Page 1

VOLUME XLVIII Number 2

The Maryland Association of REaltors速

FEBRUARY 2014 / MARCH 2014

www.mdrealtor.org

The Voice for Real Estate速 in Maryland

Page 9

Consumer Website: www.marylandhomeownership.com

6

Lobby Day

16

GLOBAL OPPORTUNITIES


Your New Year’s Solution: Coldwell Banker

Free

®

This year, you should benefit from the incredible support, technology tools and marketing materials Coldwell Banker Residential Brokerage provides to our sales associates for FREE every day! Factor in our worldwide network, unmatched Internet reach and top-ranked continuing education programs, and it’s clear we’ll give you business-building advantages the competition simply can’t match. Discover how the powerful resources at Coldwell Banker Residential Brokerage will help you achieve your goals and build your business in 2014 and beyond.

CareersCB.com

ards Business cing & market materials Personal om CBmove.c website ading Industry-leing continu education motion o r p y t r e p Pro bsites e w + 5 7 5 on Listing n presentatio por tfolio r Newspape promotion lead Unrivaled ent managem program tions Public relar t suppo d Web-base ail m company epor t & IT sup twork Global neions connect

©2014 Coldwell Banker Real Estate LLC. All Rights Reserved. Coldwell Banker Real Estate LLC fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. Operated by a subsidiary of NRT LLC. Coldwell Banker, the Coldwell Banker Logo, Coldwell Banker Previews International, and the Previews International logo are registered and unregistered service marks owned by Coldwell Banker Real Estate LLC. 7742_BAL_12/13


President’s Perspective 

R u s s B o y ce

Lobby Day 2014

A

lmost 200 Maryland REALTORS® started the new year, and the new Legislative session, by meeting with their elected officials in Annapolis this January to discuss issues paramount to the real estate industry. The meetings gave members an opportunity to be heard by lawmakers and deliver the recently published, “The Role of Real Estate in Maryland’s Economy” report. The latest biannual report is available for download from mdrealtor.org. To see photos from Lobby Day, see page 6. To view our video regarding Lobby Day go to http://www. mdrealtor.org/DesktopModules/ UltraVideoGallery/uvg. swf?vId=64&portalId=0

And don’t forget to LIKE and watch our Facebook page, website and your email for “Calls For Action” about state or federal issues. I urge you, when you get a “Call to Action” please respond promptly. It’s critical that our Legislators know that we are concerned enough to contact them. They know we are the largest trade association in Maryland, so they look to see how many of us reach out. Our “Call For Action” rate of 25% must be increased for Legislators to take us serious. We have to do better and I'm counting on each of you to help us make that happen. We have several critical bills that will need the voice of all Maryland REALTORS® if we hope to protect the interests of real property owners in the state.

Let’s not simply survive… let's raise our awareness by one degree and thrive!

www.mdrealtor.org

2013 Legal Hotline review The Legal Hotline is one the most consistently highly ranked services we provide members. Last year, MAR attorneys answered more than 2,000 inquiries from members across the state, a new record. In this issue, we feature our annual review of the most commonly asked questions in the last year, along with updates on certain issues. Turn to page 9 to find out more.

New in 2014 Nationally, there are more international homebuyers creating more business than ever. With this issue we begin a regular feature on ways to expanding your business globally. The first article in the series appears on page 17. All indications show we are in for a robust Spring market. Are you ready? Get your Business Plan in order now. Let’s not simply survive…let's raise our awareness by one degree and thrive! I am always available to answer your questions or hear your concerns. Please contact me at russboyce212@gmail.com.

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

1


TA B L E O F CO N T E N TS Features REALTORS® Lobby Day Aims at EDUCATING State Legislators 6

9

2013 hotline review

2013 hotline review

9

GLOBAL OPPORTUNITIES

17

Realtors® Federal Credit Union

20

Departments President’s perspective

1

Regulation News

22

Maryland Real Estate Commission News 24 Residential Sales

26

MRIS 29 Snippets 30 Commercial Connection 31

Lobby Day

2

6

17

GLOBAL OPPORTUNITIES

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

20

from the hotline

32

Realtors® Federal Credit Union

www.mdrealtor.org


®

D.R. HORTON TAKES PRIDE IN BEING AMERICA’S #1 HOMEBUILDER FOR 11 YEARS IN A ROW.* AMERICAN QUALITY, VALUE, BEAUTY AND DURABILITY ARE ALIVE AND WELL IN THE NATION’S CAPITAL. BETTER PRICES, BETTER HOMES, BETTER LIFE.

www.DRHorton.com

*As ranked by Builder Magazine. MHBR #535


2014 Maryland Association of REALTORS® Leadership Team Maryland Association of REALTORS® 200 Harry S Truman Parkway | Suite 200 Annapolis, MD 21401-7348 800.638.6425 | www.mdrealtor.org

Executive Leadership Team

J Russell “Russ” Boyce

Janice R Kirkner

President RE/MAX 100 10665 Stanhaven Place White Plains, MD 20695-3062 301.843.5100 russboyce212@gmail.com

President Elect Long & Foster Real Estate, Inc. 1208 Nottingham Drive Westminister, MD 21157-8334 410.795.9600 janice.kirkner@longandfoster.com

J Russell “Russ” Boyce | President Janice R Kirkner | President Elect Carole A Maclure | Treasurer Bonnie Casper | Secretary Carlton J Boujai Jr | Immediate Past President Mary C Antoun | Chief Executive Officer

Editor

Melissa Lutz | melissa.lutz@mdrealtor.org

Advisory Committee Jenn Klarman | Chair

Advertising

Arlene Braithwaite | 410.772.0820

Publication Design

HBP, Inc., 952 Frederick Street, Hagerstown, MD 21741 800.638.3508 | www.hbp.com

Carole A Maclure

Bonnie Casper

Treasurer RE/MAX Advantage Realty 17304 Evangeline Lane Olney, MD 20832-2928 240.295.6000 maclure7@aol.com

Secretary Long & Foster Real Estate, Inc. 4650 East-West Highway Bethesda, MD 20814-3419 301.907.7600 bonnie@lnf.com

Carlton J Boujai Jr

Mary C Antoun

Immediate Past President EXIT Realty Prosperity Group 5300 Westview Drive Suite 105 Frederick, MD 21703-8339 301.698.8700 carltonboujai@mris.com

Chief Executive Officer Maryland Association of REALTORS® 200 Harry S Truman Parkway Suite 200 Annapolis, MD 21401-7348 800.638.6425 mary.antoun@mdrealtor.org

4

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

Mission Statement The Maryland Association of REALTORS® exists to support all segments of its membership and their specialties. The Maryland Association of REALTORS®, through collective efforts with local boards/associations and the National Association of REALTORS®: ■ Develops and delivers programs, services and related products that maintain and elevate the high standards of the real estate business and the professional conduct of its practitioners; ■ Assists members in ethically and professionally serving the public; ■ Promotes and preserves the right to own, transfer and use real property; and ■ Protects the right of members to conduct business within a framework of fair and reasonable laws and government regulations. In principle and in practice, the Maryland Association of REALTORS® values and seeks diversity and inclusive participation within the field of real estate and recognizes each member as a unique individual. Maryland REALTOR® (USPS 0016-017) is published bimonthly by the Maryland Association of REALTORS®, Suite 200, 200 Harry S Truman Parkway, Annapolis, MD 21401-7348. Periodical postage paid at Annapolis and additional mailing offices. Postmaster send address changes to: Maryland REALTOR®, Suite 200, 200 Harry S Truman Parkway, Annapolis, MD 21401-7348. Member subscriptions of $3.81 are paid with annual dues. This publication is designed to provide accurate and authoritative information regarding the subject matter covered. It is offered with the understanding that the publisher is not engaged in rendering professional advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Articles that appear in Maryland REALTOR® are an informational service to members. Their contents are the opinions of the authors alone and do not necessarily represent those of the Maryland Association of REALTORS®. Permission to reprint articles appearing in Maryland REALTOR® magazine must be requested in writing. Also include purpose for request. While this magazine makes a reasonable effort to establish the integrity of its advertisers, it does not endorse advertised products or services unless specifically stated. ©2013 Maryland Association of REALTORS®, Inc.

www.mdrealtor.org


THE PENTHOUSES

Join your clients at the top.

Enjoy a 4% commission* when your client purchases one of Baltimore’s finest residences. Stunning water views. Inspiring architecture. Share the experience with your clients today. *See sales manager for details.

SALES BY CSM GROUP; MHBR #5575

866.980.6621 I SiloPoint.com 1200 STEUART STREET, BALTIMORE, MD 21230


REALTORS® Lobby Day Educating State Legislators Over 160 REALTORS® met with over 170 Delegate and Senate offices. REALTORS discussed their 2014 Legislative Priorities and distributed the latest edition of the “Role of Real Estate in Maryland’s Economy” study.

Southern MD Association members pictured with MAR President, Russ Boyce and Nick D’Ambrosia, Chair, MD Real Estate Commission.

MAR President, Russ Boyce address the Lobby Day attendees.

MAR President, Russ Boyce met with Mac Middleton, Finance Committee Chair. Jennifer Jones, Foote Title Group met with Representative Joseph F. Vallario, Chairman, House Judiciary Committee.

Delegates Addie Eckardt and Jeannie Haddaway-Riccio and MAR members.

6

Legislator Michael Smigiel met with constituents from his district.

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

www.mdrealtor.org


REALTORS® Federal Credit Union A Division of Northwest Federal Credit Union Commercial Real Estate Loans Purchase | Refinance | Improvements

➤ Competitive Interest Rates ➤ 5 – 7 – 10 year terms ➤ 25 year amortization ➤ No Prepayment Penalties ➤ SBA 7(a) and 504 Lender

Members of the Harford County Association of REALTORS®.

Act now while rates are at an all-time low! Call Tony 703.925.5105 (Tprice@REALTORSFCU.org), or Victoria 703.251.2190 (Vgillespie@REALTORSFCU.org) for more details.

Mike Allison, MSBR Secretary; Daphne Cawley, MSBR Legislative Chair; Alex Fountain and Bill Parker, both MSBR members. Victoria Gillespie, National Director, Business Development

Tony Price, VP, Commercial Lending

Member Care: 866.295.6038 www.REALTORSFCU.org The Credit Union is a proud partner in NAR’s REALTOR Benefits® Program.

Frederick Delegate, Patrick Hogan with Tamar Osterman (l) and Bill Woodcock (middle).

www.mdrealtor.org

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014 144415.MDRealtor.AD.1.14.indd 1

1/31/14 6:47 AM

7


2013

HOTLINE REVIEW

Each year we collect the past year’s Legal Hotline articles and provide an update on the status of the issue if there is anything new to report. We hope you find this information valuable, and as always, if you need anything from the MAR Legal Department, please let us know.

The “Mrs. Murphy” Exception to Fair Housing Law.

Q.

I recently took the required Fair Housing continuing education class, but I’m still unclear about certain exceptions to the law. Please explain how the so-called “Mrs. Murphy” exception and housing for older persons operate.

A.

As you know, the Fair Housing Act (Title VIII of the Civil Rights Act of 1968) prohibits discrimination in any type of housing-related transaction on the basis of race, gender, religion, national origin or color and familial status (i.e. the presence of children under the age of 18 in a family) and handicap (disability). Maryland law prohibits housing discrimination based on all these baseses and also includes sexual orientation. All single family homes are covered by the act when they are owned by private persons offered through a real estate broker. All single family homes owned by corporations or partnerships are covered, regardless www.mdrealtor.org

of whether a broker is used. All multifamily dwellings are covered by the Act, including townhouse and condominium communities. There are two exceptions to this rule. The first is the so-called “Mrs. Murphy” exemption, which provides that if the dwelling has four or fewer units and the owner lives in one of the units, it is exempt from the Fair Housing Act. The second exception is for qualified senior housing, which is exempt only from the familial status provision of the act. A qualified senior community must meet the following standards: 100% of the community is 62 or older, or 80% of the households have at least one resident 55 or older. None of this housing is exempt from section 804(c) of the Act, which prohibits making, printing or publishing a discriminatory statement. Any exempt housing that violates 804(c) loses its exemption and can be held liable under the Act. Stated another way, under these narrow circumstances, discrimination against certain groups is allowed.

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

9


The Mrs. Murphy exemption resulted from a legislative compromise that codified exclusionary policies. To pass the proposed bill, proponents agreed to allow resident owners of small, transient accommodations to discriminate against prospective patrons. The provision defines “place of public accommodation” to include any inn, hotel, motel or other establishment which provides lodging to transient guests, except for an establishment located within a building which contains not more than five rooms for rent or hire and which is actually occupied by the proprietor of such establishment as his residence. Please note that under Maryland law, the exemption applies only with respect to discrimination on the basis of sex, sexual orientation or marital status in the rental of rooms in a dwelling, if the owner maintains the dwelling as the owner’s principal residence, or the rental of any apartment in a dwelling that contains not more than five rental units, if the owner maintains the dwelling as the owner’s principal residence. In other words, one may choose not to rent to a prospective tenant based on that person’s gender, sexual orientation or marital status, but may not discriminate based on membership in any of the other protected classes. However, the Mrs. Murphy exemption does not apply to rental advertising. That means Mrs. Murphy cannot run a discriminatory advertisement indicating, for example, that a certain religious group is not welcome to rent her apartment or room. Also, this exemption does not apply when a real estate agent is representing the property owner, as the law presumes agents are professionally trained and aware that housing discrimination is against the law. HUD takes the position that the Civil Rights Act of 1866 (yes, 1866) makes it illegal to discriminate based on race—and as such, there is no exemption from the law when dealing with race.

A Perfect Illustration of the Need for Full Disclosure and Complete Contracts In the February/March 2013 issue, we took a break from the normal Q & A format of the column to discuss a recent case that illustrates perfectly the pitfalls facing REALTORS® and their duty to exercise care when representing parties who enter into contracts to purchase property. This case involved a short sale, but has relevance for any transaction. REALTORS® must pay attention to each detail of the transaction to protect the client’s interests.

10

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

A Tennessee court has considered whether a prospective buyer could bring breach of contract allegations against the seller, the listing broker, and the eventual buyers of the property for allegedly failing to disclose that the transaction would require short sale approval. Seller listed a property for sale with Listing Broker and Listing Agent for $159,000. Buyer made an offer to purchase the property for $147,300. The offer was made on a standard form contract and incorporated by reference a short sale addendum. Seller rejected Buyer’s offer, but made a counteroffer that included a $151,000 sales price and making the contract subject to lender/3rd party approval. Seller sent the counteroffer to Buyer. Buyer accepted the counteroffer, but the contract was never approved by the seller’s lender. Ultimately, the property was sold to a different purchaser. Buyer filed a lawsuit against the Seller, Listing Broker and eventual purchaser seeking specific performance of the sales contract and alleging breach of contract. The court ruled against Buyer and entered judgment in favor of the defendants, finding that there was not an enforceable contract between the parties. Buyer appealed. The Court of Appeals of Tennessee affirmed the trial court. The Court considered whether a contact existed between the parties. Buyer argued that there was no short sale addendum attached to the agreement and so a short sale was not part of the agreement between the parties. However, the purchase offer (prepared by Buyer’s representative) had incorporated by reference a short sale addendum, and Seller’s counteroffer had included as a requirement that the transaction was contingent on “lender/third party approval.” In examining a contract, courts look at the contract’s language to determine the intent of the parties. Looking at the language used in the initial purchase offer and the counteroffer, the Court ruled that it was clear that the parties intended to include short sale provisions in the purchase contract. However, it was not clear what short sale provisions the parties intended to include in the contract, so there was no “meeting of the minds” on the terms, a requirement for an enforceable contract. The Court affirmed the trial court’s ruling in favor of Seller, Salesperson, and the Brokerage because there was never an enforceable agreement between the parties. What doomed this contract was the attempted short cut of incorporating by reference the short sale addendum

www.mdrealtor.org


The Power of There’s a lot of power in this one little character. It can do much more than join two things. It can create magic. More than 45 years ago it created Long & Foster and started us on the path to becoming the nation’s largest independent real estate company. Now we’d like to put the power of & to work for you — by giving you the right combination of support & independence you need to succeed. While some companies offer you this or that, we give you this & that —

®

You & Long & Foster = Success in Real Estate! Join the company that puts their agents first.

Visit LongandFoster.com/Careers Or call 866-967-5563 EOE


2) Business Justification: The defendant then has the burden of proving that the challenged practice is “necessary to achieve one or more substantial, legitimate, nondiscriminatory interests.”

instead of including the proper form into the actual contract. That simple step would have cured the problem. Update: Many of the calls to the Hotline are the result of a misunderstanding between the parties that could have been avoided if the contract were written properly. Pay careful attention to your contract checklist and always recommend that buyers and sellers have legal documents reviewed by legal counsel.

More Fair Housing—Disparate Impact Analysis

Q.

In a recent Fair Housing class, the instructor mentioned that, even if a landlord does not intentionally discriminate, a practice can still be considered illegal. This question comes up often when deciding whether to participate in the Section 8 voucher program.

A.

You are correct. We consistently advise members that participation in the federal Section 8 program is voluntary and the landlord is free to make a business decision whether to accept the vouchers. We have always mentioned the possibility that a facially neutral policy with a discriminatory impact may be a violation of the Fair Housing laws. Recently, the U.S. Department of Housing and Urban Development (HUD) released a final rule under which the “disparate impact” analysis can be applied to establish discrimination. Under the rule, plaintiffs can use statistical analysis to determine if discrimination and violations of the Fair Housing Act may be taking place, without showing intent to discriminate. The rule was released February 8th and will take effect 30 days after it is published in the Federal Register. The new rule adds a provision entitled “Prohibiting Discriminatory Effects” to HUD’s existing Fair Housing Act (Act) regulations. Under the new provision, a defendant may be liable for practices with a discriminatory effect unless there is a legally sufficient justification. The showings and burdens of proof unfold as follows: 1) “Discriminatory Effect”: The plaintiffs may challenge any practice that “actually” or “predictably results” in a “disparate impact” on protected classes of individuals; or “creates, increases, reinforces, or perpetuates segregated housing patterns.” Thus, plaintiffs need not allege any intent to discriminate or any disparate treatment.

12

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

3) “Less Discriminatory” Alternatives: Even if the defendant meets its burden under the second step, the plaintiff can still prevail by showing that the defendant’s interests could be served by some other practice “that has a less discriminatory effect.” HUD has long interpreted the Act to prohibit housing practices with an unjustified discriminatory effect, if those acts actually or predictably result in a disparate impact on a group of persons, or create, increase, reinforce, or perpetuate segregated housing patterns because of race, color, religion, sex, handicap, familial status, or national origin. There are strong legal arguments against the new rule, but until the Supreme Court decides the issue, district and appellate courts will likely continue to defer to the government’s interpretation. Update: On June 17, 2013, the Supreme Court granted certiorari in Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc., to decide whether disparate impact claims are cognizable under the Fair Housing Act (“FHA”). It did so over the U.S. government’s strenuous objection that HUD’s new rule interpreting the FHA is “dispositive.” Of interest, the Court simultaneously declined to grant cert. on the question of the appropriate standard for evaluating disparate impact claims if the FHA is deemed to allow them. The repercussions of the Supreme Court’s decision will be far-reaching, assuming a settlement does not prevent the Court from issuing a decision on the issue.

Salesperson Changing Affiliations

Q.

I am a licensed salesperson considering affiliating with a different broker. Am I entitled to my usual commission for transactions that are under contract but not yet closed?

A.

This is a frequent call to the Legal Hotline. The answer is probably yes, but we prefer that it be addressed in the Independent Contractor Agreement salespersons and brokers sign when the salesperson first becomes affiliated with the broker. A recent case illustrates how this could play out.

www.mdrealtor.org


A Salesperson transferred her license to a Brokerage and worked out of a particular office. There was no written agreement establishing the terms of the relationship between the Brokerage and the Salesperson over the payment of commissions, including the time when the Salesperson earned her commissions. For the first two years, the Brokerage paid the Salesperson according to an orally agreed-upon schedule. In July 2009, the Broker told the Salesperson that he was going to close her location, but she could commute to the Brokerage’s other office. The Salesperson declined to commute to the other office, and made plans to move her license to another brokerage. Prior to the move, the Broker terminated the Salesperson’s relationship. At the time, she had four transactions under contract. Following the Salesperson’s departure, all four of the pending transactions closed. Broker reduced each of the commission checks from what the Salesperson had previously received when a transaction closed. The Broker explained that he altered the payment because of the additional work required to complete each transaction. In total, the Salesperson’s commissions were reduced by $8,800. The Salesperson filed a lawsuit against the Broker, arguing that she was entitled to receive the entire commission amounts because she had earned her commission once the parties entered into the purchase contract. The trial court ruled in favor of the Brokerage, and the Salesperson appealed. The Court of Appeals (Iowa) reversed the lower court. The trial court had determined that the Salesperson, per the oral agreement between the Broker and Salesperson, did not earn her commissions until the transaction closed. Because the Salesperson was no longer an employee of the Brokerage, the lower court determined that the Brokerage had no duty to pay her.

THE LEADING ONLINE SCHOOL FOR REALTOR® EDUCATION & PROFESSIONAL DEVELOPMENT, NAR DESIGNATIONS AND CERTIFICATIONS. Plus low- and no-cost videos of real estate related event presentations.

Easy, fast and affordable. We’re open 24-7-365. Sharpen Your Skills.™

The appeals court ruled that the Salesperson earned her commissions prior to her departure from the Brokerage. Other courts have determined that the commissions are earned once the parties execute a binding contract. Because there was no contract between the Salesperson and Brokerage requiring the payment of commissions only on closed transactions, the court found that the Brokerage owed the Salesperson the entire commission amounts. We always first look to the brokerage agreement to determine when the broker earns the commission,

www.mdrealtor.org

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

13


and find that often the commission is earned when a contract is signed. We have also consistently said that a broker may pay a salesperson directly, even if the salesperson is no longer affiliated with that broker, as long as the salesperson earned the commission while affiliated with that broker. Putting those elements together, it is easy to agree with the court’s holding in this case. However, litigation could have been avoided entirely if the broker and salesperson agreed at the beginning of the relationship how things like this would be handled. We strongly urge brokers and salespersons to enter into comprehensive independent contractor agreements that address matters like this.

Q.

I am a broker. An agent affiliated with my firm showed properties to a buyer, but the buyer never signed a written brokerage agreement. During this time, the buyer expressed a desire to purchase a particular property and the agent assisted the buyer in preparing an offer, which the seller accepted. My firm is listed on the last page of the contract as the buyer’s broker. The agent transferred his license, became affiliated with another broker and continued to work with this buyer on obtaining the inspections, title work, etc. While the agent was affiliated with the other broker, the buyer executed a written brokerage agreement with that company. Before settlement, the agent left that company and is now affiliated again with my firm. I recently received a strongly worded letter from the other company threatening me with legal action if I do not agree to allow the settlement agent to pay the other company the selling side of the commission. What are my options?

A.

Wow. Where to start? First, you should immediately refer to your attorney any matters that could result in legal action. The best practice is to negotiate in the independent contractor agreement what happens when a licensee changes broker affiliations. One option is that brokerage agreements in place when the agent leaves continue to be the property of the broker. Another option is for the broker, the salesperson and the new broker to negotiate a termination of the existing agreement and execution of a new brokerage agreement between the client and the new broker. The key issue here is to have this conversation. No licensee should ever walk out the door without your knowing what is happening with those clients.

14

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

Here, there was no written brokerage agreement in place and the salesperson failed to comply with Maryland agency law by preparing an offer without it. Under the law, a licensee can become a buyer’s agent without a written brokerage agreement under what is called “presumed” buyer agency. However, before a licensee can prepare an offer or negotiate a sale for the buyer, the “presumed” buyer agency must be terminated, typically when the buyer and broker enter into the buyer agency agreement. This was a serious failure. This mistake was compounded when the buyer executed the written brokerage agreement with the second broker. The situation was bound to result in conflict because one broker was identified in the contract as the buyer’s broker and another broker entered into a contract (the buyer broker agreement) under which the broker is entitled to a commission if the buyer purchases a property. The difference is that you may have earned the commission offered by the listing broker under the offer of cooperation and compensation in the MLS and the other broker may be entitled to compensation from the buyer under contract law if the buyer is in breach of the brokerage agreement by continuing to work with the agent even after he transferred back to your company. Also, the other broker is apparently as lax as you are about tracking clients of licensees who transfer affiliations. I really can’t tell you how this is going to be resolved, but it could have been avoided if the brokers involved had policies and procedures in place concerning the status of clients and brokerage agreements of licensees who leave the firm. If both brokers claim the commission offered by the listing broker in the MLS, they must arbitrate that dispute through the local board’s Professional Standards program. The rules of procuring cause will determine who is awarded the commission. If the other broker feels that the buyer owes her a commission under the brokerage agreement, she can pursue a breach of contract lawsuit. Update: The two articles above only scratch the surface. The key point is that brokers and salespeople should enter into written independent contractor agreements that address, among other things, how existing client relationships and brokerage agreements will be handled in case of a change of affiliation or other separation. If you are a broker and do not have an independent contractor agreement, contact your attorney immediately.

www.mdrealtor.org


“Pocket” Listings

Q.

I have heard a lot of discussion recently about “pocket listings.” I’m not sure what that means. Can you explain the term? If a seller and broker enter into a listing agreement but agree to delay putting the information into the MLS while the seller prepares the property for showing, is that a pocket listing?

A.

Your questions are timely and raise issues that have been the subject of much controversy with the real estate industry in recent months. Although this is not a new concept, “off-MLS” or “pocket” listings are properties that are marketed without being listed for sale on the MLS. The term refers to the fact that the listing is being “hidden” in the broker’s pocket. Sometimes, a listing is merely referred to as a pocket listing in the short time between when it is secured by the sellers’ agent and the time it appears on the MLS. A listing can sell before the broker completes MLS paperwork, and the listing sold to someone who knew about it outside of the MLS. Sometimes, this happens with an offer made during a “prelisting” period. The National Association of REALTORS® has not defined what constitutes a pocket listing, nor does it have an official policy regarding the practice. But REALTORS® are bound by the Code of Ethics to get the best deal for their client. Sellers should be cautioned that restricting a large pool of eligible buyers from knowledge of the sale might reduce the final sale price. There are objections to some of the ways these so-called pocket listings are used by some real estate professionals. Some practitioners argue that pocket listings violate local MLS rules. Others worry that keeping properties from the MLS may skew comparable listing numbers for appraisers. Still others worry that pocket listings could lead to abuses of single and dual agency relationships, if not properly handled.

of earning both the listing and selling sides of the commission is strong. On the other hand, Maryland law governing dual agency is somewhat complex compared to other states and must be strictly followed. Consider, too, that sellers sometimes find out later that their home could have, and probably should have sold for a higher price, leaving the broker exposed to allegations that the broker breached his fiduciary duty to the seller. A recent article from California illustrates this point, without addressing it. A young couple purchased a pocket listing for $640,000 and within 4 months a smaller, slightly more updated house down the block went on the market for $100,000 more. What would a reasonable seller’s reaction be to the news that she may have left as much as $100,000 “on the table” because the property was marketed only to buyers selected by the listing agent? To answer your second question directly, there is nothing inherently illegal or unethical about the practice you propose, but it must be done with the utmost care that it, and all actions you take, are truly in the best interest of your client and with the client’s informed consent. That means that the seller is given the pros and cons of each choice. You should take care that this not be a subterfuge to undermine the integrity of the cornerstone of the industry – cooperation with other brokers to secure the best price and terms for the client. Update: Look for this issue to be addressed in the MAR listing agreement template. Keep in mind that this article does not address the so-called “coming soon” marketing strategy. Contact your MLS for guidance on that issue.

As a practical matter, home sellers and listing agents/ brokers must be aware that the decision to forego placing the property in the MLS can adversely affect their goal of getting the best price possible for the property. Active marketing to the widest possible audience has long been recognized as the most effective means to accomplish this goal. Any practice that undermines this principle can have far-ranging consequences. Brokers should also consider the risk management implications of the practice. On one hand, the allure

www.mdrealtor.org

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

15


3 1 2 3

SERIES 100 MAR—Annapolis 800-638-6425 January 28, February 4, 11, 18, & 25

3

GREAT THINGS come in Earn the GRI:

GRI 2014 Schedule

S

Increase Income Potential

REALTORS® with designations are high earn more income than those without designations. The GRI is a way to set you apart from the competition.

Broker’s License Requirement

The full GRI classroom series (100, 200, 300, and 400) fulfills the educational requirements needed to take the Maryland broker’s exam (MAR coursework is specific for Maryland).

The Name Says it All

As a GRI (Graduate, REALTOR® Institute), you have accomplished a high level of achievement which indicates to your clients and colleagues an increased skill level, industry knowledge and dedication to your profession.

Prince George’s Association 301-306-7900 April 9, 11, 17, 23 & 25 Greater Baltimore Board 410-337-7200 October 1, 8, 15, 22 & 29

SERIES 200 MAR—Annapolis 800-638-6425 March 11, 13, 18, 25 & 27

SERIES 300 MAR—Annapolis 800-638-6425 April 8, 10, 22, 24 & 29 Greater Baltimore Board 410-337-7200 May 29, June 5, 12, 19 & 26 Pen Mar Regional Association 301-797-4480 May 29, June 5, 12, 19 & 26

SERIES 400 Greater Baltimore Board 410-337-7200 February 6, 13, 20, 27 & March 6 MAR—Annapolis 800-638-6425 May 13, 20, 27, June 3 & 10

GUARANTEED TO HOLD! Classes will not be cancelled due to low enrollment! Please visit MAR’s website, mdrealtor.org for the most current course schedules.


GLOBAL

OPPORTUNITIES

There are growing advantages for Maryland REALTORS® arising from global business demographics, economics and opportunity in our market area. The Maryland Association of REALTORS® believes that now is the time to begin to focus on those business opportunities for its members. Nationally, there are more international homebuyers creating more business than ever. Consider: ■ For the 12 months ending March 2013, total volume of international sales was estimated at $68.2 billion, 6.3% of the total $1.08 billion U.S. existing homes sales volume for the same period. ■ Of total international transactions, $34.8 billion, or 51%, involved foreign clients with permanent residences outside the U.S., and 49%, or $33.4 billion, involved clients who are recent immigrants.

www.mdrealtor.org

■ Canada, China, India, Mexico and the United Kingdom remain as the major sources of purchasers. However, it is not unusual to find potential buyers from a wide variety of countries. Where are these investors looking? About 61% of reported purchases were in Florida, California, Arizona, Texas, and New York. Interestingly, the majority of these international purchases are single-family homes for residential purposes. Location appears to be the primary factor affecting residential home purchases, depending

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

17


Distribution of International Sales by State 35 purchase homes at a slightly higher rate than those in the country as a whole, compared to 51% nationally.

30 25

The top five regions of immigration origin to Maryland in 2012 were Asia, Africa, North America, Europe and South America. The top countries within those regions were India, China, Nigeria, Ethiopia and El Salvador.

20 15 10 5 0

Arizonia California Florida

■ 2009 7 ■ 2010 11 ■ 2011 6 ■ 2012 7 ■ 2013 9

13 12 12 11 17

Georgia

23 22 31 26 23

1 5 2 4 2

on the buyer’s employment, vacation preferences, family, educational, and investment objectives. Maryland is strategically located for many of these investors. In October 2013, the second most searched city by international consumers on realtor.com was New York, relevant because it is positioned on I-95 corridor and easily accessible to Baltimore, Greater Washington D.C. and the mid-Atlantic. Washington D.C is also on the list of notable cities that being searched by international consumers. Investors from Portugal and New Zealand were among the top international searching the D.C area in October 2013. States surrounding the metropolitan Washington, D.C. area are taking a central position on international investor radar. Washington, D.C. is ranked 6th in the destination

18

Nevada New York 1 3 2 2 2

2 4 3 4 3

Texas

Virginia

11 8 9 7 9

3 2 2 1 3

of international commercial transactions that flowed into the US in 2012. Indeed, in the November 2013 MAR survey of REALTOR® members, 17% of respondents indicated that they had participated in a real estate transaction involving a client with an international background. In that same survey, 25% said that they were interested in participating in a statewide global council/international real estate program. Another 48% said that they may be interested, but needed more information. Foreign-born, naturalized citizens in Maryland comprise 7% of the population. They tend to be well-educated with good incomes— more likely to purchase, especially if they speak a second language (63% speak a language in addition to English). Almost 57% of the Foreign-born citizens in Maryland

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

See: http://www.realtor.org/ sites/default/files/reports/2013/ international-business-reports/ international-business-reportmaryland-2013-10.pdf REALTOR® specialization on the buyer’s side of the market—such as cultural affinity or orientation with the prospective purchaser, foreign language capabilities, and experience in explaining U.S. real estate procedures and requirements to foreigners— appears to be important in bringing an international transaction to successful conclusion. Approximately 27% of REALTOR® respondents reported having worked with international clients; 76% have been in the business for more than 5 years—NAR 2013 Profile of International Home Buying Activity.

Interested? Here are more tidbits to check! Watch this introductory video! http://www.realtor.org/videos/ highlights-from-the-2013-profile-ofinternational-home-buying-andselling. This is the first of a series of articles about international real estate for 2014.

www.mdrealtor.org


News and Information Maryland Convention and Visitors Bureau http://www.2chambers.com/maryland_state_visitor_ bureau.htm Maryland Chambers of Commerce http://www.2chambers.com/maryland_state_chamber_of_ commerce.htm Washington, D.C. Convention and Visitors Bureau http://www.2chambers.com/dc1.htm

RCR-Baltimore.com

World Bank http://data.worldbank.org/ International Economic Development Council http://www.iedconline.org/ Maryland Economic Development Association http://www.medamd.com/content/home Maryland Department of Business and Economic Development http://www.dbed.maryland.gov/Pages/index.html BBC Country Profiles (BBC News) http://news.bbc.co.uk/2/hi/americas/country_profiles Country Background Notes (U.S. Department of State) http://www.state.gov/r/pa/ei/bgn/index.htm Global Property Guide http://www.globalpropertyguide.com/

Educational Tips & Tools Global Perspectives in Real Estate (NAR) http://www.realtor.org/publications/global-perspectives NAR bi-monthly newsletter filled with valuable information regarding global business development for REALTORS®. 75+ Resources Guide (NAR) http://www.realtor.org/global/75-resources-for-globalre-professionals A comprehensive guide of resources and services NAR offers to help members see the global market in a totally different way.

Sources NAR’s 2013 Profile of International Home Buying Activity. http://www.realtor.org/topics/profile-of-international-homebuying-activity Field Guide to International Referrals http://www.realtor.org/field-guides/field-guide-tointernational-referrals Field Guide to REALTORS® and the Global Marketplace http://www.realtor.org/field-guides/field-guide-to-realtors-andthe-global-marketplace Field Guide to Foreign Investment Trends in the U.S. http://www.realtor.org/field-guides/field-guide-to-foreigninvestment-trends-in-the-us Field Guide to Working with International Clients http://www.realtor.org/field-guides/field-guide-to-workingwith-international-clients

www.mdrealtor.org

1 to 3 Bedroom Luxury, Resort-Style Condominiums in Baltimore’s Inner Harbor. Priced from $499,000 to over $3 Million. Immediate Occupancy | 866.922.1831 801 Key Highway, Baltimore, Maryland 21230 The Ritz-Carlton Residences, Inner Harbor, Baltimore are not owned, developed or sold by The Ritz-Carlton Hotel Company, L.L.C. An affiliate of RXR Realty LLC uses The Ritz-Carlton marks under license from The Ritz-Carlton Hotel Company L.L.C. This is neither an offer to sell nor a solicitation to buy to residents in states where registration requirements have not been fulfilled. MHBR No. 4096. An RXR Realty development. †Services provided by third-party companies are paid a la carte by the resident who requests the service.

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

19


Consider Realtors® Federal Credit Union

To Finance Your Next Project

Options are plentiful when it comes to business lending at REALTORS® Federal Credit Union (RFCU), a Division of Northwest Federal Credit Union. Whether it’s financing a new business idea, expanding an existing one, refinancing or buying commercial real estate, our team of experienced lenders is ready to help you. Like most REALTORS®, you probably think of a large national or community bank when you need financing for your business needs. But you have another source, one specifically created to serve your special needs. RFCU offers REALTORS®, as well as state and local associations nationwide commercial

20

and Small Business Administration (SBA) loans for their businesses. Small businesses are critical to the growth of the overall economy. The SBA was started in 1953 with one goal, to help Americans start and grow small businesses. There are number of risks associated with small business lending, so to encourage Banks and Credit

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

Unions to make more loans, the SBA provides the lender with a partial government guaranty. The actual loan is made by the financial institution, not the SBA. Each lender approves or declines the project based on its credit and risk parameters.

www.mdrealtor.org


Consider the two flagship programs, 7(a) and 504 programs. Each has a slightly different scope to serve different needs. The 7(a) is the primary business loan program that most borrowers use. Under the program, borrowers may purchase or refinance commercial real estate, receive start-up funding to launch a new idea, buy another company or replenish working capital. If you are purchasing OwnerOccupied Commercial Real Estate and want to minimize your down payment, then the 504 Loan program is the best option. Here’s an example of a typical project under this program. The Credit Union will work in partnership with a local Certified Development Company (CDC). It’s a two part loan; the Credit Union will provide 50% of the financing, the CDC will provide up to an additional 40%, and the client will contribute 10%. The advantages of using the 504 program are simplicity, great longterm fixed rates and a 10% down payment. The program provides 20 year fixed rate financing for borrowers buying land, buildings and equipment. The key advantage to the 504 program over the 7(a) is that borrowers can contribute as little as 10% towards the total project costs.

www.mdrealtor.org

504 REAL ESTATE PURCHASE USES

SOURCES

Purchase Price

$ 500,000

Improvements

$ 425,000

Bank

50%

$ 500,000

Furniture, Equipment

$ 50,000

504

40%

$ 400,000

Closing Costs

$ 25,000

Borrower

10%

$ 100,000

Total

$ 1,000,000

Most for-profit small businesses are eligible for an SBA guaranteed loan. Loan amounts range from $150,000 to $5 million and range from 7 to 25 years depending on the project and collateral. Lenders usually charge between 2.25–2.75 percent above the Wall Street Journal prime rate. Currently the WSJ Prime rate is 3.25%. What makes RFCU different from other Lenders? Our Credit Union was developed by the NATIONAL ASSOCIATION OF REALTORS ® as a true benefit for REALTORS®. Unlike other financial institutions, our focus is on REALTORS®. We believe in customer service, relationship management and common sense underwriting. If the deal makes sense, we want to find a way to do it. Unlike banks, we don’t have stockholders. RFCU is a member owned, not-for-profit organization and so we answer to you, not Wall Street. To access Credit Union loan programs and other services, visit www.realtorfcu.org. Credit Union membership is open to REALTORS® and their family members.

Total

$ 1,000,000 Borrower 10%

504 40% Bank 50%

About REALTORS® Federal Credit Union, a division of Northwest Federal Credit Union Originally founded in 2008 by the National Association of REALTORS®, REALTORS® Federal Credit Union was the first-ever virtual credit union. REALTORS® Federal Credit Union, a Division of Northwest Federal Credit Union, is also a proud partner in NAR’s REALTOR Benefits® Program. The Credit Union field of membership includes REALTORS® and immediate family members, NAR member boards, institutes, societies and councils, REALTOR®owned businesses, state and local associations, and local boards. For more information, visit www.realtorsfcu.org.

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

21


Regulation News  

MARK FEINROTH, ESQ.

Agency CE

I

t’s been four years since the General Assembly passed

Below is a brief review of what the law actually requires.

legislation mandating a three hour continuing

Section 2 of the legislation required any then licensed

education course “that includes the principles of

persons to take an agency CE course to renew an

agency and agency disclosures” as a condition of the

expiring real estate license any time on or after January

“next licensure renewal that occurs on or after January

1, 2012. Because all Maryland real estate licenses expire

1, 2012” and at least “every four years” thereafter. The

after two years, that meant that if you held a license in

legislation was requested by the Real Estate Commission

2012 or 2013, you were required to take a first agency CE

because consumer complaints in the preceding years

course in 2012 or 2013.

reflected an inadequate understanding of real estate brokerage agency law and practice.

However, after taking that first required course prior to license renewal in 2012 or 2013, real estate licensees are

While it is clear that both the residential and commercial

required to take the course every four years. Essentially,

agency CE courses have had a beneficial effect on

the agency requirement applies to licensees in alternate

consumers and licensees, instructors are reporting that

two year license periods.

some licensees are taking a second agency CE class earlier than the law requires. Although there is no penalty for taking the agency class more frequently, everyone recognizes that productive real estate agents are busy people with a great many demands on their time.

As with everything to do with agency law and disclosure, these rules can get confusing very quickly. If you have any questions or comments, please feel free to contact me at mark.feinroth@ mdrealtor.org. Mark Feinroth, Esquire, MAR Director of Regulatory Affairs.

…it is clear that both the residential and commercial agency CE courses have had a beneficial effect on consumers and licensees…

22

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

www.mdrealtor.org


Maryland Real Estate Commission News 

katherine connell y

What’s in a Name?

F

or more than three years, the Commission has At recent meetings of the Maryland Real Estate Commission (MREC), Commissioners discussed the law and policy that governs how a real estate brokerage company must be identified in advertisements. Current law recognizes that advertisements are communications directed to consumers, who are often unfamiliar with the highly competitive real estate brokerage business. Maryland is home to several large regionally franchised real estate firms, so there is great potential for confusion among consumer members of the public as they attempt to conduct business with companies that have similar names. The law that the Real Estate Commission must enforce was adopted by the General Assembly in 2002 and is found in the Business Occupations and Professions Article at 17-527.2. The law provides in subsection (b) that a licensee may not advertise unless the agent or broker’s name or designated name and the name of the business to which the licensee is affiliated are “meaningfully and conspicuously included in the advertisement.” The provision makes clear that the full name of the business must be included, “not a logo used by the business.” As with many of the agencies of state government, the Real Estate Commission is empowered to adopt regulations that interpret statutes adopted by the General Assembly. The advertisement regulation promulgated by MREC requires licensees to be “especially careful to present a true picture” and brokers are required to disclose either “the broker’s name or the company name as it appears on the license.” COMAR 09.11.02.01 (G). The Commissioners have taken the position that in all real estate brokerage advertisements, licensees must include the name of the company to which the licensee is affiliated. A logo is not an acceptable substitute for identification of the brokerage company unless the full name of the company is contained within the logo

24

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

and the company name is large enough to be read and understood by a consumer. Licensees may find it instructive to know that when MREC staff is concerned about whether an advertisement is in compliance with the “meaningful and conspicuous” standard, we ask our consumer members of the Commission to review the advertisement and to locate the name of the brokerage company. If they have difficulty locating the name of the brokerage company, we contact the licensees responsible for the advertisement to request changes in future ad copy. MREC staff and Commissioners are sensitive to the pressures on licensees to comply with standards imposed by national franchise branding campaigns and the competitive nature of the real estate brokerage business. We understand that advertisements are expensive, and we will work with any licensee who asks for assistance in obtaining advance approval before finalizing a particular advertisement or copy. However, please remember that as a licensee you are required to comply with the law. The Commission is aware of some advertising where there is a total disregard for requirements the law imposes. This continual abuse has prompted discussion of steep fines for violations, similar to those that were imposed for continuing education violations. While the Commission is reluctant to do so, we also recognize that it is not fair or equitable to those licensees who comply with the law to allow the continuous abuse of it by others. Please feel free to contact me directly at kconnelly@dllr.state.md.us if you have any questions concerning these provisions of law, regulation or your advertising copy. Katherine Connelly is the Executive Director of the Maryland Real Estate Commission. If you have other questions regarding the digital CE record system or any other matter concerning your Maryland real estate license at contact her at kconnelly@dllr.state.md.us or visit http://www.dllr.state.md.us/license/mrec

www.mdrealtor.org


Ask us...

How our clients receive an average of $4,074 in savings* on their home purchase when they use a Prudential PenFed Realty agent and Prudential PenFed Realty’s affiliates. It didn’t come from the commission. Career@PenFedRealty.com

Ranked Highest Overall Satisfaction † For First-Time and Repeat Home Buyers and First-Time Home Sellers among National Full Service Real Estate Firms. Regional Vice Presidents: Terri Bracciale, terri.bracciale@penfedrealty.com | Donna Buchman, donna.buchman@penfedrealty.com *Savings are based on the discounts received by PenFed Realty’s clients for using PenFed Realty’s mortgage and title affiliates as compared to purchasing the settlement services from PenFed Realty’s mortgage and title affiliates without retaining the services of PenFed Realty. † Prudential Real Estate received the highest numerical score among full-service real estate firms for first-time and repeat home buyers and first-time home sellers in the proprietary J.D. Power 2013 Home Buyer/Seller Study. SM Study based on 4,371 total evaluations measuring 5 firms and measures opinions of individuals who have sold a home in the last 12 months. Proprietary study results are based on experiences and perceptions of consumers surveyed April-June 2013. Your experiences may vary. Visit jdpower.com. © 2014 BRER Affiliates, LLC. An independently owned and operated broker member of BRER Affiliates, LLC. Prudential,the Prudential logo and the Rock symbol are registered service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide. Used under license with no other affiliation with Prudential. Equal Housing Opportunity. Prudential-PenFed Realty is an independently owned and operated member of BRER Affiliates, LLC. PenFed Membership is not required to conduct business with Prudential-PenFed Realty. We are proud to be an equal employment opportunity employer: m/f/v/d.


Residential Sales  

ANIRBAN BASU

Let it Snow

Seasonal Upturn on the Way

T

he fact that market activity has slowed in recent months comes as a surprise to no one. Beyond the typical seasonal factors have been fluctuating mortgage rates, a federal government shutdown and inundations of snow and low temperatures. At the same time, there has been an emergence of factors supporting the notion that the spring 2014 selling season will be brisk. Job growth continues, in and out of Maryland. Consumer confidence has been on the rise. Gas prices have been falling recently. The stock market boomed last year, creating more wealth available to support down-payments as well as the purchases that often accompany home-buying, including appliances, landscaping and furniture. And mortgage rates, though bumping around, have been far more stable than they were last summer and remain extraordinarily low by longer-term historic standards. With Janet Yellen set to take the helm at the Federal Reserve, we expect mortgage rates to remain stable into the spring and likely beyond.

Based on November and December 2013 data, the anticipated acceleration in market activity may already be apparent. While residential unit sales in Maryland were down 2.7 percent in November on a year-over-year basis, they were up 10.4 percent in December. Some of this pattern may be explained by the early/midOctober federal government shutdown, which may have delayed settlements and pushed a degree of activity from November to December. In fact, there were more sales in December (4,854) than in November (4,408), a divergence from normal seasonal patterns. However, taken together, these months stand for the proposition that Maryland’s housing market has remained stable in the face of significant obstacles. In December, twenty of Maryland’s twenty-four jurisdictions produced year-over-year sales increases, including large gains in several Eastern Shore counties, including Caroline (42.9%), Queen Anne’s (38.2%), Kent (33.3%), Dorchester (31.6%), and Wicomico counties

In December 2013, thirteen Maryland counties experienced an increase in average sales price on a year-over-year basis.

26

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

www.mdrealtor.org


(13.7%). There were also significant year-over-year unit sales gains in much of the Baltimore area, including in Baltimore City, Baltimore County and Harford County. Each of the three southern Maryland counties, St. Mary’s, Charles and Calvert also recorded sales increases, with particularly large increases in St. Mary’s (45.1%) and Charles (25.2%). Average and median prices were up on a year-over-year basis in the last two months of the year. In November, average sales price stood at $315,148, up 8 percent from a year earlier. But while December 2013 average sales price was up compared to December 2012 (+2.3%), it declined about $8,500 from November. In December 2013, thirteen Maryland counties experienced an increase in average sales price on a yearover-year basis. Both Howard and Anne Arundel counties had price gains approaching 9 percent. Several Eastern Shore jurisdictions recorded particularly hefty sales price increases, including Kent County (71.9%), Talbot County (34.4%) and Dorchester County (13.4%). Not all of the data emerging from November and December were positive, however. While pending sales were up in November on a year-over-year basis, they were down in December. In December 2012, there were 4,267 pending unit sales in Maryland. One year later, the corresponding statistic stood at 4,225. There is a perfectly good explanation for this—the weather. The current winter has unleashed the types of weather that render prospective buyers more reluctant to venture out. At first blush, there is also less inventory available that in past years. As of December 2013, months of inventory stood at 4.9 months, below the 5.0 months registered during the final month of 2012 and below November 2013’s figure of 5.8 months. However, this is a bit misleading. The number of homes available for sale statewide has actually expanded over the past year, from 22,154 in December 2012 to 23,576 one year later. But because December 2013 unit sales were significantly stronger, the months of inventory statistic declined. Had some fraction of November 2013

November 2013 vs. 2012 Units

Average Price

County

2013

2012

% Change

2013

2012

Allegany

27

34

-20.6%

$92,930

$90,249

3.0%

Anne Arundel

480

475

1.1%

$419,801

$352,170

19.2%

Baltimore City

486

434

12.0%

$145,923

$151,161

-3.5%

Baltimore County

531

566

-6.2%

$274,732

$248,711

10.5%

Calvert

58

72

-19.4%

$338,001

$318,845

6.0%

Caroline

17

21

-19.0%

$186,841

$186,157

0.4%

Carroll

128

125

2.4%

$300,591

$268,357

12.0%

Cecil

74

61

21.3%

$238,313

$202,488

17.7%

Charles

135

110

22.7%

$251,606

$250,845

0.3%

Dorchester

27

30

-10.0%

$144,573

$107,466

34.5%

Frederick

216

231

-6.5%

$286,410

$265,434

7.9%

Garrett

29

28

3.6%

$352,766

$349,275

1.0%

Harford

181

173

4.6%

$259,992

$265,870

-2.2%

Howard

228

244

-6.6%

$411,274

$406,110

1.3%

Kent

15

16

-6.3%

$342,593

$360,925

-5.1%

Montgomery

748

828

-9.7%

$506,868

$458,792

10.5%

Prince George’s

546

623

-12.4%

$221,298

$191,085

15.8%

Queen Anne’s

53

49

8.2%

$420,256

$314,983

33.4%

Somerset

18

9

100.0%

$109,456

$52,911

106.9%

St. Mary’s

76

62

22.6%

$300,098

$280,332

7.1%

Talbot

44

50

-12.0%

$475,023

$451,020

5.3%

Washington

83

96

-13.5%

$199,245

$170,173

17.1%

Wicomico

72

47

53.2%

$174,192

$148,462

17.3%

Worcester

136

148

-8.1%

$268,650

$282,770

-5.0%

TOTAL 4,408

4,532

$315,148

$291,746

8.0%

-2.7%

% Change

Figures reflect resales and new properties. Residential resales are reported by MRIS® and local boards MLS systems.

www.mdrealtor.org

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

27


sales not slipped into December due to the federal government shutdown, it seems quite likely that the months of inventory figure would have been higher in December 2013 on a year-over-year basis.

December 2013 vs. 2012 Units

Average Price

County

2013

2012

% Change

2013

2012

% Change

Allegany

31

36

-13.9%

$97,493

$101,714

-4.1%

Looking Ahead

Anne Arundel

419

441

-5.0%

$378,904

$348,877

8.6%

Baltimore City

536

447

19.9%

$170,731

$191,706

-10.9%

Baltimore County

644

551

16.9%

$251,717

$248,200

1.4%

Calvert

90

86

4.7%

$341,090

$325,179

4.9%

Caroline

30

21

42.9%

$160,247

$173,650

-7.7%

Carroll

133

103

29.1%

$301,546

$292,062

3.2%

The outlook for 2014 represents the best annual economic outlook in at least seven years. The U.S. economy is progressing along many dimensions, including energy production, industrial production, consumer spending and exports. Corporate performance remains impressive and job growth has remained reasonably stable from month-to-month with limited exception.

Cecil

67

57

17.5%

$222,062

$231,217

-4.0%

Charles

154

123

25.2%

$260,329

$233,727

11.4%

Dorchester

25

19

31.6%

$182,265

$160,798

13.4%

Frederick

244

221

10.4%

$291,957

$277,159

5.3%

Garrett

29

31

-6.5%

$347,588

$353,497

-1.7%

Harford

200

173

15.6%

$252,533

$252,632

0.0%

Howard

232

230

0.9%

$418,762

$384,664

8.9%

Kent

24

18

33.3%

$427,536

$248,778

71.9%

Montgomery

832

753

10.5%

$502,889

$485,254

3.6%

Prince George’s

693

663

4.5%

$216,894

$207,632

4.5%

Queen Anne’s

47

34

38.2%

$391,492

$426,431

-8.2%

Somerset

9

8

12.5%

$145,478

$157,800

-7.8%

St. Mary’s

103

71

45.1%

$283,522

$295,864

-4.2%

Talbot

35

49

-28.6%

$749,085

$557,258

34.4%

Washington

110

98

12.2%

$165,982

$147,863

12.3%

Wicomico

58

51

13.7%

$152,969

$170,518

-10.3%

Worcester

109

114

-4.4%

$255,976

$285,211

-10.3%

TOTAL 4,854

4,398

10.4%

$306,685

$299,759

2.3%

In terms of employment (and unemployment), Maryland has been a middling performer. The state’s unemployment rate remains below the nation’s, though as of this writing the gap has fallen to around half of a percentage point. The pace of job growth in Maryland is slower than it is nationally, but still respectable and strong enough to power household formation and an ongoing housing market recovery. The two major threats to an otherwise benign economic outlook appear to be rising oil prices and interest rates. Oil prices, of course, can increase at any time due to factors such as geopolitical strife or supply chain interruptions generally. Interest rates can also climb, as last summer made evident. Rates began to rise rapidly from rock bottom lows last May as the Federal Reserve announced that it would begin to taper its bond purchasing program. For now, the baseline expectation is that interest rates, including mortgage rates, will remain well behaved throughout 2014. This means that while interest rates may rise, they won’t rise to levels that would prevent ongoing housing market recovery. Moreover, steady increases in mortgage rates may actually help the market by inducing hesitant buyers to jump into the market. Anirban Basu, Chairman & CEO, Sage Policy Group, Inc.

Figures reflect resales and new properties. Residential resales are reported by MRIS® and local boards MLS systems.

28

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

www.mdrealtor.org


Simplify Your Showings Online with ShowingTime! New Product Included in Your MRIS Subscription Have you tried MRIS’s new ShowingTime for the MLS product yet? This convenient online showing management tool is included in your core MRIS subscription meaning there is no additional fee to use MRIS ShowingTime. The ‘Schedule a Showing’ button next to your listings makes it easy to get showings…other agents can just point, click and show.

Listing Agents With ShowingTime for the MLS, listing agents can turn on the ‘Schedule a Showing’ button next to their listings. This button makes a listing more attractive because other agents know appointments will be confirmed quickly. Just click on the Showings icon from the Keystone Homepage to enter showing information for a listing, and that information is then accessible to showing/buyer agents in Matrix and on the MRIShomes™ app. ShowingTime for the MLS has three showing appointment types that the listing agent can select from: ■ View Instructions Only—the showing agent views the listing instructions immediately without having to contact the listing agent to setup an appointment ■ Courtesy Call or Go and Show—the showing agent schedules an appointment that will be immediately confirmed with no action required by the listing agent ■ Appointment Required—the showing agent schedules an appointment that must be confirmed by the listing agent and/or any of the designated listing contacts

Showing Agents For showing agents, you can browse listings and click the ‘Schedule a Showing’ button in Matrix or the MRIShomes mobile app. Showing agents can use ShowingTime to make showing requests by selecting dates and times from a shared calendar. Showing requests are then delivered to the listing agent, owner/occupant, and/or another contact determined by the listing agent/broker

www.mdrealtor.org

for notification and/or confirmation. The ShowingCart™ feature can also be used to schedule several showings at a time. Once you put them in the Cart, you can print out a map for your Buyer’s Tour and be on your way.

Benefits of ShowingTime include ■ Receive and confirm requests immediately ■ Reduce your phone calls and phone tag ■ Block out times a listing is not available to be shown ■ Give agents 24/7 access to request showings on your listings ■ Access helpful feedback tools such as surveys and reports ■ Send feedback requests automatically to showing agents ■ Schedule multiple showings for clients with the ShowingCart™ Tour function ■ Integrate with Appointment Center services such as Centralized Showing Service (CSS) Video tutorials, class registration and quick reference guides are available at MRIS.com/ShowingTime. Start simplifying your showings today! Please note: Use of ShowingTime for the MLS is optional, meaning you can choose to turn on ShowingTime for your listings. Functionality in Matrix will also remain unchanged. Even if a listing agent turns on ShowingTime for his or her listings, the showing instruction fields will remain on Matrix displays and reports.

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

29


SNIPPETS Instagram (And Instagram Direct) Instagram is a fast, beautiful and fun way to share your life with friends and family. Take a picture or video, choose a filter to transform its look and feel, then post to Instagram­—it’s that easy. You can even share to Facebook, Twitter, Tumblr and more. It’s a new way to see the world. http://instagram.com/#

Social Media Examiner The world’s largest online social media magazine, Social Media Examiner® helps businesses discover how to best use social media, blogs and podcasts to connect with customers, drive traffic, generate awareness and increase sales. http://www.socialmediaexaminer.com/

Zemanta (for WordPress in particular) Waze Waze is the world’s largest community-based traffic and navigation app. Join other drivers in your area who share real-time traffic and road info, saving everyone time and gas money on their daily commute. https://www.waze.com/

Mashable Mashable is a leading source for news, information & resources for the Connected Generation. Mashable reports on the importance of digital innovation and how it empowers and inspires people around the world. Mashable’s 22 million monthly unique visitors and 13 million social media followers have become one of the most engaged digital networks in the world. http://mashable.com

30

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

Blog–Zemanta recommends your content to diverse network of engaged communities and brings new readers to your site. http://www.zemanta.com/

If you have a ‘ridiculously useful website’ to share with fellow REALTORS®, email: jermaine.hawkins@ mdrealtor.org

The sites are presented for information only. MAR is not responsible for the content of external websites and does not endorse them or their functionality. Although we make every effort to ensure these links are accurate, up to date and relevant, MAR cannot take responsibility for pages maintained by external providers. Views expressed by individuals and organizations on their own websites are not necessarily those of the Maryland Association of REALTORS®.

www.mdrealtor.org


Commercial Connection  

E d Stanfield , C C I M

The Commercial Alliance Committee There are many good hard working REALTORS working in committees within the structure of the Maryland Association of REALTORS® (MAR). This article’s purpose is to give you some insight on the activities of MAR’s Commercial Alliance Committee.

C

ommercial committee membership is taken from applications submitted to MAR in late spring for the committee year beginning on Oct 1st. About 30 members are selected based on commercial real estate (CRE) background, commercial designations, geographical or association representation, large and small company representation and on a variety of professional specialties. There are even a couple of native West Virginians on the committee to keep the other members on their toes. The committee meets at the headquarters in Annapolis four times a year in two-hour sessions. During the January session, Bill Castelli, Esq., Vice President of Government Affairs, gives the committee a rundown of what’s on the agenda for the Maryland legislature and advises us about what MAR is supporting or opposing in the way of CRE legislation. (There are good proposals and there are wacky proposals.) During the April meeting, Bill gives a summary of what legislation passed and what didn’t pass. In May, the committee puts together a symposium on a particular industry and how it affects CRE in Maryland. In past years the subject areas have been on military base realignments and closings (BRAC); the cyber security business; bioscience industry; and the entertainment business (i.e. gaming). The first part of the symposium is a panel discussion with experts in the particular subject area. The discussion is moderated by noted economist, Anirban Basu. In the second part of the symposium, Bill Castelli covers the CRE related laws that have been approved by the legislature and governor. The committee also recommends two commercial course subject areas to be presented each September at the MAR Annual Conference. Past courses have been covered commercial agency; commercial “green” construction; commercial leasing; commercial real estate consulting; and group investing.

www.mdrealtor.org

The committee meetings also feature a variety of speakers covering specific subjects: CRE relating to military installations; international investment; National Association of Realtors (NAR) support for CRE brokers and local REALTOR associations; NAR REALTORS Property Resource (RPR) data support for commercial agents; and Maryland Department of Business and Economic Development (DBED) business incentives. Other speakers have covered building cost segregation accounting methods for greater tax depreciation benefits, and laws and regulations effecting land development. Bill Armstrong, former NAR treasurer for the past three years, gave a presentation on the recognition and support that NAR has been giving to the commercial REALTOR sector in the country. Various committee members also give updates to the group on what’s happening in their particular geographical area or commercial organizations. Being on a state committee gives you insight on the tremendous support the MAR staff gives to all the membership in the state. Special thanks go to Chuck Kasky, Esq., Jason Brand, Esq. and Shannon Reed for their MAR support to the committee. Committee participation broadens your prospective, introduces you to commercial practitioners from across the state, and broadens your understanding and awareness of issues affecting CRE. It’s also fun.

Commercial Alliance Mission Statement: To provide a forum for commercial REALTORS ® and real estate professionals to confer on commercial real estate related issues, including Maryland legal and economic policies; and to provide networking and educational opportunities in commercial real estate. Ed Stanfield, CCIM is former Chair of the Commercial Alliance.

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

31


From the Hotline 

charle s A . K a s k y , e s quire

Has the Contract Been Breached? Q.

Help! I had a written buyer representation agreement and the buyer purchased a new home without my assistance. I’m pretty sure that’s a breach of contract, given that brokerage agreements are contracts. The problem is that because I couldn’t get the buyer to understand how buyer agent compensation works, I left the Commission line of the Brokerage Agreement blank (because the buyer wasn’t on the hook for my commission anyway). Now I’m afraid I’m out of luck. Can you help me?

A.

In a word, and unfortunately, “No.” As I travel around the state, one issue that is widely misunderstood is how to fill out the compensation paragraph of a buyer representation agreement. This is a function of the fact that although the broker and agent represent the buyer, compensation is typically paid by the listing broker. This fact has led many agents to misunderstand the compensation provision of the buyer representation agreement. In some instances, the agent puts “0” in the field believing, erroneously, that because the buyer/client is not actually paying the commission, that field should either be “zero” or, just as misguided, left completely blank. Of course, I could be wrong and this could simply be a trend toward working without compensation, but I don’t think so. In your case, the worst case scenario, because the document is missing a critical element of a contract—consideration—there is probably no remedy. The most unfortunate part is that all of this confusion is avoidable if the agents and brokers involved adopted some formal policies and simple best practices. Please Note: this article acknowledges that all brokerage agreements and compensation provided for therein are the property of the broker and that all brokerage agreements are written and executed in compliance with the broker’s policies and procedures.

32

MARYLAND REALTOR®  FEBRUARY 2014 / MARCH 2014

The first thing the brokerage agreement should do is make the distinction between how much the broker will be paid and who will pay it. If you intend to receive compensation for your work (and I know you do), say it in the compensation paragraph of the buyer representation agreement. It’s a simple matter to say, in effect, that “In exchange for assisting you in buying a property, I will be paid: X% of the sale price; a flat dollar amount; or a combination of both. That’s my compensation.” Next, you need to discuss with the buyer the source of that compensation. Is it the listing broker, the buyer, or both? If it’s the listing broker only and you agree to limit your compensation to what the listing broker is offering through the MLS, regardless of what the compensation paragraph provides, say that. Make it perfectly clear that the buyer is relieved of the obligation to pay any difference. On the other hand, it is a legitimate business practice to negotiate with the buyer that if the compensation you receive from the listing broker is less than the established brokerage fee, the buyer is responsible for the difference. You should also address what happens if what is offered in the MLS is more than what’s stated in the agreement— it happens! Do you keep it, split it or something else? It can be almost anything, and it’s all negotiable, but it must be part of the agreement. Please be aware that I am not advocating one practice over another. Any of the options I have described are acceptable. Again, you have options, but the bottom line is that you must make sure the final, negotiated agreement contains the agreed-upon compensation. What matters most is that your company have consistent policies and practices with which licensees affiliated with that company are familiar. Charles A Kasky, Esquire, Senior Vice President, Maryland Association of REALTORS®.

www.mdrealtor.org


Game-changer? Let’s talk life-changer!

The EXIT Realty Difference is

Like Night & Day! • Industry-leading training & coaching • Superior technology & marketing resources • Empathy-focused culture geared to your success • Financial security with sponsoring, retirement & beneficiary residual bonuses

Anne Arundel EXIT First Realty (Crofton) EXIT Results Realty (Linthicum) Baltimore EXIT Preferred Realty (Perry Hall) Calvert EXIT 1 Stop Realty (Dunkirk) EXIT By the Bay (Prince Frederick) Caroline EXIT Gold Realty (Denton) Cecil EXIT Preferred Realty (Chesapeake City)

Charles EXIT Landmark Realty (White Plains) EXIT Realty Capitol Properties (Waldorf) Dorchester EXIT Gold Realty(Cambridge) Frederick EXIT Realty Prosperity Group Harford EXIT Preferred Realty (Bel Air) Howard EXIT Results Realty (Columbia) EXIT Spivey Realty (Ellicott City)

Montgomery EXIT Realty Enterprises (Silver Spring) EXIT Realty Plus (Gaithersburg) Prince George’s EXIT Bennett Realty (Greenbelt) EXIT Elite Realty (Fort Washington) EXIT Elite Realty (Lanham) EXIT Landmark Realty (Clinton) EXIT Right Realty (Laurel) Queen Anne’s EXIT Gold Realty (Stevensville) Talbot EXIT Latham Realty (Easton)

Wicomico EXIT Shore Realty (Salisbury) District of Columbia EXIT Elite Realty (Logan Circle) Territories Available! Allegany, Anne Arundel, Baltimore, Baltimore City, Carroll, District of Columbia, Garrett, Howard, Kent, Montgomery, Somerset, St. Mary’s, Washington, Worcester • Offices in ALL 50 States • Regionally: 27 offices, 1,000+ agents • Sponsoring $$ Paid: $1,500,000 last 12 months

EXIT Mid-Atlantic Region (DE/DC/MD/WV) 60 Algonquin Road, North East, MD 21901 410-287-9000 • info@ExitMD.com

Not intended to solicit broker owners already under contract. This is not an offer to sell or solicitation of an offer to buy a franchise. An offer is made by prospectus only. Equal Housing Opportunity


MD REALTOR Magazine February/March 2014  
Read more
Read more
Similar to
Popular now
Just for you