December January 2024 Maryland REALTORS Magazine

CELEBRATE LEADERSHIP ACADEMY 19

Vol LVII, No 6 | DEC 2023/JAN 2024

MARYLAND’S NAR APPOINTMENTS 22

mdrealtor.org | marylandhomeownership.com

Real Estate in 2024 ■

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Legislation Economy Industry

CHANGES TO THE EMD LAW 36

Oilheat.

Let’s Talk About It! Addressing questions like a PRO! Schedule a 15-minute PRO$ presentation during your office meeting and you’ll learn:  How to address the long-term ramifications of owning an oilheated home.  Foreign independence: Where does our oil really come from?  Bioheat® fuel and the revolutionary solution to controlling oil prices.  The three tell tale signs that an above ground tank needs to be replaced.

Know more, sell more.

Energy Efficiency – a key selling feature When you prepare an oil-heated listing to show, you’ll want to highlight every possible selling feature of that home, including its energy efficiency. Here’s what you should find out about the home that you’re getting ready to list: Smart thermostat? Homeowners who have smart thermostats are able to moderate their energy use and reduce waste when they aren’t at home. If your client doesn’t have one installed, they should — it adds a whole new dimension to the efficiency of a home.

Service contracts? If your client has a service contract with their heating oil company, that’s a major selling feature. Heating oil systems that are regularly maintained operate at peak efficiency, leading to savings year over year. And, local heating oil dealers often transfer service contracts from one homeowner to the next. Buyers respond very favorably when they find out the heating system in their new home is already covered.

Other recent home upgrades? Home upgrades have a direct impact on the overall energy efficiency of a home. For example, if old windows are replaced with airtight windows, air leakage will be reduced. This keeps more heat inside the home, leading to increased energy efficiency. Find out if your client has made any recent home improvements to determine just how energy efficient the home really is.

 Tank replacement options: What are the real costs?  How to help your clients reduce heating costs up to 65%.

To schedule a brief, 15-minute conversation on Zoom or in-person, visit OilheatPROS.com/md-de.

The more you know, the more you’ll sell!

PRO$ is the national nonprofit educational program for REALTORS® selling oil-heated listings.

For more tips and information about highlighting energy efficiency during the sales process or for suggestions on how to improve the energy efficiency in your clients’ homes, visit OilheatPROS.com/md-de.

Bioheat® fuel — What does it mean for your clients?

Most of the heating oil in Maryland is now Bioheat fuel, which you can use as a powerful selling point when you are listing and selling oil-heated homes. It’s made by combining regular heating oil with biofuel, which is a renewable blend of oil from materials like soybeans and vegetables. Bioheat fuel supports more efficient equipment, reduces emissions dramatically and eliminates a primary source of equipment breakdowns. Visit MyBioheat.com to learn more about Bioheat fuel.

OilheatPROS.com/md-de

mapda.com Paid for by the National Oilheat Research Alliance and the Mid-Atlantic Petroleum Distributors Association.

CONTENTS FEATURES 6

Scenes from ALL IN!

8

2024 Installation & Awards Ceremony in Pictures

10 2024 Legislative Session Preview

14 A Look Ahead:

The 2024 Economy

19 Celebrating Leadership

10

Academy

22 NAR 2024 Committee Appointments

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14

26

DEPARTMENTS 3

President’s Perspective

26 CEO Corner

35 Sell More with Maryland

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REALTOR® Talk

32 Meet the Staff

26 From the Hotline

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2024 MARYLAND REALTORS® LEADERSHIP TEAM

Maryland REALTORS®

200 Harry S Truman Parkway | Suite 200 Annapolis, MD 21401-7348 443.716.3500 | www.mdrealtor.org

Leadership Team

Chris Hill

Cheryl Abrams Davis

PRESIDENT

PRESIDENT-ELECT

Century 21 New Millennium 23063 Three Notch Road California, MD 20619 301.862.2169 chris@thechrishillteam.com

RE/MAX United Real Estate 14340 Old Marlboro Pike Upper Marlboro, MD 20772 301-702-4200 cherylabrams@remax.net

Chris Hill | President Cheryl Abrams Davis | President-Elect Chris Jett | Treasurer Denise Lewis | Secretary Yolanda Muckle | Immediate Former President Chuck Kasky, RCE | Chief Executive Officer

Editor

Daniel Patrell | dan.patrell@mdrealtor.org

Advisory Committee

Rebekah Kleinman | Chair Kristin Skeweris | Vice Chair

Advertising

Arlene Braithwaite | 410.772.0820

Publication Design

HBP, Inc., 952 Frederick Street, Hagerstown, MD 21741 800.638.3508 | www.hbp.com The opinions expressed by nonstaff contributors may not reflect the official opinion of Maryland REALTORS® and/or policies derived from leadership and staff.

Denise Lewis

Chris Jett

SECRETARY

TREASURER

Brook-Owen Real Estate 41 E. Main Street Westminster, MD 21157 410-871-1110 denise@denisehasthekeys.com

Shore 4U Real Estate 23 Fountain Drive W 2nd Ocean City, MD 21842 443.523.2360 chris@shore4u.com

Mission Statement Maryland REALTORS® exists to support all segments of its membership and their specialties. Maryland 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, Maryland REALTORS® values and seeks diversity and inclusive participation within the field of real estate and recognizes each member as a unique individual.

Yolanda Muckle

Chuck Kasky, RCE

IMMEDIATE FORMER PRESIDENT

CHIEF EXECUTIVE OFFICER

Long & Foster Real Estate 9300 Lottsford Rd., Suite 500 Largo, MD 20774 301.249.1600 yolanda.muckle@lnf.com

Maryland REALTORS® 200 Harry S Truman Pkwy.

Suite 200 Annapolis, MD 21401 800.638.6425 chuck.kasky@mdrealtor.org

Maryland REALTOR® (USPS 0016-017) is published bimonthly by Maryland 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.

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. ©2023 Maryland REALTORS®, Inc.

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PRESIDENT’S PERSPECTIVE

Searching for Certainty in an Uncertain World There’s no doubt that we all feel headwinds upon us as we enter 2024. With the Burnett verdict, high interest rates, and an ongoing inventory crisis that makes homeownership a challenge for many Marylanders, it may lead some to feel a bit of trepidation coming into the New Year.

If knowledge is power, then knowledge based on known facts is a supreme level of power, and that’s where this issue of Maryland REALTOR® comes in handy.

First, let’s bring up the Burnett verdict. Speculation does not help and only prevents one from moving forward. So, my humble advice: don’t speculate; it’s a waste of time. This verdict is not close to being final, which could be 18–24 months or away, at a minimum.

In the meantime, buyers will still look to buy houses, and they’re going to need experts to help with these transactions. Who’s best prepared to help these people? It will be the REALTORS® who can best communicate their value to the consumer, that their expertise is worth every penny that goes toward their commission. Know your value. Communicate it proudly and remember that we’re one of 17 states with a strong buyer agreement in place. Our CEO Chuck Kasky writes extensively about this, and I encourage you to read this thoroughly, starting on page 26.

As for high interest rates: no one knows what the Federal Reserve

will do, but we do know that NAR Chief Economist Lawrence Yun, Freddie Mac, and guest author and economist Anirban Basu see the new year bringing with it a 30-year fixed rate mortgage rate that will be in the range of 6, not 7%. Already we’re witnessing interest rates leveling off and Yun believes that as the softening of inflation catches up with the Federal Reserve, they will do what’s right and lower the rate.

No promises, of course, but hope based on expert analysis of known fact. Turn to page 14 to read Basu’s take on the 2024 economy.

The lack of available housing isn’t new, of course; as REALTORS® we’ve been living with this reality for some time. The good news is that others are beginning to recognize this, as well, including the Moore Administration, key General Assembly members, and even some local governments. Welcome to the party, folks. Our Director of Advocacy and Public Policy, Lisa May, has written a Session Preview, starting on page 10, which provides details on what to expect next legislative session. We could see a package of housing legislation introduced, and we should all be prepared to do what’s necessary to get our state and local representatives on board for legislation that provides more housing opportunities for Marylanders.

Save the Date: your voice will be needed this next Lobby Day, February 14 (yes, Valentine’s Day),

MARYLAND REALTOR®

to engage your representatives on the importance of housing affordability and availability.

There’s a lot of chatter out there, these days. Social media has the tendency to fan flames of speculation into wildfires. It can stress anybody out trying to keep up with all the opinions—the wild and the mild—out there.

Here’s my promise to you, as President: Maryland REALTORS® will not speculate. Look to us for facts. Look to your state association to deliver actionable, grounded advice that can help to place your business on a firm footing. It’s part of our Value Proposition to you and the work you do.

I wish you all a wonderful New Year. ■

Chris Hill Is Maryland REALTORS®’ 2024 President.

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REALTOR® TALK

Save these 2024 Event Dates!

Maryland REALTORS® has planned some outstanding events in 2024. Mark your calendar now for these dates.

Lobby Day

Calvert House, Annapolis February 14

Regional Roundtable

Save a Tree!

Regional Roundtable

Are you a digital person moving through a paperdriven world? Do you love the content of this magazine, Maryland REALTOR®, but would like to view its content digitally rather than the printed page?

Hyatt Chesapeake, Cambridge March 7 Eagles Nest Country Club, Phoenix April 3

INNOVATE 2024

If you wish to forego the print version of this magazine, you can still grab its most important content online. Use this QR Code to access the most recent digital edition of the magazine:

Maryland REALTORS® Commercial Symposium College Park Marriott, College Park March 28

Pride in Practice

American Visionary Art Museum, Baltimore June 11

2024 Annual Conference You can also visit Maryland REALTORS® Online, our blogspace, where the important articles from each issue are

Ocean City Convention Center, Ocean City September 16-19

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posted as blogs, and sharable wherever you share content.

If you liked a story and wanted to send it to a colleague, it’s as easy as sending a link.

Follow this QR Code to visit our blog space:

If you would like to discontinue receiving the print version of the magazine, please email victor.pessima@mdrealtor.org, and ask to be removed from the distribution list. You can still access all our great content online and remain plugged into the news that’s shaping our industry! ■

Advanced Education for Growing Your Business

GRI

The Graduate REALTOR® Institute Designation Be the first pick.

Stand out from the crowd.

Earn Your GRI Designation One Time Completion

sophisticated than ever, requiring

Must complete Series 100 & 200 for a total of 72 hours, no renewal required.

professionalism. By earning the

Continuing Education

Designation (GRI), you will lead

Each six-hour course offers advanced guidance for the modern REALTOR® and most provide continuing education credits.

Your clients are more

you to perform at a higher level of Graduate, REALTOR® Institute the pack with real-world knowledge about new

technologies, laws and marketing techniques that positively affect your bottom line.

Questions? Email: GRI@MDRealtor.org

Online Classes Each GRI series is offered virtually twice a year through Maryland REALTORS®.

Sessions run from 9:00am to 3:45pm.

TO REGISTER, SCAN QR CODE OR VISIT: www.mdrealtor.org/Professional-Development/ Certifications-and-Designations/Graduate-REALTOR-Institute

ALL IN! Pictures from the Maryland REALTORS® 2023 Annual Conference!

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aryland REALTORS® members went ALL IN last September at its annual conference, held at the Live! Casino and Hotel in Hanover.

We’ve provided some memories here, on these pages, but there’s a whole lot more to share! Follow this QR Code to see and download images from our Annual Conference— and we’ll see you—Back to the Beach—in 2024, in Ocean City, September 16–19! ■

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New Year, New President!

Pictures from the Maryland REALTORS® Installation & Awards Ceremony

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ongratulations to the award recipients, the new 2024 Maryland REALTORS® Board and Directors, and the Association’s new 2024 President, Chris Hill! On a beautiful day late September, members and leadership gathered underneath sunny skies at the beautiful Kent Manor Resort to celebrate high achievers and new leadership.

What could make it even better? Crabs!

Follow this QR Code to see and download images from our event…and stay tuned for an exciting year! ■

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Is 2024 the Year of Housing?

What to look for in our next legislative session.

BY LISA MAY

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f you advocate for housing, but no one was around to hear—did you even make a sound?

Reforming the Permitting Process to Reduce Delays

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Reducing Litigation Over New Development

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Better Reporting on Local Housing Needs

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Preserving and Expanding Housing Programs

When it comes to Maryland’s housing crisis, there have been times when REALTORS® must have felt like voices in the wilderness. While we have been sounding the alarm on what was once an 82,000-unit shortage that first grew to 120,000 units, and now to just shy of 150,000 units (per the National Low Income Housing Coalition), the General Assembly has been tackling legislation on everything but that issue.

What remains to be seen is whether those measures will be enough to close the state’s now-estimated 150,000 housing unit shortage. Expect to hear much, much more on this in the coming months.

This coming year, in 2024, it looks like our calls to act are being answered.

Industry Matters

Housing Crisis: No Longer Just a REALTOR® Issue The drumbeat on housing supply and affordability in Maryland appears to have grown too loud to ignore any longer. The Administration, key General Assembly Committees, and yes, even local governments, agree that a package of housing legislation will be introduced in the 2024 Session.

Early conversations among stakeholders indicate that these efforts will be focused on several aspects of the housing pipeline:

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Year in and year out, Maryland REALTORS® proposes legislation to improve the operation and conduct of the real estate industry. This year, those measures will include changes both big and relatively small.

First up is a change to state law, which would allow for submission of anonymous complaints to the Maryland Real Estate Commission (MREC) for advertising violations. Several states currently investigate complaints submitted without the name of the person bringing the complaint; however, this has

General Assembly 101— Why State Advocacy Matters Need a quick overview of the General Assembly and how it impacts you? Want a refresher on those acronyms your lobbyists are always using? This article is for you:

The Session

not been possible in Maryland due to a requirement that complaints be made under oath by the accuser.

Because advertising violations are readily apparent, REALTORS® believe this change can be made without raising due process concerns.

Another REALTOR® bill will address an inconsistency within the brokerage statute. Currently, real estate brokers may oversee one office, but office managers are not given a limit on the number of offices that they may supervise. Having to hire an office manager to expand to a second location can be a financial deterrent to a broker growing his or her business. This bill will allow brokers the same oversight of branch offices as is given to office managers.

Finally, Maryland REALTORS® will seek legislation to address recent changes to how continuing education (CE) is reported to MREC. Policies instituted by MREC this summer requiring expedited reporting of CE credits by real estate schools has placed a hardship on those providers, which could result in fewer class offerings or increased costs passed on to licensees. The Commission has also prevented licensees from renewing when their CE credits are not recorded in the licensing system by the renewal deadline. The reasons for these changes include a high number of licensees who completed education requirements at the last minute or who falsely certified that they had completed credits when they had not. REALTORS® will submit legislation to require licensees to complete CE credits 30 days before license expiration and restore longer timeframes for continuing education providers to report completed credits to MREC.

The Maryland General Assembly meets for 90 calendar days each year, beginning the second Wednesday in January and concluding in early April. At the beginning of Session, most work is conducted between Monday afternoon and Friday morning. However, as the session wears on, meetings and hearings stretch from early morning to late evening – including the weekend – to finish the business of the legislature.

The Process Members of the General Assembly introduce bills by their own initiative, on behalf of the Administration, or at the request of a constituent or group, like Maryland REALTORS®! Bills then proceed through a maze of committees (and House subcommittees), readings, and floor votes before reaching the Governor’s desk for passage. Read more about this process here: The Legislative Process (maryland.gov)

The Committees to Watch While all General Assembly Committees discuss matters of importance to the state, there are those which deal with the real estate industry more than others.

In the House, those are the Environment and Transportation (E&T) and the Economic Matters (ECM) Committees. E&T hears housing, common ownership community, and property management related legislation. Those bills will flow through two subcommittees: Housing and Real Property, and Land Use and Ethics. ECM hears bills related to real estate licensing and business operations. REALTOR® legislation most often goes to their Business Regulation continued on page 13

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Protecting Consumers, Protecting Homeownership One of the top issues for REALTORS® in 2024 will involve reforms to the Condo and HOA resale process.

Our members continue to report excessive fees charged

by Associations to obtain resale information, while the differing timelines and disclosure requirements between the acts cause confusion in sales transactions.

Following the lead of our neighboring Virginia, Maryland REALTORS® will seek legislation to conform resale disclosures and timelines across Common Ownership Community types and to prohibit any fees which are not outlined in statute.

Even before the beginning of litigation over commissions, Maryland REALTORS® was drafting changes to the brokerage act on buyer brokerage compensation.

This bill will clarify existing requirements to clearly state the amount of compensation owed to the buyer’s

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broker, who is responsible for paying it, and what actions entitle the broker to that compensation.

Once again, legislators will take up improving financial literacy among Maryland’s student population. Joining counterparts from the mortgage banking industry, REALTORS® advocated for legislation on the topic despite opposition from local school officials. However, we are also working with the Administration on nonlegislative initiatives, such as through the Comptroller’s Financial Literacy Advisory Board, to broaden awareness among the population.

A related measure involves expanding upon the state’s First-Time Homebuyer Savings Accounts. When Maryland REALTORS® passed this initiative in 2021, several compromises were made to the program’s structure to win approval. Unfortunately, those resulted in making the accounts less attractive to first-time buyers. Working with the original bill sponsor, REALTORS® hope to allow family members to open

accounts on behalf of a first-time buyer to maximize their savings timelines and gain wider adoption.

Real estate wholesaling practices continue to be an area of concern within Maryland. An MREC workgroup has discussed the issue, and members of the General Assembly have turned to REALTORS® for assistance in explaining wholesaling transactions and potential pitfalls for consumers. If successful with this year’s legislation, Maryland would join ten states that have licensed or required additional disclosures from real estate wholesalers so that consumers have transparency during a wholesale transaction.

Budget Clouds on the Horizon?

A session preview would not be complete without a word of caution on state finances. Back in the Spring, officials began sounding the alarms on declining revenue estimates and the need for future spending restraint. With the General Assembly giving more scrutiny to the fiscal impacts of new legislation and existing services, REALTORS® will need to stand up to preserve funding levels for state housing services like the Maryland Mortgage Program. Especially in this time of rising interest rates and unaffordability, Maryland must hold housing harmless in any proposed spending reductions.

All in all, 2024 is shaping up to be a busy and consequential session. Policy makers are listening, so let’s make it one that counts for housing. ■

Save the Date: Love & Legislation If Maryland’s legislature is in session, then it’s time for another Maryland REALTORS® Lobby Day! If you haven’t guessed by the headline: The 2024 Lobby Day will be held February 14, 2024, Valentine’s Day the perfect day for love…and legislation. Check mdrealtor.org and the HotSheet for more information.

But for now: Save the date, and we’ll see you in Annapolis!

continued from page 11

subcommittee, though the Insurance and Banking subcommittees may also come into play. A third Committee, Ways and Means, hears most property tax credit legislation.

Over in the Senate, the Education, Energy, and the Environment Committee (EEE or “Triple E”) is the destination for housing and land use issues, along with professional licensing bills. For matters related to landlord-tenant issues and contracts, Judicial Proceedings (JPR) is the place to be—and you may be there for a while! JPR is known for its long-running meetings and in-depth debate in tackling the most controversial issues introduced in recent years. Finally, the Budget and Taxation Committee (B&T) decides funding levels for property and income tax exemptions, rental subsidies, and assessment calculations.

The Issues Each year, the General Assembly considers 2,500 pieces of legislation and the state’s capital and operating budgets.

These issues won’t have the news coverage of national issues or the immediacy of local ones, but that doesn’t mean they aren’t of importance to you and your clients.

Around 200 bills each year impact real estate or homeownership in some way. They can range from the monumental— a sales tax on commissions, increasing housing supply, raising transfer taxes, or statewide rent control—to the mundane, like property tax credits and ground rents. Of course, there’s also the chance for something out of left field, such as requiring real estate agents to register their clients to vote or mandating the use of plexiglass to cover windows in vacant buildings. These are in addition to the measures sought each year by Maryland REALTORS®, which are summarized in this issue.

The Bottom Line The actions of the General Assembly can boost—or hinder— the real estate industry. It’s our job to influence passage of positive bills while keeping harmful ones at bay. In both instances, the constant presence of Maryland REALTORS® in Annapolis keeps your views front and center when the legislature sets their sights on real estate.

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A Free State Housing Market Overview

BY ANIRBAN BASU

Interest Rates and the Recession That Never Materialized

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urging interest rates over the past 18 months have made the current economic environment challenging for many stakeholders, including those situated within Maryland’s housing industry. The headwinds generated by these elevated rates not only amplify the hurdles the economy will face in the near term but also jeopardize the Federal Reserve’s attempts to moderate rising prices without inducing a severe downturn. The Fed’s actions in the last year and a half have been aimed at achieving a “soft landing.” However, the actual outcome remains uncertain because the effects of rate hikes are often delayed. Milton Friedman and Anna Schwartz, the godfather and godmother of

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monetary economics, taught us that monetary policy operates with “long and variable lags.”

While not fully committing to a soft landing, Federal Reserve Chairman Jerome Powell has indicated that the current economic indicators seem to lean toward such a scenario. In other words, the recession that many economists and market analysts have been predicting for the past two years might never materialize. This view appears to align with the ongoing Federal Reserve strategy, although the chairman has not confirmed it explicitly. In recent months, interest rates have remained stable but elevated, with Fed officials maintaining their policy stance. These developments suggest that they anticipate a soft landing in the near future.

That said, not every Fed official agrees with the current pause in rate hikes. Some members have advocated

… the market will continue to be defined by high home prices, low inventory levels, and a lack of affordability—especially for would-be first-time homebuyers.

for more increases, while others favor a wait-and-see approach, pointing to data that shows only a modest rise in consumer prices. Despite these varying viewpoints, the consensus within the Fed is that a soft landing is within reach. Updated projections also paint a positive picture, with no forecasted recession and unemployment not expected to exceed 4.5%over the next three years. Furthermore, real GDP growth is predicted to remain above 1%.

However, it’s not all smooth sailing ahead. Historical data suggest that achieving a soft landing is

uncommon. Additionally, the present economic vulnerabilities, coupled with global conflicts in eastern Europe, south Asia, and the Middle East, further complicate the situation. The cautious strategy adopted by Fed officials seeks to strike a careful balance between controlling prices and fostering economic stability and growth.

The implication is that while the Federal Reserve may be done raising the target range of the federal funds rate, it may be years until they meaningfully lower it. According to the most recent Wall Street Journal

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Perhaps the largest barrier to homeowner affordability in Maryland is missing middle housing, or the lack of units comparable in scope with single-family homes but at smaller sizes and price points … There is more than sufficient demand for these types of units, yet builders are unable to meet this demand due to overly restrictive zoning—and pushback from local homeowners opposed to higher density housing—in communities throughout the state.

Economic Forecasting Survey, the consensus expectation is that the federal funds rate will be lowered by just one percentage point between now and the end of 2024.

the issue is a housing market defined by exceptionally low inventory levels.

For housing in Maryland, this means that the market will continue to be defined by high home prices, low inventory levels, and a lack of affordability—especially for would-be first-time homebuyers. Those dynamics have contributed to what has been lackluster economic growth in the Free State since the start of the pandemic.

The pandemic gave rise to remote work, and in an economy where jobs aren’t tied to specific locations, workers will migrate to areas with ample affordable housing and low tax rates. Put simply, that is not the case in Maryland.

Maryland’s Stagnant Economy Maryland is one of only 12 states that has yet to regain all the jobs lost during the early months of the pandemic, with payroll employment currently 0.4% smaller than in February 2020. While many states that have recovered slowly from the pandemic have seen an acceleration in hiring in recent months, that hasn’t been the case in Maryland. Maryland’s employment base is up just 1.4% over the past year, the 36th slowest rate of growth among all states. The state’s population has also been stagnant in recent years and actually contracted in 2022, down 0.2% from 2021. That performance ranks tenth worst among all states.

Despite this disappointing economic performance, Maryland’s unemployment rate currently sits at 1.6%, the lowest among any state. While lower unemployment rates are traditionally viewed as a good outcome, and Maryland is far from the only state dealing with labor scarcity issues, the current rate of unemployment is too low to support hiring and new business formation and is yet another sign of economic malaise. At the heart of

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Maryland’s Lack of Housing Inventory

In September 2019, two quarters before the start of the COVID-19 pandemic, there were more than 22,000 homes for sale in Maryland. At that point, inventory had already been trending lower for several years, having declined from nearly 32,000 active listings five years earlier in September 2015.

As of September 2023, the most recent month for which data are available, there were fewer than 9,400 homes listed for sale in Maryland, 56% fewer than in September 2019. Over just the past year, active inventory has fallen by more than 3,000 units, a decline of nearly 24%.

The lack of housing inventory is largely due to constraints on the production of new housing imposed by local governments, exacerbated by high interest rates, which have pushed mortgage rates to levels not seen in decades; the average rate on a 30-year fixed mortgage is currently at the highest level since the fourth quarter of the year 2000. At the turn of the century, however, mortgage rates had been trending lower for over 20 years. Those contemplating a move consider not only the prevailing level of mortgage rates, but also how those rates compare to the rate

on their existing mortgage, leading to the so-called “lock-in effect.”

During the early months of the pandemic, household finances were padded by stimulus payments and the lack of opportunities to spend. With the Fed easing interest rates, average mortgage rates reached a historic low by the third quarter of 2021. Households took advantage. Many moved, and more refinanced.

As a result, the distribution of outstanding mortgage rates underwent an unprecedented shift. Fewer than 4% of outstanding mortgages had a rate below 3% during the first quarter of 2020. By the first quarter of 2022, that share had risen to 25%, by far the highest level on record. At that time, three in every four mortgages were locked in at a rate lower than 4%.

Homeowners have been understandably reluctant to part with their low fixed rate mortgages, and even as of the second quarter of 2023, more than 60% of outstanding mortgages have a rate below 4%. On the flipside of that dynamic, the share of mortgages with a rate above 6% currently stands at 10.5%, half a percentage point lower than at the end of 2019.

(19.9%) and more than five times the rate at which average hourly wages have increased in Maryland (7.2%) over that span. In other words, the law of supply and demand is alive and well.

Assuming a 20% down payment on a purchase at the average sales price and mortgage rate, the regular monthly payment has increased from $1,267 in September 2019 to $2,579 in September 2023, an increase of 104%.

But that understates the decline in affordability because the average rate on a 30-year fixed-rate mortgage increased from about 3.7% in September 2019 to about 7.2% in September 2023. Using the simple rule that housing costs should be no more than 30% of a household’s annual income, that raises the qualifying income from less than $51,000 to more than $103,000.

It should also be noted that most first-time homebuyers are not making a 20% down payment; according to a Bankrate analysis of data produced by ATTOM Data Solutions, the average down payment in Maryland during the third quarter was just 11.9% of the purchase price.

The Trouble for First-Time Homebuyers

The Lack of New Home Construction and The Missing Middle

While many existing homeowners are content to stay put with their low fixed-rate mortgage, there has been a surge in household formation as the relatively large Millennial generation starts to build families and head to the suburbs, and that has bolstered demand from would-be first-time homebuyers. Not only are these households seeking to become homeowners, but they have also begun to accumulate the wealth necessary to make a down payment; Americans’ real median net worth expanded 37% from 2019 to 2022, the largest three-year increase on record, and those below the age of 35 experienced a particularly large increase in wealth.

Some aspects of Maryland’s affordability problem are unavoidable. Interest rates, for instance, are out of the state’s control. The crisis-level lack of supply, however, is something that could be—but hasn’t been—addressed by state and local policymakers.

Despite this rise in net worth, however, first-time homebuyers are still being pushed out of the market by lack of housing options, elevated borrowing costs, and high home prices. The average sales price in Maryland has risen from about $344,000 in September 2019 to $474,861 in September 2023. That’s an increase of 37.9%, nearly double the rate of economywide inflation

During the year ending in July 2023, Maryland issued just 15,511 authorizations for new residential construction. That’s the fewest in any twelve-month period since July 2017 and, on a per capita basis, ranks 40th among all states.

Put simply, Maryland is not building enough new housing units to meet demand. That has caused prices to balloon and served as a significant headwind to economic growth; notably, Maryland’s population shrank last year while the state’s employment base remains below the pre-pandemic level.

Perhaps the largest barrier to homeowner affordability in Maryland is missing middle housing, or the lack of units comparable in scope with single-family homes but

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… some communities are actually moving in the opposite direction. A resolution currently being considered in Prince George’s County would restrict the number of units that can be authorized each year, especially in areas outside the beltway where there is the greatest demand for housing. If this resolution passes, it will exacerbate affordability in a county that has seen the average sales price increase 34.9% over the past four years.

at smaller sizes and price points. This includes townhomes, accessory dwelling units, duplexes, triplexes, and other similarly situated units. There is more than sufficient demand for these types of units, yet builders are unable to meet this demand due to overly restrictive zoning—and pushback from local homeowners opposed to higher density housing—in communities throughout the state.

Some jurisdictions have started to take action to address this missing middle. The Abundant Housing Act, currently being considered in Baltimore City, would amend zoning regulations in some areas, while Montgomery County’s Thrive 2050 comprehensive plan and Howard County’s HoCo by Design general plan both advocate for more units to fill in the missing middle.

Proposed legislation and plans may not be enough to facilitate the type of development needed to address the state’s housing needs, however. A recent study of similar efforts in Seattle, where zoning density regulations were reduced in some areas, but developers were also required to build a certain percentage of low-income units, found that development actually decreased in those specific areas yet increased in parts of the city not subject to the requirements.

And some communities are actually moving in the opposite direction. A resolution currently being considered in Prince George’s County would restrict the number of units that can be authorized each year, especially in areas outside the beltway where there is the greatest demand for housing. If this resolution passes, it will exacerbate affordability in a county that has seen the average sales price increase 34.9% over the past four years.

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Looking Ahead The current expectation is that interest rates, while being near their cyclical peak, will remain higher for longer due to stubborn inflation and a still-hot nationwide economy. Mortgage rates are expected to come down during 2024, but likely not to a level that supports a significant uptick in existing home sales.

While the nationwide economy continues to outperform expectations, there are an unusually high number of risks. Commercial real estate debt is coming due, and the beleaguered office market still represents a significant risk for the banking sector. Credit card debt remains low by pre-pandemic standards but is rising, and those that do fall into delinquency now face historically high interest rates. And then there’s ongoing political dysfunction and rising geopolitical uncertainty, both of which are particularly difficult to account for in economic forecasts but could negatively impact the economy in a number of ways.

The upshot is that, barring an economic downturn, rates will likely remain too high in 2024 to facilitate a surge in homebuying activity in Maryland. When rates do drop, however, pent up demand will be released causing a large increase in transactions.

In the longer term, Maryland must address barriers to building new residential units, especially with regards to the missing middle. If it fails to do so, the state’s economy will remain one defined by a shrinking population and anemic employment growth. ■

Celebrating the Class of 2023!

Leadership Academy Grads, Take a Bow!

M

aryland REALTORS®’ Leadership Academy Program trains today’s shining real estate stars to be tomorrow’s leaders. Whether it’s the industry, your brokerage, or local and statewide association efforts, Leadership Academy places its graduates on a path toward leadership opportunity.

Congratulations to the graduate leaders on pages 20 and 21. Read below to learn from one recent graduate, Hope Mims, about her experience in this prestigious program. Interested in honing your leadership potential? The next Leadership Academy will begin accepting applications in May 2024.

Why did you apply to the academy?

I applied to the Maryland REALTORS® Leadership Academy because I sought personal and professional growth and development. I learned about its outstanding structured program and all its benefits, and I was ALL IN!

What were your goals for the academy and were they met?

I had a host of goals for the Academy, which included Career Advancement, Networking, Impact, and Growth.

These goals were met and then some. I have built relationships with my classmates who are some of the most dedicated leaders in the industry, and these relationships have proven to be invaluable.

Did the education help you in your business? If so, how?

Absolutely! The education obtained through the Leadership Academy has helped me in my business in a number of ways. I have enhanced my leadership, communications, strategic thinking, and conflict resolution skills. As a boutique brokerage owner, I have become a more well-rounded and impactful leader for my agents.

Hope Mims

Do you think the sessions affected your personal growth as well?

I’ve been able to successfully utilize the skills gained in a number of personal situations—most notable, my confidence. Developing leadership skills has increased my confidence, which is evident by the new ventures and opportunities that I have taken.

How would you describe the interaction with your classmates?

All I can say is, WOW! The relationships I’ve built are solid! Collaborations, encouragement, and support has been my experience! I’ve learned so much from each of my classmates, and I was honored to be in the room to learn and grow with them! ■

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LEADERSHIP ACADEMY ADVISORY GROUP

RACHEL RILEY BRODERICK RE/Max One

Southern Maryland Association of REALTORS®

YOLANDA MUCKLE

2023 Maryland REALTORS® President

SHARON CALLAHAN Berkshire Hathaway Homeservices HomeSale Realty

Carroll County Board of REALTORS®

JOANIE HYNES

Chair, Leadership Academy Advisory Group

CHARNISE CARTER Realty One Group Performance

Prince George’s County Association of REALTORS®

SUMMER FORBES

Coldwell Banker Realty-123 Coastal Association of REALTORS®

KRIS GHIMIRE

GARRETT GILLESPIE

SUSAN HOUCK RE/MAX Aspire

My Transaction Co.

Greater Baltimore Board of REALTORS®

Frederick County Association of REALTORS®

Frederick County Association of REALTORS®

Howard County Association of REALTORS®

Ghimire Homes

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Taylor Properties

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ANITA KESTEL

2023 GRADUATES JULIE KING-SCHULTZ

HOPE MIMS

INDERA COGGINS

RE/MAX Components

Mims Realty Group

Harford County Association of REALTORS®

Greater Baltimore Board of REALTORS®

CHAZI DIGGS

SHANDELL GREEN

JASON HALL

Mid Shore Board of REALTORS®

Greater Baltimore Board of REALTORS®

Capital Structures Real Estate Prince George’s County Association of REALTORS®

RAHKIYA A. REID

Douglas Realty

InderaCanHelp of Berkshire Hathaway HomeServices Southern Maryland Association of REALTORS®

Cummings & Co

Keller Williams Preferred Properties

Village Premier Collection Maryland

LEISEL L. TAYLOR

CAROLE WARREN

Prince George’s County Association of REALTORS®

Prince George’s County Association of REALTORS®

Prince George’s County Association of REALTORS®

Keller Williams Preferred Properties

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PATTI DeARCANGLIS Long & Foster

Historic Highlands Association of REALTORS®

ROBIN FERNANDES-HESS EXIT Preferred Realty

Greater Baltimore Board of REALTORS® (Primary)

HENRY YAWSON

Tenet Real Estate Solutions Greater Capital Association of REALTORS®

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Celebrating Maryland’s NAR 2024 Committee Appointments Congratulations to our Maryland REALTORS® members who are shaping the real estate industry at the national level by serving on select committees, boards, and advisory groups of the National Association of REALTORS®.

BENJAMIN ANTKOWIAK

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CINDY ARIOSA

WILLIAM ARMSTRONG

JACQUELINE BENNETT

Land Use Property Rights and Environment Committee

Board of Directors MLS Technology and Emerging Issues Advisory Board Multiple Listing Issues and Policies Committee

Board of Directors Executive Committee

RUSSELL BOYCE

RUSSELL BRAZIL

BOYD CAMPBELL

INDERA COGGINS

Board of Directors REALTOR® Party Trustees for Campaign Services Committee

Board of Directors State and Local Issues Policy Committee

Board of Directors FPC Advisory Committee

Global Business and Alliances Committee

KATHLEEN DARTEZ

ANITA DAVIS

ALICYN DELZOPPO

JAMES DIAMOND

Risk Management Issues Committee

Board of Directors Federal Financing & Housing Policy Committee

Board of Directors RPAC Major Investor Council

Board of Directors Research Committee

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Board of Directors Global Business and Alliances Committee

STEPHANIE DONNELLAN

CASSANDRA DORSEY

FREDERICK DORSEY

Data Strategies Committee

Board of Directors Member Communications Committee

Global Business and Alliances Committee

NAKIA EVANS

GLORIA FARRAR

GREG FISK

Board of Directors Housing Opportunities Committee

Meeting and Conference Committee

Board of Directors Leading Edge Advisory Board

DONALD FREDERICK

MELANIE GAMBLE

MARIA GARCIA

Conventional Financing and Policy Committee

Real Property Valuation Committee

CIPS Advisory Board

GARRETT GILLESPIE

HUGH GORDON

Legal Action Committee

AEC-RCE Certification Advisory Board

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CHRISTOPHER DREWER Board of Directors Federal Taxation Committee

MARYGRACE FITZHENRY State and Local Issues Policy Committee

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JASON HALL

JANICE HARIADI

LATONIA HARRIS

ROBBYN HARRIS

JOHN HENTSCHEL

Fair Housing Policy Committee

Broker Engagement Council

Fair Housing Policy Committee

Business Issues Policy Committee

Institute Advisory Committee

CHRISTOPHER HILL

BETTY JANS

ROBERT JOHNSTON

PATRICIA KALLMYER

GREGG KANTAK

Board of Directors Conventional Financing and Policy Committee

Real Property Valuation Committee

Land Use Property Rights and Environment Committee

Board of Directors Leading Edge Advisory Board

Global Alliances Advisory Board Member

CHARLES KASKY

BRENDA KASUVA

JANICE KIRKNER

JENN KLARMAN

CAROLE MACLURE

AEC Recommendations and Recognition Advisory Board

Fair Housing Policy Committee

RPAC Participation Council

Strategic Planning Committee

State and Local Issues Policy Committee

ANTHONY MANCUSO

RICHARD MARSHALL

DALE MATTISON

LISA MAY

DEE DEE MILLER

Professional Standards Committee

AEC Volunteer Leadership Advisory Board

Diversity Committee Fair Housing Policy Committee Multicultural Real Estate Leadership Advisory Group

Consumer Communications Committee

Board of Directors Membership Policy and Board Jurisdiction Committee

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YOLANDA MUCKLE

PETER MURRAY

GERARD OCCHIUZZO

JESSICA OLEVSKY

Consumer Communications Committee

Small Broker Committee

Professional Standards Committee

Professional Development Committee

ANA-NATASHA PHILLIPS-FERGUSON Conventional Financing and Policy Committee

JOANNE POOLE

SARAH RAYNE

RAHKIYA REID

GENE SEMENTILLI

ERICA SOLOMON

Board of Directors Distinguished Service Award Council

AEC-RCE Certification Advisory Board Association Executives Committee & Forum

Professional Standards Committee Young Professionals Network Advisory Board

Board of Directors Professional Standards Committee

Global Business and Alliances Committee Public Policy Coordinating Committee Sustainability Advisory Group

SANDRA STEWART

KENDRA TAFT

KEVIN WATERMAN

ALISON WISNOM

REALTOR® Safety Advisory Committee

Housing Opportunities Committee

State and Local Issues Mobilization Support Committee

Professional Development Committee

HENRY YAWSON

JOHN YOUNG

Global Business and Alliances Committee

Diversity Committee

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CEO CORNER

Keep Calm and Keep Doing What You Do

BY CHUCK KASKY

By now, you have likely heard about the verdict in the Sitzer/ Burnett case, in which the jury in Kansas City, Mo., found NAR and other corporate defendants liable in the federal antitrust class action case. The jury awarded the plaintiffs ~$1.8 billion in damages, which will be automatically tripled to ~$5.4 billion.

Where we are.

Let’s be clear: this matter is not close to being final. NAR will appeal the liability finding because

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it stands by the fact that NAR rules serve the best interests of consumers, support market-driven pricing, and advance business competition. NAR remains optimistic that they will ultimately prevail. In the interim, they will ask the court to reduce the damages awarded by the jury. Also, we don’t know at this time what, if any, business practices the judge might order changed through issuing what known as “injunctive relief.”

Before the trial verdict described above, Anywhere Advisors—the

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parent company to Coldwell Banker Realty, Corcoran, and Sotheby’s International Realty— entered into a proposed settlement, which included payment of $83.5 million and injunctive relief, requiring practice changes in its brokerage operations for a period of five years following final court approval, which should come early in 2024. Anywhere has also agreed to recommend and encourage these same practice changes to its independently owned and operated franchise network. Also, RE/MAX

entered into a substantially similar agreement, which included a $55 million payment.

These practice changes include: ■

Prohibiting company-owned brokerages and their affiliated agents from claiming buyer agent services are free.

■

Requiring company-owned brokerages and their affiliated agents to include the listing broker’s offer of compensation for prospective buyers’ agents as soon as possible in each active listing.

■

Prohibiting company-owned brokerages and their affiliated agents from using any technology (or manual methods) to sort listings by offers of compensation.

Further, the companies agreed to advise and remind companyowned brokerages, franchisees, and affiliated agents that the company has no rule requiring offers of compensation.

Finally, both firms will also not require company-owned brokerages, franchisees, or affiliated agents to belong to the NAR or follow the NAR Code of Ethics or MLS Handbook. They will require company-owned brokerages and their agents to clearly disclose to clients that commissions are not set by law and are fully negotiable.

So, in the words of the immortal baseball legend Yogi Berra “It ain’t over till it’s over.” Telling people X is X provides no real information. But it does remind us that there is still hope. There is something about the never-say-die,

no-matter-the-odds-we-can-do-this spirit of “It ain’t over...” that finds a place to inspire. It tells us to wait, don’t rush to judgement because things might turn around.

Now might be a good time to take a step back and take a broader, longer look at the state of the real estate profession.

While it only involves home sellers in Missouri, the trial has led to a national conversation on whether sellers should have to pay buyer agent commissions. Indeed, just minutes after the verdict, the attorney filed a new class action lawsuit against another group of real estate industry entities, including NAR. Our members have many questions and we have compiled what we know so far and the most common questions, with answers.

That’s a lot of money.

Where will it come from?

According to NAR, an appeal will be filed, and they have the funds to post bond, which allows them to proceed with the appeals and defer potential payment of damages.

While appeals will take years, NAR reports they are financially prepared for any final judgment.

Alleged co-conspirators found liable for an antitrust violation are joint and severally liable, and there is no right of contribution among the defendants. Joint and several liability is a legal rule under which, when someone is partly responsible for causing harm, they may be required to fully compensate the victim, even if others share blame.

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Questions and Answers, directly from NAR President Tracy Kasper What are next steps legally, and the timing?

This matter is not close to being final as we will appeal the jury’s verdict, and we remain confident we will ultimately prevail. In the interim, we will ask the court to reduce the damages awarded by the jury. Due to the nature of appeals, this case likely will not be concluded for several years.

What will be the basis for NAR’s appeal?

We can’t speak to the specifics of that until we file our appeal, but we can say that we have a very strong legal basis for appeal.

Is there anything REALTORS®, brokers, state/ local associations or MLSs need to do differently because of this verdict?

Not because of this verdict. But NAR has emphasized for many years two important things. One is the use of buyer representation agreements, which maximize transparency by putting all agreements in writing to ensure clarity and understanding, as all members are obligated to do pursuant to the NAR Code of Ethics. These continued on page 29

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CEO CORNER

Successful claimants can choose to pursue the entire award from one of several defendants.

However, that defendant does not have the right to compel its alleged co-conspirators to contribute, even if they are found liable to the claimant, and even if the co-defendant paid an amount lower than its pro rata share of liability (either through settlement or a judgment).

To address joint and several liability, co-defendants in some antitrust cases will enter into judgment sharing agreements, in which they agree to pay their pro rata share of any judgment or, if they settle, include a provision in the settlement agreement that the claimant will not pursue that share against the non-settling defendants.

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In other words, NAR is potentially liable for the entire $5.4 billion judgment, although that’s unlikely.

The Future of Cooperation and Compensation

Where Might We Go from Here? Chapter 1— Maryland-Specific Lawsuits

Two things many people are struggling with:

We’re not immune from getting caught up in some form of copycat lawsuit because the focus was more on the mandatory nature of the offer, not whether it can be minimal or even zero.

Although this verdict only applies in Missouri, and given Bright MLS’s large footprint, we should actually expect it.

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■

The difference between cooperation and compensation

■

Who actually pays the buyer’s broker and what happens to cooperation if there is no offer of compensation.

As you know, cooperation is simply sharing information about a broker’s listings.

In November 2019, the NAR Board of Directors adopted the Clear Cooperation Policy in response to concerns about the use of pocket listings, and other tactics to keep properties off the MLS. According to NAR, pocket listings operate to

… this matter is not close to being final. NAR will appeal the liability finding because it stands by the fact that NAR rules serve the best interests of consumers, support market-driven pricing, and advance business competition. the disadvantage of homebuyers and sellers. Effective January 1, 2020, with local implementation required by May 1, 2020, the policy requires listing brokers to submit property listings to the MLS for cooperation within one business day of publicly marketing a property.

Compensation, on the other hand, is the offer to pay the buyer’s broker from the commission paid by the seller to the listing broker.

What connects these two distinct functions is another policy, which states that in filing property with the MLS, participants must make blanket unilateral offers of compensation to the other MLS participants and shall therefore specify on each listing filed with the service the compensation being offered by the listing broker to the other MLS participants. While technically still mandatory, according to Bright MLS policy, in Maryland, compensation to the buyer’s broker or subagent can be $0.

The mandatory nature of the offer of compensation to the buyer’s broker, not the practical effect of allowing $0, is at the heart of these lawsuits. According to the complaints, NAR’s requirement that offers of compensation be expressed in specific dollar or percentage terms enables buyeragents to easily compare the

financial compensation offered to them by home sellers and steer their clients to higher commission homes.

The rule, therefore, is designed to create tremendous pressure on sellers to offer a high, standard commission and to act as a powerful deterrent to anyone who may attempt to offer lower compensation.

There is a notion that somehow, if the listing broker is not required to compensate the buyer’s broker, the purchase price will be reduced by that amount, which we know won’t happen. The result would be a windfall for the seller and more out-of-pocket expense for the buyer.

If the seller is opposed to having the listing broker compensate the buyer’s broker, the seller needs to understand that the pool of prospective buyers will be diminished to the extent that some buyers will be unable to come up with the additional closing costs.

This, in turn, assumes lenders will continue to resist including brokerage fees into the buyer’s costs of purchasing the home.

Also, sellers should be told to expect that, notwithstanding there is no offer of compensation in the MLS, buyers may include in the offer a request that the seller MARYLAND REALTOR®

continued from page 27

agreements formalize the professional working relationship with clients and detail what services consumers are entitled to and what the buyer agent expects from their client in return.

Second, it’s also an imperative for members to continue to express that commissions are negotiable and set between brokers and their clients; explain how local MLS broker marketplaces promote equity, transparency, and market-driven pricing for consumers; and persistently communicate the incredible value agents who are REALTORS® provide.

What does the future of buyer representation look like as a result of the verdict?

This verdict does not require a change in our rules, but if class action attorneys had it their way, buyer representation would be very much at risk because many first-time home buyers, among others, couldn’t afford to pay for representation out of pocket. It’s important that members take every opportunity to express how they are experts who guide consumers through the financial, legal and community complexities of buying or selling a home.

Would NAR ever consider changing the cooperative compensation rule?

This rule always has been in place to protect and serve the best interests of consumers, support market-driven continued on page 31

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CEO CORNER

directly compensate the buyer’s broker (similar to what sometimes happens in the FSBO situation) or contribute more to the buyer’s closing costs to help offset the commission.

The Future of Buyer Representation NAR President Tracy Kasper said that NAR still believes in its cooperative compensation rule, which requires listing brokers to make an offer of compensation to buyer brokers in order to submit a listing to a REALTOR®affiliated MLS. However, she said REALTORS® should be transparent with consumers about the negotiable nature of the rule, which allows listing brokers to continue to make an offer of compensation to buyer’s brokers or allows buyers to pay their broker directly.

“For buyers, this includes paying for your services directly, plus options to obtain some or all of that fee through other means, such as offers of compensation from a listing broker, all of which would be specified in your buyer representation agreement,” she explained.

“For sellers, this includes options to allow offers of compensation to be made by their listing broker to a buyer’s broker, and if so, how much and under what terms, all of which, again, would be specified in your listing agreement.”

She added, “I also encourage everyone to express the incredible value that we as real estate agents who are REALTORS® bring as we guide our consumers through the financial, legal and community complexities of buying and selling a home.”

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…REALTORS® should be transparent with consumers about the negotiable nature of the rule, which allows listing brokers to continue to make an offer of compensation to buyer’s brokers or allows buyers to pay their broker directly.

Where might we go from here? Chapter 2: “Quitting” NAR Some real estate firms and individual members are expressing their displeasure at NAR as an organization and have considered “quitting” NAR and perhaps state and local associations. This is largely a result of the recent revelations of harassment and perceived lack of response by the organization.

This is one area of confusion, and there are separate issues that need to be reconciled. One is the reason for considering not being a member of NAR. Being part of the settlement described above is being confused with a more specific dissatisfaction with NAR. For example, some real estate firms have indicated that participating in NAR governance or being a member is discouraged. This has nothing to do with the antitrust litigation.

Regardless of the reason for not wanting to or not being required to be a member of NAR, this is simply not an option in Maryland at this time because of how the NAR dues formula is constructed.

Brokers and managers comply with the NAR dues formula as the “designated REALTOR®” (DR) in their office or firm. Under NAR’s rules, DRs are assessed dues based on how many agents are affiliated

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with the DR’s office/company.

Even though it is customary for local Boards/Associations to bill agents directly, the DR is ultimately responsible for payment.

All local Boards/Associations in Maryland have adopted this membership formula in their bylaws. Dues are assessed to each principal (DR) in a firm based on the number of real estate licensees employed by or affiliated with the firm or office. The DR receives credit for each agent who is a REALTOR® member.

The bottom line is this: There is currently no process to decouple dues owed to NAR, Maryland REALTORS®, and your local board.

To be a member and to receive all the benefits of membership, one needs to be a member of all three organizations. I can’t speculate on the future of this “three-way agreement” but whatever happens, we will let you know and adjust as needed.

Suppose people simply leave real estate in large numbers. What then?

This is a major topic of conversation, often revolving around the low barriers to entry for this industry. Historically, agents come and go quickly, and we see roughly 30% churn annually, meaning

that fully a third of agents come and go every year. Over time, you have seen that the top agents do most of the work. Interestingly, even with the ups and downs of the real estate market, the average earnings of a REALTOR® has been about $50,000 for a very long time, reflecting the degree of turnover. That number doesn’t change even as the number of agents fluctuates. In that regard, it’s a pretty efficient marketplace: people come in when there are opportunities and leave when they don’t make it.

But the real point is the level of competence, which is a function of training, which in turn is directly related to how well (or poorly) brokers and managers take on that responsibility.

We know from teaching classes that way too many agents don’t know the contract, so it’s no wonder we’re sinking in the estimation of consumers.

While I completely agree that changes are coming, I disagree that forcing buyers to pay their brokers won’t have a significant impact.

As you certainly know, buyers are struggling already. To make them come up with an additional X% of the purchase price to pay the buyer’s broker would price even more out of market.

My biggest frustration is the banks’ unwillingness to finance the commission. I think they already do because they finance the purchase price, which the seller only gets once costs, including commissions, are taken out of the gross proceeds.

So, what’s the difference between the reduction in the seller’s net or just financing it on the front end.

As long as the property appraises, who cares?

We’re working on legislation and education to enhance our ability to explain compensation to buyers and we’re well aware that it’s a weakness in the industry.

If cooperative compensation survives (an open question) we need to do better.

I think it would be a shame if we find ourselves leaving buyers without representation. If they had to visit every broker’s website to see what’s listed and had to deal only with listing agents, we will have lost 30 years of progress, and buyers will suffer.

Lastly, I can tell you that we do not discuss or filter our advocacy on any policy through the lens of its effect on membership.

If membership drops, we’ll adjust.

This is not a numbers game for us.

We’d work just as hard for 15,000 members as we do for the 30,000 we have today.

Please feel free to reach out to me with any questions, comments, or concerns, at chuck.kasky@ mdrealtor.org. ■

continued from page 29

pricing and advance business competition. NAR consistently reviews and considers evolving its rules in a way that responds to changes in the industry and what best serves consumers.

Do you expect the plaintiffs to seek an injunction that would require NAR to stop making the rule mandatory or eliminate the rule altogether?

We cannot predict what plaintiffs will do. We would contest any such effort because this rule has always been in place to protect and serve the best interests of consumers, support marketdriven pricing and advance business competition.

Is there any scenario where NAR would consider settling?

NAR always has been open to a resolution that maintains a way for buyers and sellers to continue to benefit from the cooperation of real estate professionals and eliminates our members’ risk of liability for the claims alleged. We remain confident we will prevail on our appeal.

Chuck Kasky is CEO of Maryland REALTORS® and host of the Association’s podcast, “Get Real Estate,” which is available through any podcast app.

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MEET THE STAFF

With You Every Step of the Way Maryland REALTORS®’ Value Proposition gives back to its members in so many ways. Meet the people who have dedicated themselves to providing exceptional service for its members in every facet possible.

Chief Executive Officer Chuck Kasky was elevated to CEO in October 2015, after having served as the association’s top in-house legal officer for 10 years. Chuck works closely with volunteer leadership to develop and implement policies and initiatives that promote the real estate industry, private property rights, and housing opportunity. As CEO, he has continued the association’s primary focus on representing members’ interests before the legislature and advocating for REALTOR professionalism with members and the public.

Chuck also hosts the association’s Get Real Estate podcast.

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Operations April Sheesley serves as the Director of Operations.

Having joined in April 2020, April manages all operational functions of the association and is a member of the senior leadership team.

April was the lead on the new buildout for offices, successfully completed in 2022. April staffs the Governance, Awards, and Real Property Operations committees. Joanne Gleason, who came on board in 2020, is the Administrative Assistant. Her work supports meetings, events, volunteer coordination, and other operational functions. As our Receptionist, Rebecca Baker is the first person you may meet whenever you call or visit association offices. She answers many of the questions our members have or can point them to the right staff person for an answer. She also assists with mailings and meetings. IT Director Michael Cunningham provides IT support and management, software

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development, and networking functions for the office and staff. His work has enabled the association in setting up hybrid environments to allow members to meet virtually and in-person, simultaneously.

Advocacy & Public Policy Two people who advocate on your behalf in Annapolis are the Director of Advocacy and Public Policy Lisa May and Grassroots and Policy Advocate Christa McGee. Lisa formerly served as our Director of Housing and Consumer Affairs. Lisa directs the legislative strategy for the association, while continuing to develop and strengthen our consumer advocacy. She serves as staff liaison to the Public Policy, Legislative, and Housing Opportunity committees. Christa recently served as the Association Executive for the Historic Highlands Association of REALTORS. in Allegany County.

Christa will grow our advocacy relationships with local associations through management of the Local Government Affairs Director program, development of our Key Contacts network,

and maintaining our FPC network with the Maryland Congressional Delegation. She serves as our primary liaison to the Maryland Real Estate Commission and staffs the Issues Mobilization and Association Executives Committees.

Strategic Communications Daniel Patrell serves as Senior Director for Strategic Communications, managing the association’s strategic communications approach for members, the media, and consumers. Angel Brandt serves as Program/ Events Manager.

An events professional with years of experience, Angel manages all the events that members enjoy, from Regional Roundtables to the Annual Conference, Back to the Beach, returning to Ocean City in 2024. Kelli Beard, Content Specialist, whose background is in marketing for residential and commercial real estate and events, joined Maryland REALTORS® in April 2023. You can see her work in the association’s branding, the new email platform, webinars, graphics, and more. The department’s newest member is a shared position with Advocacy and Public Policy:

Jacky Mueck, Communications/ Advocacy Administrative Assistant, serves a vital support role for both departments, while also providing ongoing support and development of Maryland REALTORS®’ website mdrealtor.org and the consumer site MarylandHomeownership.com.

A former real estate agent herself, Jacky recently directed a universitylevel creative writing program.

Professional Development & Member Engagement Susan Yashinskie, Director of the Professional Development and Member Engagement department, comes to the association with 27 years of association experience in the energy sector.

Joining Susan is Administrative Assistant Dyana Quinzi, who administers many of the association’s continuing education programming. Dyana joined the association earlier in the year and worked in the mortgage financing industry previously. Sandi Frazer serves the association as its Professional Standards Administrator.

MARYLAND REALTOR®

This department focuses on professional development and educational opportunities to advance the professionalism and success of members. This department manages the Graduate, REALTOR. Institute (GRI) program, the popular Leadership Academy program, and DEI (Diversity, Equity, and Inclusion) efforts. This department manages several committees including: the DEI Advisory Group, the REALTOR. Institute GRI Advisory Group, the Leadership Academy Advisory Group, the Grievance Committee, and the Professional Standards Committee.

Legal Affairs The Department of Legal Affairs is headed

by Kathleen Dartez, who has served in this role since 2015. Taylor Kitzmiller joined the association in February 2023, having previously worked in private practice in real estate and businessrelated litigation. He manages the association’s statewide forms, used widely throughout the state.

Diamond Smith joined Maryland REALTORS® in 2023, as well, and works closely with the Commercial Alliance committee, which stages the Commercial Symposium,

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MEET THE STAFF

INNOVATE 2024. Previously, she served as Corporate Counsel for an Illinois general contractor where she negotiated complex commercial transactions.

Lelica Scott, Legal Affairs Assistant, started her career as a mortgage loan processor before quickly moving up as a mortgage loan auditor.

The “Legal Dream Team” produces answers to members’ vexing legal questions on a daily basis through its Legal Hotline (443.716.3502) and through various communication channels, such as “From the Hotline,” which you can find in every issue of Maryland REALTOR® magazine. Kathleen staffs the Global Business and Real Property Operations Committees and manages the annual CIPS Institute.

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MARYLAND REALTOR®

Tyler staffs the Statewide Forms Committee. This department also manages the Commercial Alliance committee, staffed by Diamond, which is responsible for the association’s annual Commercial Symposium INNOVATE 2024. The Legal Department teaches CE courses to members throughout the state.

Finance Patti Schmitt, Vice President of Finance, manages the budget and financial operations for the association, working with its auditors and financial advisors, and is the administrator for staff benefits. Her finance work informs the CEO, Board of Directors and officers, the Finance Committee, and staff. As Assistant Controller, Kim Knopp manages accounts payable and assists with daily financial transactions. Kim also maintains financial records

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for RPAC. Deja Grider administers receivable accounts and assists with daily financial transactions. She previously worked as a payment processor at a nonprofit homeowners’ association. Membership Administrator Victor Pessima maintains the member database, enrolls and activates secondary members, and manages office supplies and equipment. ■

SELL MORE WITH MARYLAND

Thanks for Visiting us at ALL IN! We would like to thank members for stopping by our booth at the Maryland REALTORS® Annual Conference this year! We were so excited to see all the wonderful REALTORS® who partner with us.

We expect to be back again next year, so come say hello!

MMP has been the state’s flagship homeownership program for over 40 years and for the past three years, has achieved around $1 billion annually in home loan reservations, helping more than 3,500 Marylanders purchase their dream home each year. The biggest barriers to entry for potential homebuyers include insufficient funds for down payment and closing costs, student debt, and high interest rates. MMP has specially designed products which assist in each of these categories. We always encourage local municipalities to reach out to our business development team to generate cutting edge

new partnerships that promote homeownership in their area.

Below are some of the most advantageous MMP partnership products: Montgomery Homeownership Program: Helps a potential homebuyer purchase a home in Montgomery County by offering an MMP first loan with a generous Down Payment Assistance (DPA) second loan.

departments purchase a home in Montgomery County by offering an MMP first loan with a generous Down Payment Assistance (DPA) second loan.

Greenbelt Home Advantage: Gives current renters in zip code 20770 purchasing in Greenbelt, a grant of $15,000 for d​own payment assistance and closing cost assistance. ■

Montgomery Employee DPA Loan (MEDPAL): Helps employees of certain Montgomery County

Follow us on social to stay up to date: facebook.com/ marylandmmp/ instagram.com/ marylandmmp/

Gregory Hare is the Assistant Secretary, Maryland Department of Housing and Community Development. mmp.maryland.gov, singlefamilyhousing. dhcd@maryland.gov, 1-800-756-0119

twitter.com/ marylandmmp

MARYLAND REALTOR®

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FROM THE HOTLINE

Update on Changes to Maryland’s EMD Law

BY KATHLEEN DARTEZ, ESQ.

Q:

Maryland law regarding return of the EMD changed on October 1, 2023. As a broker who holds EMDs, please share additional details on the new law.

A: The new provision of the Real

Estate Brokers Act applies to EMDs delivered to the title company or Broker (“Escrow Agent”) after October 1, 2023. The process is only triggered when the BUYER terminates the contract. If you are holding an EMD in a transaction where the seller terminated the contract, you should continue to follow the same procedure that you have been following for years.

The Buyer must terminate the Contract pursuant to a specified contingency to trigger the new process.

“Contingency” includes a clause relating to: 1. Appraisals 2. Back-up contracts 3. Condominium notices 4. Conservation easements 5. Deeds and titles 6. Home or environmental inspections 7. Homeowners association notices 8. On-site sewage disposal system inspections 9. Property condition disclosures and disclaimer act notices 10. Termite inspections 11. Third-party approval not related to financing; or 12. Water and sewer assessments notices

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If the Buyer terminates pursuant to any of the above contingencies, the Escrow Agent holding it would follow the new, expedited process.

The biggest change with the new expedited process is that if the Seller does NOT want the EMD disbursed to the Buyer, the Seller must act within 10 days. The Seller’s inaction will result in the Escrow Agent returning it to the Buyer within 30 days.

For example, if the Buyer wants to terminate the Contract on the basis of the Condo or HOA Resale Package, the Buyer will complete the Notice of Unilateral Termination of Contract. The Buyer will also complete the Mutual Release of Deposit Agreement. The Buyer’s Agent will send both documents to the Listing Agent and to the Escrow Agent.

The Listing Agent sends a copy of both documents to the Seller and explain to the Seller what their options are. If the Seller agrees that the EMD should be returned to the Buyer, the Seller can simply sign the Mutual Release of Deposit Agreement and the Listing Agent would send it to the Escrow Agent.

The Escrow Agent would then disburse the EMD to the Buyer and notify the Buyer and Seller of

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that disbursement, within 30 days If the Seller agrees that the EMD should be returned to the Buyer, the Seller doesn’t sign the Mutual Release of Deposit Agreement.

The result is the same. If the Buyer terminates pursuant to a specified contingency, the Seller’s refusal to sign the Mutual Release of Deposit Agreement will NOT prevent the Escrow Agent from returning the EMD to the Buyer.

The new process clearly states what the Seller must do if they do NOT want the EMD to be returned to the Buyer. Within 10 days after receiving the Buyer’s request, the Seller shall provide the holder of the trust money with a copy of a NOTARIZED, written request for mediation relating to the distribution of the trust money.

If the Escrow Agent RECEIVES a copy of a notarized request for mediation, they must hold the EMD until: (1) A court order or mediation agreement authorizes the distribution of the money; or (2) The Escrow Agent files an interpleader action in the District Court. ■

Kathleen Dartez, Esq., is the Director of Legal Affairs for Maryland REALTORS®’.

Sell More With Maryland

The Maryland Mortgage Program is here to help REALTORS® by offering flexible financing options for their customers to purchase affordable homes throughout the state. Take a look at our Specialty Loan partnership products for eligible Maryland first-time homebuyers:

GREENBELT HOME ADVANTAGE

Gives current renters in zip code 20770 purchasing in Greenbelt, a grant of $15,000 for down payment assistance and closing cost assistance.

MONTGOMERY EMPLOYEE DPA LOAN (MEDPAL)

Helps employees of certain Montgomery County departments purchase a home in Montgomery County by offering an MMP first loan with a generous Down Payment Assistance (DPA) second loan.

MONTGOMERY HOMEOWNERSHIP PROGRAM

Helps purchase a home in Montgomery County by offering an MMP first loan with a generous Down Payment Assistance (DPA) second loan.

Learn more about how our programs can help you sell more:

mmp.Maryland.gov/Realtors

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