Century 21 New Millennium 23063 Three Notch Road California, MD 20619
301.862.2169
chris@thechrishillteam.com
Denise Lewis SECRETARY
Brook-Owen Real Estate 41 E. Main Street Westminster, MD 21157 410-871-1110
denise@denisehasthekeys.com
Yolanda Muckle
IMMEDIATE FORMER PRESIDENT
Long & Foster Real Estate
9300 Lottsford Rd., Suite 500
Largo, MD 20774
301.249.1600
yolanda.muckle@lnf.com
Cheryl Abrams Davis PRESIDENT-ELECT
RE/MAX United Real Estate 14340 Old Marlboro Pike Upper Marlboro, MD 20772
301-702-4200 cherylabrams@remax.net
Chris Jett TREASURER
Shore 4U Real Estate 23 Fountain Drive W 2nd Ocean City, MD 21842
443.523.2360 chris@shore4u.com
Chuck Kasky, RCE CHIEF EXECUTIVE OFFICER
Maryland REALTORS®
200 Harry S Truman Pkwy. Suite 200 Annapolis, MD 21401
800.638.6425 chuck.kasky@mdrealtor.org
Maryland REALTORS ®
200 Harry S Truman Parkway | Suite 200 Annapolis, MD 21401-7348
443.716.3500 | www.mdrealtor.org
Leadership Team
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.
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.
To Our Brokers
Without a doubt, NAR’s proposed settlement and the deadline of August 17, when the National Association of REALTORS® (NAR) implements new practice changes, has created a countdown of sorts. All of us are standing in front of a closed door, which will open later in August, wondering what will happen when the deadline arrives.
The door may feel big. It may seem imposing, and not knowing what’s on the other side fills us with a bit of trepidation. At the same time, it’s just a door.
What makes it easier to open that door? Preparedness.
There are things your state association is doing now to get ahead of the August 17 deadline. As I write this column, our Legal team and the Statewide Forms Committee have been hard at work updating our forms to embrace our new realities. We’re producing videos to help your agents understand these changes and how these changes can empower REALTORS® when working with Buyers.
Maryland REALTORS® is with you 100 percent on this journey. We’re getting our house in order now, but it can’t be just us. As Brokers, you must do your part, as well. How are you going to help your agents open that door?
Talk Compensation and Professional Worth. Let’s face it: much of the language that has been used as Buyer Agents has led us down a path where we’re questioning how we talk about
compensation with clients. Lawyers, caterers, accountants—I cannot think of any other professional occupation where their professional worth is obfuscated as much as has been done in real estate. To some extent, we’ve done this to ourselves in how we’ve chosen to talk—or not talk—about compensation.
These new practice changes provide an opportunity where agents can talk about value, about their professional worth. Your agents are not pro bono. They are not volunteers. Your agents are experts in their communities, professional negotiators on the side of the Buyer, and knowledgeable about a plethora of aspects crucial to buying a home. It doesn’t matter if the seller is or is not bringing compensation to the table. Starting now, with every Buyer, your agents should be sharing their value and declaring their worth. As their Broker, lead this charge. Have the conversation with your agents. Have it again. Look at the processes in your office to determine how your agents can discuss compensation as an opportunity. They are about to provide a valuable service to the Buyer, and it is worth every penny.
Get the Buyer Representation Agreement Signed Up Front. As Brokers you already know that Buyer Agency has been enshrined as Maryland Law since 2016. Follow the law. Make sure your agents follow the law. When you have the compensation conversation discussed above, presenting the Buyer Agreement should be second
nature. How does your brokerage support getting the agreement signed up front?
Roleplay. As you talk compensation and the Buyer Agreement with your agents, have them practice various scenarios, repeatedly. Have them discuss situations where they have brought up these important issues to Buyers. Roleplay easy scenarios and the difficult ones, using your new brokerage policies on compensation and the Buyer Representation Agreement. Do it again and again until these conversations become automatic within your company.
When we all work together—the brokerage and your state and local associations—we will find that the best way to open the door begins with the simple act of preparedness.
We’re in this together. Let us know how we can help. ■
Chris Hill Is Maryland REALTORS®’ 2024 President.
Hats off to an INNOVATE-ive Day!
BY DIAMOND SMITH, ESQ
Maryland REALTORS® presented its annual Commercial Symposium, INNOVATE 2024, at the College Park Marriott Hotel & Conference Center with guest speaker, Anirban Basu, Chairman & CEO of Sage Policy Group, Inc. Guest panelists included Tom Sadowski, Executive Director of the Maryland Economic Development Corp.; Greg Permison, Senior Manager of Business Development for Gilbane Construction; Jaclyn Hartman, Assistant Secretary of Transportation Investments at the Maryland Department of Transportation; and Richelle Wilson, Deputy Director of Rockville Development, Inc. The panel discussion, focusing on local economic development and solutions, delivered important and actionable information for commercial practitioners.
The afternoon provided CE opportunities for attendees taught by instructors Stuart Kaplow, Esq., CCIM’s Lorenzo Wooten Jr., and last year’s Maryland REALTORS® Commercial Excellence Award winner Ed Stanfield. The day concluded with sponsor presentations, the always-popular Deal Exchange and Happy Hour, and the celebration of the latest recipient of the 2024 Maryland REALTORS® Commercial Excellence Award, Maryland REALTORS® Commercial Alliance Chair, Dave Fritz.
Save the date for next year!
INNOVATE 2025 will be held at the College Park Marriott Hotel & Conference Center in Hyattsville on March 20, 2025. Thank you to our sponsors, who helped to make this an amazing CRE event!
Thank You to our Sponsors!
Diamond Sponsors
WLC Design & Site360
CoStar Group
Mackenzie Commercial Real Estate Services
Gold Sponsors
NAI KLNB
Fox Mountain Property Inspections
Platinum Sponsors
CCIM
Concairge
ProTec Inspection Services
My Guys Moving & Storage
KW Select Commercial
(top) Dr. Anirban Basu, Tom Sadowski, Jaclyn Hartman, Greg Permison, and Richelle Wilson; (middle): 2023 Commercial Excellence Award Winner, Ed Stanfield with 2024 Commercial Excellence Award Winner, David Fritz; (bottom) Greg Permison, Dr. Anirban Basu, Diamond Smith, Esq., David Fritz, and Richelle Wilson
Diamon Smith, Esq. is an Associate Counsel with Maryland REALTORS®.
Say Hello to the New SMAR HQ!
BY ZACH HILL
The changes made to the headquarters of the Southern Maryland Association of REALTORS® (SMAR) are a key component of the association’s commitment to better serve its members.
SMAR’s physical footprint has been transformed from administrative offices to a member-centric workspace. With an upgraded infrastructure, a new physical layout, and a creative environment, this new space has been designed to increase productivity and creativity. The remodel features space optimization, such as an open floor plan that includes specific member collaboration areas, a cutting-edge and expanded classroom, and an audio-visual room dedicated to helping our members create multimedia content such as photos, videos, podcasts, and interviews. SMAR’s conference rooms have
been modernized and expanded, and the space also provides several member workstations to meet members’ business needs. Members will have access to the building as needed and for whatever the business event/meeting requires, 24 hours a day, 365 days a year.
The new SMAR headquarters has been upgraded with energy-efficient systems, new technology and sustainable materials to provide a more cost-effective and environmentally responsible workspace. SMAR’s mission has been to make this new space reflect the association’s culture, values, and identity, resulting in a physically appealing atmosphere that fosters motivation, pride, and a sense of community.
Welcome to the new home for real estate in Southern Maryland!
Registration is OPEN for Maryland REALTORS®’ Annual Conference, Back to the Beach, taking place September 16–19, 2024, at the Ocean City Convention Center in Ocean City, and this is the event you don’t want to miss! With more than 40 hours of CE (some of that overlaps, so take care in building your schedule!), and a more expansive trade show experience, this will be the event that moves your career forward. You will learn from the best and brightest: CE instructors, specialization experts, and our Keynote Speaker, Ryan Serhant, a real estate rock star who sold nearly $3 billion last year. ■
Register today!
Follow the QR Code below to learn more.
Zach Hill is the Advocacy and Communications Director at Southern Maryland Association of REALTORS®.
The Value of A GRI Education
Join the Graduate REALTOR® Institute and gain a competitive edge.
BY DYANA QUINZI
Uncertainty can be the name of the game in any industry. With so many factors at play in the real estate market, real estate professionals need to give themselves every advantage to stand out as a consummate professional and subject matter expert. There are many reason REALTORS® are required to obtain continuing education; reasons can include keeping up with legal changes, ensuring that Fair Housing laws are being followed, even understanding the changing tides of the industry.
The nation’s largest REALTOR® designation, Graduate, Realtor® Institute (GRI), can help you achieve your continuing education requirements while moving your career forward with a robust curriculum designed to take your skill set to the next level.
“For longevity in real estate, education is key,” said Demetria Scott, Chair of the GRI Advisory Board who has held her GRI designation since 2016. “Most real estate agents have been in the business for less than five years, and they have not experienced the cyclical nature of real estate first-hand—agents need to equip themselves in these challenging markets. When the market is shifting, this is when it’s most important to acquire new skills and new knowledge. The classes offered as part of the GRI curriculum allow agents to interact with experts across a variety of fields to better understand which skills and specializations can best help them expand their businesses in a changing market.”
Often referred to as the “REALTOR® Master’s Degree,” obtaining your GRI involves 12 days of intensive classes that cover a variety of topics designed to enhance and strengthen your skills. Pre-licensing classes provide you with information needed to legally conduct a real estate transaction, but GRI classes take you to a new level, delivering insight into how to navigate the difficult and
complex situations you are guaranteed to run across in your real estate career.
An added benefit of each series is the continuing education credits that students earn in Fair Housing, Ethics, Brokerage Relations, Contract Law, Basic Financing, Buyer Representation, Technology and Trends, and so much more.
100/200 Series – GRI Designation
From your very first class in GRI 100, you will realize the value of the GRI designation when learning all the tools, tips, and tricks to set up your very own successful real estate business from the ground up. Our instructors combine their years of experience with modern innovations and provide great advice that students can implement immediately. The GRI 100 series can help you build a better real estate business and re-focus your prospecting and listing systems to deliver these types of leads to your inbox and phone.”
The GRI program is not just for those new to the real estate world. REALTORS® already in the field have taken advantage of the evolving education provided by GRI. Debbie Rettberg, a real estate professional with 23 years’ experience and a recent GRI student, enjoyed the classes. “I learned quite a bit,” said Rettberg. “My favorite classes were the appraisal class, sales and marketing techniques, and the land class.”
Series 200 delves into legal, environmental, and pricing issues. You will also learn how to use evolving technologies to aid you in your real estate business, while also discovering the importance of meditation and arbitration.
At the end of the 200 series, you will have earned your GRI Designation, which shows prospective clients your commitment to excellence and professionalism.
When the market is shifting, this is when it’s most important to acquire new skills and new knowledge. The classes offered as part of the GRI curriculum allow agents to interact with experts across a variety of fields to better understand which skills and specializations can best help them expand their businesses in a changing market.
—Demetria Scott Chair, GRI Advisory Board
300/400 Series – Brokers License?
For those interested in sitting for the broker’s exam, GRI 300 and 400 offer the additional continuing education hours needed to qualify. These classes provide valuable insight into more advanced subjects such as commercial property, investments, distressed property, and land use. The instructors, who bring years of experience to the classroom, share in a collective goal to equip and empower participants to overcome any challenge they may encounter in the real estate market
While GRI is an investment in time, the GRI designees clearly understand the benefits that can come forth.
“One of the most important things I learned in the GRI classes was the need to split my time between working IN my business and working ON my business,” said Scott. If you’re spending all of your time on listing appointments and showing homes, this increases the likelihood of burnout and encourages the myopic view that the business is all about moving from one transaction to the next. Investing time to work on your business—pursuing certifications, learning how to incorporate assistants into your business model, or how to better supervise as a team lead—can help you grow financially and professionally as a real estate practitioner.”
If you are interested in taking your career to the next level with a GRI designation, please scan the QR code on the bottom of this page or visit our website. You can also email gri@mdrealtor.org with any questions. ■
Dyana Quinzi is the Administrative Assistant for Maryland REALTORS®’ Department of Professional Development and Member Engagement.
24 YEARS CELEBRATING
OF LEADERSHIP EXCELLENCE
CHRIS HILL
2024 President
Maryland REALTORS®
JOANIE HYNES Chair
Leadership Academy Advisory Group
KAYREN JAN’ICE BENJAMIN
Keller Williams Preferred Properties
Prince George’s County Association of REALTORS®
JONATHAN HOORY
Exit Preferred Realty
Greater Baltimore Board of REALTORS®
BRAJESH MAHARJAN
Ghimire Homes, LLC
Greater Baltimore Board of REALTORS®
CHRIS TRAPANI
Keller Williams Gateway, LLC
Harford County Association of REALTORS®
ALONNA DAVIS
Realty One Group Universal
Greater Baltimore Board of REALTORS®
BRENDA HUELLE eXp Realty LLC
Southern Maryland Association of REALTORS®
CAITLIN MARTINEZ
D.R. Horton Realty
Greater Capital Area Association of REALTORS®
TRUESDALE
Realty One Group Universal
Greater Baltimore Board of REALTORS®
MONICA
GRADUATES2024
TEREZ DORSEY
Keller Williams Realty Centre
Frederick County Association of REALTORS®
JAMES SPENCER
Coldwell Banker Realty
Anne Arundel County Association of REALTORS®
JENNY MCATEE
Taylor Properties
Greater Capital Area Association of REALTORS®
SHONTEL WILMER
Rosendale Realty
Mid Shore Board of REALTORS®
AMBER DURAND
Patterson Schwartz Chesapeake Cecil County Board of REALTORS®
JIMMIE JENNINGS
Century 21 New Millennium Howard County Association of REALTORS®
TAIYE SINGLETARY
Harris Hawkins & Co.
Greater Baltimore Board of REALTORS®
CHERYL YOUNGBAR
Samson Properties
Greater Baltimore Board of REALTORS®
ANA FERGUSON
Douglas Realty, LLC
Greater Baltimore Board of REALTORS®
AZALEA JOHNSON-FOX
Berkshire Hathaway HomeServices PenFed Realty
Harford County Association of REALTORS®
KENDRA TAFT
Coldwell Banker Realty
Greater Capital Area Association of REALTORS®
YOU COULD BE IN OUR NEXT GRADUATING CLASS!
That’s a Wrap! Curtains Close on a Successful 2024 General Assembly Session
BY LISA MAY
The final bells rang, the confetti fell, and the General Assembly adjourned sine die for the 2024 Session. While there was the typical set of both highs and lows, victories and disappointments, REALTORS® overall have much to celebrate from this year’s 90 days at the State House.
Thumbs Up to Housing
Just six short months ago, our 2024 Session Preview article asked, “Would this be the year of Housing in the General Assembly?” That answer was an overwhelming yes!
Two of the Administration’s bills aimed at boosting housing supply, HB 538 and HB 599, found approval. HB 599, the Housing and Community Development Financing Act, establishes a state-level housing finance agency to better leverage and direct funds for affordable housing development.
But the big bill, and the one Maryland REALTORS® supported as vital to addressing our state’s housing crisis, was HB 538, the Housing Expansion and Affordability Act. This bill establishes the following:
■ Local zoning ordinances cannot prohibit manufactured or modular dwellings in areas designated for single-family residential uses.
■ “Middle Housing” and “Cottage Cluster” are defined in state law for the first time.
■ Former state properties and federal government military reservations can receive bonus density of 30% above the current maximum in exchange for dedicating as affordable 25% of the new units.
■ Transit-oriented developments within 0.75 mi of a rail station can receive bonus density of 30% in exchange for dedicating 15% of new units as affordable.
■ Lands owned by non-profits may receive a 30% density bonus in exchange for dedicating 25% of the units as affordable.
■ Local governments may not impose unreasonable restrictions or excessive public hearing requirements on the above projects.
That bill alone accomplished more on housing than many previous sessions combined. However, the General Assembly did not stop there.
HB 7 and SB 203 establish the Housing Innovation Pilot Program and Housing Innovation Fund to assist localities in the development of mixed-income housing projects and reward counties that are making strides in reducing their local housing shortages. In addition, HB 131 requires jurisdictions with over 150,000 residents to annually report data on local housing production to state agencies.
Success on REALTOR® Issues
More good news came from the unanimous passage of four REALTOR® priority bills. Those include:
■ HB 520/SB 461 – allows submission of anonymous complaints to the Maryland Real Estate Commission (MREC) for advertising violations. The law is limited to advertising because those violations are readily apparent, and licensees will still be afforded due process in accordance with the current MREC disciplinary process.
■ SB 564 – addresses changes in MREC continuing education reporting requirements that were instituted last year. Agents were no longer able to selfcertify credits completed prior to license renewal and CE providers had reporting times reduced by nearly 80%. To address this, licensees will now complete required CE credits 30 days prior to
license expiration, which allows reporting times for CE providers to be fully restored. Those completing CE credits less than 30 days before expiration will be subject to an additional renewal fee.
■ SB 542 – In keeping with both existing Maryland law and the proposed NAR settlement, REALTORS® secured clarifications to the brokerage act regarding buyer and seller compensation. Under this bill, both buyer and seller brokerage agreements must clearly state the amount of compensation owed as a percentage, dollar amount or both. In addition, buyers’ agreements must state who is obligated for payment, whether compensation can be sought from someone other than the client, and what actions entitle the broker to that compensation.
■ HB 709/SB 462 – resolves a discrepancy in the law that allows office managers to oversee many office locations while limiting brokers to just one. Once enacted, brokers and managers will have the same ability to conduct reasonable and adequate oversight of branch offices.
Disclosure Details
Changes to real estate disclosure laws are once again on the horizon following the passage of two bills in 2024.
The first is HB 143/SB 46, which addresses the presence of asbestos in condominium developments. REALTORS® successfully narrowed the disclosure requirements for condominium owners, which now include knowledge of asbestos in the unit or whether abatement has taken place during their occupancy. The condominium associations have separate disclosure requirements on health or safety violations regarding asbestos.
Then, under HB 486/SB 125, home sellers will be required to determine whether their property is within one mile of one of Maryland’s 26 Superfund sites, per the Environmental Protection Agency’s online lookup tool. If the property is within that radius, the seller must attach an addendum with Superfund information. The buyer has 5 days following receipt of the notice to cancel the contract.
One disclosure that did not pass before adjournment was HB 1408, which would have required those engaging in “wholesaling” practices to disclose to both the seller and the eventual buyer that an assignment of
contract was taking place. Maryland REALTORS® and other stakeholders reached consensus on this bill, and we are hopeful that it will pass in 2025.
A Mixed Bag on Rentals
The Administration’s housing package included a third bill, HB 693, aimed at rental housing issues. Maryland REALTORS® began negotiations with staff from DHCD and the Governor’s office starting in 2023 to deal with a very specific part of this bill: a tenant right-of-firstrefusal program.
As originally proposed, this bill would have allowed a tenant to match a third-party offer to purchase their rental property. From the REALTOR® standpoint, this process was a disservice to both to tenants, who would need to scramble to meet an offer they did not negotiate, and to landlords and third-party purchasers, who would be left in limbo while the tenant made their decision.
Instead, our feedback shaped the final product, which is an exclusive negotiation period for tenants to work with their landlords on a potential purchase. Prior to listing the rental property for sale, landlords will send a notice to the tenant outlining the terms they are seeking. The tenant has 30 days to develop their offer, with subsequent 5-day periods for counteroffers. If unable to reach an agreement after those timeframes, tenant rights are extinguished, and a landlord may list the property as intended.
The only exceptions to that process are if the landlord accepts an offer for 10% less than what the tenant offered, or if the landlord receives an unsolicited offer to purchase. In those cases, the tenant will have the option to match those offers and, if they do, the landlord will accept the offer from the tenant.
The bill also:
■ establishes an Office of Tenant and Landlord Affairs;
■ limits security deposits to one month in most circumstances;
■ increases eviction filing surcharges, allowing for recoverability from the tenant’s security deposit for judgements in favor of the landlord; and,
■ limits tenant evictions during extreme weather events.
Also passing was HB 1117, the Tenant Safety Act of 2024. This bill deals with the rent escrow process for rental units that are deemed uninhabitable for tenants and penalties for landlords that do not repair serious and dangerous defects. REALTORS® and other multifamily housing groups expressed concern that this legislation could impact landlords who were acting in good faith to make repairs, not just those who were willful in neglecting their properties.
However, that bill’s passage helped to assure the defeat of a more significant bill in the Senate Judicial Proceedings Committee. REALTORS® and other stakeholders have long opposed Just Cause/Good Cause legislation (HB 477), which would require a landlord to give a valid reason for lease non-renewals. Absent one of those reasons, the landlord would be forced to continue a tenancy. Even though this bill was a local option, it received REALTORS® highest level of opposition, as it upends basic contract law and property rights of rental owners.
Condo Conundrums
A lack of General Assembly action on Condo and HOA issues continues to be a source of frustration for the industry. REALTORS® saw defeat of priority bills SB 898/HB 1039, to conform timelines across the two acts and limit resale document fees to only those listed in statute. While REALTOR® efforts to reach a consensus on the bill fell short, we will again bring legislation in the 2025 session to address association practices.
Other measures to provide oversight of association activities met similar fates. This includes HB 273, to regulate Common Ownership Community Managers, and HB 1457, to establish the Common Ownership Community Ombudsman Unit in the Attorney General’s Office.
One area where we expected legislation to pass was on reserve study requirements. Many communities have reported difficulties in meeting their reserve requirements, particularly in older, high-rise condominiums.
While REALTORS® supported several bills proposed to address the issue, HB 281 was the vehicle to advance in the House. That bill would have extended the current funding period from three years to five years and provided flexibility in how reserves were met. Unfortunately, that bill did not receive a Senate vote prior to adjournment. What passed was HB 280/SB 446, which allows local governments to assist condominium and HOA communities with necessary infrastructure repairs.
Good News on Budget, Taxes
Arguably the biggest and most contentious issue of the 2024 Session centered on the state budget. Maryland faces dire out-year projections for expenses while experiencing anemic economic growth.
This could have been a difficult environment not just for REALTORS® but for housing in general. Thankfully, it was not.
REALTORS® advocated to preserve funding levels for the Department of Housing and Community Development (DHCD) and services like the Maryland Mortgage Program. While other areas of the state budget were eyed for cuts, DHCD’s funding remained
steady, with federal pandemic aid reductions offset by a 5.9% increase in state funding.
That doesn’t mean real estate was not under threat this session. Our REALTOR® Advocacy efforts once again defeated a proposed 5% sales tax on services (HB 1515), which would have imposed an additional $4 billion in taxes on businesses such as real estate brokerages, property management and home construction. REALTORS® sent over 700 letters to members of the House Ways and Means Committee in opposition to the bill, which died in that committee without receiving a vote.
Other revenue measures targeting the industry included HB 638, to create a progressive state transfer tax that would increase costs on properties valued above $500,000; HB 751, to institute a 15% transfer tax on properties sold to institutional investors; and the Fair Share for Maryland Act (HB 1007/SB 766), which among other provisions would have lowered the estate tax cap to $2 million and imposed additional taxes on pass-through and capital gains income. None of the above measures passed either as stand-alone bills or were included in the budget reconciliation act.
Much of the above success was due to the Senate and the Governor holding the line on broad tax increases. However, REALTORS® should expect that taxes and revenue will be a defining issue of the next few sessions, and that we will see some or all these measures again.
A full listing of these and other bills from the 2024 session is available on our Advocacy page at mdrealtor.org. Follow this QR Code to review this report. ■
Lisa May is the Director of Advocacy and Public Policy for Maryland
REALTORS®.
Getting Our Houses in Order
August 17. That’s the day when everything gets real, the deadline for MLSs across the nation, including Bright MLS in Maryland, “to implement policy changes pursuant to mandatory NAR policy.”
How prepared are you?
Below is NAR’s Settlement Timeline, which provides important milestone dates. As June is Homeownership Month, we’ve put a lot of information in this issue to help you add value to the work you do. We’ve also inserted, our updated publication, “152 Things Maryland REALTORS® Can Do for their Clients,” expanded with more ideas for Buyer Agents.
Both the National Association of REALTORS® (NAR) and your state association, Maryland REALTORS®, has published information, FAQs, and guidance. As this topic is constantly in motion, we’re making sure you have the most up-to-date information available.
Please use the QR Codes on this page to navigate information online that will help to make sense of the changes coming to the industry.
As always, we are here to support the work you do. We look forward to working with you as we travel this path together.
Chris Hill 2024 President, Maryland REALTORS ■
NAR SETTLEMENT TIMELINE*
MAR 22
NAR filed Notice of Settlement / withdrew pending motions and sought to stay litigation
MAR 15
Settlement Agreement signed
APR 23
Preliminary Approval granted
APR 19
Plaintiffs filed Motion for Preliminary Approval
JUNE 18 - ACTION REQUIRED
Deadline for REALTOR® MLSs to execute Appendix B (to be included as a Released Party)
• Deadline for brokerages to execute Appendix C (to be included as a Released Party)
• Deadline for non-REALTOR® MLSs to execute Appendix D (to be included as a Released Party)
AUG 17 - ACTION REQUIRED
• Earliest date for Plaintiffs to issue class notice
• New NAR MLS Policy takes effect to implement practice changes
Deadline for REALTOR® MLSs to implement policy changes pursuant to mandatory NAR policy**
~SEP
Anticipated Motion in Support of Final Approval
NOV 26
Hearing for Final Approval
SEP 16
Deadline for REALTOR® MLSs and opting-in nonREALTOR® MLSs to implement practice changes to be a Released Party under the settlement agreement
*As of May 7, 2024. Please refer to the settlement agreement for detailed information on deadlines. **NAR encourages all MLSs to implement the practice changes by August 17, 2024. More information on the effective date of practice changes can be found in our FAQ at facts.realtor.
The Best Buyers’ Agent Follows Maryland Law
BY KATHLEEN DARTEZ, ESQ.
By now, we’ve all heard about NAR’s proposed Settlement Agreement in the Burnett/Spitzer class action litigation and have had some time to consider what it means for us, as real estate professionals and, more importantly, what it means for our clients. In the 100+ page Agreement, there are a few key “Practice Changes” which will have the most significant impact on how we conduct our day-to-day business.
Let’s start with the good news. One provision of the Agreement requires that all REALTORS® representing buyers enter into a written brokerage agreement before touring a home. Maryland law has required the use of written buyer agency agreements since October 1, 2016, so REALTORS® in Maryland should already be very comfortable with this practice.
If you’ve taken the Brokerage Relationships and Disclosures class recently, you may remember an FAQ related to when a buyer’s agent needs to have the buyer brokerage agreement signed. The Maryland Real Estate Commission’s answer is “ Before you provide any real estate brokerage services you must have a written and signed brokerage agreement in place.”
This information is consistent with the Maryland Real Estate Brokers Act. The Brokers Act defines “provide real estate brokerage services” as engaging in any of the following activities:
(1) for consideration, providing any of the following services for another person:
(i) selling, buying, exchanging, or leasing any real estate; or
(ii) collecting rent for the use of any real estate;
(2) for consideration, assisting another person to locate or obtain for purchase or lease any residential real estate.
The Maryland Real Estate Commission has provided guidance on what activities an unlicensed assistant may or may not perform within the scope of “providing real estate brokerage services.” The guidance is clear that an unlicensed assistant may not, among other things, show property because showing property is “providing real estate brokerage services.”
Although Maryland law does allow you to show a property to an unrepresented buyer, you are required to utilize the “Understanding Whom Real Estate Agents Represent” form in that situation. This document clearly established that you do not represent the buyer, it does not provide the buyer with the benefit of representation or create a fiduciary relationship between you and that buyer/customer, nor does it set forth any agreement as to whether and in what amount you will be paid. We recommend that agents enter into written Buyer Agency Agreements before showing a home. Many brokers are offering additional training opportunities to their agents to help them explain the value they bring to the transaction and the importance of creating that real estate brokerage relationship prior to showing a home. Maryland REALTORS® will be offering NAR’s Accredited Buyer’s Representative (ABR) course in May. We encourage all members to consider taking the ABR training or completing any courses offered by your brokerage.
Stay tuned for additional guidance on upcoming changes to the MLS and how offers of compensation may be made. ■
Kathleen Dartez, Esq. , is the former Director of Legal Affairs for Maryland REALTORS®’.
Have the Conversation
Aim for long-term success rather than short-term profitability by being prepared to communicate your worth— but maintaining an openness to buyer and seller needs.
Over the past three decades, I’ve witnessed remarkable transformations within the real estate industry. My journey began when I purchased my first house at the age of 22, back in 1990. It was a For Sale by Owner transaction, and when the appraisal didn’t support the price, I found myself negotiating the seller down. It sparked my curiosity about the intricacies of property transactions.
When I sold the house a few years later, I realized that my natural interest in real estate and drive made me a good candidate for real estate sales. I also realized the tremendous importance of the work. What we do matters. In 1995, just before the concept of buyer
brokerage gained prominence in my Spokane, Wash., market, I obtained my license.
Today, approximately 80% of my time is devoted to residential real estate, and 20% revolves around commercial properties. This blend allows me to see both sides of the coin.
When I saw the details of the pending settlement that NAR signed in March, I recognized that it would result in even more communication with buyers and sellers about how compensation works. I’m fine with that; I love the ask. Throughout my career, my guiding principle has been to tailor commission structures based
on the specific context and client needs. Let me share a recent experience that exemplifies this approach.
A couple who had purchased a property from sellers I represented reached out to me. They were buying a property from a friend and sought basic transaction assistance. I agreed to charge a modest fee to help the two parties navigate the transaction. Part of the negotiation was that the seller would pay my fee, and she agreed. In the end, I not only provided full service on the purchase but also secured the listing for the buyers’ house. During the appraisal process, the seller said she believed I had gone above and beyond, even suggesting additional compensation. My response was simple: Our agreement stood. The result? A seamless transaction that left both parties content.
My business thrives on repeat customers and referrals. I’ve come to realize that success isn’t solely about maximizing profit on every deal; it’s about playing the long game. As I continue my journey in real estate, I find joy in selling properties to the grandchildren of my original clients—the legacy of trust and service echoing through generations.
Be Prepared to Talk Compensation
Compensation discussions require a blend of transparency, confidence and adaptability. Here are some key points to keep in mind.
Understand your value. The first step is to quantify your worth. This involves understanding the market and your unique skills and making a fair calculation of the time you put into a buyer or seller transaction. Your experience, local knowledge and negotiation skills are part of this value proposition.
Have real-life examples. Successful compensation discussions often involve education. Use examples to explain how your services can save clients time and money in the long run. Highlight your track record of successfully closing transactions on homes that match clients’ needs.
Explain the value of cooperative compensation. When discussing cooperative compensation with sellers, describe the benefits. Explain how cooperating with other brokers, which can now occur only off the MLS under the settlement, can expand the pool of potential buyers and potentially lead to quicker sales.
Take lessons from commercial real estate. Residential agents can learn from commercial practices, where buyer and tenant representation is often compensated through a negotiated fee. This approach emphasizes the agent’s role in due diligence and the complex negotiation process.
Play the long game. Flexibility in compensation discussions can pave the way for long-term relationships. By showing clients that you’re willing to work within their budget while also standing firm on your value, you build trust and respect.
Know when to walk away. If a client insists on a commission or fee that doesn’t reflect the effort required, and you don’t see long-term value in compromise, it may be more prudent to say no and invest your time in clients who appreciate your value.
Communicate clearly and often. This helps build trust and avoid misunderstandings, keeps everyone informed about current market conditions, manages expectations and solves problems.
Consider risk. When you charge an hourly fee, the risk is primarily on the consumer. On the other hand, when you work for a percentage commission, the risk shifts to you. In either case, it’s important to have clear agreements upfront about fees and expectations.
Continually strive for transparency, fairness and open communication to ensure that all parties feel valued and respected.
Not All Agents Are Created Equal
The real estate industry attracts a diverse range of individuals. Some agents may struggle to articulate their value, especially if they lack experience or confidence or don’t fully recognize their worth. Your ability to negotiate your compensation reflects your skill when negotiating real estate deals. Don’t be afraid to communicate your worth clearly to prospective clients. But recognize that buyers and sellers have a right to push back, and know that inflexibility in today’s environment may not be your best response. ■
Marianne Bornhoft is affiliated with Real Broker LLC. She and her husband are also co-owners of Spokane-based Bornhoft Commercial.
Reprinted
HTips for Talking With Buyers and Sellers
BY NAR LEGAL AFFAIRS
aving a plan to navigate conversations about compensation and answer consumers’ questions provides transparency and is a critical component of the home buying and selling process. Consider these tips from NAR’s Legal Affairs team as a starting point.
On the Buyer Side
DO emphasize your value proposition: what you do, how you do it, and why it’s important to them.
DO highlight the benefits of a written agreement, including that it benefits all parties by solidifying the relationship, duties and compensation. (All REALTOR® MLS participants who are working with buyers will be required to enter into written agreements with their buyers starting in late July 2024.)
DO explain the compensation terms of a written agreement and the fact that compensation is negotiable.
DO emphasize that you will inform the buyer before showing a property whether there is an offer of cooperative compensation and whether that offer covers the agreed-upon compensation. advise consumers that they have choices about how the buyer broker is compensated, depending on broker-consumer negotiations, including but not limited to fixed-fee commissions paid directly by consumers, concessions from the seller (as long as such concessions are not limited to or conditioned on the retention of or payment to a cooperating broker or other buyer representative), or a portion of the listing broker’s compensation.
DO educate the consumer that offers of cooperative compensation help make professional representation more accessible, decrease costs for home buyers to secure these services, and increase fair housing opportunities.
On the Listing Side
DO advise the consumer of the benefits of cooperation and obtain seller consent regarding any compensation that will be offered to another broker who brings in the buyer.
DO explain the compensation terms of a written agreement and the fact that compensation is negotiable. educate the consumer that offers of compensation can help increase the potential buyer pool for sellers, thereby increasing the likelihood of obtaining the best sales price and terms.
DO inform the consumer about limitations on the ability to finance buyer broker compensation, as well as the current inability of buyers who are veterans to directly compensate their broker. ■
How Realtors® Can Talk To Sellers About Compensation
BY KATHLEEN DARTEZ, ESQ.
Most conversations regarding the proposed NAR Settlement Agreement and its corresponding practice changes focus on the buyer’s side and the requirement that a buyer’s agent enter into a written buyer agency agreement with the buyer before touring a home. Of equal importance, however, is the impact that the practice changes will have on sellers. Regardless of which side of the transaction we are on, it is critical to focus on communicating with our clients and customers.
The inventory shortage that we’ve been experiencing over the past few years has created a seller’s market. Sellers enjoyed the luxury of receiving multiple offers for their home. Buyers were willing to offer more than the home had appraised for or willing to waive certain contingencies, such as a home inspection. While higher interest rates have changed things, the fact is that the conversations we were having with sellers a few years ago are not the conversations we will be having with
sellers this year—and that’s not even taking the NAR Settlement Agreement into account.
The post-Settlement Agreement environment offers all of us an opportunity to refocus on our business practices, our skill set, and our communications with our clients and customers, including our listing presentations.
The Settlement Agreement sets forth certain required practice changes. The class action plaintiffs were home sellers who alleged that NAR’s cooperative compensation policy was anticompetitive because they were forced to pay a commission, which was divided between the listing broker and the buyer broker. The seller on your next listing appointment may have heard a news segment, read an article, or skimmed a headline and may believe that you are going to charge them too much. If you are not prepared to have this conversation with seller clients, you should begin preparing immediately. Reach out to your Broker, Branch Office Manager, or Team Leader to discuss modifying your listing presentation to address the lawsuit and the Settlement Agreement.
If you are a coach, work with a coach, or have taken some additional training to enhance your client communication skills, let your Broker or Branch Office Manager know that you are willing to share your expertise with your colleagues in the office to help them develop and enhance their ability to communicate clearly and effectively with sellers.
You should be prepared to discuss the lawsuit and Settlement Agreement and to explain the required Practice Changes and their impact on the transaction.
Be prepared to explain to a seller how compensation works, what options are available to them, and what impact each option may have on the transaction. Bright MLS changed its rules last year, allowing a listing broker to offer compensation to cooperating brokers in any amount or percentage, including zero. There are advantages and disadvantages to a seller who offers zero cooperative compensation and hopefully we have been discussing this with sellers for several months now. Explaining the concept of how cooperative compensation works should be a comfortable conversation by now.
The conversation itself will vary depending upon your communication style and your client’s communication style. You would start by explaining the services you and your brokerage will provide to the seller. Again, if you haven’t focused on this previously, you should start practicing and role playing now. The listing agreement is structured so that the listing broker and the seller agree upon the total amount of compensation the seller will pay to the listing broker, which can be set forth as a percentage, a specified dollar amount, or a combination of the two. Once that has been agreed upon, the listing agreement transitions to a paragraph where the seller instructs the listing broker on the amount of compensation, if any, to be offered to cooperating brokers and subagents. Be prepared to describe the pros and cons of the listing broker offering compensation to the buyer’s broker.
Describing the concept of cooperative compensation should be straightforward, the conversation about the method by which cooperative compensation may be offered will be more involved because of the required
If you are a coach, work with a coach, or have taken some additional training to enhance your client communication skills, let your Broker or Branch Office Manager know that you are willing to share your expertise with your colleagues in the office to help them develop and enhance their ability to communicate clearly and effectively with sellers.
Practice Changes. The most meaningful change is that while offers of cooperative compensation are still permissible, they will no longer be displayed on the MLS. It will be permissible for a listing broker to display offers of compensation on the broker’s listings only on the broker’s website. It will also be permissible for the seller to let the buyer know that the seller is willing to consider helping to pay some or all of the buyer’s closing costs so long as such concessions are not limited to or conditioned on the retention of or payment to a cooperating broker, buyer broker, or other buyer representative. In other words, the seller concession field on the MLS cannot be used as “code” for an offer of compensation or conditional upon such an offer of compensation.
The amount being offered as a “seller concession,” if any, may be utilized to pay buyer’s closing costs and/ or to pay compensation to the buyer broker. It is also permissible for the buyer to request that the seller pay compensation directly to the buyer’s broker, using an Addendum to the Contract of Sale. As of the date on which this article was written, Bright MLS has not yet modified the data fields, nor has Maryland REALTORS®
adopted new and revised Statewide Forms to reflect the required Practice Changes and to facilitate communication, negotiation, and hopefully agreement among the parties with respect to the changes and the transaction.
The most important takeaway is not to fear these changes, but to take this as an opportunity to pause, analyze your current techniques and procedures, and adjust as needed to continue to thrive in this industry. Please consider coaching, sharing resources within your brokerage, taking classes, watching videos on YouTube, and checking in regularly with Maryland REALTORS® to take advantage of our Webinars, videos, and other content designed to help you master the new world.
You’ve got this. ■
Kathleen
Dartez, Esq. , is the former Director of Legal Affairs for Maryland REALTORS®’.
Honoring Top Producers
BY GREGORY HARE
In April, we honored our top producing industry partners at an Annual Awards event in Edgewater. Congratulations to our Maryland Mortgage Program (MMP) Award Winners! Our program could not be the success it is without your tremendous efforts—we truly appreciate it.
TOP PERFORMING LENDER
First Home Mortgage Corporation GOLD
TIER LENDERS
First Home Mortgage Corporation
NFM, Inc. dba NFM Lending, Main Street Home Loans
Primary Residential Mortgage, Inc.
Fairway Independent Mortgage Corporation
PrimeLending, A PlainsCapital Company
SILVER TIER LENDERS
Meridian Bank
Lower, LLC
Direct Mortgage Loans, LLC
FitzGerald Financial, a Division of TowneBank Mortgage
Prosperity Home Mortgage, LLC
Homespire Mortgage Corporation
RISING STAR
Ark-La-Tex Financial DBA
Benchmark Mortgage
TOP PRODUCING LOAN OFFICER
Ryan Paquin – First Home Mortgage Corporation
Alexis Vining – Lower, LLC
Tammi Printz – First Home Mortgage Corporation
TOP PRODUCING
PROCESSOR
Tara Flynn – Primary Residential Mortgage, Inc.
Roni Sierra – Direct Mortgage Loans, LLC
Hayden Mills – Guild Mortgage
TOP PRODUCING REALTOR®
James Archie – Samson Properties
Diego Rodriguez – Spring Hill Real Estate
Cory Willems – Exp Realty, LLC
TOP REAL ESTATE COMPANIES
Samson Properties
EXP Realty LLC
Long & Foster Real Estate
Keller Williams Realty
NEW SMARTBUY STUDENT DEBT ELIMINATORS
SWBC Mortgage Corporation
Movement Mortgage, LLC
AnnieMac Home Mortgage
Waterstone Mortgage Corp
Thank you to all of our partners for helping make Maryland communities flourish! Fair housing practices are a crucial and integral part of the housing community. The State of Maryland is dedicated to upholding these standards and, together with the help of our partners, we’re building strong Maryland communities. MMP is designed to help Marylanders, regardless of age, race, religion, family situation, or level of ability. ■
Gregory Hare is the Assistant Secretary, Maryland Department of Housing and Community Development. mmp.maryland.gov, singlefamilyhousing. dhcd@maryland.gov, 1-800-756-0119
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Revisiting the Three-way Agreement
BY CHUCK KASKY
As we prepare to confront a new business environment with the implementation of the business practices agreed to by the National Association of REALTORS® (NAR), Maryland REALTORS® is committed to helping our members adapt and thrive. We are working tirelessly with all stakeholders, including NAR, Bright MLS, lenders, and appraisers to develop the tools we will need to successfully transact business. Keep on the lookout for new forms, plenty of educational and training opportunities, and collateral.
At the same time, we can’t lose sight of other issues, such as the tumultuous past few months at NAR. As you know, the NAR CEO resigned, the NAR President resigned, as did their successor. The internal culture and toxic workplace environment at NAR garnered lots of attention, and negative stories abounded. Many of us found much to be disappointed about.
While all that was happening, Anywhere, Keller Williams, and RE/MAX settled the class action antitrust case before the verdict was announced. Part of those settlements was an agreement to not require REALTOR® membership (specifically NAR membership) on the part of licensees affiliated with those companies. After the verdict, NAR and the plaintiffs entered into a proposed settlement.
The
three-way agreement outlines the rights of the member boards (local and state associations) to grant REALTOR® status to qualified members and binds the member boards to subscribe to the Code of Ethics, maintain good standing, and regulate the REALTOR® trademark, among other things.
Brokers who were not included in the proposed settlement agreement are understandably upset because they now must dedicate precious resources to evaluate the relative benefits of opting into the settlement against the risks of not doing so and being exposed to potential lawsuits later. For context, brokerages with 2022 total transaction volume for residential home sales in excess of $2 billion who choose to opt into the settlement would be required to pay 0.25 percent of their sales for 2022, which for a company with just over that amount would have to pay $5 million.
On a regular basis, I hear from members who are asking whether NAR membership is worth it, and if there is a way to pay state and local association dues but not NAR dues.
The short answer is no. The long(er) answer is below.
It all has to do with the “Three-way Agreement.” The basic concept is simple. The three-way agreement
outlines the rights of the member boards (local and state associations) to grant REALTOR® status to qualified members and binds the member boards to subscribe to the Code of Ethics, maintain good standing, and regulate the REALTOR® trademark, among other things.
The Three-way Agreement is more of a concept than a written document, although each state and local association is granted a “charter” by NAR. The idea of the agreement, which establishes the relationships between NAR, state associations and local boards, is embodied in a board’s governing documents, its charter, license agreement to use the NAR trademarks, and other documents that define the interactivity of NAR, state associations, and local boards.
The term “Three-way Agreement” refers to the structure of the REALTOR® organization. This agreement was established among NAR, the state associations and
local boards and associations. In our charters, the state associations and local boards and associations agree to:
■ Accept the charge of properly granting and regulating the use of the terms “REALTOR®”
■ Subscribe to the NAR Code of Ethics, and
■ Uphold and enforce the Code of Ethics within the board’s/ association’s jurisdiction.
Also, each local board agrees to maintain membership, in good standing, in the state association of the state in which the board is located.
In other words, the REALTOR® organizations are a federation of organizations and this structure allows the REALTOR® organizations to use their combined resources (both human and financial) and influence to have a unified, powerful voice in shaping public policy, set recognized standards for ethical real estate practice, and contribute to the advancement of the real estate industry.
The state association integrates the work of local, state, and national bodies and act as a link between NAR and its member associations. The local association of REALTORS® is most visible and best known to the public and our members. Most of the products and services members rely upon every day are delivered by our local boards/ associations.
But what about dues? Under NAR’s rules, firms, not individual members, are assessed dues based on how many salespersons/associate brokers are affiliated with the company. Even though it is customary for local associations to bill agents directly, the brokerage is ultimately responsible for payment. This is NAR’s longstanding policy. This policy is articulated in Article II “ANNUAL DUES,” Section 1 of the NAR Bylaws:
“The annual dues of each Member Board (local Board) as defined in Article III, Section 1(B)(1) of the Constitution, shall be in an amount established annually by the Board
of Directors… times the sum of the number of REALTOR®… members of the Board and the number of individuals who are licensed with such REALTOR® members of the Board ….”
All local associations have adopted this membership formula in their bylaws. Dues are assessed to each principal in a firm based on the number of real estate licensees employed by or affiliated with the firm. The firm receives credit for each agent who is a REALTOR® member. Under the consolidated dues structure, there is currently no way to be a REALTOR® member of less than all three levels of REALTOR® associations.
Admittedly, there are good reasons to be upset with what’s happening in our industry, and it’s natural to look for someone to blame when things aren’t going according to plan. But we should all focus on what lies ahead, not what’s already a done deal. We don’t know all the specifics of the trial or the settlement negotiations, but we should be prepared to give the benefit of the doubt when we can and prepare for the future and all its uncertainty. Rest assured: NAR, Maryland REALTORS® and our local associations will be here to support you in the coming weeks, months, and years. ■
Chuck Kasky is CEO of Maryland REALTORS® and host of the Association’s podcast, “Get Real Estate,” which is available through any podcast app.
The Economic Case for Housing
Real estate transactions, or a lack thereof, are, of course, central to a REALTOR’S® personal economic well-being, but recent reporting also highlights just how important home sales are for Maryland’s local and state economies.
Each year, NAR releases a report that quantifies the economic impact of a home sale in each state. For Maryland, each transaction adds $126,800 in direct and indirect economic activity. Or, to put it another way, each home sale that doesn’t happen, removes that activity from being realized in our economy.
NAR Economic Impact Report
Of course, decreases in home sales also directly affect state and local revenues through reduced transaction tax collections. Recordation and transfer taxes provided local governments with over $1 billion in revenues in both Fiscal Years (FY) 2023 and 2024, according to the Maryland Department of Legislative Services County Revenue Outlook Report.
Maryland Department of Legislative Services County Revenue Outlook Report
That is a significant sum. However, in FY 2022, that number was $1.6 billion.
Local governments experienced recordation tax decreases of 18.7% and transfer tax decreases of 21.5% over that two-year period. Those losses alone were enough to wipe out gains in other local government revenues such as property, income, and occupancy taxes.
As REALTORS® have said many times, the causes of Maryland’s dual housing and economic crises are clear. We are not building housing in quantities to match our needs, and the housing we ARE building is so constrained by local regulations that it is not and cannot be affordable for our workforce.
Want proof? Harvard’s Joint Center for Housing Studies reported in January that the nation’s home price to income ratio had reached all-time highs—surpassing even the housing boom of the mid-2000s. In the Washington D.C. Metro Area, that ratio reached 5.1, meaning that home prices were over five times the median household income. The Baltimore Metro Region fared only slightly better with a 4.2 price to income ratio, rising to levels last seen in 2008.
Harvard University Joint Center for Housing Studies Report
The connection between housing and our economy caught the eye of Maryland Comptroller Brooke Lierman as her office gathered information for the 2023 Maryland State of the Economy Report.
2023 Maryland State of the Economy Report
shortage was directly linked to a company’s ability to attract and retain employees. It stated, “housing is a major issue from an economic development standpoint as both businesses and residents require a sufficient supply of affordable and available housing across all income levels to thrive.”
It’s no coincidence that Maryland recently ranked 6th worst in the nation in two inauspicious categories: difficulty in hiring workers (according to WalletHub) and ability to find a starter home (according to constructioncoverage.com).
Absent adequate housing supply, businesses can and have turned down opportunities to expand their operations in Maryland, and workers are looking elsewhere.
Beyond the Numbers
The above figures are likely to convince statisticians and datahobbyists. But are those enough to sway your local policymakers and business interest groups to action? If we’re being honest, probably not. However, that doesn’t mean those stats are off-limits for advocacy efforts. It only means that they need to be humanized to really resonate. Luckily, there is an online tool that can help you with this process.
National Housing Conference
Paycheck to Paycheck Report
In each of those areas, you can compare incomes for various professions against local costs to purchase or rent housing. For instance, if you want to know if a firefighter, elementary school teacher, or postal worker can afford to live in the area in and around Salisbury, this tool will tell you. (And in case you were wondering, yes, you can also look up what a real estate broker or agent can afford in those areas too.)
It will come as no surprise that those and many other professions make just a fraction of what is required to purchase a home in Maryland. This reinforces the Comptroller’s findings that high housing costs and our state’s business climate are inextricably linked. To improve on the latter, we must improve on the former.
The consensus from a series of regional roundtables with business leaders, including local REALTORS®, was that our housing
The National Housing Conference’s Housing Resource Center has created the Paycheck to Paycheck database. In it, they have gathered information on home prices, median wage data, and rental costs by Metropolitan Statistical Area.
When your local Council or economic development entity laments a lack of workers or inability to recruit them, this database can give you an answer as to why, with housing at the center of the solution. And isn’t that what we all really want from housing advocacy? ■
Show Me The … Coverage?
Q:I’m the broker/owner of my brokerage and am making every effort to understand all the nuances of the NAR Settlement Agreement so I can implement necessary practice changes and explain them to my agents. I had heard “something about E & O Insurance” on a recent webinar. I don’t recall reading or hearing anything about E & O Insurance in connection with the Settlement Agreement. Can you please explain this to me?
A: In response to your question, let’s start with some context. First, you may have heard some concerns that the unintended result of the proposed Settlement Agreement and required MLS and practice changes will be an increase in unrepresented buyers. Another concern that you may have heard is that there will be more transactions where agents won’t receive any compensation.
As you know, Maryland has required the use of written buyer brokerage agreements since 2016. If you’ve taken the Brokerage Relationships and Disclosures class recently, you may recall a question asking, “when do I need to get the buyer brokerage agreement signed,” and the Real Estate Commission’s response would be, “ Before you provide any real estate brokerage services you must have a written and signed brokerage agreement in place.”
Accordingly, the proposed Settlement Agreement’s requirement that the buyer and broker enter into a written agreement before the buyer tours a home should not cause undue concern here in Maryland. Brokers who
have not had such a policy, or agents who have not consistently followed such a policy, now have a unique opportunity to fine-tune their presentation skills, develop scripts, role-play, and consider obtaining the Accredited Buyer’s Representative designation or taking similar training to be able to respond to buyers’ concerns. Taking the time and effort now will help ensure that we do NOT have a large increase in the number of unrepresented buyers.
The second concern mentioned above is that there may be an increase in the number of transactions where buyer’s brokers/ agents are not receiving compensation from any source, including the seller, the listing broker, or the buyer. Taking the effort now to step up your game in getting buyer agency agreements signed before showing a home will also help reduce or eliminate the transactions where buyer brokers/agents are not receiving compensation. The discipline of entering into a written buyer agency agreement prior to showing a home means that the buyer and agent have agreed upon the amount of compensation being
paid to the buyer broker, they have engaged in a discussion regarding what the buyer can afford to pay out of pocket; and the buyer enters into that agreement with “informed consent.” These practices and conversations should all serve to significantly reduce, if not eliminate, the number of transactions where the buyer broker/agent isn’t receiving compensation from any source.
With that context in mind, let’s get back to your original question. The concern that increasing number of transactions will result in buyer’s agents not being paid was what prompted the question of whether a broker’s E & O insurance would provide coverage in those transactions. The answer is everyone favorite lawyerly non-answer, “it depends.” Some E & O policies would deny coverage if the broker/ agent did not receive compensation while other policies do not include such a limitation. We encourage you, and every broker, to reach out to your E & O provider to determine whether your policy contains such a limitation. ■
Kathleen Dartez, Esq. , is the former Director of Legal Affairs for Maryland REALTORS®’.
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