of the drone as used in this context refers to the use in his real estate brokerage business, whether he concentrates his practice in the commercial or the residential arenas. In short, he wants to use the drone for business purposes.

There has been a recent administrative case where FAA imposed a $10,000 fine on a drone operator who was taking aerial photos of the University of Virginia. The drone operator appealed the imposition of the fine and the FAA’s action was dismissed. FAA has promised to appeal this administrative ruling to the courts. So, at the time of this writing, the question on the authority to fly drones for commercial purposes is “up in the air.” (Pun intended) Federal Aviation Administration v.

Raphael Pirker (Docket CP-217)(March 6, 2014). In an effort to get more guidance on the subject, the National Association of REALTORS® (NAR) has joined a large group of other organizations in a letter addressed to FAA encouraging rulemaking to clarify and give guidelines for the commercial use of drones. (http://realtormag.realtor.org/daily-news/2014/04/09/nartrade-groups-urge-faa-clarify-drone-use) Until the FAA issues rules on the subject, and an FAA spokesperson has said maybe later this year; real estate licensees would be wise to refrain from using drones in their brokerage business. (DR Legal News, May, 2014, Todd Turner, citing The Washington Post, (April 8, 2014 by Brian Fung)). If a broker uses a drone in his business, he would be doing so at his own risk.

Speaking of risk, drone operators, whether piloting themselves for their own businesses or hiring a third party operator, need to check for adequate or any insurance coverage in the event of property damage or bodily injury resulting from accidents involving drones. The best advice for now is to stay grounded, follow regulatory developments, and check your insurance policies for coverage. If you must fly a drone for business purposes now, consult your company legal counsel for specific advice on this matter.

Q My seller client has her home listed for sale and

she would like to record buyers who are viewing the property using devices containing both video and audio capabilities. Is this permissible?

A Until recently, under Illinois eavesdropping statutes, the answer to this question when there is a possibility of audio recording, would have been no, not without both parties’ consent. (720 ILCS 5/14-1 et seq.) However, in March, 2014 the Illinois Supreme Court struck down the Illinois eavesdropping statute as overbroad and unconstitutional in two cases.

(People v. Clark, 2014 IL 115776, cited in Illinois Bar Journal,

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Lawpulse, What next for eavesdropping law in Illinois, Janan Hanna, May, 2014 and People v. Melongo, 2014 IL 114852, cited in DR Legal News, May, 2014, Todd Turner). Prior to these decisions, the Illinois eavesdropping statutes required the consent of all parties to an audio recorded conversation, even if that conversation was considered public. At the present time, given the Illinois Supreme Court’s decisions, there is an argument that an audio recording of an unknowing buyer would be permissible without the buyer’s consent. However, chances are good that there will be a revised eavesdropping statute in the relatively near future that will require consent of parties when there is some expectation of privacy. As a result, the best practice in the situation where the seller wants to audio record buyers touring a listed property would be for the sellers to obtain consent.

How should the seller obtain consent? Implied consent can be obtained by posting notice that conversations will or may be recorded. (DR Legal News, May, 2014, Turner) So if a seller insists upon using surveillance equipment which will include audio, the seller should post a notice stating that the buyers may be recorded when they are viewing the property.

This might be a good question for listing agents to address with their sellers before the property goes on the market.

Buyers’ brokers should advise their buyers to act as if they are being recorded at all times. This very situation occurred on the IAR Legal Hotline recently where the buyer and the buyer’s broker sat in a room within the listed property to discuss a

counter-offer and they suspected afterwards that the seller had been recording the conversation.

This scenario gives a slightly different spin to the adage, “buyer beware.”

Is it permissible for the seller to use video surveillance only? The answer to that question is generally yes, so long as there is no ability to audio record and so long as the video is not located in a room where there is a high expectation of privacy, such as the restroom.

In this age of advanced and affordable technology, it is prudent for listing brokers to discuss these issues with their seller clients. Likewise, buyer’s brokers should advise their buyer clients to be mindful of the possibility that they could be recorded and govern themselves accordingly.

GOT A LEGAL QUESTION? The IAR Legal Hotline is the Designated REALTOR®/managing broker’s go-to source for legal information.

HOURS: 9 a.m. to 4 p.m. Monday through Friday

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TURNING

RENTERS INTO BUYERS

By Bridget McCrea

It doesn’t take a magic potion to turn renters into buyers, but it does require a little planning, some buyer education and a dose of patience.

I

llinois REALTORS® have known for years that for most people, buying a home is clearly the smarter choice. Recent housing and mortgage market issues aside, it’s been proven time and time again that over the long haul, buying is better than renting.

But how do you turn today’s renters into tomorrow’s buyers? Illinois REALTORS® share their tips for convincing reluctant buyers to climb off the fence.

And if the “would-be” buyers that you’re working with are skeptical about the long-term benefits of buying, it’s time to whip out the National Association of REALTORS® rent versus buy comparison chart to back up your assertions. (See page 16.)

Consider this cost comparison scenario from NAR: Over a 7-year period, a renter starts out paying $800 per month with annual increases of 5 percent, while the homeowner purchases a home for $110,000 and pays a monthly mortgage of $1,000. After six years, the homeowner’s payment is lower than the renter’s monthly payment. With the tax savings of homeownership, the homeowner’s payment is less than the rental payment after three years.

Getting Them Off the Fence

Laying out the arguments in favor of buying versus renting real estate — even when the information is backed up by statistics from reputable industry sources — is no easy task. After years of watching property valuations fluctuate, friends and family lose their homes, and mortgage lending standards tighten, even qualified buyers are still waiting for a good time to jump into the market. Getting them takes a little planning, some buyer education and a dose of patience.

REALTOR® Linda Linder, a property manager at Strano & Associates/GMAC in Belleville, takes a soft-but-dedicated approach to working with renters who in many cases will turn into buyers. Rather than trying to convince them otherwise at the outset, Linder and her team track lease dates and — because they’re often working directly with the owners of the properties, some of whom may be interested in selling — hits up renters 90 days before their leases are up.

“We’ll send out a short email at that point, letting them know that their leases are expiring and to find out if they want to continue renting or

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“I talk to them about how this is a good time to get off the sidelines and about how their mortgage, taxes and assessments could add up to less than what they’d be paying in rent.” Heather Gustafson if they’re looking to buy,” says Linder, who then refers the business to one of the firm’s sales agents.

Strano’s website is an important marketing tool for renters, many of whom use the site to pay rent and submit work orders for repairs and maintenance. That helps to keep the company’s brand in front of LINDA LINDER lessees throughout the term of the lease.

“That’s just one more way to get them thinking about us when it comes time to buy a home,” says Linder.

When working with individuals who want to become homeowners, Linder says her biggest challenge is explaining that breaking a current lease is not feasible unless the person plans to buy the home that he or she is living in (and, if a deal can be worked out with the current owner). “A lot of times they think that if they’re renting from us they can get out of their leases early, but this isn’t the case,” says Linder. “In those instances, it takes some education in our role as the managing broker and how we don’t have any control over that aspect of the leasing arrangements.”

Pssst…What’s For Sale?

Over the last few years, REALTOR® Heather Gustafson, vice president of business development at CMK Companies in Chicago, has converted a number of renters into buyers. In most cases, those sales came about when a current client (i.e.,

the renter) called with a simple question: “Hey, what do you guys have for sale in such-and-such building right now?” Other times, the transaction resulted from a current renter interested in buying the specific property that he or she already resided in.

Gustafson says highlighting Chicago’s rising rental rates helps her persuade renters to look into purchasing properties.

“I talk to them about how this is a good time to get off the sidelines and about how their mortgage, taxes, and assessments could add up to less than what they’d be paying in rent,” says Gustafson.

When selling condominiums in a property in the Chicago Loop, Gustafson says CMK developed a “Rent Versus Buy” campaign that outlined the differentiation between renting and buying in the same building. “We ran the numbers,” says Gustafson, “and in some cases buying was $200 to $300 less per month after you took the tax savings into consideration.”

HEATHER She says the campaign produced GUSTAFSON good results and that it worked especially well with potential clients who were just “exploring the opportunity” and unsure whether they wanted to buy or rent.

Clients who want to lease are put in a database and tagged as “renters,” according to Gustafson, and looked upon as being potential buyers. CMK sends out periodic email blasts

Renting vs. Buying Source: National Association of REALTORS

®

YEARS

RENT PAYMENT

MORTGAGE PAYMENT

MONTHLY DIFFERENCE

AFTER-TAX SAVINGS

YEARLY DIFFERENCE

AFTER-TAX SAVINGS

1

$800

$1,000

-$200

-$50

-$2,400

-$600

2

$840

$1,000

-$160

-$10

-$1,920

-$120

3

$882

$1,000

-$118

+$32

-$1,416

+$384

4

$926

$1,000

-$74

+$76

-$888

+$912

5

$972

$1,000

-$28

+$122

-$336

+$1,464

6

$1,021

$1,000

+$21

+$171

+$252

+$2,052

7

$1,072

$1,000

+$72

+$222

+$864

+$2,664

8-30

Savings increase every year

16 www.illinoisrealtor.org

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and traditional mailings to these individuals to keep its name in front of them over the course of the lease, she says. One such mailing highlighted how a first-time buyer could qualify for and save money by acquiring a sub-$300,000 unit, for example, while another invited potential buyers to “pick their unit’s finishes” now and then use the next year to save for a down payment.

“From time to time (typically once a quarter) we’ll also call specific renters we’ve worked with and ask if they need help finding a new residence,” says Gustafson. “It’s all in the name of staying in close contact with these folks while not being terribly overwhelming.”

The Lease is Up

Getting buyers off the fence and into the market isn’t always easy, but Rich Levin, a real estate coach in Rochester, N.Y., has at least one tool that they can use to accomplish that feat: Let buyers know that getting in now — before interest rates and property values rise — is a solid idea. “Even though we’ve been in an environment of historically low interest rates for a while, it’s not going to last forever,” Levin points out.

“If you can get potential buyers and renters thinking along those lines, the odds that they’ll make a move will be greatly enhanced.”

And remind customers that timing the market doesn’t work — much like it doesn’t work in the stock market. “It will move faster than they can act on it,” he says. Levin points out that locked-in interest rates (for the time period between the offer and closing) could go away just as quickly if the U.S. returns to an era of rising interest rates. “Things are favorable RICH LEVIN right now, so be sure to remind your clients of that and use it to your advantage when marketing and selling.”

But what about the renter who is dead-set on leasing — at least for the time being? Levin says those individuals should be managed with a long-term customer contact campaign that includes email, phone calls, social media updates, traditional mailings, and even the occasional in-person visit. The idea is to keep your name “top of mind” for those potential buyers,

knowing that at some point in the near or distant future they will likely entertain the thoughts of buying real estate.

But don’t expect to jam a bunch of names into a drip email campaign and hope that the automation does all of the work for you, says REALTOR® Adam Merrick, CEO of Adam Merrick Home Selling Team at Keller Williams Premier Realty in Peoria. “In today’s technology-centric world, most agents want to pop someone on a drip and hope that it nets some results in the next 12 to 18 months, but it just isn’t that easy,” says Merrick, who prefers phone contact and relationship-forming over email marketing.

“There’s so much spam out there now that it’s too easy to get lost in the shuffle and have that client call someone else when it’s time to buy,” says Merrick. “You have to make some phone calls and stay consistent with your communication. If you ADAM MERRICK don’t mix in at least a few ‘live’ conversations, those prospects just aren’t going to engage with your electronic communications and they’re not going to call on you when their lease is up.”

About the writer: Bridget McCrea is a business, real estate and technology writer in Clearwater, Fla. She can be reached at bridgetmc@earthlink.net.

Resources for Potential Homebuyers The Illinois Association of REALTORS® RVOICE program has free brochures and other resources that you can share with renters who are thinking about becoming buyers: •

Homeownership: Understanding What You Can Afford, Mortgages, and Closing Costs

•

Homeownership: Understanding the Costs of Owning A Home

•

What You Need to Know About Purchasing a Condominium with an FHA-Insured Mortgage

Available by download at http://www.illinoisrealtor.org/rvoice/ downloads or ordered in bulk from the IAR RELATOR® Store: http://shop.illinoisrealtor.org/catalog (only shipping charges apply).

15-17_feature_renters-buyers.indd 17

ILLINOIS REALTOR® July 2014

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GAME ON!, Illinoi

OUR TIME IS

RE-MOORE

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et has “Every Mark to rket — How a Luxury Ma ccess Maximize Su in Yours”

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INAUGURAL GALA Celebrating incoming IAR president

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Get inspired, gain valuable education and referral contacts when the Illinois Association of REALTORS® Fall Conference & Expo returns to the city of Chicago.

Just $99 a day or $149 for the full conference (before Aug. 14)

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#GameOnIAR 6/6/2014 6/5/2014 1:46:00 3:00:27 PM PM

GAME ON!!

Schedule At-A-Glance*

6 hours CE

Thursday, September 4

Pitfalls & Possibilities: Negotiating Contracts

9 a.m. - 1:30 p.m. Pre-Conference Event IAR Multicultural Summit: The Latino Factor: Global Opportunity in Your Own Backyard Register at www.illinoisrealtor.org/latinofactor 9 a.m. - 5 p.m. Fall Conference Registration Desk Open 1:30 p.m. Continuing Education (CE) Registration 2 - 5 p.m. CE Session with Lynn Madison - Elective RB 707 - Pitfalls & Possibilities: Negotiating Contracts 5 - 6:30 p.m. Networking Reception 6:30 p.m. Past Presidents Reception and Dinner (invite only) 6:30 - 8 p.m. Illinois YPN Social

Friday, September 5

8 a.m. - 4 p.m. Conference Registration Desk Open 9 - 11:15 a.m. Opening Session with Ashton Gustafson: “Making Music in a Noisy World” 11 a.m. - 6 p.m. Expo Open 11 a.m. - 1 p.m. Cash Lunch in Expo 1:30 p.m Continuing Education (CE) Check-in 2 - 5 p.m. CE Session with Marki Lemons Ryhal COR 1625 - Core B Legal Issues: Short Sales 2014 & Beyond 2 p.m. - 3:15 p.m. Break Out Session with Ashton Gustafson: “Time Management: Systems, Tools, and Disciplines” 3:30p.m. - 4:45 p.m. Commercial Panel: “The Retail World from the Perspective of the Landlord” 4:30 - 6 p.m. Networking Reception in Expo 6:30 - 9:30 p.m. WCR Installation & Banquet

Saturday, September 6

8:00 a.m. - 1:00 p.m. Conference Registration Desk Open 9 a.m. - 10 a.m. Morning Session 10 a.m. - 1:30 p.m. Expo Open 10:30 - 11:30 a.m. Keynote Session with Matt Tenney: “Serve to Be Great: How Being Selfless Will Help You Sell the Roof Off” 11:30 a.m. - 1:30 p.m. Cash Lunch Available in Expo 1:30 p.m. - 3:00 p.m. IAR Legal Services Update 1:30 p.m. - 3:00 p.m. Break Out Session with Laurie MooreMoore: “Every Market has a Luxury Market — How to Maximize Success in Yours” 6:30 - 7:15 p.m. Inaugural Gala Reception Honoring Jim Kinney, 2015 President of the Illinois Association of REALTORS® 7:15 - 9 p.m. Inaugural Gala

RB 707 Elective CE (3 hrs.)

Lynn Madison

Legal Issues: Short Sales 2014 and Beyond COR 1625 Core B CE (3 hrs.)

Marki Lemons Ryhal

Register today!

1-800-252-2910 | register@iar.org www.illinoisrealtor.org/fallconference

Just $99 a day or $149 for the full conference (before Aug. 14)

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#GameOnIAR 6/6/2014 6/5/2014 1:46:19 3:00:30 PM PM

BUILD A WINNING

Real Estate Team

By Chris Stroisch REALTOR® Elizabeth Ballis resisted the idea of hiring someone to work for her for more than a decade but eventually, she like many other agents, had to decide whether it was time to build her business by building a team.

“I was in business for 11 years when my husband coaxed me into hiring my first assistant to move forward,” said Ballis, an agent with Coldwell Banker in downtown Chicago, who has worked in the real estate industry since 1980. “The idea of having an assistant or a partner and having to delegate was really hard. I never really wanted to manage people.”

Once you’ve decided to build a team, how do you go about putting your plan in action? Several Illinois REALTORS® share their strategies for putting together the right real estate team that will work for you.

Despite Ballis’ initial resistance, her business grew 30 percent the first year she had a team member on staff. Plus, having someone to help clients with open houses and paperwork allowed Ballis to get involved with activities outside of the office.

“It gave me the luxury to do so much more knowing that someone was there to help me,” Ballis said. “By having a partner, you have the opportunity to go to meetings with the (local) association and get to know other people. It also gives you the opportunity to give back in different ways and to get to know other agents.”

After two years as an agent, REALTOR® Missy Jerfita realized she could not manage all of the paperwork and do everything she wanted to do for her clients.

“I realized early on you can’t manage every detail and give 110 percent,” said Jerfita, a 12-year agent with KoenigRubloff Realty Group in Chicago.

“There was a point in my career where I was so stretched I hired an assistant to handle all of the paperwork and phones,” Jerfita said. “Then, I hit another point in my career when I couldn’t give all my cliElizabeth Ballis ents 110 percent and get back all the leads I was receiving, so I hired my first buyer’s agent.”

Jerfita’s team now consists of three buyer’s agents, an assistant and Jerfita as the seller’s agent.

REALTOR® Amanda Wycoff, an agent for Coldwell Banker in Bloomington, found herself in the similar situation of trying to find better work-life balance.

Missy Jerfita “I got to a point where I was on track to close about a house a week, 60 houses that year,” Wycoff said. “I was booked three weeks out with appointments and didn’t have time to spend with my buyers. I had zero time to show my buyers around and really zero time for a life.”

Wycoff hired REALTOR® Julie Duncan, who was already an agent in central Illinois and who served on a real estate committee Wycoff chaired.

Duncan initially helped Wycoff with open houses and eventually became the buyer’s agent. As a team, the two sold 100 houses in 2013.

“Once we joined as a team, we increased our volume by 70 percent,” Duncan said.

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The two, deemed “Team Wycoff” by Duncan, now have an office assistant who is in the process of getting a real estate license. Once that happens, the assistant will eventually handle open houses and assist buyers.

Questions to ask before hiring someone

“The biggest reason I see teams fail is because there is a lack of a team leader to create the environment for team success.”

– Industry Trainer Lori Cox

Before hiring someone or creating a team, agents need to ask themselves a series of questions to determine whether it would be a better business strategy for them to remain solo, according to Lori Cox, a co-author of the NAR Short Sale and Foreclosure Certification (SFR) and frequent instructor for the National Association of REALTORS®, who has worked in the real estate industry since 1987.

“Are the reasons because there is an overflow of business? Or, is the goal to have an unlicensed transaction and marketing specialist that will handle the unlicensed activities, such as social networking and transaction paperwork? Is the purpose to have a better quality real estate experience for each represented client? Is the goal to Lori Cox have quality time available to enjoy life outside of real estate?” Cox asked.

“None of these reasons are right or wrong,” she said. “The reasons, though, should assist in developing the right group of individuals to achieve the desired goals. Once reasons have been determined, interviewing and hiring strategies can then be implemented to be certain the team is being successfully formed.”

Drawbacks of a team

Hiring additional agents or licensed staff can lead to business growth and more time spent outside of the office while others focus on particular client groups, marketing initiatives and office work. However, building a team can have drawbacks.

“When people hire you as their agent, they expect you to never have a life. They want to know you have a partner, but they want to deal with you all of the time,” Ballis said. “If you want your business to grow, though, you can’t have one person trying to do everything and trying to accommodate every client.”

Other drawbacks can occur if there are any missteps during the hiring process where failure to hire the right person can cost time, money and relationships.

“I had a little misstep because I hired someone who just wasn’t a good fit,” Ballis said. “When you start over, it’s hard because you lose some of the relationships you built during that time.”

To avoid this drawback, Jerfita recommends hiring agents on a trial basis.

“One of the biggest lessons I learned is hiring the right people for the right position,” Jerfita said. “When hiring I would give a three month trial period to make sure it’s the right fit. If it’s not a fit, don’t drag out the process of talking with the agent and parting ways. The wrong fit will cause double the work and bad customer service.”

Building the right team

Finding a team of people to work for you can be easy but finding the right team members who have similar personalities as your own and who share your goals and objectives can be a lengthy process.

“When you hire someone, you have to know what their goals are,” Ballis said. “If you need to be away, you need to make sure you have the right people who are going to step up and be available.”

Ballis recommends finding agents or licensed staff members who have similar personalities, a strong work ethic and strengths that complement your weaknesses. Also, look for newer agents within your real estate group and find ways to partner with them.

“Have them help you with open houses and showings; have them shadow you,” Ballis said. “Once you find someone who can work well with you, give them more and more responsibilities.”

If you hire an existing agent who already has plenty of business, consider consolidating their listings with your own to make them feel like a partner, Ballis said.

The key is to establish goals and standards that all team players share and believe are important to good business.

“Any benefits of having a team need to be benefits that all team players enjoy,” Cox said. “When the team functions as a unit with the same standards, the team benefits from the synergy and, in the end, the team provides a better quality experience for all 22 www.illinoisrealtor.org

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“One of the biggest lessons I learned is hiring the right people for the right position. When hiring I would give a three month trial period to make sure it’s the right fit. If it’s not a fit, don’t drag out the process of talking with the agent and parting ways. The wrong fit will cause double the work and bad customer service.”

– REALTOR® Missy Jerfita clients because the team believes in themselves and instinctively wants the experience to be unlike other real estate transactions that clients may have experienced in the past.”

Having clearly defined roles in the beginning can make the difference between having a long-lasting, successful team where everyone feels like they are a partner and a weak team where everyone is out for themselves.

“Some teams aren’t as successful as they could be because they don’t have clearly defined roles,” Duncan said.

Julie Duncan “Make sure you hash it out at the very beginning and decide who is doing what.

Roles need to be defined so one person doesn’t feel like they are doing more work than the other.”

Similar to defining roles and responsibilities, compensation should be clearly defined at the beginning of a partnership.

“Put it very clearly in writing, so there are no discrepancies, what kind of split Amanda Wycoff you’re going to do,” Wycoff said. “Make sure it is very clear and very thought out. It takes the guess work and the unknown out of the situation.”

Wycoff also recommends meeting with team members on annual business to determine if the compensation is fair and to ask if anything needs to be adjusted.

“You want them to feel like they are a part of the team,” she said.

“Begin with a second member of the team, master the tasks, see success and then take a step back to determine what the next step should be,” Cox said.

Agents also face pitfalls when they fail to be the team leader.

“The biggest reason I see teams fail is because there is a lack of a team leader to create the environment for team success,” Cox said. “If there is a team leader who is ego-centered and who only established the team to grow their own business rather than develop a highly-efficient team, it is a recipe for less-than-steller results.”

Team leaders are encouraged to genuinely strive to develop team members. People who do not feel valued or nurtured are likely to quit.

“Communication and respect for each team member is paramount to long-term success,” Cox said. “Without set goals and systems to effectively manage the business, the team doesn’t grow; team players get frustrated and leave when a better opportunity comes along.”

Bottom line: start slow and decide why you want to create a team in the first place.

TIPS FOR BUILDING A TEAM •

Start slowly and ask yourself why you want to create a team in the first place.

•

Look for team members with similar personalities as your own and who share your same goals and objectives.

•

Hire one team member at a time.

•

Set clear goals and objectives at the very beginning.

•

Be the team leader.

Determining the team size and makeup

“I’m always one to say ‘start slow’,” Cox said. “Trying to go from a solo agent to a team of many players is too big of a change all at once.”

Plus, there is no one size fits all when it comes to creating the perfectly-sized real estate team. The size depends on the goals of the agent who wants to create a team in the first place.

“Look inside yourself and analyze your daily work habits and growth opportunities,” Cox said. “Ask yourself what has been the key to your current system and where you see yourself in 90 days, 180 days, a year from now, three to five years from now. Look to that future picture of your success and establish your team based upon where you see yourself in the future.”

Cox warns that agents face challenges when they try to expand too quickly.

About the writer: Chris Stroisch has been a freelance writer for daily and weekly newspapers, business magazines and not-forprofit publications for nearly a decade. He can be reached at chris.stroisch@hotmail.com

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Return of the

BUYERS Working with those who lost their homes and are ready for a new beginning BY STEPHANIE SIEVERS, SENIOR EDITOR

F

or some of REALTOR® Anna Klarck’s newest buyers, the path to homeownership has been bumpy, but it is one her clients are still eager to follow.

The market’s newest buyers were some of the hardest hit by the housing downturn, losing their homes to short sales, foreclosure or even bankruptcy. But they have dusted themselves off and are now ready to buy again.

They are “Boomerang Buyers” and as time passes, more of them are beginning to reenter the housing market.

Klarck, a broker with RE/MAX Showcase in Long Grove, has seen renewed interest from former short sale clients in the last year as more of them restore their credit, put aside money for Anna Klarck down payments and get past the mandatory waiting periods needed to qualify for mortgage financing again.

“I’m seeing more people coming back and buying again,” she said. “The excitement of these buyers is something that I just love to see.”

It’s a trend that more Illinois REALTORS® will be encountering and agents who know how to navigate the financing hurdles and concerns of boomerang buyers will be ahead of the game.

According to the 2013 NAR Profile of Home Buyers and Sellers, six percent of U.S. buyers had previously sold a distressed property through short sale or foreclosure.

The trend will likely continue as more distressed properties move through the system. Since late 2008, there have been approximately 4.9 million completed foreclosures across the country and more are in the pipeline, according to CoreLogic.

The Illinois foreclosure picture is improving. In the spring, Snapshot of Today’s the state’s foreclosure inventory was declining at a faster pace and if that trend continues, invenBecause boomerang buyers are just tory could return to pre-bubble beginning to emerge, statistics are fairly levels later this year, according to scarce, but some analysts estimate that a recent forecast from Geoffrey 1.5 million consumers who have gone through foreclosure would be eligible to J.D. Hewings, director of the buy in early 2014, according to AfterForeRegional Economics Applications closure.com, a website for consumers Laboratory of the University of who have gone through short sale or Illinois. foreclosure. The site polled these conEarlier this year, the Illinois sumers and found: ® Association of REALTORS • 80% are interested in buying again hosted the 2014 Illinois Housing Leaders Conference, a day• 40% report higher income than long event focusing on what when they purchased the first time REALTORS® need to know to • 61% report other debt obligations help boomerang buyers and feaare lower than when they first turing credit experts, mortgage purchased bankers and housing industry • 46% report the desire to purchase officials. in a lower price range this time Their advice: Be an informed resource by staying up-to-date on the programs and requirements that can help or hinder your boomerang buyers. Know the factors that can affect how long it takes a person to fully repair their FICO credit score.

A boomerang buyer who went through foreclosure will take a greater hit to their score than someone who sold through short sale. And clients who had better credit before losing their home will take longer to get their score back where it was, said Terry W. Clemans, executive director of the National Consumer Reporting Association. For example, it could take a consumer seven years to restore a FICO score of 780 after foreclosure compared to three years for someone with a score of 680.

Familiarize yourself with the various waiting period guidelines for different financing options. Qualifying for a VA loan could take as little as one year for some boomerang buyers while a loan through Freddie Mac or Fannie Mae could take longer. Other programs, such as the Federal Housing Administration’s Back to Work program can shorten the waiting period to one year.

Shari Olefson, director of the Carnegie Group, author and keynote speaker at IAR’s Housing Conference said boomerang buyers will be an important

Boomerang Buyers

24 www.illinoisrealtor.org

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factor in the emerging market and REALTORS® need to build a referral pipeline now to identify and assist them.

So how can REALTORS® help these would-be return buyers?

Klarck has had success maintaining relationships with the distressed sellers she helped through short sales. She says agents need to stay in touch.

Send them market materials with updates on sales and pricing activity in the neighborhoods where they eventually want to buy. Not only does it keep them informed, it can motivate them and keep them focused on their goal of buying, she said.

Since restoring their credit can be one of their biggest obstacles, Klarck connects them with a trusted loan officer who can offer advice on where they stand with their credit and what they need to fix. The lending landscape has changed since they last bought a home so they may need to be educated about how much they will need for a down payment or closing, Klarck said. “(A three year waiting period) is a long time to wait. All these people when they bought (their previous homes) believed that it was the best investment that you could make,” Klarck said. “To see them coming back, it gives you the feeling that the confidence in the buyer’s mindset is there.”

More Online: Find highlights and PowerPoint presentations from the Illinois Housing Leaders Conference at www.illinoisrealtor.org/ capitolconference

Playing the Waiting Game How long it takes for someone who has gone through a short sale or foreclosure to qualify for mortgage financing varies on the loan product. Bernie Miller, director of mortgage banking with The Federal Savings Bank offered these general guidelines: Bernie Miller

The Federal Savings Bank

WAITING PERIOD REQUIREMENTS Conventional DEROGATORY EVENT

VA

FHA

USDA

*Note* All waiting periods are listed per AGENCY guideline only (and also subject to investor overlays).

Chapter 7 BK

4 years

2 years

2 years (Discharge to Application)

3 years

Chapter 13 BK

2 years discharged; 4 years dismissed

1 year

1 year (of the pay out period Elapsed to Application)

3 years

Multiple BK’s

5 years

Foreclosure

7 years

2 years

3 years (Deed to Application)

3 years

Short Sale or DIL (Deed-In-Lieu)

FNMA: 2 years to 80%; 4-7 years to 90%. FHLMC: 4-7 years to 90%

2 years DIL/ UW Discretion Short Sale

3 years

3 years

Not allowed (Typically NO derogs after BK allowed).

The state’s new loan product, Welcome Home Illinois, is aimed at first-time homebuyers but since the Illinois Housing Development Authority (IHDA) defines first-time buyers as anyone who hasn’t owned a home in three years, boomerang buyers could qualify once their waiting period is over. IHDA loan products appeal to buyers who don’t have the highest credit scores or a lot of money saved for a down payment. Borrowers receive homebuyer counseling and can qualify for $7,500 in down payment assistance. Learn more about Welcome Home Illinois at welcomehomeillinois.gov.

c h i c ag o l a n d ’ s h o m e l e n d e r

W

intrust Mortgage has offices located throughout the Chicagoland area. Call us at 847-939-9500 or go online to www.WintrustMortgage.com to find a Loan Officer near you!

9700 W. Higgins Road, Suite 300 • Rosemont, IL 60018 Wintrust mortgage is a division of Barrington Bank & Trust company, n.a., a Wintrust community Bank. Wintrust nmls# 449042 – © 2013 Wintrust mortgage. 131106093

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ILLINOIS REALTOR® July 2014

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NEW! Peoria Location Peoria Marriott Pere Marquette 501 Main St., Peoria, IL

Single/Double room rate: $109 + tax Reservation deadline: Nov. 7, before 5 p.m.

Hotel Reservations: 309-637-6500 | 800-228-9290

December 1 - 4, 2014 Course II

Don’t miss out! Terry Watson kicks off Course II

Course III

$325 by Oct. 31 $340 by Nov.1 - 21

$325 by Oct. 31 $340 by Nov.1 - 21

December 3 - 4, 2014 Grad Course $204 by Oct. 31 $224 by Nov. 1 - 21

The GRI Graduate Course is designed for those who have already earned their GRI Designation.

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. Terry provides ridiculously effective and easily implementable strategies. In short, Terry gives your organization the tools your people need to get out of their own way while making them laugh till they snort in the process.

Need Course I? The Illinois Association of REALTORS® offers TWO FASTTRACK OPTIONS to earn credit for Course I so that you can move directly to Course II of the program.

To register: Visit www.illinoisrealtor.org/GRI

IAR Licensing & Training Center

Real Estate Licensing & Continuing Education

The IAR Licensing & Training Center is your TRUSTED SOURCE for state-approved education.

Complete courses

!

NEW

WITHOUT LEAVING HOME!

2014 WEBINARS July 22 & 23 -

Broker Pre-license

Norm Willoughby

August 11 & 12 - Broker Pre-license Lynn Madison

INSTRUCTORS

September 17 & 18 - Broker Pre-license Norm Willoughby October 14 & 15 --Broker Pre-license Norm Willoughby November 5 & 6 - Broker Post-license Applied Real Estate Practices Lynn Madison

Norm Willoughby

(for any Broker licensed after 2/1/14 through 4/30/16)

Norm Willoughby

November 19 & 20 - Broker Pre-license Lynn Madison

Register online at

https://iar.webex.com Cost for 15-hour Webinars: $159

December 16 & 17 - Broker Pre-license Lynn Madison

www.illinoisrealtor.org/education 1-800-523-5077

26 www.illinoisrealtor.org

IL_REALTOR_July2014_FINAL.indb 26

6/6/2014 1:37:42 PM

V ICE Mike Scobey |

Assistant Director, Advocacy and Local Issues

UNDERSTANDING (AND OPPOSING) HOME RULE

H

ome rule comes up in every election. While it gives municipalities more local autonomy, when home rule powers are misused, it can negatively impact real estate and private property owners. REALTORS® can be a voice of reason when it comes to educating the community about the unintended consequences of home rule.

What is home rule? Pursuant to the Illinois Constitution, a municipality can seek to become a home rule unit if the voters approve it in a referendum. The Constitution also states that a municipality automatically becomes a home rule unit when its population reaches 25,000. With home rule status comes additional powers for municipalities to regulate and tax its citizens and businesses.

WHY DO ILLINOIS REALTORS® OPPOSE HOME RULE?

• Increased debt for local governments • Higher property taxes without voter approval • More regulations, red tape and fees on real estate transactions • New inspections and fees Some home rule municipalities have abused their powers by attempting to control property transfers through point-ofsale inspections and imposing regulations regarding: inspections of apartment buildings and vacant homes; landlord-tenant relationships; and crime prevention measures. Some home rule units have passed property demolition taxes, unfettered impact fees and excessive fees with the inspection programs.

STRICTER BUILDING CODE ENFORCEMENT…THAT GOES BEYOND HEALTH AND SAFETY PROTECTION

The Illinois Association of REALTORS® believes that building code enforcement is an important function for any municipality. But when enforcement includes the following measures, we believe that home rule units are going too far: • Prevent the sale/transfer of properties.

• Prevent the sale of “AS IS” properties.

• Force a property owner to convert/change the permitted use.

• Impose a fire sprinkler mandate with large renovations of a home.

TAXATION POWERS OF A HOME RULE UNIT

A broad range of taxation options are available to home rule municipalities. Prior to 1997, home rule units could freely

adopt a real estate transfer tax, but changes in state law (which IAR was instrumental in getting passed) put limits on this.

Home rule units must go to a referendum to get a transfer tax adopted or increased. Except for this limitation—and a few others that are specifically set forth in state law—home rule units are free to enact any kind of tax (except an income tax) they want. Home rule units are even exempt from the Property Tax Caps law.

The Illinois Constitution specifically states that only home rule units can incur debt. This enables home rule units to do long-term financing of infrastructure projects. This can be good for a community and it can attract new businesses.

This is a genuine benefit to being a home rule unit as economic development is important for all Illinois communities.

However, the question of how the debt will be managed and financed is an important issue for citizens in existing home rule municipalities or those who are considering becoming a home rule unit.

Since home rule was enacted in 1970, REALTORS® have seen abuses of home rule power in some municipalities including some of these more extreme examples: • In 1998, Highland Park enacted a $10,000 residential “teardown tax.” In 2005, Evanston passed a similar tax. In 2008, Highland Park considered increasing its tax to $25,000.

• Several home rule municipalities have adopted what is known as a “zero-dollar transfer tax.” While there is no direct taxation cost to the seller, this is an attempt by the municipality to block a transfer in order to enforce building code regulations. (The municipality will deny issuance of the transfer stamps.)

• With some pre-sale home inspection ordinances, the municipalities will require an escrow deposit from buyers of “AS IS” properties that have totaled as high as $40,000.

• Impact fees in several municipalities are imposed for libraries, police cars, fire protection equipment and “public art.” No statutory authority exists for these fees but these municipalities claim their home rule status as the authorization.

• Since 1988, pursuant to a home rule ordinance, a tenant in Chicago is entitled to “damages” and attorney’s fees if the landlord did not return the correct amount for interest on the security deposit.

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Showing the Power of R

Building Homes for Habitat for Humanity

Murphysboro

#PowerofR

The Illinois Association of REALTORS® is building three homes for Habitat for Humanity this year. By the time of this magazine’s publishing, homes in Murphysboro and Springfield are scheduled to be complete. You can still sign up to help build a home in Aurora with work set to begin July 7.

Thanks to the many volunteers who signed up, the American Dream of homeownership is now a reality for three Illinois families. #PowerofR

Springfield

Photo submitted by REALTOR® Mabél Guzmán

Visit www.illinoisrealtor.org/IARHabitat2014 to sign up to help.

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HOMEFRONT

By Stephanie Sievers | Senior Editor

MEET THE 2014 ILLINOIS REALTOR® OF THE YEAR PAT CALLAN You began your career as an accountant. How did you get involved in the real estate business?

I grew up on a farm in Iowa and I’ve always had an affinity for the land and have been drawn to it. I initially worked a few years in public accounting and then had an opportunity to go work with a real estate developer. I thought it was an area where I could be engaged in the real estate industry. I spent about 20 years on the corporate financial side of the real estate business. Helping people achieve their goals and the creation of value associated with the land pulled me in that direction.

What prompted you to start your own brokerage?

I started on the financial side of the business working as an accountant and controller for Del Webb Corporation, chief operating officer for Collins Development Corporation and later chief financial officer for CMD Corporation, a commercial industrial developer. I remained on that side of the business for about 20 years. Later I decided to break out on my own to explore entrepreneurial opportunities.

I got into the brokerage business and in 1993, I formed Realty Executives Premiere, which is primarily a residential brokerage with 52 agents and four offices.

What appeals to you about what you are doing now as compared to before?

I like being the CEO of my own business. I make the decisions and

Callan at the REALTOR® of the Year banquet

Pat Callan is the Managing Broker-Owner of Realty Executives Premiere in Wheaton. He is a member and past president of the Mainstreet Organization of REALTORS® and has twice received his local association’s REALTOR® of the Year award. A Certified Public Accountant as well as a REALTOR®, Callan led the Illinois Association of REALTORS® as president in 2009.

take the responsibility. There is a certain amount of freedom that I didn’t have before. When you move from an employment to an entrepreneurial situation you just trade one set of insecurities for another. Owning my own brokerage fits my personality.

What advice do you have for agents who are thinking of starting their own office or starting out on their own?

It’s going to take longer to be successful than they anticipate. The margins are thinner on the brokerage side than the sales side. They’re going to need to take that into consideration.

They will need to be well capitalized and make recruitment a priority.

What other professional goals would you like to achieve?

I still want to build my business and I’d like to do some consulting as another avenue to use the knowledge that I’ve accumulated in my career in a professional way. I think it’s extremely important to be intellectually engaged in life and in something that you really enjoy doing. I still enjoy everything associated with the industry.

What do you see as the most pressing issues in the real estate industry today?

How do we best serve the consumer’s need for knowledge and data?

Information technology has advanced to the point that there are many sources of data that consumers can access.

Bringing accuracy and knowledge to the consumer about the data and the process are important. There’s a struggle going on among the MLSs, the large

real estate Internet portals and the brokers who provide the content. Finding a way for those three entities to coexist is a big challenge. Another big issue is making sure there is liquidity in the secondary mortgage market so that people can finance their homes. Progress has been made with Congress but more needs to be done.

You’ve been actively involved with the REALTOR® organization. What has been the most meaningful experience and do you encourage other REALTORS® to get involved?

It’s important to give back to the industry you make your living in and contribute to it to keep it healthy. I got involved with that in mind. I like working on large, complicated issues that have a high level of significance either to the organization or the industry. I think that everyone should be involved at a level that makes sense to them. If a $20 donation to RPAC fits your time and budget, great. If you have the time, talent and treasure to contribute more, do that. Find the part of the industry that engages your passion and skill set and gives you the ability to give back. You don’t have to do it all at once. Do what makes sense to you now and fit it within a balanced life.

What are your thoughts on being named 2014 REALTOR® of the Year?

It is a great honor to be recognized by one’s peers for contributions to the association and the real estate industry.

It’s a validation of one’s commitment and I am very appreciative. I will always cherish this honor.

Photo/Terry Farmer

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Commercial Corner What is Placemaking and how can it help communities grow through economic development?

Two of the country’s leading experts on the subject share insights on this important trend in commercial real estate.

David J. Wilk, CRE, MAI National Chair, Corporate Real Estate & Advisory Services Sperry Van Ness david.wilk@svn.com David J. Wilk, CRE, MAI, is National Chair of Corporate Real Estate and Advisory Services for Sperry Van Ness and Corporate Valuation Advisors. Wilk is a real estate management consultant who creates value in today’s market by focusing on real estate strategies that generate new earnings, cost savings and shareholder value. He provides valuations and market studies, economic development strategies for municipalities through repositioning key properties, and marketing/branding strategies that optimize challenging real estate assets.

What do you mean by “Placemaking” to foster economic development?

In today’s real estate market, the most important decision people make is the place they choose to live.

Communities seeking new economic development and job growth must position themselves to attract new residents by becoming a place of innovation and creativity.

Real estate is the “currency for economic development and job creation” in today’s economy. Creatively Placemaking – A movement that reimagines public spaces as the heart of every community, in every city. It’s a transformative approach that inspires people to create and improve their public places. Placemaking strengthens the connection between people and the places they share. – Project for Public Spaces Creative Class – The socioeconomic theory by economist and social scientist Richard Florida that identifies those who create for a living, the “creative class,” as an emerging economic force. According to Florida’s book, “The Rise of the Creative Class,” this creative workforce comes from a variety of areas including engineering and science, education, small business, architecture, arts and entertainment.

repositioning under-productive real estate assets through “Placemaking” economic development strategies will stimulate new demand and private investment in communities.

Generating new demand for under-productive real estate remains a major challenge during these uncertain economic times. That is why understanding the importance of “Placemaking” and the “Creative Class” to driving real estate demand is essential today, since the most important decision in people’s lives today is where they choose to live.

Communities that recognize this new market paradigm, and develop innovative real estate and “Placemaking” strategies targeting the “Creative Class,” will capture more than their fair share of future market demand, economic growth and new jobs.

Who are the players and how do we translate the concept into economic development for communities?

Corporations, universities, government, and healthcare providers also play a critical role today in “placemaking”, attracting the “Creative Class,” and developing ecosystems that drive economic development. The challenge facing many communities today is how key stakeholders can take corporate location decisions, downsizings, facility closings, and consolidations and turn them into exciting and innovative new value creation strategies that result in future social value creation and community benefits.

Fostering new economic development and private investment in communities can be accomplished through bringing key stakeholders together and developing innovative strategies that bring new jobs and real estate value to communities who are struggling to find pathways to economic growth by: •

Creating strategic marketing plans and new “market stories” that transform under-productive real estate assets into economic development catalysts that attract new investment.

•

Developing “Placemaking” and branding strategies that help communities “tell their market story” and articulate “why” someone would want to choose to locate their company or family there.

•

Exploring how corporate, governmental, and university real estate decisions can foster new economic development, business entrepreneurship and acceleration, and

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social value creation through rebranding real estate (university research parks, city labs).

Are these strategies only good for communities with beaches or mountains?

The above initiatives can be customized to fit the unique attributes of any community. Creating “market stories” that capture the essence of an area will lead to catalyst projects that spark new energy and excitement. When communities push for economic development, they often start by commissioning a study with pretty pictures and “blue sky” plans. A more effective way to create new economic development is to create a “wow” market story that “placemakes” the area into a compelling place for companies and professionals to locate.

Creating a “market story” for your community that resonates with today’s lifestyle, professional and personal choices is not easy, but it is the key to future economic development and growth. Without the market story or brand, why would anyone choose your real estate product? The answer is they won’t unless you “hook” them by becoming a great place. Real estate professionals are here to show you the way to achieve this objective.

Peter Kageyama

Author of “For the Love of Cities” fortheloveofcities.com

Peter Kageyama is the co-founder and producer of the Creative Cities Summit, an interdisciplinary event that brings together citizens and practitioners around the big idea of the city. He is the former president of Creative Tampa Bay, a grassroots community change organization. He has spoken all over the world about bottom up community development and the amazing people that are making change happen.

Why does love matter in city making?

Because love makes things better. If you love something you will be a better caretaker, you will forgive shortcomings in something/someone you love and you will fight for something you love. If more people fall in love with their places, they will go above and beyond ordinary levels of citizenship and do something, perhaps even something extraordinary for the place they care about.

Any simple solutions for better places?

Increase the opportunities to people watch and you make better places. Human beings are endlessly fascinated by each other and if you account for our nature in your planning and design, you will make spaces that are inherently “better.” And this can be applied to existing places as well.

What can ordinary citizens do?

We have made city making into something that seems beyond the ordinary citizen. Most people believe that placemaking, city building is a complex process that is done by

mayors, city managers and other professionals. These professionals are operating from a fairly set playbook but the rest of us are not encumbered by the same ideas, traditions, rules and regulations. We need more citizens to step up and make something happen because they see and approach the problem differently and can be a real source of civic innovation and creativity.

In making a more vibrant downtown should we start with retail or residential?

I always ask cities which do they want more of — retail or residential. Their answer is what they should start with.

Build from strength. If you have more retail than residential, work to increase those numbers, upgrade the existing quality of retail and use that to encourage more residents. If you have more residential, how can you expand the demographic of those residents which in turn can attract a new kind of retail? These are symbiotic — one inherently impacts the other.

You speak about dogs in cities.Why are dogs important in city making?

Unlike cats, birds and fish, we have to walk our dogs and in doing so we get outside, we use the sidewalks, the parks and green spaces which creates a sense of activity and energy in places. And we interact with each other. Dogs are amazing ice breakers and conversation starters. Go to your local dog park and you will see one of the most social and egalitarian places in your entire community. There is also safety. Dog walkers become the “eyes of strangers” that Jane Jacobs wrote about and because they are out there we feel safe as we walk the streets. Dogs in cities humanize cities for the better.

Alex Ruggieri, CCIM, S.E.C., GRI, MBA is Senior Investment Advisor with Sperry Van Ness/Ramshaw Real Estate in Champaign. He is currently serving on NAR’s Presidential Advisory Group for Commercial Outreach, NAR’s 2014 Commercial Committee and has served on IAR’s Commercial/Industrial/Investment committee.

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Market Watch

By Stephanie Sievers | Senior Editor

Drill Down to Your Local County Data with IAR’s FastStats

W

onder how many days on the market listings are averaging in your county?

How about local housing inventory levels for a particular month? If you haven’t checked it out yet, IAR’s Faststats clickable state map and sortable stats are useful tools exclusive to IAR members to help you get a better picture of what is happening in your county’s real estate market.

Click on a county and Faststats will pull up the latest county data including: closed sales, median prices, housing inventory and days on market data compared monthly, annually and year to date. You’ll also find charts and graphs of your local market data.

Faststats and the sortable statistics are available in the Members Only MarketStats section of the IAR website, www.illinoisrealtor.org/ membermarketstats. #IARMarketStats

What economists are saying about the market:

“As of April 2014, there are 26,039 homes at some stage of foreclosure in Illinois — this comprises the foreclosure inventory. REAL’s analysis projects that the foreclosure inventory would return to the pre-bubble levels by October 2014 if the declines in the average rates of the past 6 months (-10.7%) were sustained.”

– Dr. Geoffrey Hewings, Director of the Regional Economics Applications Laboratory of the University of Illinois (May 22, 2014) “Some growth was inevitable after sub-par housing activity in the first quarter, but improved inventory is expanding choices and sales should generally trend upward from this point. Annual home sales, however, due to a sluggish first quarter, will likely be lower than last year.”

– NAR Chief Economist Lawrence Yun (May 22, 2014) “Expect the 30-year fixed-rate mortgage to gradually rise higher, ending the year around 4.6 percent. We expect fixed rates to rise gradually during the second half of the year in part as a result of the Federal Reserve’s “tapering” of net MBS acquisitions. ” – Freddie Mac (May 19, 2014)

ILLINOIS HOUSING MARKET Median Sales Price of an Illinois Home

OGLE COUNTY

KANKAKEE COUNTY

CHAMPAIGN COUNTY

IAR members check out the Illinois Housing Market Sortable Statistics.

Click on the state, PMSA or county for a full monthly report.

ST. CLAIR COUNTY

www.illinoisrealtor.org/membermarketstats

JEFFERSON COUNTY

Take advantage of the unique opportunities in today’s housing market. Talk to a REALTOR®, the local market expert.

“Housing indicators remain mixed. April housing starts recovered the drop in March but virtually all the gain was in apartment construction, not single family homes.

New home sales also rebounded from recent weakness but remained soft. Mortgage rates are near a seven month low but recent comments from the Fed point to bank lending standards as a problem. Other comments include arguments that student loan debt is preventing many potential first time buyers from entering the housing market.”

– David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices. (May 27, 2014) “In a positive development, builders are adding inventory in anticipation of a further release of pent-up demand. We are only about half-way back to what could be considered a normal market, but relatively low mortgage rates and affordable home prices are other factors that should help keep starts and sales on a slow upward trajectory in the months ahead.”

– David Crowe, chief economist for the National Association for Home Builders (May 23, 2014)

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REALTOR COMMUNITY ®

FOLLOW US:

IAR Spring Conference: Gateway to Success More than 400 people attended the IAR Spring Conference & Expo in Collinsville in May. This year’s two-day event featured sessions with Kim Daugherty, Chris Bird, CE courses and an update on legal trends.

Photo/Terry Farmer

Raising Money for RPAC

REALTORS® raised more than $43,452 for the REALTORS® Political Action Committee (RPAC) with two fundraising events this spring: the RPAC Stickhorse Derby and a firstever RPAC Phone-A-Thon.

Council of Great Lakes Governors

Members of IAR met with Chicago Mayor Rahm Emanuel and top state executives at the Council of Great Lakes Governors.

IAR Pays Off Springfield Headquarters In March, IAR held a ceremonial “burning of the mortgage” to celebrate paying off the association’s headquarters ahead of schedule in seven years. The 30,000-square-foot building is located in historic downtown Springfield, across the street from the Illinois Executive Mansion.

Sheryl Grider Whitehurst Elected NAR Region 7 VP

Whitehurst, Managing Broker and Development & Operations Coordinator with Traders Realty in Peoria, will serve as Regional Vice President for the Illinois, Indiana and Wisconsin region.

Did you know Illinois Association of REALTORS® has a new

LinkedIn company page? Take a look and follow us at

www.linkedin.com/company/iar-llinois-association-of-realtors

Sign Ordinance Amended and Repealed The Chicago Heights City Council has amended and repealed part of an ordinance that required a permit and fee to place real estate For Sale signs.

The action came after work by the association and the Mainstreet Organization of REALTORS® to get the rules changed.

The fees had been in place for decades and were a byproduct of home rule authority.

The ordinance called for a $50 sticker that had to be obtained to place a For Sale sign in front of a residence. The sticker was good for just six months.

In the case of a property that was a bankowned property, sales could take much longer than six months. The result was that many REALTORS® doing business in Chicago Heights opted to forgo putting any signs up at all.

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