realtors®, the net, and the law; page 20 • Smarter Googling; page 30 January/February 2010
A journal for real estate professionals published by the Virginia Association of REALTORS® • www.VARealtor.com
Simpler, Sharper Short Sales
10231 Telegraph Road, Glen Allen, VA 23059-4578
firstword ANDREW KANTOR
PUBLISHED BY THE VIRGINIA ASSOCIATION OF REALTORS® The Business Advocate for Virginia Real Estate Professionals Cindy Stackhouse, GRI President John Dickinson, CCIM, GRI President-Elect Trish Szego, CRB, CRS Vice President John Daly Treasurer John Powell, ABR, CRB, CRS, GRI Immediate Past President R. Scott Brunner, CAE Chief Executive Officer scott@VARealtor.com Ben Martin, CAE Vice President, Marketing & Communications ben@VARealtor.com Andrew Kantor Editor & Information Manager andrew@VARealtor.com For advertising information, Brittany Sullivan at (410) 584-1968 or e-mail email@example.com The mission of The Virginia Association of REALTORS® is to enhance its membership’s ability to achieve business success. Commonwealth magazine (ISSN#10888721) is published bi-monthly by the Virginia Association of REALTORS®, 10231 Telegraph Road, Glen Allen, VA 23059-4578; (804) 264-5033. Virginia Association of REALTORS® members pay annual dues with a one-year subscription included within their dues. Periodicals postage paid at the Glen Allen, VA post office and additional mailing offices. USPS Per. # 9604. Postmaster: Send address changes to: Commonwealth magazine, 10231 Telegraph Rd., Glen Allen, VA 23059-4578. Custom Publishing Services provided by Network Media Partners, Inc. Executive Plaza 1, Suite 900, 11350 McCormick Road Hunt Valley, MD 21031
VARbuzz.com. Your virtual café for real estate news, views, and issues. Read the perspectives of your fellow Virginia REALTORS®. Join the conversation at VARbuzz.com today.
Get it? Got it? Good!
In addition to the print version of Commonwealth, VAR publishes electronic newsletters at regular intervals, including...
...the online version of our print magazine, published every month. If you’re not receiving newsletters via e-mail from time to time, it may be that we don’t have your correct email address. Contact your local association of REALTORS® to enter your address in the database. Also, check the spam filter on your computer and authorize any email from VARealtor.com.
Realtors’® burden I JUST SOLD my house in Roanoke. Thanks to some great work on the part of my Realtor®, I ended up only slightly upside-down, which is far better than a lot of folks these days. I was upside-down because my lender wasn’t equipped to handle a short sale or an upside-down borrower. Like many lenders, it was apparently blindsided by the turnaround in the economy, so dealing with the customer service department was an exercise in confusion. I would call one day and get information, only to find out the next that it was incorrect. I documented literally dozens of calls like this. (And yes, I know what “literally” means.) My friend Tom in Phoenix also had to move and sell his house at a loss. He got lucky, though — he
lender that needs one, and you can’t get all your clients to use banks that know what they’re doing. You need to get your ducks in a row. Knowing what happens on the lenders’ side is important, because you can adjust for it. You can take steps to make the process smoother on your end by anticipating the lenders’ needs. And you can be prepared — prepared for confusion, for frustration, and for the new and exciting kinds of paperwork you’ll encounter. For phone calls and e-mail from your clients that contain unprintable words. For having to explain to your client and your client’s bank what the real deal is. That’s why we’ve been working overtime to get and give as many
There are too many upside-down and underwater homeowners these days; ignorance — or even trial and error — is not an option.” got a short-sale offer. But his lender turned it down. (Turned down an offer! In Phoenix!) Tom ended up going into foreclosure, and his lender ended up selling the house for about $60,000 less than that offer. Lucky for Tom, he’s off the hook for the difference. Our two stories are a drop in the bucket. But they’re testament to a simple truth: Lenders aren’t ready for short sales. (If you’d like the gory details of my story, go to www.VARbuzz.com/go/horror.) Ergo: Realtors® need to be. There are too many underwater homeowners these days; ignorance — or even trial and error — is not an option. You can’t deliver a clue to a
short sale resources for you as we can. This issue. Our Short Sales Resource Center (www.VARealtor. com/shortsales). And why we’re always looking for more. Let us therefore brace ourselves to our duties, and so bear ourselves that, when this crisis ends and the Commonwealth recovers, men will still say, “This was their finest hour!” (With apologies to Mr. Churchill.) ●
Andrew Kantor, Editor andrew @VARealtor.com
January/february 2010 Volume 17 ● Issue 1
departments 4 quickhits The latest news and announcements for Virginia’s Realtors®.
10 legallines Lem Marshall answers readers’ questions about real estate law.
16 lifelessons Bad examples: The footsteps you shouldn’t follow in.
30 accessibletech There’s a lot more to using Google than simple keyword searches.
in every issue features 1 firstword 32 rpacreport
34 contactvar 36 lastword
APEX Award of Excellence winner
Simpler, Sharper Short Sales
No Realtor® wants to do a short sale, but they’re all to often the reality these days. So is the frustration. That’s why VAR created standard, statewide forms to simplify and standardize the process. Chances are you’ll be using one or all, so take the time to get to know them.
Let’s Be Careful Out There
Before you send an e-mail, post a blog comment, or update Facebook, be sure to know the rules. What must your signature contain? What text should be on your Web site? What happens if someone posts a disparaging comment on your blog? Read on to find out. www.VARealtor.com
quickhits Education and Events
February 16-19, 2010
Register Now for the 2010 Legislative Conference Get Active! It’s VAR’s 2010 Legislative & Education Conference, and it’s second only to our annual convention in its popularity. Hundreds of Realtors® from across the Commonwealth will converge on Richmond for four days of classes, briefings, and meetings — including our annual Realtor® Day on the Hill, where they meet with their legislators face to face. When you add the Hall of Fame Awards Reception, and the worldfamous Legislative Reception at the Jefferson Hotel, it’s no wonder the entire event is so popular. Registration is now open, and you must register to attend; go to www.VARealtor.com/ LegislativeConference. You can find more information about Get Active there, too. And don’t forget to get familiar with our 2010 legislative agenda. Know what we’re you’re fighting for!
If you haven’t already, be sure to check out VAR’s 2010 Legislative Agenda at www.VARealtor.com/ LegislativeAgenda
New short-sales resource
Short sales present some additional ethical issues for Realtors® and brokers. To help create a unified approach to the process — so every professional involved has similar expectations — the leaders of five local Realtor® associations in Northern Virginia (Dulles Area, Fredericksburg Area, Greater Piedmont, Northern Virginia, and Prince William) developed the Regional Short Sales Reference Guide. It covers everything: pricing, MLS issues, confidentially, and a lot more. Calling themselves the Ethics Dialog Group, they’ve put the result of their work online at ethicsdialoguegroup.com; you can also access it through our Short Sales Resource Center — click on Best Practices. (The SSRC also has a lot more, including the new standard short-sales forms and video from Lem Marshall’s standing-room-only Short Sales Summit for Brokers.) Here’s a sample from the Regional Short Sales Reference Guide’s section on confidentiality: A Short Sale transaction presents different confidentiality issues from a regular transaction. The most important one is whether the Seller discloses the fact that the transaction could be a Short Sale. It’s important to note that in accordance with the Realtor® Code of Ethics and Virginia law, a seller pursuing a short sale is considered confidential financial information. The listing agent must have the seller’s permission to disclose such information and the permission should be obtained in writing. A short sales situation may present an appealing financial opportunity to the buyer, but there are some concerns... There are two kinds of Virginia Realtor®: Those who have done a short sale and those who will. Be prepared. Short Sales
Short Sales Summit for Brokers dazzles We’ve been working hard to give you the latest information and tips about dealing with short sales. We’ve got new statewide forms (see below) and we sent our special counsel, Lem Marshall, across the state to give a three-hour seminar on the best ways to deal with them. Short sales present all sorts of challenges (as if you didn’t know that), and Lem helped hundreds of brokers learn to speed and smooth the process. We collected comments from attendees, and they seemed mighty happy. “Class could have been longer,” wrote one. (Remember, it was already
three hours!) “A very necessary meeting,” wrote another. “It should be repeated with updates about 3 more times!” “Way above excellent,” “Best seminar I have ever attended,” “Excellent class,” and so on. Clearly Lem hit the nail on the head. What’s that? You’re not a broker but still want the scoop? Or you couldn’t make one of the sessions? No worries. Thanks to the good folks at the Fredericksburg Area Association of REALTORS® we have the entire presentation on video, split into five segments of about 30 minutes each, commercial free. www.VARealtor.com
VAR & Housing Virginia partner to create a Virginia Housing Affordability Index How affordable is housing in Virginia? It depends on the region, of course, and how you define “affordable.” VAR is working with Housing Virginia, Virginia Tech, and local Multiple Listing Services to analyze incomes and home prices throughout the state — then create a fact-based tool for understanding how affordable a region is. The results will help housing advocates and state officials understand trends in housing affordability across the state. The tool looks at the relationship between both buyers’ and renters’ housing costs and their household income, making it the first housing index in the nation to consider both buyer and renter affordability on a statewide basis. It determines the HAI: the percentage of a typical household’s income necessary to afford the typical home in Virginia. The Virginia Center for Housing Research at Virginia Tech is doing the analysis, which takes into account A) what a “median-priced, existing single-family home” actually is, based on local MLS data; and B) the typical family income for the area, based on U.S. Census data. The results will be HAIs for individual market areas (counties and cities) as well as regions across the Commonwealth.
So what’s “affordable”? In general, if average housing costs less than 30% of average income, it’s considered more affordable. If it costs more than 30% of income, it’s less affordable. So even if an area has typically higher incomes, if housing is also more expensive, that area might have an HAI similar to a lower-income area with lower-priced homes. Having a standard, statewide affordability index will give both consumers and legislators a useful tool and a clearer picture of what it costs to own or rent a home in today’s Virginia markets. The first Housing Affordability Index is expected to be released in the first quarter of 2010, and should reflect housing data from the final quarter of 2009.
See them at VARbuzz.com/sssb, or go to our Vimeo video page — www.VARbuzz.com/go/ssvideo — where you can download them for a presentation (free registration required).
Volume 17 ● Issue 1
IRS releases new home buyer tax credit guidelines Syndicated real estate columnist Kenneth Harney points out that new IRS guidelines about the renewed and expanded home buyer tax credit were recently released. He offers a great Q&A section in the new guidelines, including this: For example, some taxpayers seeking the extended $8,000 credit are uncertain about co-purchase and co-signing situations, especially involving parents and adult children. When a homeowning parent co-signs for a mortgage with a son or daughter and both names appear on the note, can the son or daughter qualify for the first-time purchaser credit? The IRS says the parent clearly does not qualify for any portion of the credit because he or she already owns a principal residence. But if the son or daughter has not owned a house during the three years preceding the purchase and qualifies on income, he or she can be allocated the entire $8,000. You can read the entire column, “Enter the maze of tax credit rules,” in the Washington Post at www.VARealtor.com/Harney, and check out the rules in detail from the IRS at www.VARbuzz.com/go/IRS.
quickhits VAR Victory
Good news about signs Just in case you haven’t heard: Officials at the State Corporation Commission have agreed that Realtors® who install metal frame signs by hand on a property do not need to call Miss Utility first. The SCC had said that Realtors® using common, metal frame signs were “excavating” and were therefore required by law to call Miss Utility before installing them. VAR believed this definition of “excavation” was overly strict. After many discussions with VAR, the SCC staff concurred. In mid-November, SCC Director of Utility and Railroad Safety Massoud Tahamtani wrote made that absolutely clear, writing: As interpreted and applied by the Division, the installation of a metal frame sign that is done by hand and does not involve movement or displacement of earth or other material “by means of any tools, equipment…” is not considered a form of excavation that would require a person to contact the Miss Utility notification center. However, if the installation requires use of a hammer, shovel or other tools, rather than by simply pushing the sign into the ground, then the Act requires the installer to contact Miss Utility. The SCC has the thanks of thousands of Virginia Realtors®. Mythbusting
Energy standards: No, you don’t have to comply before you sell VAR has received many, many forwarded e-mails from members who have read on the Internet (the fount of all knowledge) about H.R. 2454, the American Clean Energy and Security Act, often called the “Cap and Trade Bill.” It will (says the Internet) require homeowners to comply with government-mandated energy and water efficiency standards before they can sell their properties. (One version of the message even says that owners will need permission from the Environmental Protection Agency to sell, and will have to retrofit their homes to meet the bill’s standards!) Let’s be clear here: These allegations are wrong. They are based on an earlier version of the bill that was floated 6
before Congress. NAR was able to have these provisions deleted. Only about 50 pages of the 1,428 bill concern real estate, and NAR successfully advocated for significant improvements in those pages. So, as it passed the House, there are no federal energy audit or retrofit requirements at point of sale. The bill is now before the Senate, which at press time had not voted on it. (You can track it via OpenCongress at opencongress.org/ bill/111-h2454/show.) If you want to know more, download NAR’s information pack at www. VARealtor.com/NAR2454. And, of course, check VARbuzz.com regularly for any updates. That’s one part of the Internet you can trust.
2010 Realtor® Convention free…for some By now you’ve probably heard that VAR’s Convention & Expo (Oct. 1–3, 2010) is undergoing a complete transformation. We’ve taken your suggestions and remade the show. More education, more choices, more real estate, less VAR. (We’ve moved the VAR governance events to its own venue.) Some of the big changes: • We’re changing the name to the REal Show. • We asked members to nominate keynote speakers. • We’re holding it at the Virginia Beach Convention Center for three straight years starting in 2010. • We’re partnering with the Hampton Roads REALTORS® Association on the event.
Our new format is all about giving you more of what you want. How about this: Want to come free? Tell us about a company that should be exhibiting at our trade show. If it’s never exhibited at a VAR expo before and signs up for 2010, we’ll give you a free registration to the REal Show 2010. And yes, you can suggest more than one vendor. Just go to www.VARbuzz.com/ referavendor and fill out our handydandy form. We’ll take it from there. And be sure to get the latest at www.REalShowVA.com. www.VARealtor.com
Foreclosures down in November, but… Foreclosures in Virginia dropped 16.3% from October to November, according to RealtyTrac. That’s the good news. The really good news is that foreclosures dropped 19.4% compared to the year before. (The country as a whole saw foreclosures increase more than 18% year to year.) All isn’t rosy, of course. When it comes to foreclosures, Virginia ranks 22nd in the country (meaning only 21 states have a higher foreclosure rate). And a recent Wall Street Journal story pointed out that we’re 7th worst in the country when it comes to mortgage holders being underwater.
VHDA Extends Homebuyer Tax Credit Plus Loan Program The Virginia Housing Development Authority has extended its Homebuyer Tax Credit Plus program to match the deadlines of the Federal First-Time Homebuyers Tax Credit. VHDA’s program lets borrowers use the tax credit to finance down payment and closing costs up to 5% of the sales price, using a second mortgage. VAR’s Tax Credit Flyer has been updated to reﬂect this change to VHDA’s program. Go to www.VARealtor.com/ PrintonDemand, print one, attach your business card, and hand them out to your clients and customers today.
VREB’s Fall newsletter: BPOs, fingerprinting and PLE Don’t forget to download your copy of the Virginia real estate board’s fall 2009 newsletter at VARbuzz.com/go/VREB. what’s in this issue? Information on criminal background checks for new agents (including the fingerprinting process), changes currently under consideration to agent post-license education, as well as guidance issued by the board on broker price opinions. Get clicking!
Treasury issues short sale guidelines The Treasury Department has finally issued its official guidelines for short sales, and the good folks at NAR have put together an issue brief about it. The gist: The new Home Affordable Foreclosure Alternatives Program (HAFA) — which is part of the Home Affordable Modification Program (HAMP) — provides incentives to homeowners who are looking to sell but won’t make enough to cover their existing loans, but only if that existing loan is eligible for modification under HAMP. HAFA doesn’t apply to loans guaranteed by Fannie Mae or Freddie Mac, which, the feds say, will soon offer similar programs. The idea is to streamline short sales (or deeds-inlieu) so the homeowner can avoid foreclosure. Here come the bullets. What does HAFA do? It… • complements HAMP by providing a alternative for borrowers (the current homeowners) who are HAMP eligible but unable to keep their home. • uses borrower financial and hardship information already collected in connection with consideration of a loan modification. • allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
Volume 17 ● ISSue 1
• prohibits the servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6 percent). • requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed). • uses standard processes, documents, and timeframes/ deadlines. • provides financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to $1,000 for investors for allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders (on a one-for-three matching basis). The program takes effect on April 5, 2010, “but servicers may implement it before then if they meet certain requirements.” It sunsets on December 31, 2012. You can read the complete NAR brief by going to www.VARealtor.com/NAR-HAFA. And don’t forget to go to www.VARealtor.com/ShortSales for our Short Sales Resource Center. You’ll find VAR’s standard forms for lender mediated transactions, links to information about certifications for distressed property sales, and information to pass along to your clients about avoiding foreclosure.
Know the new RESPA regs New RESPA rules went into effect on January 1, and even though HUD said it would “exercise restraint in enforcing new regulatory requirements,” for the first four months of the year, you ought to get to know them now. And waddaya know, HUD has everything you need to know about those new rules — including the new HUD-1 (that’s a settlement statement) and Good Faith Estimate forms — on its Web site. You can get answers, download docs, and watch videos by going through www.VARealtor.com/ RESPA2010.
Klaussen brawls her way to NYC Realtor® Jennifer Klaussen of Arlington won the fourth version of our Blog Brawl — a contest featuring real estate bloggers from around the country. This time, the blogs were judged on several fronts: best single post, graphic design, video blog entry, and more. Jennifer scored a free registration to Inman’s Real Estate Connect NYC 2010 (including Bloggers Connect), plus a $1,000 travel allowance, sponsored by NAR’s Center for REALTOR® Technology. Our second-place finisher, Daniel “The Real Estate Zebra” Rothamel, won the free Inman registration and a lovely Asus Eee Seashell 1005HA netbook. And we’re already making plans for Blog Brawl 5... l
VAR’s Legislative & Education Conference The Omni Richmond Hotel February 16-19, 2010
Get more from VAR’s Legislative & Education Conference.
Engage your legislators, rack up education credits, and find ideas for boosting your profitability in 2010! These courses and power networking sessions will teach you to produce and protect your profits: Money Talks/Compensation Issues with Deborah Long, DREI Commissions and other fees can generate confusion. This session will answer questions about fees, services, collections, and referrals including a helpful discussion of minimum service companies and anti-trust issues. (Approved for 2 Hours Real Estate Related CE; 2 Hours Elective PL; 2 Hours Broker Management CE)
Working with Buyers in a Challenged Market with Brian Copeland Agents need proven systems to effectively assist buyers in making the right decisions in tense times. This course offers best practices in buyer counseling, presentations, and working with different generations. Attend to discover novel “permission-based approaches” to consumers. (Pending 2 Hours Real Estate Related for CE; 2 Hours Elective for PL)
Click. Think. Sell: Using Web Analytics To Dominate Your Market with Brian Copeland We’ve bombarded today’s agents with tech tools, social media lingo, and Web site ideas... Now what? This course helps harness the wealth of digital data available into a practical process. Learn analytics strategy, building trust and transactions with statistics to sell, and other real world applications for web-based information.
Find out more and register at www.VARealtor.com/LegislativeConference 8
BY Meredith Cox, Director of Political Communications
It’s January. Lawmakers have returned to Richmond. Although you’ve hopefully already invested in RPAC, studied this year’s VAR legislative agenda (at www.VARealtor.com/ LegislativeAgenda), and are reading Capitol Connections, there’s more you can do to remain politically involved during the 60 days of the 2010 General Assembly session.
lovely listing We know you’d never publish a bad photo in the MLS. But others…well, they sometimes let one slip through. Or two. Enter Lovely Listing (at lovelylisting.com, of course), where questionable real estate photos go to die — or, rather, to live forever. With the kind permission of our friends there (who wrote the text), we present this issue’s beauties:
Respond to Call-to-Action e-mail VAR makes it easy for you to tell your delegates and state senators what you think about an important real estate issue. In most cases, the text is already written and all you have to do is hit “Send.” Lawmakers listen — especially when more than 30,000 Virginia Realtors® are talking.
Attend Realtor® Day on the Hill, February 17 What more efficient way to communicate the Realtor® position on issues that matter to you than face-to-face with your legislators? Join hundreds of fellow Realtors® to ascend to the state capitol and sit down with lawmakers to discuss the legislation that’s important to you and your business. Contact your local association to organize a bus trip with other Realtors® from your area. Invest in RPAC Haven’t done this yet? You should. RPAC is one of the most important tools you have in being politically effective. RPAC helps elect and keep candidates in office who support issues that matter to you. Without RPAC, you risk having people who don’t think like you do in the General Assembly. And if they don’t already support our issues when they get to Richmond, do you think they’ll listen when you send them a call to action or visit their offices to talk in person? Not likely. Invest today at www.RPACofVA.com. (Your contribution is divided among local, state, and national RPACs.)
Contributions are not deductible for income tax purposes. Contributions to RPAC are voluntary and are used for political purposes. The amount suggested is merely a guideline and you may contribute more or less than the suggested amount. You may refuse to contribute without reprisal and the National Association of REALTORS® or any of its state associations or local boards will not favor or disfavor any member because of the amount contributed. 70% of each contribution is used by your state PAC to support state and local political candidates. Until your state PAC reaches its RPAC goal 30% is sent to National RPAC to support federal candidates and is charged against your limits.
Volume 17 ● Issue 1
Included: oven, air conditioner, lingerie rack/curtain rod Oh, Mr. or Ms. Real Estate Agent. I understand you are busy. I understand that there isn’t much of a commission to be made selling a $85,000 house. I understand your reluctance to touch someone else’s unmentionables. But couldn’t you have taken the purple underwear off the curtain rod? But wait: no. If you did that, and if all your associates did that, I would have no blog. So you keep right on doing what you’re doing. Cheers!
Creep Factor: Off The Charts Know what’s really bothering me about this? The more I stare at it? It’s almost symmetrical… but then not quite. It’s bugging me, really bugging me, that they’re short a witch over on the right side. How could they take the look this far and then just quit? (Oh yeah plus I’m bothered by the whole freaking thing and they have Chucky dolls all over their house including the kid’s room and I just don’t get it but whatever, it’s not symmetrical.)
(Found an MLS photo that made you say “Huh?” Send it to firstname.lastname@example.org.) l January/February 2010
Lem Marshall, VAR Special Counsel
What’d I tell you? Yogi Berra beat me to it, with his The Yogi Book: I Really Didn’t Say Everything I Said. I didn’t say everything I said, either.
Agent represents a purchaser who is trying to build a new home with a small builder. The builder is offering to pay $2,500 of purchaser’s closing costs if purchaser uses the builder’s affiliated lender and an additional $2,500 if purchaser uses its affiliated title and settlement company. The agent says she thought I said earlier this year that new HUD regulations prohibited such dealings by lenders.
A. HUD has fought many legal battles over the last few years in an effort to outlaw this kind of incentive from builders, on the grounds that it constitutes a required use of the lender’s affiliates, in violation of RESPA. (Generally, the argument is that the incentive is far greater than the value to the consumer of using the affiliates, so consumers have no real choice but to accept the offer – thus, the use becomes “required.”) HUD has consistently lost these battles, but late last year adopted a new regulation that attempted to do by regulatory fiat what it had failed to do in court. This regulation was withdrawn almost as soon as it was rolled out, and we find ourselves now where we have been all along: Lenders may offer such incentives as long as the consumer is free to decline the offer. So, yes, I spoke of the new regulation, but I also noted it was being opposed by builders, and it has now been withdrawn.
I understand you maintain that short sale contracts are not ratified until lenders have approved them. Is this true?
The 6 percent solution
“I thought I heard you say,” wrote a broker, “that Realtors® had to be paid 6% on short sales and not less.” It seems a lender is trying to beat up her agent to accept only 5%, although the listing calls for 6%.
A. This just goes to show that you have to be very careful what you don’t say. What I have spoken of is the new guideline issued by Fannie Mae and Freddie Mac whereby they and their servicers will no longer challenge a listing firm’s fee in a short sale as long as it does not exceed 6%. Nothing requires that we be paid that much, nor are noteholders other than Fannie and Freddie governed by the new guidelines. It is still up to Realtors® and their clients to determine, independently, what Realtors®’ services are worth, and it is up to us to fight for our fees against the lenders who will still try to nip us. In this endeavor I urge all Realtors® to keep their ears to the ground, their shoulders to the wheel, their noses to the grindstones, and all other appropriate body parts fully engaged.
A. ARRRRRRGGGGGGGHHHHHHH!!! No. They are typically ratified but with seller’s obligations contingent on lender approval. This contingency is a title contingency that benefits seller, and no more defeats the existence of a ratified contract than does a buyer financing contingency, which also calls for lender approval.
It is still up to Realtors® and their clients to
determine, independently, what Realtors®’ services are worth, and it is up to us to fight for our fees against the lenders who will still try to nip us.”
10 January/February 2010
An agent with ABC Realty is married to a man who is an agent with XYZ Realty. When buyers approach her for assistance in purchasing a resale, she refers them to her husband, because she does not deal with resales. She claims to have heard me say that this kind of situation would not present a conflict as long as the client is made aware of the relationship between her and her husband and waives any objection. Is that true?
A. The client might waive the conflict, but the conflict does not go away. This is an important distinction that applies to dual agency, representation of competing buyers, representation of divorcing couples, and other real or potential conflicts. Here’s the right way to think about this. The client is saying: ���Thank
Volume 17 ● Issue 1
you for bringing the conflict to my attention. After duly considering what I now know, I agree to go forward with the representation notwithstanding the conflict I know to exist.” In this case, the client is saying, more precisely, that the client will work with husband even though the referral could have been influenced by the self interest of the referring agent. Understanding this, we can take the appropriate action. Mainly, we do not refer any client to an agent unless we are confident of the competence, professionalism, and integrity of the other agent. Marriage will generally get in the way of such an honest assessment, so we have to redouble our effort at impartiality. Key: The conflict does not go away because the client agrees to waive it.
Marriage will generally get in the way of such an honest assessment, so we have to redouble our effort at impartiality. Key:
The conflict does not go away because the client agrees to waive it.”
January/February 2010 11
legallines Selling out
“i thought you said that disputes over commissions had to be arbitrated,” complained the irritated agent, who had just received bad news from me. “i also thought you said that brokerage agreements had to be in writing and signed to be enforceable under Virginia’s statute of Frauds. now you tell me i can be sued over a commission on an agreement the other guy never signed.” here’s what prompted his outburst. he was the seller of a home that was not listed with his firm. a buyer agent expressed interest on behalf of a buyer client and inquired as to the commission this Fsbo agent would offer. the agent/ seller agreed to pay 2% to the selling firm, and this covenant was put into the contract, which, of course, the seller signed, but which the buyer agent did not. at closing, the seller complained that he could not afford to pay the full commission, and that he needed to net an additional $1,000, so he insisted that the settlement agent reduce the selling fee by that amount. although neither the buyer nor the selling agent agreed, the settlement agent reduced the commission disbursement by $1,000. the question is, what remedy is available to the selling firm?
A. First, it’s important to note that the issue here is not the typical procuring cause dispute, but is a different kind of contractual dispute. It arises from the agreement of the seller/agent to pay the selling firm a fee. As to the subject matter, therefore, it is an arbitrable issue, but because it does not involved Realtor® principals, it does not meet the requirements of the Code of Ethics as an arbitrable dispute. However, because it is not, the selling firm is free to bring a civil suit for the unpaid portion of the commission. Will it prevail? On these facts, I believe it should, because commission agreements (unlike brokerage agreements) are not subject to the Statute of Frauds; that is, verbal commission agreements can be enforceable. More to the point, even if the Statute were involved, this case probably meets its requirements, because the agreement was reduced to writing and signed by the party against whom enforcement is sought (the seller/agent). This, to the surprise of many, is all the Statute requires. Besides, just let the seller try to argue to the judge that he did not agree to pay the 2% when his signature is all over the contract containing that promise. So here we have a commission dispute not arising from the issue of procuring cause and not subject to arbitration because of the identity of the promisor, but which can be litigated successfully by the selling firm on the promise of the seller, even if it is determined to be subject to the Statute. 12 January/February 2010
VAR Legal Hotline (800) 755-8271 Is it risky? Quick! To the Hotline… The VAR Legal Hotline is a free, members-only risk management tool that is among the top-rated services offered by the Virginia Association of REALTORS®. Through the Legal Hotline, you can receive timely legal information on the issues you confront day-in and day-out in your real estate practice. The VAR Legal Hotline has one major objective: to increase Realtor® professionalism and decrease professional liability. Before you call: Please note that many of the routine questions the Hotline receives — and we receive a lot of routine ones — have previously been answered in Commonwealth articles; check the indexed Hotline archives at VARealtor.com before calling. Guidelines for Legal Hotline calls: All principal or supervising brokers are eligible to use the Hotline. In addition, one other designated person from each office (for example, an associate broker or office manager) may register as designees of the principal broker. How to sign up: Registration is easy. Complete the form found under the Member Services tab at VARealtor.com. You must register before you call the Hotline. Hours of operation: Monday through Friday (except holidays) from 10 a.m. to 3:45 p.m. How to contact the Hotline: By phone: (800) 755-8271 or (804) 264-5033. By e-mail: hotline@VARealtor.com Call handling process: When you call, please have your NRDS number ready, and include it with any e-mailed questions. Questions? If you have questions about the Hotline, contact VAR at (800) 755-8271 or (804) 264-5033, or by e-mail at info@VARealtor.com The VAR Legal Hotline should not replace your own legal counsel. We will not answer questions on matters unrelated to real estate or real estate brokerage, nor can we help with pending arbitrations.
“Did you or did you not say that a seller could not require the buyer, as a condition of purchasing the seller’s property, to use a particular settlement service provider, such as a lender? Well, my buyer, who is buying a short sale property, is being required to make underwriting application with a lender designated by the seller’s loss mitigator, even though he has already received a loan commitment from a lender of his choice. Isn’t this a violation of Section 8 of RESPA?”
A. This is 100% true and accurate. But it’s not what’s going on. This requirement is being imposed on behalf of the seller’s lender because it
wants to know the buyer can get the money to close, and it is not going to trust any commitment letter for the truth of that proposition. For heaven’s sake, lenders invented and have spent decades perfecting the totally worthless commitment letter! They invented this game, so why would they trust the approval the buyer received? No, they want to see the buyer’s assets, income, debt and credit rating for themselves, so they impose this requirement. This is one of the many important deal differences buyers of short sale property have to deal with. If they won’t open up to the seller’s lender, they probably won’t get the deal.
The Buyer Agent and the FSBO I even received at least one inquiry where I was not accused of rendering an incorrect opinion:
A broker writes, “May an agent who engages only in buyer representation place a sign in the yard of a house that is for sale by owner? The owner has made this interesting request. By the way, this is the only thing I’ve never heard you offer an opinion about.”
A. If this weren’t such a good question I would have informed this smart aleck about certain truths regarding his parentage. This offer is a nice little quid pro quo. The seller gets more attention and more calls, and the buyer agent gets leads. A couple of thoughts: I would be sure to inquire of callers whether they are exclusively represented, and if so to put them back in direct touch with their agent or the seller (this would be good to discuss with the seller in advance). In this way the buyer agent might actually make a friend or two of the other agents in town. Second, I would consider something on the company sign that mentions “Buyer agent” although the caller is known in his community as representing only buyers. Otherwise, with the seller’s consent in writing, the agent may do this. There’s nothing requiring you to have a brokerage agreement to advertise for a seller – you need only the written consent of the seller. Volume 17 ● Issue 1
Once more into the breach
“I distinctly remember reading something you wrote to the effect that it is a breach of a confidence for a listing agent to place information about seller’s financial situation (that a sale will be a short sale) in the MLS, and that therefore a multiple listing service may not require this of the listing agent.” So wrote about twenty brokers, all close friends of mine, of course.
A. So close, and yet so far. Listing agents may not make this disclosure unless the client consents. The MLS may condition seller’s use of the MLS on his consenting to the disclosure of this financial information. Seller does not have to consent, and the listing agent may not make the disclosure without the consent, but the MLS may impose this requirement. Listing firms have to remember that if the local MLS has such a requirement, they must obtain seller’s consent. I suggest it be made a part of the listing agreement. (VAR’s new addendum to listing agreement, part of a series of short sale forms now available at VARealtor.com, deals with this very issue.)
Listing firms have to remember that if the local MLS has such a requirement, they must obtain seller’s consent.” January/February 2010 13
To me the key is that
the entire commission belongs to the firm, and only the amount left after netting out the offsets ever becomes owed to the agent.”
What’s mine is mine
A broker receives a garnishment summons on one of his agents. The paperwork references earnings, wages, salaries, and commissions. May the broker take what is owed the broker from commissions and send the balance to the creditor? (His accountant said he should have a judgment to withhold anything from the creditor.)
A. This is not 100% clear, so I begin by noting that I might be wrong. But I won’t worry about that because I will probably be misquoted. I think the broker can exercise his “bona fide right of setoff” in holding those funds owed him under his agreement with the agent. This assumes the amounts owed are not unrelated to the business, and that the broker routinely reimburses himself or the firm for amounts expended on behalf of the firm’s agents. To me the key is that the entire commission belongs to the firm, and only the amount left after netting out the offsets ever becomes owed to the agent. Otherwise the creditor might as well demand 100% of the commissions owed on the deal, and refuse to let the broker have the brokerage side. I expect the creditor will accept the offsets of amounts never owed to the agent as simply keeping what is the broker’s.
“You have said that a buyer may not waive his rights under the POA Act. Doesn’t this mean the deal cannot close unless he has received the information packet? What if the REO owner will not provide it?”
A. It is true that a buyer may not waive his rights under the Act, but he does not have to exercise them. If you ever thought this was a distinction without a difference, you can now correct your wet-noodle logic. In part, this is the result of an interesting concatenation (look it up) of provisions in the Act. Section 55-509.4 provides, in subsection A that “the right to receive the association disclosure packet and the right to cancel the contract are waived conclusively if not exercised before settlement.” (Emphasis mine) Subsection F provides that “Except as expressly provided in this chapter, the provisions of this section … and the rights conferred by this section … may not be waived.” (Emphasis mine) So the statute makes clear that a buyer may waive his rights by not exercising them before settlement, but not otherwise. This gives us interesting options. If a seller (REO owners are famous for this) imposes a contractual waiver on a buyer, it may be accepted, because the seller will not be able to enforce it. The buyer may sign such a contract and continue to insist on receipt of the packet, and may still terminate right up to settlement. I don’t necessarily recommend this strategy unless circumstances leave no option, but you should be aware of its availability to sophisticated buyers if the situation warrants. Legal Lines is written by VAR Special Counsel Lem Marshall. Please note that answers to Legal Hotline questions are informational only. Consult your own legal counsel for legal advice. More Legal Hotline questions and answers are in the Legal Resources Center on VARealtor.com.
14 January/February 2010
Fast ones, and the pulling thereof
an agent represents buyers who enter into contracts with sellers who are about to lose their property to foreclosure. the purchase agreements contain an early-occupancy provision. while the seller is negotiating a short sale, the buyers move in, but foreclosure occurs before the contract is approved. the buyers then assert their rights under public law 111-22 (protecting tenants at Foreclosure act) enacted may 20, 2009, which permits tenants under “bona fide” leases to remain in foreclosed property for up to 90 days after notice of the foreclosure. the agent solicits buyers by holding out to them the advantage of being a bona fide tenant: that they will be best positioned to buy the property from the new owner, or that the new owner who wants the tenants out sooner will generally required to give them “cash for keys” to secure their willingness to depart. the agent’s literature says the rent the tenants will be required to pay will be discounted as an incentive from the seller. will these tenants qualify as bona fide tenants under the act?
Volume 17 ● issue 1
A. The Act defines a bona fide tenancy as one entered into at arm’s length and for which a market rate rental is paid. A discounted rent (if the discount is more than nominal) will likely defeat the plan. I also question whether the whole idea of a bona fide tenant is really at work here. The proponent of the plan says the idea of trying to obtain for the buyers the status of bona fide tenants is to position them favorably to buy the property from the new owner or to get paid to leave. Neither one of these results meets my understanding of a bona fide tenant: one who enters into a lease in good faith with the intent to use the property during the term of the lease as a leasehold. In short, I don’t see these tenants as satisfying the requirements. But until we have rulings on the skimpy statutory language, it’s hard to say for sure. And we can expect that if the new owners want the occupants out and the tenants want to stay, the owners will ask for proof of their bona fides, and the issue will be joined. At any rate, it seems unlikely to be too long before a federal court tells us whether a preoccupany agreement is a bona fide lease under the Act. ●
January/February 2010 15
lifelessons ANDREW KANTOR
Short trips to the dark side of real estate Realtors® who neglect the Code of Ethics or Virginia law can find themselves in the crosshairs of the Virginia Real Estate Board, facing punishment ranging from a small fine to loss of their license. They can be cited for small things or large, including the eyebrow-raising finding of “Unworthiness & Incompetence.” Here are a few real-world examples taken from recent VREB actions. The stories are based on the Board’s official findings and do not necessarily reflect the opinions of VAR; participants may disagree with VREB’s findings as well. They are provided solely as examples of Board actions. Names are not real. They are taken from the official list of 2009 hurricane names; we’re using them instead of writing “the licensee” or “the broker” over and over.
When silence isn’t golden Ana’s firm (Ana Realty) represented the seller in a transaction. The contract was ratified and called for a substantial earnest money deposit, with Ana Realty acting as escrow agent. The buyer, Bill, gave Ana a personal check for the $20,000, but asked her to wait before depositing it so the money would be available. The contract did not reveal this fact. Ana waited 14 days after ratification to do so. The next day, Ana’s bank told her the check would be held for seven more days. Eight days later, Bill put a stop payment on the check. After several weeks and repeated inquiries, Ana told the seller what happened. Ana was found to have violated the regulations requiring her… • to deposit the earnest money within five business banking days of contract ratification (18 VAC 135-20-180 — Maintenance/Management Escrow Accounts) • to notify all the principals of the transaction that a “material change” had occurred (18 VAC 135-20-310 — Delivery of Instruments); and • to respond to the seller’s requests about the status of the EMD (18 VAC 135-20-260 — Unworthiness & Incompetence; “Failing to act as a real estate broker or salesperson in such a manner as to safeguard the interests of the public”). She was fined $5,700 and lost her real estate license.
Out of the loop Claudette worked with Danny Realty as an independent 16 JANUARY/FEBRUARY 2010
contractor, with Danny as her principal broker. In at least three instances she concluded real estate transactions, through the contract phase, without informing Danny about even their existence. In one case she gave out a business card indicating she worked for a different firm (“Claudette Realty”), and in two cases she allowed Claudette Realty to be listed as the brokerage of record. (These were corrected in a contract addendum.) In none of these cases did she inform Danny. Although the transactions completed, Claudette was found to have engaged in “improper, fraudulent, or dishonest conduct” and therefore in violation of 18 VAC 135-20-260 — Unworthiness & Incompetence (“Failing to act as a real estate broker or salesperson in such a manner as to safeguard the interests of the public”). She was fined $4,500, required to attend eight hours of continuing education, and had her licensure put on probation.
Everything in its place Grace, a property manager employee at Henri Realty, turned in a tenant’s security deposit, expecting (per longstanding verbal agreement) that the money would be deposited in an escrow account. However, that money was accidentally deposited into Henri Realty’s general account. No paperwork was filed, so trouble ensued when Grace tried to get the money back at the end of the lease. Grace finally resorted to using her personal funds, but blamed Henri Realty for the trouble. The Board agreed. Henri Realty’s principal broker was disciplined for: • not depositing the security deposit in an escrow accounts (18 VAC 135-20-180 — “Maintenance/ Management Escrow Accounts”); • not giving the security deposit back (18 VAC 13520-185 — “Maintenance/Management Financial Records”); • not, as principal broker, taking the appropriate actions to prevent or deflect the errors made by those she was responsible for (18 VAC 135-20-330 — “Broker’s Responsibility for Licensees’ Acts”); and • the catch-all “Failing to act as a real estate broker or salesperson in such a manner as to safeguard the interests of the public” (18 VAC 135-20-260 — “Unworthiness & Incompetence”). He was fined $4,500 and required to attend eight hours of continuing education. ● WWW.VAREALTOR.COM
Get legal help 24/7
The VAR Legal Resources Center is online and open to all members. It includes: • Legal hotline answers archive • Articles on how new laws affect your business • Info on the Realtor® Code of Ethics • Legal webcasts (including Lem Marshall’s recent Short Sales Road show!) • Links to dozens of NAR legal resources
Visit the Legal Resources Center today for more information on: agency, earnest money, fraud, disclosure, tax regulations, and RespA
Pearl of Wisd m
Use Caution with REO Agreements by Marcy Slane Many real estate buyers and sellers like to focus on Real Estate Owned, or REO, properties because these can be inexpensive compared to the standard real estate transaction. REO properties are usually owned by the bank or real estate company, but are not as safe as one might think in regards to your Errors and Omissions liability. REO properties are often homes that have gone through foreclosure, been taken back by the bank, and usually sold “As Is” to the next buyer. Many homeowners or business owners are quite distressed at the time of foreclosure and do not have the financial ability to physically maintain the property. Unfortunately, when selling the property to a new owner, the bank, lender, or other owner of the property may not be required to provide a disclosure statement, leaving buyers to fend for themselves in discovering defects of the property or other damages left by the previous owners. Many real estate professionals have been taking advantage of REO listings because people are interested in acquiring properties for flipping purposes or to renovate and sell them for a profit. Not only can “flipping” lead to adverse outcomes, but REO contracts can also be precarious. These agreements can leave firms exposed to liability not covered by typical E&O policies such as those provided by Pearl Insurance. According to the article “Lenders Stick Listing Agents With REO Liabilities” by Matt Carter in Inman News (www.inman.com), “some lenders are crafting listing agreements that attempt to shift the risk that comes with sales of bank-owned homes—including property defects and personal injury claims—onto real estate brokers.” Other real estate professionals are picking up REO properties for the sake of having as many listings as possible to offer clients. In the aforementioned article, real estate attorney Harold Justman is quoted as saying, “Some of these listing agreements are lethal or have lethal provisions in them. You may have a knee-jerk reaction, and say, ‘Oh boy, now I have 100 listings.’ But a year from now, one lawsuit might wipe out all your profits.” The lesson to be learned is to take time to analyze any REO contract before signing it. Banks and lenders are adept at protecting themselves with legal jargon, and often these agreements can be upwards of 30 pages. Since the property is sold “As Is,” spend substantial time considering the risks of unforeseen defects or other problems with the property in the future. In addition, most E&O policies have exclusions, including when you agree to assume the liability of others—common in the case of REO properties. Yet it’s often part of an REO agreement, so again, read the contract carefully. Pearl Insurance E&O Consultants advise their clients to never sign a listing agreement that contains this last provision since it essentially makes you liable for the alleged misrepresentation of or failure to disclose property defects. Help 18 January/February 2010
protect yourself from claims involving REOs and questionable REO contracts—spend the necessary time to understand any REO agreement you’re contemplating and what your E&O insurance will or won’t cover. l Pearl Insurance is a nationally known broker, marketer, and administrator that specializes in the design and administration of quality insurance plans for associations, affinity groups, unions, and large firms. In addition to providing real estate professionals with quality products and services for 30 years, their partnership with the XL Insurance companies (through Indian Harbor Insurance Company and Greenwich Insurance Company) solidifies their strength, allowing them to offer association members an A rated (by A.M. Best) E&O program. Pearl has been a sponsored E&O provider for the Virginia Association of REALTORS® since 1984. For more information about Pearl’s sponsored E&O programs, call Debbie Bindeman, your association’s Regional Director, at 1.800.455.1154. Information provided within this article is not to be taken as legal advice and is to be used for educational and illustrative purposes only, and is not a contract. It is intended to provide a general overview of the services described. Please remember only the insurance policy can give actual terms, conditions, and exclusions. For information, please call your Regional Director, Debbie Bindeman, at 1.800.455.1154. www.VARealtor.com
FREE (for some of you)
A great philosopher once said, “Realtors® are happy when their pockets are full.” And we believe him. That’s why we’re offering you multiple chances to attend the Real Show 2010 for FREE. There are more ways than one to win. Check each issue of Commonwealth for a new chance to win and attend Virginia’s premier real estate education and networking event.
Win a free registration
> Pick the presenter
RealShowVA.com Log on today and vote for the keynoter you think Virginia’s Realtors® need to hear from. View clips and bios, vote, and enter to win today.
Refer a vendor
Tell us about an awesome service provider who should exhibit at the Real Show and if that service provider signs up, you win a free registration. Visit RealShowVA.com for details and to submit your vendor recommendation for a chance to win.
by Blake Hegeman, Associate Counsel
Let’s Be Careful Out There The ever-growing list of Internet tools creates new opportunities — and risk — for Realtors®. Here’s a guide to staying safer.
Online Advertising According to NAR, more than 80 percent of buyers today use the Internet when looking for a home and most start there. That is why Realtors®’ Web sites have become more detailed and sophisticated — and why more Realtors® are using social media technologies (blogs, Facebook, Twitter, etc.) to reach buyers and their agents. Remember, though: If you are engaging in online advertising of any sort, whether on your own Web site or blog, with Google ads, or a site such as Facebook, LinkedIn, or Craigslist, you’re still expected to adhere strictly to the REALTOR® Code of Ethics and the Virginia 20 January/February 2010
Real Estate Board (VREB) regulations that cover online advertising. Advertising, from VREB’s perspective, is a broad concept, and it covers everything from a full page ad you buy in the local newspaper, to — potentially — the contents of your e-mails. Its regulations encompass all communication media (although they require different disclosures for print and online advertising). Online ads for a firm must have: • the firm’s name; • the city and state of its main office; and • a list of all the jurisdictions where the firm is presently licensed, active or not. That’s it. No phone number, fax, “Realtor,” or street address are necessary. www.VARealtor.com
Online ads for a licensed individual must have: • the licensee’s name; • her firm’s name; • the city and state of her office (not necessarily the firm’s main office); and • a list of all the jurisdictions where she is presently licensed, active or not. For all other ads, the requirement is simply this: The firm’s name must be clearly and legibly displayed. No address, states of licensure, phone, etc. — just the name.
Marketing and advertising A broad definition of advertising, combined with strict online disclosure requirements, can create problems. For example, an agent might use one e-mail account primarily for communicating socially, or for general business correspondence, but occasionally use it to market property or otherwise solicit business. No matter how infrequent, when agents use an e-mail account for marketing purposes, they must include the required online disclosures. In fact, VAR advises agents that if there is any chance that an e-mail account or online technology — Facebook, LinkedIn, Twitter, etc. — might be used to solicit business, they should include the required disclosures in a signature file or somewhere visible on the Web page. Please also remember to keep your online ads current; VREB regulations make that clear: • Online listing information must be consistent with the property description and actual status of the listing. The licensee shall update in a timely manner material changes to the listing status authorized by the seller or property description when the licensee controls the online site. • The licensee shall make timely written requests for updates reflecting material changes to the listing status or property descriptions when a third party online listing service controls the Web site displaying the listing information. • All listing information shall indicate in a readily visible manner the date that the listing information shown was last updated. (18 VAC 135-20-190) For principal and supervising brokers, also note that you are responsible for all advertising for your firm. This means if your agents are blogging or using some other online technology to market properties, you must review and approve the advertising. You should educate your Volume 17 ● Issue 1
agents about this fact and establish clear and precise firm policies dealing with online advertising.
Code of Ethics It is also important to remember that the Code of Ethics specifically addresses online advertising and other subjects pertaining to the Internet. Below are key provisions you should remember. Information on Realtor® Web sites must be current, and if it is out of date the information must be removed promptly. Realtor® Web sites must present a true picture in their advertising, including URLs and domain names. The following are strictly prohibited: • engaging in deceptive or unauthorized framing of real estate brokerage Web sites (e.g., presenting content developed by others); • manipulating listing content in any way that produces a deceptive or misleading result; or • deceptively using meta tags, keywords or other devices/ methods to direct, drive, or divert Internet traffic, or to otherwise mislead consumers. Realtors® intending to share or sell consumer information gathered via the Internet must disclose that possibility to the consumer in a reasonable and readily apparent manner.
Information on Realtor® Web sites must be current, and if it is out of date the information must be removed promptly. The duty to avoid making false or misleading statements about competitors’ businesses and practices includes the duty not knowingly or recklessly to repeat, retransmit, or republish using electronic means false or misleading statements made by others. Realtors® shall not: • use URLs or domain names that present less than a true picture, or • register URLs or domain names which, if used, would present less than a true picture. A common ethics complaint involves firms “photoshopping” images in a listing. VAR has heard of far too many instances of buyer agents being lured to a property miles January/February 2010 21
away because of attractive photos in the MLS only to learn that the home was in shambles. This form of deception can result in a trip to an ethics hearing or to the VREB.
Terms of engagement Web site operators in general, and bloggers specifically, should include a terms-of-use statement for visitors and subscribers. Anyone posting material should have to affirm that he has the right to do so. Putting a statement next to the “Publish” button (e.g,. “By posting this material you affirm…”) is one way to do this. (A good example of a terms-of-use statement can be found at www.VARbuzz.com/terms-and-conditions-of-use.) Even with such a statement, you can further reduce your liability by removing infringing content as soon as you discover it, although remember that you should delete it, not edit it. There are a few other important steps you should take to limit potential liability. Brokers should instruct their agents to use caution when posting on blogs; the company may be responsible for anything an agent posts while the agent is working for it. And realize that blogs can be viewed as advertisements; follow all the applicable rules covered above. Finally, antitrust liability is a serious concern to keep in mind when blogging. Bloggers must be vigilant about posts that could raise antitrust issues, including discussions of commission rates, pricing structures, listing policies, or any suggestion of a boycott. If you see these posts, delete them immediately. There is no way to guarantee a risk-free online environment for Realtors®, but by using common sense, knowing the REALTOR® Code of Ethics and VREB’s guidelines, and taking some basic precautions, you can certainly lower your risk substantially. ●
Principal and supervising brokers: Remember that you are responsible for all advertising for your ﬁrm.
22 January/February 2010
If you’re paying an annual fee on a credit card and don’t have a business-relevant rewards program you’re not making the most of your dues. For info on therapy for your bleeding wallet visit www.VARealtor.com/Discounts
Three things you’ve paid for that you’re probably not using:
Guard dog for your car & bumper for your home
Or maybe the other way around. Get the best rates and service on protecting your home, automobiles, and more at www.VARealtor.com/Discounts
Is there an angry manager living in your office? Is it you? It can be a struggle balancing human resource management and actually doing business. Get experienced, costeffective help today with payroll, benefits, billing, and more at www.VARealtor.com/Discounts
Simpler, Sharper Short Sales Know the forms that can smooth the process.
by Blake Hegeman, Associate Counsel
24 JANUARY/FEBRUARY 2010
Short sales have appeared in every corner of Virginia, and in some areas sales of distressed properties now make up the majority of transactions. The increase in short sales has led to the creation and use of a wide variety of forms to help manage these complicated transactions. Over the last several months, VAR’s Standard Forms Working Group (SFWG) has met to develop forms for statewide use. Recently, VAR’s Risk Management Committee and Board of Directors approved the following forms proposed by the SFWG: • Short Sale Addendum to Residential Contract of Purchase; • Short Sale Addendum to Exclusive Authorization to Sell; • Short Sales: Information for Purchasers; and • Short Sales: Information for Sellers. You can download these forms at www.VARealtor.com/StandardForms. Key provisions of the forms are highlighted on the following pages, but we encourage you to read each form thoroughly before using it in your practice.
VOLUME 17 ● ISSUE 1
JANUARY/FEBRUARY 2010 25
RS® REALTO TION OF ASSOCIA IA IN G O IR V NDUM T LE ADDE CHASE as of the SHORT SA NTRACT OF PUR rchase dated ____ O C L IA ntract of Pu ____ T N E D en SI sid tial Co ________________ eller”) RE rt of that Re __ “S
e a pa __________ _____________(th and made at __________ e sale of th attached to ____ NDUM is een ______________ ________________ e “Purchaser”) for th sting as LE ADDE th Li __ tw e _( SA __ be th __ d __ in RT __ an __ O ed __ __ by ______ ______ 20___, THIS SH ia, describ _____ ________, __________ __________ ___, Virgin ________________ ___ ____ day of ________________ __________________ ________________ ____ ____ __ __ __________ ________________ ______ __ of __ ty __________ ________________ __ Ci llows: __ __ or ______ __ County ________ ovides as fo and ______ operty located in the ________________ __________________ rty”), and pr pr __ (the “Prope ____ __ __ __ __ __ __ __ oval __ __ __ pr certain real __ ________ n holder ap ________ __________ __________ ll require lie __________ ________________ __________ __ might or wi __ n __ __ tio __ ac __ __ on ns __ __ __ ____ red by liens that this tra Property in which: __________ Purchaser ations secu es e __________ a sale of th e amount of all oblig n liens, property tax to owledge to to kn ac rs fe by re re th tio le es he socia ort sa s than r Seller le: Seller do ight be les dgments, as in order fo , the term sh 1. Short Sa sale. As used herein e costs of sale, is or m loans, credit lines, ju at must be released th , net of th as a short n mortgage other liens rchase price out limitatio r fees and liens, and (a) the pu erty, including with ounts d sewe an ter op wa Pr , cies; and ns the s than the am lting deficien echanics lie ser; t of sums les and liens, m table title to a purcha assets to pay any resu liens upon paymen eir d ke deliver mar t have sufficient liqui full agree to release th ___ days paid in r does no midnight __ those of ns. will not be (b) Selle lie ingent until o m e wh th s er by hold der are cont taining approval, fro net cured un se re s he on s ati (c) lien ob e ation e oblig return for th itten ller’s oblig ) on Seller’s owed on th ch liens in ract and Se “Deadline” wr Seller (the ttlement, to release su lder approvals or, if ) This Cont ncy shall ingency: (a ied by Purchaser and se ho ge nt nat in lie Co id nt le pa en co of writt ser, this t be fully ntract 2. Short Sa ntract is fully ratif line copies ons will no le to Purcha writing that this Co ad Co ati ab De pt is lig e th ce th ob ac e ter os af ed by ably ller in ration of n holders wh Seller has not deliver ch approvals reason r notifies Se to the expi se r ha io rc pr Seller’s lie su Pu If als of ov after shall the sale. evidence siness day written appr ntract, this Contract in good proceeds of not available, other the third bu all required Co are er approval Section midnight on rchaser evidence of er of rejection of this approvals e lien-hold cally until Pu rsu this ld ati ed pu ho in m id ll nto ed ov wi lie au us r pr continue e from its oval. As ser. Selle Seller has ate unless ceives notic n to Purcha toward appr will termin y period. If Seller re such rejectio rchaser of its progress holiday. of e tic no da ing delivery of such threeto notify Pu deral bank Company on Seller’s ekend or fe terminate up by authorizes Listing day that is not a we as follows: ts on the re na s and agrees ditional requiremen n ge led ow faith, and he siness day shall mea obtai pose ad ser ackn to im d ha rc ire ay bu m Pu qu m d re ents: sale, an 2, the ter er the time and Agreem ove a short proval or ov ledgements not obligated to appr listing any such ap ser Acknow are forth in their control over t se no s n 3. Purcha holders and lenders io ha r iss Selle comm (a) Lien reduce the a short sale. to of der, and e on re len ati ag ed er to consid specifi g ligation tion with its proved for financin approvals. under no ob n holders. ica e pl ar ap ny g necessary pa in ap ng Com oval of lie has been underwrit r and Listi Purchaser re the appr lien holder to make r. t cu de no se len or y to r (b) Selle ed er an ifi in eth in orde d by Seller’s such requirement wh m such spec ct be altered agreement ht be require th financing fro e terms of this Contra mmissions, or rchaser mig to comply timely wi obligation to accept (c) Pu essions, co ement or none of th nc es at no th co r 4. rcha r agremes de on Tim r lle efra iti un se Se , be n and Fina for settl e cond Pu shallectio thg. ser Insp ncin ent, the price d result in delays in be made on re. Purcha te of settlem coul elsew lders may (a)he Time n ho liees fram ges to the da by lien holders and of the for hom chanction e yinspe consent by an ts e prov inspection or en y ided ef ns for an er in co this of th (d) Any Contract, if any, shall er lt y, and as a re besumeas quire furth ured from: material wa l ch___ s willofreCont Purchaser Date ge by an ract against ted ratifi es cation, ria oceedings erty requ other mate PropOR proval. reclosure pr the earnest of ap___ pairs to the Date t or future fo maker re en nt deliv withdrawal to Selle ev rre ers le evid cu ich ence ab y of wh un an writt rupt lien-holder approval ntract, in might be ll interen llerprov This r. affec ision (e) Se hasenot process wi t will terminate this Co of this Contract to Purchaser. shall sale es Purc t time ortfram for anyem en r inspections othe Property by arantee that the sh under the Contract. before settl gu re su (b) no is Time clo e re fram es for ty . Focing continge finan ser.if any, shall (f) Ther ncy, the Proper to Purcha be measured from: Seller and be returned will sit___ Date of Contract ratification, money depo OR ___ Date Seller delivers evidence of written lienholder approval of this Cont NOTE: DELAYING INSP ract to Purchaser. ECTIONS AND APPLIC LIKELIHOOD OF SET ATION FOR FINANC ING MAY DIMINISH TLEMENT BY RAISING THE LOA APPROVAL. FOR THI 2 N AND INSPECTION ISSUES S REASON, SUCH DEL Page 1 of AFTER LIEN HOLDER AY APPROVAL OF THIS CONTRACT BY SELLER WILL LIKELY DIMINISH THE LIKELIHOO 9 /0 09 D OF SS ’S ENCRM LIEN HOLDER(S). PUR 0- D TO CON 60AGE FO OUR SIDER WHETHER RES CHASER AND SELLER VARSOO OLV ARE N AS POSSIBLE AFT ER RATIFICATION WIL ING INSPECTION AND FINANCING ISSU ES AS L BETTER SERVE THE 5. Settlement Date: Notw IR INTERESTS. ithstanding any other prov ision of this Contract, the the date set forth in Sect settlement date shall be ion 8 of the underlying Cont the later to occur of ract, or _____ days after lien-holder approval to Purc the date Seller delivers evid haser. ence of written 6. Ratification. Upon full execution of this Cont ract and Addendum by Purc create a contractual relat haser and Seller, and deliv ionship between the parti ery as required to es, this Cont ratification, Seller shall Co ract shall be deemed have the right to continue ratified. Notwithstanding to market the Property, and such its lien holders for considera may accept other offers tion. and submit them to 7. The parties agree that the earnest money deposit will be deposited in Escr ow Agent’s escrow acco unt (check one): ___ within five (5) busin ess banking days after the date this Contract is fully Seller; OR ratified by Purchaser and ___ within ___ days after delivery by Seller to Purc haser of notice of lien-hold Contract. er approval of this 8. Other terms: (Use this space for additional term s not dealt with elsewhere ____________________ in this Addendum.) ____________________ ____________________ ____________________ ____________________ ____________________ ___________ ____________________ ____________________ ____________________ ____________________ ___________ ____________________ ____________________ ____________________ ____________________ ____ ____________________ _______ ____________________ ____________________ ____________________ ___________ ____________________ ____________________ ____________________ ____________________ ___________ ____________________ ____________________ ____________________ ____________________ ___________ ____________________ ____________________ ____________________ ____________________ ___________ ____________________ ____________________ ____________________ ____________________ ___________ ____________________ ____________________ ____________________ ____________________ ___________ ____________________ ____________________ Witness the following duly ___________ authorized signatures and seals: __________/_________ ____________________ _(SE AL) DATE __________/_________ SELLER ____________________ ___(SEAL) DATE PURCHASER __________/_________ ____________________ __(S EAL DATE ) ____ ______/_____________ SELLER ____________________ (SEAL) DATE PURCHASER COPYRIGHT©2009 by the Virginia Association of REALTORS®. All right members in good standing s reserved. This form may of the Virginia Associati be used only by on of REALTORS®. The or the use of the name “Vir reproduction of this form ginia Association of REA , in whole or in part, LTORS®,” in connectio prior written consent of n with any other form, is the Virginia Association prohibited without of REALTORS®.
VAR FORM 600-SS 09/0 9
Page 2 of 2
VAR Form 600-SS
This form provides clear definitions and timeframes, while at the same time ensuring that purchasers are aware of and agree to certain aspects of the short sale process. Section 2 sets out the short sale contingency with the number of days the seller has to secure lienholder approval after ratification, and it contains termination methods if evidence of short sale approval is not secured. Purchasers are often unaware of the challenges that short sale transactions can create. Section 3 notifies purchasers of potential pitfalls and secures certain agreements. For example, it makes clear that the seller does not control whether or when a lien holder or lender will approve the short sale. It also notifies the purchaser that the seller and listing company are not required to modify their commission agreement in order to secure approval of the short sale. Section 4 provides timeframe options for home inspection and financing. The parties may choose to measure these contingencies from the date of contract ratification or the date when the seller delivers evidence of written lien-holder approval of the contract to the purchaser. This section also provides a warning that delaying inspections and waiting to apply for financing until lender approval may reduce the likelihood that the contract will be approved. The ratification provision in Section 6 makes clear that sellers may market the property, accept other offers and submit them to lien holders after ratification. Section 7 allows the parties to agree on the deposit date of the earnest money deposit. WWW.VAREALTOR.COM
VAR Form 400-SS
Form 400-SS sets forth the parameters for a successful agency relationship in the context of a complicated transaction. Section 2 provides for a basic acknowledgment from the seller that the property will or might be the subject of short sale, and that the seller agrees to carry out steps necessary to complete the transaction. Section 3 secures agreements from the seller to ensure that the transaction is carried out as efficiently as possible. This section: Authorizes the broker to obtain information from the lien holder and to communicate and negotiate directly with it. Provides an agreement allowing the broker to disclose that the property is or could be subject to a short sale in MLS systems requiring such disclosure. Requires the seller to provide the broker detailed information about his finances, and authorizes the broker to provide necessary information to lien holders. It also gives detailed examples of what must be provided. Makes clear that, unless otherwise agreed by the parties, the broker will continue to market the property after securing a ratified contract or contracts and provide all offers to the owner. Furthermore, the broker agrees to use available methods in the MLS to indicate the owner’s interest in receiving additional offers. Section 4 seeks to educate sellers about their options and important considerations related to short sales. It warns that a lien holder may seek to recover any remaining deficiency owed after the short sale VOLUME 17 ● ISSUE 1
RS® REALTO TION OF IA C O S S A VIRGINIA O ENDUM T SELL ALE ADD SHORT S HORIZATION TO “Listing”) to Sell (the E AUT horization _______________ EXCLUSIV clusive Aut
________ wner”) of that Ex ade a part __________ ___________(the “O that ed to and m n ______________ __ ch __ ta at __ is __ the sale of ee __ M r U tw __ fo D ) be __ N r” d E __ ke an D __ by __ AD “Bro ing as __, 20___, RT SALE __________ _____________(the , described in the List ___ THIS SHO e ____ day of ______ ________________ __ inia ____ __ irg __ __ V __ __ _, __ __ th __ __ __ ________ ________ ________ ___ dated as of ________ __________ __________ __________ __________ __________ s: __________ ________________ ounty or City of ____ __________________ ________________ es as follow __ id __ C __ e __ ov __ __ th pr __ __ __ d in __ __ ____ and ”), an ____ cated e “Property property lo __________________ ________________ al (th re __ in __ rta __ ce ____ __________ __________ __________ __________ ________________ __________ liens on : __ __________ secured by __ ty in which __ __ __________ __ __ the Proper ount of all obligations ns, property taxes __ of __ le __ sa __ a an the am ciation lie le refers to wner __________ ments, asso rm short sa is or might be less th order for O rein, the te le, it lines, judg at must be released in : As used he net of the costs of sa mortgage loans, cred th le ns Sa t lie or r he e, 1. Sh t limitation rchase pric liens, and ot (a) the pu erty, including withou and sewer fees and d amounts , water ns the Prop iencies; an ss than the lie cs ni r; ng echa hase sulti defic t of sums le and liens, m ketable title to a purc assets to pay any re r liens upon paymen d ar ei ui to deliver m t have sufficient liq full agree to release th s r does no paid in sale, and ha will not be (b) Owne le and be a short liens. ho e w th s by er d ld ho ill or might accomplish a short sa cure w se ty ns er io op at (c) lien to lig e Pr th as ob e of so th le ty on sa er owed that the the Prop knowledges pective purchasers of t: Owner ac ker and pros . wledgmen ro no B ck ith A w r t sale ements 2. Owne half and to ake arrang to such shor llows: Owner’s be agreed to m oval of lien holders into agrees as fo n holders on , and agrees to enter appr by lie re l al he r ith ne w obtain the ations rectly ts: Ow Agreemen icate and negotiate di as to all relevant oblig lders. d an ns tio mmun d lien ho tuation erty will be Authoriza Broker to co ion as to Owner’s si required by Broker an into which the Prop 3. Owner r authorizes rmat as may be ultiple listing service be a short sale. gs (a) Owne om lien holders info in al de fairs as may obtain fr ions to such nt required by any m Property is or could cial condition and af clude, te n authorizat le of the ion may in ns, finan at sa io e rm at such writte izes Broker, to the ex th fo lig at in th ob r’s ers Such te ne ok . or la w ty br th g O er g in au to in op r rd at for the Pr tices rega al (b) Owne to disclose to cooper ker all information as ting strategy of Owner’s loans; no ion as to the financi ro placed, ovide to B us r. timal marke rmat agrees to pr r to formulate the op ory and payment stat s; and info d settlement can occu r er ne ic w rv O se an s or ition (c) for Broke yment hist lien holder le approval wner’s financial cond sa om t fr or be required tion: the balance, pa ed sh iv tion rece ita ch time as erial changes in O ns until su without lim faults or note accelera mat on obligatio about any de s, any payments, ner to make payments omptly information lien holder provide to clude, among other w r pr O ke of ro B ty ili to e e Broker to in ab iz id ht or ov ig W-2 th m pr au n to io to es n including format r, and Owner agre listing. al. This in d/or Broke t informatio ed term of the n holders an tain short sale approv ip letters, employmen thiness to be approv lie to e during the id prov to ob s wor rdsh r agrees to or Owner’ n required returns, ha (d) Owne ion or documentatio ts, bank records, tax repay the obligations l mortgage ty to atemen ili informat ent agent al st ab al s ci r’ an ne se the ttlem t Ow n, fin to io ou d at ab an n rm ts io fo at in eir agen other inform yers and th e opinion or forms, and ospective bu broker pric sale. ovide to pr formation, pr in to s r le for a short ke sa ro e B ceipt of parabl r authorizes rmation. erty after re ers any com (e) Owne account payoff info ket the Prop d will present any to lien hold sion. ar e m id to ov n ue pr lie in and Broker to r’s posses r will cont Property, an rest in receiving ker, Broke r authorizes ty in Broke rchase the te (f) Owne analysis of the Proper ed by Owner and Bro r better offers to pu to make Owner’s in d. he e re ot bl ag la ek ai lly se market av erty is liste e ar op ue to mutua in Pr as e e is nt ds th co rw ho ch he ill s ot s, w ch met in whi (g) Unles ore ratified contract r will use su tiple listing services ptly. Broke mul one or m Owner prom to participants in the to ification, rs fe of ear such g loan mod nal offers cl ing: le, includin w tio sa t di llo or fo ad sh e ch a th su es to dges r acknowle ithstanding alternativ available to Owner. be tw ents: Owne nowledgem pursue a short sale no in lieu thereof, might ck A r ne w d to deed 4. O r has electe closure or 2 of (a) Owne ng, bankruptcy, fore Page 1 refinanci 9 0-SS 09/0 40 M R VAR FO
transaction closes, and even if it forgives the deficiency there may be tax consequences for the owner. Sellers are encouraged to secure legal and financial assistance. Section 4 also notifies sellers that lien holders are not required to approve the short sale and brokers have no control over the time it takes to obtain an approval.
It points out that these transactions can take a significantly longer time to consummate than other transactions. This section states in clear terms that brokers are not required to reduce their fees to obtain the approval of a lien holder.
JANUARY/FEBRUARY 2010 27
VAR Form 600-G
This form educates short sale purchasers about the process and attempts to provide reasonable expectations. The first section explains that a short sale can take a significant amount of time and purchasers should consider whether they are willing to wait. It further points out that even after the long wait the short sale may not be approved. Section 2 suggests methods buyers can use to make their offers more attractive and likely to be accepted by lenders. For example, the purchaser can: • Perform needed inspections before entering into the contract and put the costs of repairs in the offer; • Obtain financing approval before beginning the short sale process; • Not delay inspections and loan applications until after short sale approval is obtained. Section 3 informs purchasers about the common practice of lien holders requiring loan underwriting application with the lien holder’s lender. This often raises red flags with purchasers, but it is simply a way for the lien holder to know the buyer can secure financing. However, the lien holder and the loss mitigation company may not insist that the purchaser obtain financing through the lender. The fact that settlement can occur rapidly after lender approval is explained in Section 4; it prepares the purchaser to close on short notice. Purchasers are often confused and irritated when they learn that sellers are continuing to market the property after accepting a contract. Section 6 points out this possibility and suggests that the purchaser will be most successful with a desirable, clean offer.
28 JANUARY/FEBRUARY 2010
ES: S ASER T SAL being ility in SHOR OR PURCH e possib because the th F ed N ss l O I va pre than er appro RMAT have ex
asers n hold might be less nt to , Purch uire lie r ie a broker that might req s of sale, is o assets suffic s with st id d n o co ee ti e n c th nsa not liqu tate of a o es tr et d n a al , , rs re at is rs’ selle perty urchase transaction, th for their pro roperty, and e ssing P ep le In discu in a short sa xpect to receiv y liens on th b e ed d involv price sellers tions secure y se ga roval b purcha nt of all obli ttlement. y: but app e se carefull ou nder(s), required. Th st n le io r at ei the am deficiency at g inform t with th ment will be in. You mu y and no ta pay an le followin re to ob u have roperty der the ll at sett of the p ng paid in fu 20 days or mo vals, or if yo ort sale ld consi u rs o e ll sh 1 ei rs pro sh e se b e se t a ap th ir a o , u e h h e n q it es rc re w ers th Pu f a hom will be ther lien hold an sometimes cannot await ssion o uarantee of ontract c o you g s of g posse Your c nder(s) and lengthy, and vals. If ng on or takin t, there is no ject the term ro (1) le e p b s’ ap ai er e an w c ht re es losi sell d to c ig th o r t m ri le e ai ) fo p ab y s e aw n al an approv g and able to rt time horizo ven if you ar rance comp E su n o be willi relatively sh ion for you. ir mortgage in gotiated. rming ct d e y perfo ed e n sa -n a th t r re an c be e tr stri ccess, b rs (o eed ot be th e terms n holde ces of su the cost of n aking an h c might n Sellers’ lie request that th r you dm utting al. t increase sellers and p as possible an t fund any approv tract or migh o h ve, and on n attracti a contract wit ter ratificati s will likely n roval before your co re o m af r p er ur offe entering into ons as soon s’ lien hold financing ap u might save ake yo ti o er u can m ections before g such inspec llers and sell at you obtain your plans. Y val is o Y (2) . Se doin insp ed th r of appro r lende r short sale discuss your needed the price, or in the process recommend u o y te rm in y ld hly af repairs stments earl It is also hig d that you info cations until al. You shou ou. y . li v dju price a the property le process an and loan app ance of appro ost sense for d sa s to m n ch rt s s o o r e ir ti u a k a ec yo specifie e sh m rep sp h t th a in is g th g in in im nc yin lan holder’s comme pense by dela y will likely d decide on a p ers’ lien close on your . ll se h la it ex to sale nw and ch de our broker some plicatio ity to obtain t of the short , but su y riting ap tex s abil obtained carefully with the con e lien holder’ underw lder of your y in an r lo e e o ld . k h th o strateg h er ts; to ma the lien t to the lien ch lend gemen prepared is to assure an g arran g through su import ould be on nancin in You sh his applicati ething that is your own fi your financ on for s. m ) m T (3 h in m co ay lender. nancing – so t interfere wit that you obta ly. It is as 7 to 14 d k ic u o q fi st n ery little chosen lication will t legally insi occur v en within as n e o p n ft p o a y l ft a st m This again ent wil s, and o d lender edings sellers. , settlem within 30 day specifie re proce ith btained t reclosu ur contract w val is o ire settlemen fo t ro p p u p a rr o requ nder ate y ill inte tract. Once le en holders to cess w nt will termin our con of (4) li sale pro me sk val of y sellers’ e short before settle r appro might be at ri th e at ld o th h of tee en ct sure aiting li l, your contra your chances o guaran perty. Foreclo w n a is e il e a h pro lean Ther yw ions, prov (5) propert en holder ap tate negotiat tract offer. C and the e rs th e t ll e li n es se be to mark your co all real gent on ontinue ill be contin e in virtually esirability of will generally d u might c y tw Sellers your contrac erty. As is tr portion to the g at the read ) p (6 in a Because ers on the pro e in direct pro proved financ taining ff lb after ob ith ap e better o approval wil possible ht need to b ens price w le as g n ab in o n li n ig aso win at m y as so lso to ts at a re propert sues of title th rights) but a ore contrac eous. h of the y is rm erse g tle searc nly to ordinar nd other adv ou to monito ti a advanta in obta not o ents, a will allow y ts. raged to n ert you n , easem e encou t. This will al as covenants is informatio -holder conse You ar Th uch trac . n (s er ary lien (7) ll co ed ratified and address ased by the se taining necess b le ed review need to be re progress in o s l that wil ly your seller’ e effectiv
SHORT SALE S: INFORMAT
ION FOR SELL In discussing Se ERS llers’ real estate needs with a bro property might require lien ho ke r, Sellers have lder approval of receive for the dis closed that the a short sale, be ir property, net sale of Sellers’ cause the purch of the costs of secured by liens ase price Selle sale, is or migh on the property rs ex t be less than the . amount of all ob pect to Sellers should ligations consider the fol lowing inform ation carefully : (1) Alternatives to a short sale, inc luding loan mo deed in lieu the dification, refina reof, might be ncing, bankrup available to Se tcy, foreclosure llers. (2) A short sale mi or ght negatively affect Sellers’ cre dit rat (3) ing or score. Unless the unde rly satisfy an oblig ing obligation is non-recours e to the Sellers ation only from (in which case the the lien holder(s a creditor may ) are not obligate property/collateral and not fro m personal rec sale, and migh d to rel ease Sellers fro ourse to Sellers) t require Sellers m any deficiency to agree to repay cases, even if the res ulting from a sho , such deficiency lie rt or some part the consequences fro n holder releases Sellers fro reof. In some m such deficien m receipt of suc cy, Sellers migh a legal or tax ad h t have income visor. Sellers sho “forgiveness of debt” incom tax e. appropriate in Se uld obtain such llers’ real estate conn leg retain legal coun ection with the potential conse al and financial counsel as Se broker is not llers feel is sel to connection quences of the sale. Sellers are with this transa encouraged to ction. (4) Lien holders an d lenders are no t obligated to ap release Sellers prove a short sal from further lia bility e, are not alway requirements on s obligated to the consideration if a short sale is approved, an d may impose any such appro of a short sale. additional val or over the Se lle rs’ bro ker will have litt time required to le or no control obtain necessar (5) Short sal over y approvals. e transactions fre quently take mu months) than oth ch longer to co er transactions. nsu mmate (sometim cooperate with Consequently, es many weeks their broker ful Sellers underst or and that it is ess ly and to respo and to take oth nd promptly to entia er actions requir all ed of Sellers. requests to furnis l for Sellers to h information (6) Seller’s bro ker is under no obligation to red in order to obtai uce the brokerag n the approval e fee set forth in of any lien holde the listing agree r to a short sale. (7) A short sal ment e does not chan ge the seller’s condominium ob ligations under resale certificat Vi rginia law to pro e or encouraged to vide to purchase comply with the property owners’ association rs a information pa se legal requirem purchasers a co cket. Sellers are ents, as failure ntract terminatio to do so will ge n right. ne ral ly afford (8) Compete nt representation – by real estate successful comp , tax and legal letion of a short pro fes sio nals – is importa sale. nt to the SELLERS ____________ /____________ ____________ Date (SEAL) Owner ____________ /____________ ____________ Date (SEAL) Owner
VAR Form 660-H
Form 660-H re-emphasizes many of the same points raised in Form 400SS that seek to educate sellers about short sales. Sections 1-3 point out that there are alternatives to a short sale for sellers and the potential financial and tax implications. Sellers are further encouraged to obtain tax and legal counsel before proceeding. This form also clearly states that short sales can take a significant amount of time to complete, and that seller’s cooperation with the broker is critical to success. Section 7 addresses a common misconception by making clear that condominium resale certificates and property owners’ association information packets must still be provided in all cases when the seller would otherwise be obligated under the relevant statutes. ●
COPYRIGHT© 20 members in goo 09 by the Virginia Association d standing of the of REALTORS ®. All rights res part, or the use Virginia Assoc of the name “V iation of REAL erved. This for irginia Associati m may be used TORS®. The rep without prior wr only by on of REALTO roduction of thi itten consent of RS®,” in connec s the Virginia As tion with any oth form, in whole or in sociation of RE ALTORS®. er form, is prohib ited VAR FO
RM 660-H 09 /09
Page 1 of 1
Purchasers are often confused and irritated when they learn that sellers are continuing to market the property after accepting a contract.
VOLUME 17 ● ISSUE 1
JANUARY/FEBRUARY 2010 29
accessibletech ANDREW KANTOR
Searching Google smarter You use Google to search the Web, I assume. But if you’re simply typing in a word or two and hoping for the best, there’s a better way. A bunch of better ways, in fact. Google has a long list of tips and tricks you can use when entering something in the search box — they help you narrow your results, find a specific kind of information, or just make your life easier.
Do your own tech support. If you get an error message, before calling the IT department (or your 10-year-old nephew), type the text into Google, or just describe the problem. Chances are someone else had it and solved it. Hint: Add the word “solved” to your search. Can’t paste image in Word unable to contact your dhcp server solved
Use quotes. If your search includes a phrase, put it in quotes so Google doesn’t search for the words separately. (It’s especially useful if the words are common.) “free wallpaper” “these are the times”
Google gives you a few ways to find a person. The simplest: Enter his name and the state, or narrow it with a city or ZIP Code. James Johnson VA Rachel Smith 23059 You can do a reverse white-pages lookup by using the word phone: phone: 8042645033
Eliminate some results. Using the minus sign tells Google to look for pages that do not contain the word or phrase. zoning regulations virginia -“west virginia” Find similar things. Should you search for pipes or plumbing? House or home? Let Google do both: Use a tilde (~) in front of a word, and Google will also search for synonyms. three BR ~house will also search for “three BR home” ~cheap tires will also search for “inexpensive tires” “affordable tires,” and “low cost tires” Narrow the search. If you’re looking for a particular kind of document instead of a typical Web page, tell Google. You can search for (among other things) PDF files, Word documents, and PowerPoint presentations by adding “filetype:whatever” to your search virginia real estate laws filetype:pdf southwest Roanoke zoning filetype:ppt Pick your site. If a particular site doesn’t have a good search engine, or you simply want to search straight from Google, just enter “site:whatever.com” to your search. insulation site:owenscorning.com “real estate license” site:dpor.virginia.gov (You can also use this trick to search certain kinds of sites: Enter “site:gov” to search only government sites, or “site:edu” to search only colleges and universities.)
Not everyone will be listed, but it’s certainly a good starting point.
Look at dat Google is a great tool for finding images and even video. Just enter your search terms, then click “Images” at the top of the results page. (If you’re in the office, you’ll probably want to make sure that Google’s Safe Search is set to “Moderate.” When you’re at home, turn Safe Search off and you’ll understand why.) Once you get your results, you may want to click the “Show options” button at the top left. That will let you specify the size of the image you want. Small and medium are fine for the Web and e-mail, but if you plan to print something you’ll definitely want to choose large. And, of course, keep copyright in mind if you’re thinking of using an image commercially.
Who said dat? Want to know what — if anything — those pesky bloggers are saying about you or
30 January/February 2010
your company? Go to blogsearch.google.com, where you can search the blogosphere to see who’s saying what.
Where dat? Track a package simply by entering the FedEx, UPS, or USPS tracking number.
Dat’s fun! Want to know the time? Just say so. time (for your local time) what time is it fresno Want to catch a movie? Enter the name and your ZIP code or town avatar 23059 Want to check the status of a ﬂight? Enter the number. Delta 1462 There are many more ways to search with Google. The easiest way to find them? Search for “Google tricks” of course. ●
What dat? For a quick and easy dictionary lookup, put “define:” before a word, phrase, or acronym. define:short sale define:LOL
How much dat? Google does math, and lots of it. Just remember that the multiplication sign is an asterisk, not an x. 26 * 9000 143+27+85 6% of 265500 It can even do conversions. 2 quarts in oz 46 cubits in rods 300 us dollars in euros You don’t have to leave the page you’re on, either. Instead of hitting Enter, type an equals sign. As soon as you hit it, Google will display the result in a popup box.
Tell me about dat If you go to alerts.google.com, you can enter a search term (using any of the tools we just covered) and have Google send you regular e-mail —immediately, daily, or weekly — with any new pages, blogs, images, or more that mention it. By entering your name, for example, you can keep track of anytime you appear on someone’s page. And by using a search term like “link:yourwebpage.com,” you’ll be alerted whenever someone links to your page. Volume 17 ● ISSue 1
January/February 2010 31
rpacreport GOLDEN R INVESTORS ($5,000)
As of January 8, 2010 the following REALTORS® and local associations have joined RPAC of Virginia as Major Investors. For more information on the value of RPAC and how your investment works to protect your business, contact Meredith Cox at mcox@VARealtor.com or (804) 264-5033. Or, if you want to get invested today, please visit rpacofva.com.
John Dickinson Hall Associates Inc. Union Hall
Jack Torza Long & Foster REALTORS® Mechanicsville
John McEnearney McEnearney Associates, Inc. Alexandria
GOLDEN R ASSOCIATION ($5,000) Williamsburg Area Association of REALTORS®, Williamsburg
STERLING R INVESTORS ($1,000–$2,499)
Charles Bengel RE/MAX Allegiance Alexandria
Margaret Handley M.C. Handley, Ltd. McLean
Patricia Kline Avery Hess Realtors® Springfield
Susan Mekenney Re/Max Allegiance Fairfax
John Powell Long & Foster Real Estate, Inc. Colonial Heights
Jane Quill Re/Max Presidential Fairfax
Anne Rector Long & Foster Real Estate Alexandria
Peter Rickert Coldwell Banker Residential Brokerage Alexandria
Thomas Rickert Coldwell Banker Residential Brokerage Alexandria
Cindy Stackhouse Century 21 Stackhouse & Associates Dumfries
Mack Strickland Strickland Realty Chester
Trish Szego ERA - Elite Group Realtors® Haymarket
32 January/February 2010
What does RPAC accomplish? You may not see RPAC, but it’s always working for you. During election season, RPAC is busy backing Realtor®- and property-owner friendly candidates and helping them win their races. And RPAC has a solid track record of endorsing winning candidates, proving that Realtor® priorities are the public’s priorities. But there’s no time when RPAC’s impact is felt more
than when the General Assembly's in session. Every year, we tell you about all the Realtor® and homeowner friendly bills that have passed. Now imagine all of the countless bad bills that the VAR and RPAC partnership has helped defeat. VAR works hard to keep Virginia a place where it’s easy to be a Realtor®. But we need RPAC to do that. ●
Contributions are not deductible for income tax purposes. Contributions to RPAC are voluntary and are used for political purposes. The amount suggested is merely a guideline and you may contribute more or less than the suggested amount. You may refuse to contribute without reprisal and the National Association of REALTORS® or any of its state associations or local boards will not favor or disfavor any member because of the amount contributed. 70% of each contribution is used by your state PAC to support state and local political candidates. Until your state PAC reaches its RPAC goal 30% is sent to National RPAC to support federal candidates and is charged against your limits.
When you’re good to RPAC...
RPAC’s good to you
Get invested today at www.RPACofVirginia.com Volume 17 ● ISSue 1
January/February 2010 33
WE’D LOVE TO HEAR FROM YOU
We’re online at www.VARealtor.com Our official blog is VARbuzz, at www.VARbuzz.com If you have questions, we’re ready to help. During normal business days, we’re available from 9:30 a.m. to 3:45 p.m.
Our phone number is
(804) 264 -5033 For membership and dues questions Ask for Kim Martin, Membership Records Manager kim@VARealtor.com
For questions about professional standards and the Code of Ethics Ask for Blake Hegeman, Associate Counsel blake@VARealtor.com
If you’re interested in marketing or advertising opportunities Ask for Amanda Rainsford, Marketing Manager amanda@VARealtor.com
To reach our Legal Resources Center (formerly the Legal Hotline) Call (800) 755-8271* *You must register first at www.VARealtor.com — click Member Services
If you’d like to have someone speak at your association or brokerage
To find out about conferences, seminars, and professional education
Ask for Lisa Noon, Vice President of Member Outreach lisa@VARealtor.com
Ask for Glenda Puryear, Conferences Specialist or Lili Paulk, Director of Education glenda or lili @VARealtor.com
If you need to know about professional designations Ask for Lynne Wherry, Specialties and Chapter Manager lynne@VARealtor.com
If you have comments or questions about Commonwealth magazine or our Web sites Ask for Andrew Kantor, Editor & Information Manager andrew@VARealtor.com
Ask for Meredith Cox, Director of Political Communications meredith@VARealtor.com VAR 2010 Leadership Team
Cindy Stackhouse, GRI President Century 21 Stackhouse and Associates Prince William (703) 580-0880 email@example.com
VAR Member Service Partners
Advanced Access Internet marketing and Web site development Bank of America, WorldPoints credit card DNCSolution, Do-not-call solutions Security code SC1795VR Liberty Mutual Home, auto, and renters insurance LLE Language Services Telephone interpretation and document translation Promotion code VARM08 Outstaffing, Staffing and payroll Pearl Insurance E&O, medical, life, and dental insurance TASC/BizPlan, Medical expense tax benefits T-Mobile, Wireless service
Our CEO is Scott Brunner
VAR Wireless Center Wireless plans and hardware
(804) 249-5712 scott@VARealtor.com
Virginia Department of Motor Vehicles Realtor license plates
34 JANUARY/FEBRUARY 2010
For information about RPAC
John Dickinson, CCIM, GRI President-Elect Hall Associates, Inc., Roanoke (540) 982-0011 firstname.lastname@example.org Trish Szego, CRB, CRS Vice President ERA-Elite Group, Haymarket (703) 359-7800 email@example.com John Daly Treasurer Prudential Towne Realty, Virginia Beach (757) 826-1930 firstname.lastname@example.org John Powell, GRI, ABR, CRB, CRS Immediate Past President Long and Foster Real Estate, Colonial Heights (804) 520-5600 email@example.com R. Scott Brunner, CAE Chief Executive Officer (804) 264-5033 scott@VARealtor.com
Zipform, Electronic Forms Solutions
Earning your GRI designation satisfies the 30-hour post license requirement for new licensees
lastword SCOTT BRUNNER
A new market goes to the dogs
Millions of years of evolution, and suddenly our pet needs a dental hygienist. So I get home from work the other evening to find my wife on her knees on the kitchen floor, elbows to the hardwoods, and nose-to-cold-wet-nose with our Shih Tzu puppy, Cooper. “Come on, sweet baby, help Mommy and I’ll give you a treat,” she’s cooing. “You talking to me or the dog?” I inquire hopefully. She glares up at me. “If you must know, I’m trying to save you $700,” she says in a notat-all-cooing, don’t-mess-with-me-ifyou-know-what’s-good-for-you tone. “Trust me, that’s the only reason I’d be down on the floor with toothpaste on my finger trying to get this animal to open his mouth so I can clean his teeth. This is what I do. Plus you can brush yours without a lot of help. I’ve seen you do it.” “You never told me there might be treats involved,” I point out. “So what’s with the doggie dental hygiene?” “Warding off an outbreak of canine gingivitis,” she grumbles,
36 January/February 2010
standing up and handing me a brochure from the counter. “Is that an imminent threat?” “So they tell me at the vet’s. Millions of years of evolution, and suddenly our dog needs a hygienist. It could just be a clever ploy to make all of us soft-hearted puppy owners pony-up for expensive medical procedures of questionable necessity to help pay the mortgage on the vet’s new summer cottage at Nag’s Head.” Turns out Karen had taken the dog to the vet that day for his checkup, only to be advised that poor Cooper was at risk and needed a professional teeth-cleaning. A $300 professional cleaning. For which they’d have to anesthetize him. But which they couldn’t risk until they did some blood work. Total price tag: upwards of $700. That night, I go online in search of a bit of objectivity. What I find are a bunch of ghastly pictures of diseased doggie mandibles with captions like, “Inflammation... gingival bleeding... slight to moderate bone loss.” Charming. Those, and plenty of doggiedental-disease Web sites offering “a complete program of dental care for your dog,” and including paeans to advanced medical technology that now allows us to detect and treat canine afflictions we heretofore never knew existed; to wit: Our dogs are living longer now than in the past. [...] Now we are seeing more animals whose most severe medical problems are dental problems. To prevent oral disease, which is the number one health problem diagnosed in pets, it is essential to provide our pets with good dental care…
There are even non-invasive herbal remedies available for those of us too anxious (or cheap) to have our beloved pet even momentarily anesthetized. How did I miss this phenomenon? Having last had a pet when I was 17, I’d returned recently and reluctantly to pet ownership – our boys need a dog, my wife decreed – to find puppy health care just as complicated and expensive as humans’. Not just complicated, but clever: creating a heartstring-tugging market for everything from cookie dough for the school band to waterproof caskets — things to which very few of us are callous enough to say no. No one this side of Michael Vick would let his beloved pet suffer for long from degenerative tartar build-up (nor let Uncle Fred molder in a leaky coffin), and that’s a fact. Which brings me back to…well, me, and Cooper. I imagine the parade of puppies I had in my youth arriving in doggie heaven with an embarrassing coating of plaque on their teeth, and I feel bad. Not bad enough to pay $700 to have my dog’s teeth professionally cleaned, mind you, but certainly bad enough to commence brushing them with toothpaste on my finger every now and again. Or better yet, to let Mommy do it. l Scott Brunner is VAR’s chief executive officer. E-mail him at Scott@ VARealtor.com. (No animals were harmed in the composition of this column.) www.VARealtor.com