Insight | November 2013

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Leadership Academy is Back Identifying and Developing Future Leaders

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November 2013

C O N T E N T S

In Every Issue 2

President’s Message

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Events Calendar

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Editor’s Desk

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By the Numbers

20 Inside NC REALTORS®

Features 6

Cover Story Identifying and developing future leaders is vital to any organization where cooperation and volunteerism shape its future. This is why NC REALTORS® Leadership Academy is back!

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8 Business Planning Tips for 2014 Whether you already have a plan in place – or whether it’s time to start fresh – these eight tips for success will help ensure that you have a productive new year.

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A Look Ahead: NCAR Inaugural Meetings January’s Inaugural Meetings will provide new and veteran leaders the opportunity to hone their skills and learn new ideas for effective leadership from top trainers and motivators.

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Government Affairs Political Action Committee Partner Program The Forms Guy Technology Tips Guest Columnist: Buyers Should Protect Their Investment Prior to Closing

P R E S I D E N T ’ S

M E S S A G E

By patrice willetts president

There is a Song Written by Bart Millard Titled “I Can Only Imagine.”

You think you can imagine how things will turn out, and then you are faced with a situation and realize you had no clue. This is my realization as we embark on the last few months of 2013.

As I began my year as president of NCAR, I could hardly have imagined all of the experiences that lay before us. I could hardly have imagined the extent of the political climate we faced, and the successful campaign we would mount in order to protect our industry and those we represent from destructive tax reform policies. I could hardly have imagined the level of focus and courage we witnessed from our legislative team, comprised of both staff and volunteers. I could hardly have imagined the level of respect NCAR has within the Raleigh environment. I always knew the respect was there, but until you witness it first-hand, it is impossible to really know.

I could hardly have imagined the welcoming I received from all of our local associations across the state. You have invited me, treated me like a queen, and you were open to new ideas and participative in their implementations. You worked hard, met goals and added to a great year for NCAR, way beyond my imagination.

I could hardly have imagined the intense PRIDE I had as I represented NCAR with the placing of a wreath at the Tomb of the Unknown Soldier in Washington, D.C. This is an experience I will NEVER forget.

As much as we plan and do all the positive things that encourage our members to attend our state conventions, I could never have imagined the level of success we experienced at The Grove Park Inn this year. We had the highest attendance in years, fantastic programs and education, and a view to surpass all views. Thank you to the many volunteers, staff and members for all you did to make this year’s convention so wonderful.

We have all faced a slowdown in our markets and a decrease in membership. That is something that unfortunately we did not have to work hard to imagine. We lived it. But now we are on an upswing. Not hard to imagine is the tenacity of our members and the stick-to-it attitude that makes us strong and resilient. Committee meetings were hard at times as we worked through the budget and discussed the impact new ideas would have on that budget. Committee members did all they could to find the balance. Also, not hard to imagine, is the dedication of our staff as they worked to persevere in the hard times by doing the best they could for NCAR and for its members. I will work to find the right words, before my term is over, to properly express our gratitude to every staff member of NCAR. I thought I knew who the member was. I thought I understood your focus and ability to make a difference in your communities. Oh my…I could hardly have imagined the depth of your dedication to your clients and to your local communities.

You raised money, built and repaired homes, held job fairs, donated to worthy causes, served on local boards and commissions, and supported new ideas for affordable housing. You helped us shine the light on issues that matter to property owners, both residential and commercial, and also how certain issues impact the property management side of our industry. You all are amazing. As I struggled last year to find my theme, I could hardly have imagined how spot on the words “Protecting and Promoting Private Property Rights and Ownership” would be.

I can only imagine what the future holds for NCAR. We are made up of talented, dedicated, ethical, hardworking, kind and loving REALTORS®. I CAN imagine all you will do for your association, your family, your clients and for each other.

Patrice Willetts

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E V E N T S

C A L E N D A R

Key Dates in the Coming Months Nov. 14-15

ABR® Designation Course

Boone

Nov. 18

GRI 303: Pricing Residential Properties

Charlotte

Nov. 19

GRI 103: From Contract to Closing

Charlotte

Dec. 3 Executive Committee Meeting Greensboro Jan. 21 Executive Committee Meeting Greensboro Jan. 21-24

2014 Inaugural Meetings

Greensboro

Jan. 21 Leadership Academy Greensboro Jan. 21 RPAC Training Greensboro Jan. 21 Finance 101 Greensboro Jan. 21 Diversity Workshop Greensboro Jan. 21 Spokesperson Training Greensboro Jan. 21-22 Vision Quest Greensboro Jan. 23 2014 Inaugural Gala Greensboro Jan. 24

Board of Directors Meeting

Greensboro

Visit www.ncrealtors.org for more information and the latest Events Calendar.

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E D I T O R ’ S

D E S K

By blair wilburn Editor

Thank You for a Great Year Fall is a time of transition for us all - a time of reflection and a time of planning for the year to come. As we all finalize our objectives for 2014, I want to take a moment to thank all of you who took the time to complete our member communications survey. It is helpful for us to hear what you expect from your organization.

One big change on the horizon is that Insight is going back to print in 2014. Although it will still be accessible in an online format, members will begin to receive Insight in their mailboxes on a quarterly basis. In addition to the featured stories and departmental columns you’ve grown accustomed to, we’ll be incorporating some fresh ideas, too.

Insight magazine is for our members, and should be about our members – and that’s why we need your help. Do you have an inspirational story about rising to success in the midst of adver-

The numbers tell the story.

55 The percentage of Americans who expect home prices to rise over the next 12 months.

3/4 The proportion of the fall in household formation that can be directly correlated to student debt. $7,400 The increase in amount of money a buyer of a new single-family home will spend during the first two years after closing, compared to a similar homeowner who doesn’t move.

16.9 In millions, the number of people who moved between counties in 2012, as compared to the 7 million that took a long-distance move to another state.

0.25 In acres, the median lot size for single-family homes that began construction in 2012 in the South Atlantic (Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia).

42 The percentage of real estate executives who say recruiting young talent is the biggest obstacle for their business.

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sity? How about an outrageous story about a showing gone wrong – you know, the kind of story you always tell at a dinner party that results in a roomful of belly-laughs. Submit your 200 word stories to me at bwilburn@ncrealtors.org and you may find yourself featured in 2014!

As you’re looking back on the past year, I know you’ll begin to think about the year to come and start planning next year’s new set of goals and challenges. You’ll see as you browse the pages of this issue that we’re striving to offer you ideas and excellent personal growth opportunities throughout the new year. Read the “8 Business Tips for 2014” on page 10 to learn solid business strategies that will equip you for a productive year to come. You’ll also see that our Inaugural Meetings in Greensboro this January have an abundance of sessions to enhance your professional skills. And, last but not least, with the newly re-launched Leadership Academy kicking off next year, you’ll find that the opportunities to enhance your leadership expertise are plentiful in 2014. v

Leadership Academy is Back

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I was fortunate enough to participate in the 2009 NCAR Leadership Academy Class. This one of a kind experience was more than just learning about the Realtor® organization and the important role it plays in our industry. It was an opportunity to learn about myself and how to better interact with my clients and customers. I still talk to the other Realtors® from my class and continue to learn from them. I can say without a doubt that this experience far exceeded the time, money and effort it took to participate. It has absolutely had a positive impact on me personally and professionally. If you are on the fence about applying…

Go for it. You won’t regret it!

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Amy Hedgecock Fowler & Fowler, REALTORS® High Point, N.C. Class of 2009

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Identifying and developing future leaders is vital to any organization where cooperation and volunteerism shape its future. This is why NC REALTORS® Leadership Academy is back!

This rigorous program is designed to foster a new generation of association leaders that are diverse in age, career, experience, culture and gender – a generation that wants to be involved, make a difference and become the visionaries of tomorrow. The NC REALTORS® Leadership Academy will help participants grow both personally and professionally, increase their effectiveness as leaders, and equip them with a resiliency that is essential in an ever-changing profession.

Through a powerful series of retreats that combine team-building exercises, improving communication skills and personal profile analysis, participants will become aware of their own leadership strengths. They will then be guided through the different aspects of leading within the organization, the real estate industry and the community.

By ellie edwards director of professional development

Graduates of previous Academies have become leaders within their associations and communities; which in turn has made them more effective in business and more valuable to the companies for which they work.

For these reasons and more, NCAR leadership and staff cordially invite you to apply for admission to the NC REALTORS® Leadership Academy!

Application Process

All interested NC Association of REALTORS® members are invited to apply for the NC REALTORS® Leadership Academy Class of 2014. Applications are available on www.ncrealtors.org.

Applications are reviewed by a Selection Committee made up of NCAR members, and 12 participants will be selected for the 2014 class.

The committee will be seeking representation from a cross-section of the profession that will reflect the diversity of the organization.

Additional Information

All participants selected for the program will be required to pay a one-time tuition fee of $750.

Additional costs to the participants will include transportation from home to the meeting or retreat site and other minimal expenses.

The NC REALTORS® Leadership Academy will provide training sessions, some meals and overnight accommodations for four retreats. Participants will be sharing a room with other class members at the retreats.

“

Leadership Academy is one of the most phenomenal programs I have ever had the privilege to participate in. It not only sharpened my existing leadership skills, but also taught me new and effective ways to lead in every aspect of my life. The experience also gave me the opportunity to spend time with eleven other outstanding individuals. More than a decade later, we remain closely connected and share ideas with each other often.

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Tomp Litchfield The Rich Company Washington, N.C. Class of 2002

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Upon reflection of my initial experience with the NCAR Leadership Academy and subsequent opportunities since then, those memories and skills learned have impacted me in ways that I did not imagine a decade ago. I’m deeply connected to this class of very special people in my life and carry lessons learned from each and every one of them on a regular basis.

”

Wendell Bullard, Broker/GRI Bullard Properties, L.L.C Durham, N.C. Class of 2002

The commitment includes attending Vision Quest, three subsequent retreats and the NCAR Annual Convention.

Attendance at all retreats is mandatory. Those who fail to attend will be asked to withdraw, with no refund of tuition. v

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GOVERNMENT

AFFAIRS

By Adair Collins Director of Political Communications

Amplified Voices: REALTORS® Unite, Lead and Engage This fall, NC REALTORS® from across the state have been activating and uniting to lead and engage in the legislative process, on the local, state and national levels.

In mid-September, at the 2013 NC REALTORS® Convention & Expo, hundreds of NC REALTORS® turned out – packing the rooms and spilling out into the hallways at several legislative and regulatory sessions. REALTOR® members of the North Carolina General Assembly and REALTOR® appointees to the regulatory boards and commissions overseeing or affecting the real estate industry and NC REALTORS® shared their unique experience bringing a REALTOR® perspective to policymaking and expert insights into how REALTORS® can advocate effectively. Additionally, NCAR’s Government Affairs staff and Legislative Committee and National Association of REALTORS® staff spread the word about the results of the 2013 state legislative session and about recent and emerging national legislative developments, and together called on NC REALTORS® to engage and invest in NCAR and NAR-led advocacy efforts.

During the Convention, NC REALTORS® raised the second highest amount ever recorded for a Convention fundraising event and then stepped up afterwards to strongly invest further in the NC REALTOR® Political Action Committee (RPAC). NC REALTORS® got involved in myriad other ways in October and early November – from learning the implications of recent federal legislation on the National Flood Insurance Program (NFIP), to taking on leadership posts in a state regulatory commission and running successfully for local public offices.

Local Municipal Elections The fall local municipal elections cycle will culminate with mayoral, alderman and city council elections around the state on November 5. As of press time, 8

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two early races (October 8) have already been decided, with sound victories for the NC REALTORS® North Carolina Homeowners Alliance.

Ronnie Thompson, Morganton City Councilman-elect, NAR Director, NC REALTOR® and former NCAR President (2004), defeated longtime incumbent Alfred Hamer, Jr. by 27 points (63 percent vs. 36 percent). Dennis Bailey, NC REALTOR® and a champion of housing during his tenure on the Shelby City Council, has been serving out a vacated three-year term and won his first-ever election – garnering 79 percent of the vote.

State NCREC Appointments On October 9, two NC REALTORS® newly appointed by Governor Pat McCrory to the North Carolina Real Estate Commission, who have worked in real estate for decades, signed their oaths of office. Appointee George Bell was named 2012 NCREC Educator of the Year and has served on the 2013 NCAR Executive Committee, and appointee Tony Craver received a 2012 NCAR Regional Service Award and was elected a 2011-2012 NCAR regional vice president. They will be sworn in officially to the NCREC on November 13.

2013 NCAR Convention NC REALTORS® came together September 14-17 for the 2013 NCAR Convention, which showcased and called for REALTOR® legislative engagement in several legislative and regulatory sessions.

During the Legislative Forum, U.S. Representative Mark Meadows (R-NC) spoke about the importance of REALTOR® voices in the legislative process. Mark Zimmerman, chair of the 2013 NC REALTORS®

U.S. Rep. Mark Meadows (R-NC) speaks at the 2013 Legislative Forum.

Legislative Committee and the Forum’s moderator, said about NCAR members and legislators, “We need to engage...and they listen!”

The Forum’s panel participants also spoke of the housing industry’s importance to the economy and how their experience in the real estate industry has helped them in their elected or appointed positions.

Panel participants included: w w w w w w w w w w w

U.S. Rep. Mark Meadows (R-NC) Rep. William Brawley (R-Mecklenburg) Rep. Kelly E. Hastings (R-Gaston) Rep. Andy Wells (R-Catawba) Rep. Chris Whitmire (R-Transylvania) Thomas A. Barton, North Carolina Appraisal Board Garth Dunklin, North Carolina Rules Review Commission Tony Jarrett, North Carolina Home Inspector Licensure Board Everett “Vic” Knight, NCREC Tom Smith, North Carolina Housing Finance Agency Janet B. Thoren, NCREC

NC REALTORS® also heard a year-in-review of the state legislative session at the 2013 NC REALTORS® Legislative Committee Meeting, thanks to a presentation by Mr. Zimmerman and Lolita Malave, chair and vice-chair of the Committee; Cady Thomas, NCAR director of government affairs; and Robert Broome, NCAR director of regulatory affairs.

Together, they shared the series of accomplishments made by NC REALTORS® during the session on important issues concerning regulatory reform, property management and environmental law, and reported on state tax reform developments in 2013. (For more information on the 2013 session, please contact cthomas@ncrealtors.org.)

National During and following the Convention, NAR also reported on recent and emerging legislative developments, on the national level, and called on NC REALTORS® to engage and invest in advocacy.

nationally take the federal mortgage interest deduction, and the average tax savings for North Carolina homeowners who claim it is more than $9,000. Along with protecting the MID, NAR is working to protect the many other favorable tax treatments afforded to real property in the current code.

Flood Insurance Ms. Brown also reported on NAR’s work legislatively with the U.S. House and Senate to support a reasonable phase-in of increased premiums for flood insurance coverage and a delay in the implementation of these increased premiums for previously grandfathered properties. The increase has resulted from changes to the federal flood insurance subsidy in the law that has reauthorized the NFIP, and could have a significant impact on real estate markets.

In October, NCAR and NAR continued the flood insurance conversation with NC REALTORS® that had begun at the Convention. NAR updated state and local associations on the issue, and requested they conduct outreach to the North Carolina delegation of the U.S. Congress, to press for a delay of the rate increases. In response, NCAR 2013 President Patrice Willetts submitted letters of concern to all Members of the U.S. House of Representatives from North Carolina and the state’s two U.S. Senators. She also encouraged local association executives and government affairs directors to request that local board presidents each send a letter to their House member and the two Senators.

On October 29, Congress introduced a bipartisan bill that NAR supports as a first step toward the delayed implementation

Advocacy At the Convention’s General Membership Meeting, Kenny Parcell, NAR member mobilization liaison, called for NCAR members to continue increasing their engagement and investment in NAR and NCAR-led federal and state advocacy efforts, RPAC and the Broker Involvement Program. He noted those are like an essential “insurance policy,” and members’ strong and united voices are needed for the U.S. Congress and General Assembly to pay attention to important real estate issues.

Federal Tax Reform During the Legislative Committee meeting, NAR’s April Brown presented an update, facts and NAR’s perspective on federal tax reform. She reported that the U.S. House and Senate have both taken action on federal tax reform in 2013 – considering multiple models for reform – but concrete bills have not yet been introduced. According to Ms. Brown, 75 percent of homeowners

That night, NC REALTORS® brought in more than $15,000 for RPAC at a trivia and live auction fundraiser, and thousands contributed to RPAC in anticipation of the fundraising year’s end on October 18 (see page 12). For more information on RPAC and the Broker Involvement Program, visit NCRealtors.org and RealtorActionCenter.com. v

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G U E S T

C O L U M N I S T

By Bridget McCrea

8 Business Planning Tips for 2014 Ready for a fresh start for the New Year?

Check out these eight business planning success tips for real estate agents and brokers.

With the New Year right around the corner now is the time to start thinking about some solid business planning strategies for 2014. Whether you already have a plan in place – or whether it’s time to start fresh – these eight tips for success will help ensure that you have a productive year:

1) Embrace your fluctuating income. When you signed up for a sales career based solely on commissions, it didn’t take long to uncover the positives and negatives of the setup. On one hand, your paychecks are sizable and unlimited in that there is no real “ceiling” prohibiting you from earning as much as you can. But these checks are not always guaranteed, nor do they come at a predictable rate. Keep this very important point in mind throughout the business planning process.

2) Don’t neglect your own needs. New and seasoned business owners alike have a bad habit of paying off their business bills and obligations before taking care of their own financial needs. Your business planning will be more fruitful if you pay yourself an adequate compensation (from each month’s commission checks) that provides sufficient money to “live on” for the month ahead.

3) Allocate your commission checks wisely. If you just collected a $3,750 commission check (based on the sale of a $250,000 home, split with the cooperating broker and split 50/50 with your own broker), for example, deposit $2,000 to your personal bank account (for living and personal expenses and savings), set aside 20-30 percent for taxes, and then reserve the remaining cash to either pay off business expenses (MLS dues, for example) you’ve incurred during the last month, or retain that money for future business use.

4) Always be prospecting. A real estate agent’s income fluctuates in direct proportion to how well he or she prospects, plain and simple. That means if an agent slacks off on finding new customers, generating referrals, or cultivating her existing customer base, she’ll definitely feel it in the pocketbook. “Agents need to have consistency about their work habits,” says David Fletcher, a Florida-based real estate coach and author. “They 10

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can’t back off just because they’ve had a few sales, nor should they go into panic mode if they haven’t made a few sales.” Here are a few good prospecting options: w Farming, or selecting a specific neighborhood, community, or “farm area” to market yourself and your services to on a regular basis. w

Direct mail pieces (Just Sold, Just Listed, etc.)

“Warm” calling potential customers with whom you’ve had prior contact

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Calling For Sale By Owner listings

Contacting “expired” or “cancelled” listings from the local MLS

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Reaching out to anyone else in your own network who may be ready to buy or sell in the next one to 12 months

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Asking past clients for the names of two to three of their friends, family, or colleagues who may need an agent now, or in the near future

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5) Focus on filling your deal pipeline. Instead of working towards one commission check at a time, aim to have at least a few deals in every stage of the “pipeline” at any given moment. That means having a regular supply of: Potential buyers who are looking to purchase new homes now

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Potential buyers who may be ready to buy within the next three to 12 months

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Homeowners who are ready to sell their homes now

Homeowners who are ready to sell within the next three to 12 months

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With all four categories covered (some clients may not “fit” perfectly, such as the buyer who is ready to purchase in 60 days, but this gives you a general idea), you’ll be assured a steady flow of business possibilities.

6) Divvy up your daily activities accordingly. The social nature of the real estate profession can quickly bog you down with tasks that don’t generate income. Floor time, during which you man the office phones for potential clients, can be very productive, for example. Time spent chatting by the coffee pot waiting for that phone to ring, however, can be better spent on marketing and advertising activities, calling friends and family to remind them that you’re there to help if they want to buy or sell, or updating your web site to reflect updated listings and information.

7) Save for the lean times. This isn’t always easy for newer agents, but there’s no excuse for those entrenched agents to not sock away some money from each check for a rainy day.

If you need to open a separate account and deposit $500 from each check into it, go for it. Money market accounts – which pay slightly higher interest rates than regular savings accounts – are a good option. Whatever investment vehicle you choose, the key is to create a cushion on which to fall

back on should you ever need to go more than two to four weeks without a commission check.

8) Review and tweak your plan as needed. Pull out your business plan every quarter and review it and/or tweak it to make sure you’re on the right track. “If you’re stagnating, then you definitely need to tweak your plan,” says Greg Herder, CEO of Hobbs/Herder Training in Santa Ana, Calif. “There should be a steady, upward trend in an agent’s real estate sales based on natural client-generation tools, such as referrals.” For example, referrals are a great source of business, but they shouldn’t be your only revenue streams. To pump up sales, achieve your financial goals, and avoid income fluctuations, you should also be feeding your client pipeline with new marketing efforts.

Check out NAR’s Field Guide to Writing a Business Plan for even more business planning tips, resources, and advice. v

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NC RPAC Gives Thanks…

NC RPAC continues to be one of the largest in the state. It’s a nonpartisan committee organized for the specific purpose of raising funds to support political candidates of all parties, and it exists through the voluntary contributions of members, their spouses and their families. NC RPAC raised more than $364,000 this year, reaching 79 percent of our goal. More than 5,500 NC REALTOR® members contributed to the PAC, bringing our statewide participation to 18 percent. The leadership and staff of NCAR greatly appreciates your voice, time and investments and would like to give a big “thank you” to each of you. (A complete list of all 2013 contributors can be found on our website at www.ncrealtors.org)

RPAC Hall of Fame Members (Lifetime Investments total $25,000 and up) Douglas Brindley Danny Brock Cindy Chandler J. Alan Holden Tommy Lawing Sandra O’Connor Scott Rooth Buddy Rudd Tony Smith Allen Tate Ronnie Thompson Myra Zollinger Golden R’s ($5,000 and up or $2,000 renewal) *Indicates President’s Circle Douglas Brindley* Danny Brock* Leigh Brown* Cindy Chandler* Glenn Cobb* William Gallagher* Swayn Hamlet J. Alan Holden Tessa Hultz* Tommy Lawing* Tomp Litchfield* Sandra O’Connor* Buddy Rudd

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Tony Smith Ronnie Thompson* Stephanie Walker* Mary Edna Williams* Myra Zollinger* Crystal R’s ($2,500-$4,999.99 or $1,500 renewal) *Indicates President’s Circle Nancy Braun Michael Davenport Jerry Panz Sterling R’s ($1,000-$2499.99) *Indicates President’s Circle Jim Allen Nancy Anderson Louis Baldwin Michael Barr Gray Berryman Margaret Bishop Kirk Booth Diana Braun Phyllis Brookshire Andrea Bushnell* Michael Butrum Steve Candler Kathy Carpenter Brenda Carroll Robert Carter Connie Corey

Linda Craft Kimberly Dawson Rosemarie Doshier John Dowdy David Evans Bonzie Everson Treasure Faircloth Carolyn Fincher Margaret Fisher Van Fletcher Peter Frandano Susan Franks Bruce Gates W. Neal Hanks Wendy Harris Karin Head Amy Hedgecock Anne Marie Howard Ruth Hudspeth Tony Jarrett Vic Knight Susan Lacy Andrew Leung Lolita Malave Larry McNeill Timothy Milam Victoria Mitchener Patrick Morgan Chet Oehme Mollie Owen Sheila Pierce Denise Pilkington Gary Rabon

Nicole Rafferty Hensley Scott James Sherrill Betty Smith Tracy Swanson Michael Tavener Monica Thibodeau Cady Thomas James Townsend Linda Trevor* Christina Valkanoff Patrice Willetts* Bruce Williams Governor’s Club Members ($500-$999.99) Lisa Bennett Phyllis Bosomworth Teresa Byrd Brooke Cashion Harriette Doggett Laurie Donofrio Jane Ebberts Tim Hock Joseph Hodge Terri King R. Gilliam Kittrell Curtis Leonard Mark Mansfield Paul McGill Zan Monroe Sam Ogburn Teresa Pitt Samara Presley Patrick Riley Bob Robbins Elizabeth Stahnke Larry Strother Wendy Taylor Robert Wiley Alexander Wrenn Steven Dozier David Cross Susan Doninger Greer John Pace Jim Kane Philip Bunch Debra Hays Phillip Johnson

Shawn Britt John Wood Marian Stafford Gina Miller Dollar-A-Day Club Members ($365-$499.99) Pamela Boyle Randall Carson Jonathan Corbin Sandra Fincher Christa Goff Kathy Haines Jeanette Holland Phillip Johnson Eric Locher George Munford Nancy Radtke Nancy Roper Steven Saunders Foss Smithdeal Jeff Sweyer William Warmath Donald Whiteside Rachel Wiest Doyle Williams Capital Club Members ($250-$364.99) Catherine Anderson Joan Atkinson Brenda Ballard Beth Blevins Norman Block Mark Brothers John Carroll Brad Cherry Cirila Cothran Diana Davis Steina De Andrade Nadine Deason Susan Duncan Sharon Evans Alice Fansler Mary Fouty-Davis Cathy Griffin Kenneth Harmer Anthony Hensley Stephen Hobbs

Betty Honeycutt Julia Howard Sandra Hurst Lynda Hysong Jody Jessup Louis Jewell Tom Johnson Stephen Jones Mary Kendall Raymond Larcher Marcus Larose Alan Leary Robert Lewis Arthur Linhart James Lipscomb N. Vernon Luffman Kelly Marks Harry McComb Moises Miranda Mike Montpetit Kara Novello Douglas Nunnally Angela O’Bey John O’Neal Janice Pappas Mary Kay Pendergraph Robert Percesepe David Pressly Clifford Ray Marshall Rich Krista Sands J. Shields Tracey Shrouder Renee Smith Jeffrey Smith April Stephens Sue Stewart Douglas Tharp Joann Wainio William Waston S. Hayes Wauford Louis Weil David West Queen Wheeler Dennis Whitson Nancy Whitt Dana Wooten David Zeitz v

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Want To Reach More Than 31,000 NC REALTORS®

NCAR offers many cost-effective marketing platforms including print and digital advertising, sponsorships and exhibitor space at the annual NCAR Convention & Expo.

To find out how NCAR marketing can work for you, please contact: Mike Buescher Director of Business Development at 336-808-4229 or mbuescher@ncrealtors.org

The North Carolina Association of REALTORS® Would Like to Thank Our Sponsors...

Diamond

Platinum

Silver America’s Preferred Home Warranty, Inc CoreLogic MarketLinx Wilde Law Firm, PLLC zipLogix 14

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Gold

P O L I T I C A L

A C T I O N

C O M M I T T E E

By KRISTIN MILLER RPAC MANAGER

REALTORS® Get Snapped, Laugh... and Roll in 5K! “Stop, sit, pose!” More than 100 REALTORS® did just that at the 2013 NCAR Convention & Expo in September, as they had their pictures taken in support of the charitable housing foundation, Homes4NC. Each day, between sessions at The Grove Park Inn in Asheville, Convention attendees packed the photo booth to get their headshots taken while also learning more about Homes4NC programs (bottom right). NCAR is happy to report that, with attendees’ contributions and matching donations from Studio 16, Homes4NC raised more than $2,000.

Another Homes4NC fundraiser, comic and haunted bus tours of Asheville, was also a great success. On board LaZoom buses (top right), riders enjoyed cold beverages, laughter and Asheville’s sights--raising more than $3,000 in just a few hours.

At the Convention, Homes4NC also was pleased to receive a major donation from a Region 1 golf tournament. v

{ 16

Would you like to support low- and moderateincome families who need affordable housing?

Learn more about Homes4NC programs, donate, or signup to volunteer at Homes4NC.org.

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}

>> Accepting Applications for Board of Directors

Homes4NC currently is accepting applications for its Board of Directors. For more information, please contact Adair Collins at acollins@ncrealtors.org.

REALTORS

New Course to be Offered

by NCREEF The North Carolina Real Estate Educational Foundation (NCREEF) is focused on being the leading advocate for exceptional real estate education in North Carolina. To that end, we have been exploring ways to bring passion coupled with education to all NC REALTORS® as well as the public. It is our belief that education, in conjunction with experience, will bring competence and confidence to our REALTOR® community.

NCREEF has created a Home Owner’s Association course designed to help REALTORS®, property managers and the public understand how an HOA works and what members, officers and agents need to know. A licensing agreement for this course is in its final stages and will be ready soon!

To learn more about this course please send an inquiry to ncar@ncrealtors.org. v

Access the Legal Hotline in 2014 for $99!

Subscribing to the Legal Services Program gives you unlimited calls to experienced lawyers every weekday. Your call will be handled by one of NCAR’s lawyers, who collectively have more than 25 years experience representing REALTORS® on a daily basis. They’re not just any lawyers-they’re lawyers who really know and understand the legal issues you face. If you’re faced with ongoing legal challenges, make the Legal Services Program your go-to resource for fast answers from industry experts.

During November, NCAR members can take advantage of a reduced subscription cost of $99, for not only the remainder of 2013, but for the entire 2014 calendar year. The cost after November 30 is $125.

Visit the NCAR website (www.ncrealtors.org/ legal-services-programone.cfm) to learn more about the program. v

Update on New NCAR Healthcare Provider Healthcare reform may be a topic we’re tiring of, but the truth of the matter is – things are in a constant state of transition. Your new REALTOR® Partner, Worksite Associates, is working hard to be a resource for you during this time of change.

Earlier this month, Worksite Associates launched a virtual mall, an online portal where members can view and compare different major medical, supplemental and life insurance plans. By accessing this mall, NC REALTORS® can watch a seven-minute product overview video, find premiums and premium estimates, and access a federal subsidy calendar. Members can also schedule an indi-

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vidual appointment to speak with a benefits counselor who can answer questions, provide quotes, and help you enroll in the programs.

We are hearing from you – renewals are being issued and deadlines are approaching. Let Worksite Associates take the stress and fear out of learning to navigate the federal exchange on your own. Log onto www.ncrealtors.org and visit the REALTOR® Partners page to access the virtual mall and schedule your consultation today. v

REAL ESTATE LAW

NC

NC REAL ESTATE LAW

INSIDE

F O R M S

G UY

By will martin general counsel

Escalation Clauses May Throw Kinks Into Deals Dear Forms Guy: I need some help! My clients, the Greens, are moving here from another state. They want to make an offer on a hot property that they really like. The property is listed for $425,000 and they are willing to pay up to $435,000. At the suggestion of their lawyer from back home, the Greens have asked me to add an escalation clause to their offer. I’ve heard of escalation clauses but don’t really know what they are or how they work. What should I do? Sincerely, Lola Dear Lola: Is that L-O-L-A Lola? Sincerely, Forms Guy Lola: Yes. Forms Guy: Rhymes with C-O-L-A cola?

confirm that it existed?

Forms Guy: Another great question, Lola! There is obvious potential for fraud in this situation. The seller may be tempted to manufacture a competing offer, or have someone submit a semi-legitimate offer, for the sole purpose of bumping up the amount of the Greens’ offer. To combat this, the Greens would want to consider adding something to their escalation clause, requiring the seller to provide the Greens with a true and complete copy of the competing offer. But of course, just seeing the other offer would not necessarily establish that it is a bona fide or genuine offer.

Lola: Would it be legal for the listing agent to share the other offer with me?

Lola: Yes, that’s right. Will you just answer my question, please?

Forms Guy: Real Estate Commission Rule 58A.0115 states: Forms Guy: Question? Oh yes – escalation clauses. An escalation clause is a provision in an offer to purchase that allows for incremental increases in the offering price based on competing offers.

An escalation clause in the Greens offer might say something like the following: if the seller receives any other offer with a purchase price greater than the purchase price in the Greens offer, the purchase price will be increased in an amount equal to $1000 more than the purchase price in the other offer.

Lola: What if someone else offers more than the Greens are willing to pay? Would they be stuck with a higher price?

Forms Guy: Great question, Lola. To avoid that possibility, it would be very wise for the Greens to include a maximum amount up to which their offer could “escalate.” That “ceiling” might be $435,000, which is the maximum amount they are willing to pay for the property. However, including a ceiling may compromise their bargaining position because the seller will know that they are willing to pay that amount for the property.

Lola: The seller could just counter at $435,000, couldn’t he?

Forms Guy: Yes, that’s certainly possible.

Lola: Okay, let’s say the Greens include an escalation clause along the lines of what you said. Then suppose that I get a call from the listing agent notifying me that the Greens have a deal at $431,000, which the listing agent says is $1,000 more than another offer that was made. Would the Greens be entitled to see the other offer to 22

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“[a] broker shall not disclose the price or other material terms contained in a party’s offer to purchase, sell, lease, rent, or to option real property to a competing party without the express authority of the offering party.” I am not aware of any definitive opinion on the subject from the Real Estate Commission, but based on informal discussions I have had with the Commission’s Regulatory Affairs Division, the Commission could well take the position that sharing a copy of the competing offer with the Greens would constitute “shopping” the competing offer in violation of the Rule.

However, it could also be argued that in this context, the Greens were not competing with the other buyer because the competition ended when the seller signed the offer from the Greens. If the purpose of the Rule is to prevent a listing agent from being able to unfairly use one buyer’s offer to encourage another buyer to make a higher offer, that’s not what’s happening in this situation. Here, the listing agent would be sharing the other offer with you simply to confirm the existence of the other offer and the price term of the resulting contract between the Greens and the seller.

Lola: I don’t see how the contract could be binding on the parties unless the final price is actually in the contract.

Forms Guy: I am not aware of any statute or case law specifically addressing the legality of escalation clauses in North Carolina. However, there is existing case law supporting the proposition that as long as the price can be readily determined

by reference to an ascertainable standard (which in this situation would be the other offer), a contract is not unenforceable simply because the price isn’t in the contract itself. But while I think it is likely that a contract containing a well-drafted escalation clause would be legally enforceable, it is also possible that a court might conclude that there’s no contract unless the offering party signs off on the final price since, at the point in time the seller accepts the offer, only the seller actually knows what the final price is.

Lola: Wouldn’t the listing agent have to tell the agent representing the other buyer that the offer from the Greens included an escalation clause?

Lola: Wow. That’s a lot to think about.

Forms Guy: No. I think that sharing a term of the Greens offer

Forms Guy: And that’s not all that needs to be considered.

Other things to think about: are the Greens competing with other offers based on gross purchase price, or on net price (gross purchase price less seller concessions)? How about other offers where the purchase price may not be payable in cash at closing or that may be contingent on the sale of the competing buyer’s existing property or that may have a delayed settlement date? And would the Greens be competing only with other offers that may have been presented to the seller prior to the acceptance of the Greens’ offer by the seller, or may a later offer be used by the seller to escalate the Greens’ offer? All of these issues should be considered and possibly addressed in the escalation clause.

Lola: How should I advise my clients?

Forms Guy: The Real Estate Commission discourages the use of escalation clauses and has recommended that agents discourage their clients from using them. A buyer who asks for an escalation clause to be included in their offer should be advised to seek legal counsel for advice and drafting of any such clause.

An agent who attempts to draft an escalation clause is engaged in the unauthorized practice of law unless she/he also has an active law license.

Lola: Is there a standard form I can use?

Forms Guy: No. The NCAR Forms Committee recently considered a request to develop a standard escalation clause and decided against it.

Lola: Gosh. It seems like making an offer with an escalation clause would just open up a big can of worms for everybody.

Would I even have to present an offer containing an escalation clause?

Forms Guy: Yes. You would need to present it in accordance with NCREC Rule 58A.0106 and Standard of Practice 1-6 of the REALTOR® Code of Ethics. The same would go for the listing

agent too. The listing agent in such a situation should advise the seller to seek legal counsel for guidance and should also advise the seller that the listing agent may be unable to share a competing offer with a buyer who includes an escalation clause in their offer.

with the other buyer would clearly violate the Rule prohibiting the shopping of offers that we discussed earlier.

Lola: So what do you think about escalation clauses, Forms Guy? Forms Guy: Although a well-drafted escalation clause might possibly work in a given situation, as a general rule, I would advise buyers and sellers and their agents to stay away from them.

Lola: Thanks, Forms Guy. Forms Guy: So long, Lo-lo-Lola! v

T E C H N O L O G Y

T I P S

By Tyler Helms Technology Manager

Google Hangouts: Take Your Open House to the Next Level Picture this. You are showing a house. The house is in a great neighborhood and is perfect for newlyweds and young families. You have everything set up and ready for your open house, but the house is empty. Problem, right? Wrong!

You’re hosting a virtual open house with the help of a webcam and Google Hangouts.

Google Hangouts is a free video streaming and sharing application integrated with Google+ that enables both one-on-one chats and group chats with up to ten people at a time. While somewhat similar to Skype or FaceTime, Google Hangouts focuses more on the interaction instead of the conversation and utilizes sophisticated technology to seamlessly switch the focus to highlight the person currently chatting. For companies familiar with GoToMeeting and Webex, the Google Hangouts application offers a free and easy alternative that requires little to no setup or instruction.

Why Use Google Hangouts?

Buyers interested in particular homes can’t always make it to open houses, and sometimes prospective clients simply want to see other homes you have listed and how you market them before they make you their selling agent. Google Hangouts allows the option to virtually connect with potential clients through dynamic communication and interaction. While posting pictures is always a great way to attract attention, recording a video of specific properties as you actually walk through them can create a virtual experience that is much more engaging and personable. You can even record your footage and send it directly to your YouTube channel for editing or re-

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sharing on your social networks.

Ready to give Google Hangouts a try? Check out these quick tips and simple instructions: w A working webcam: Whether it is on your smart phone

or your laptop, make sure that you have some way for your clients to see you or your surroundings. w Create a Google+ account: You must have a Google+ account to use Google Hangouts. If you already have a Gmail account, select the “You+” tab on the top menu bar of Google.com to begin your profile setup. If you do not have a Gmail account, simply visit the Google+ homepage and begin creating an account. w Install the Google+

plug-in: As you are creating a Google Hangout, you will be prompted to install a plug-in that will allow Google Hangouts to work. This should only take 1-2 minutes to complete. w Inviting people:

Google+ is a bit tricky when it comes to inviting people to a Google Hangout. The best thing to do is to wait until you have created a Hangout and then copy the URL and paste it into an email to those you want to include in the conversation.

Your Google Hangouts experience should be one that brings out your personality and showcases your technological skills.

For more tips on utilizing Google Hangouts and other applications for your business, be on the lookout for upcoming free technology webinars provided by NCAR. v

G U E S T

C O L U M N I S T

By Christy Davis Executive Director, NCSS

Buyers Should Protect Their Investment Prior to Closing Since January of this year, the Risk Management Advisory Group has been meeting with the NC Society of Surveyors to address citizen concerns and protections. As part of those discussions, the following article has been submitted by Christy Davis, the Executive Director of the NCSS. Please note that they are available to come speak to your Board or office and would welcome opportunities to open dialogue. Please contact Christy at cdavis@ncsurveyors.com to arrange a meeting.

Bank-owned properties make up about 80% of the listings currently on the market in North Carolina. With so many foreclosures still in process, many new related problems are rumbling to the surface.

Measures that were once required to protect the public and the banking industry have fallen away as industry standards have changed, followed by the face of the real estate market and economy. Homeowners that have personal knowledge and the ability to make disclosures are now often out of the picture, as contracts are between third party banking entities and buyers. With so many properties being sold without warranty or repairs, buyers are opting to forgo certain types of inspections. Property surveys are one type of inspection often overlooked, but buyers beware: opting out can be costly!

Below are three scenarios in which property surveys were ignored within our state over the past 12 months.

Scenario One The subject property was bank owned. Prior to listing the property, the bank requested an inspection to assess repairs necessary to make it eligible for a new mortgage. It was discovered that the well on the property had failed and a new well would be required. The bank reluctantly contracted for a new

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well to be dug, hooked up water lines and then proceeded to list the property. A contract agreement was reached and the buyer of the property made inspections he felt necessary, but was unable to afford a new survey. The property closed and after the buyer had taken possession, the adjoining neighbor in the subdivision decided to put up a fence and ordered a survey of the adjoined property. The survey revealed that the new well dug by the bank’s contractor had been drilled on the adjoining neighbor’s property.

After much deliberation, attorneys were able to reach a settlement in which the neighbor agreed to grant the subject property water rights. The buyer essentially purchased a home without water readily accessible on his property, and the adjoining property was awarded a “free” well.

Scenario Two A bank-owned property was listed and sold to a buyer in a small subdivision.

A new survey was not obtained, but an old subdivision plat was passed on to the buyer representing the land that was being purchased. The old survey did not locate buildings or structures, but merely displayed the area of the land in each lot. The buyer was content to know the size of his lot and see it represented on the plat. The buyer did not opt to purchase a current survey prior to closing. Three months after closing, the adjoining neighbor became concerned about his property line and ordered a survey of the adjoining property. The buyer was shocked to learn that the subject home he just purchased was not constructed within the proper county or subdivision setbacks. In fact, the home encroached the adjoining property line by several feet. To further complicate the matter, the adjoining neighbor had a mortgage on his property making it impossible for him alone to release a portion of the land to settle the dispute. Both parties had to work with their lenders and attorneys at their expense to rectify the encroach-

ment. A current property survey would have revealed this title defect prior to closing, saving the buyer money and the aggravation of working through a resolution.

the issue at their own expense. The buyer was protected from having to correct this issue after the closing due to his decision to invest in a property survey.

Scenario Three

When buyers think about protecting their investment in a home or property purchase, they often do not think about that protection beginning before closing. These scenarios prove the importance of thorough consideration for what is at stake. A current property survey is an important means of protection for a buyer, as it can reveal title defects, easements, right-of-ways, etc, before they become the buyer’s liability. Many buyers do not realize a current survey will also allow their investment to be protected in the event that a title defect arises after closing. Title insurance will not cover the buyer, only the lender for defects that could have been reasonably detected through a property survey. Protect your buyers by educating them on the risks involved when choosing not to have a current property survey. v

In this particular example, buyers and seller (bank) entered into a purchase agreement allocating an examination period for which the buyer may inspect the property as wanted, with the understanding that no repairs would be made, and no warranties or disclosures would be available due to the involvement of the third party. The buyer opted to pay for a land survey as part of his inspections process for informational purposes only. However, the survey revealed the adjoining property had two encroachments: a fence which was 17 feet over the property line and a utility shed which was 8 feet over the property line. While the bank had indicated they would not make any repairs, this allocation did not apply to title defects. The bank worked with the adjoining property owner to remedy and resolve

Contact Us: Members of the NC REALTORS® staff can be reached Monday through Friday during regular business hours of 8:30 a.m. to 5 p.m. at 336-294-1415 or via email using the person’s first initial and last name@ncrealtors.org. Our fax number is 336-299-7872.

Administrative Andrea Bushnell Executive Vice President 336-808-4220 Bryan Jenkins Chief Financial Officer 336-294-3112 Denise Daly Membership Records Coordinator/Bookkeeper 336-808-4223 Mike Buescher Director of Business Development 336-808-4229 Robin Cooper Partner Program Manager 336-217-1047 Sherry Harris Administrative Assistant 336-808-4230

Amanda Lowe Accounting Assistant 336-217-1048 Phyllis Lycan Accountant 336-808-4224 Donna Peterson Executive Assistant 336-808-4221 Caroline Main Receptionist 336-808-4220 Communications & Marketing Blair Wilburn Director of Communications and Marketing 336-808-4228

Samantha Ashburn Electronic Communications Manager 336-808-4226 Mckenzie Hamrick Communications Specialist 336-808-4227 Tyler Helms Technology Manager 336-808-4225 Professional Development Ellie Edwards Director of Professional Development 336-808-4231

Legislative Cady Thomas Director of Government Affairs 919-573-0996 Adair Collins Director of Political Communications 919-573-0992 Kristin Miller RPAC Manager 919-573-0995 Nicole Arnold Shared Local GAD 336-808-4237

Legal Will Martin General Counsel 336-808-4238 Kay Bailey Legal Assistant 336-808-4235 Events Mandy Lowe Director of Events 336-808-4236 Keri Epps-Rashad Meeting Planner and EXPO Manager 336-217-1049

Monica Huckaby Professional Development Coordinator 336-217-1051

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