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October 2010 $5.00
Attacking the American Dream Why the dream of home ownership is under threat.
REALTORS速 Endorse Walker For Governor
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table of contents
A look at the WRA Board of Directors’ unanimous decision to support Walker this fall.
Attacking the American Dream
Which tools should a successful REALTOR® keep on hand?
A growing attack on home ownership has REALTORS® paying attention.
Continuing EducationOn Demand
27, no. 1
REALTORS® Endorse Scott Walker for Governor
Notes Tool Take notes while you watch your videos.
Best of the Legal Hotline
Get answers to your questions on negotiation, property inspections, exclusive agency listings, and more.
Determining Deficiency Judgments Think you’ve got all the facts on deficiency judgments? Read on.
Watch Your Step After a rain-filled summer, many listing agents wonder what their responsibilities are when it comes to disclosing basement issues.
Private Transfer Fees A primer on private transfer fees and what the WRA is doing to stop them from appearing in Wisconsin.
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Practice Quizzes Sharpen your skills with review exercises.
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Deadline to complete CE requirements is December 14, 2010! See page 29.
inside the wra
with bill malkasian
Top News Stories in and Around the Industry
Top News Stories in and Around the Industry WOW. the Stark Family United Way Honors for Service to Community
help for working including both particularly traditional items such as families. flashlights, tape measures and business What a convention. Between 800-1000 people took the time to attend NAR Releases Free FHA United Way of Dane County cards $39 to newer, tech-savvy additions like Toolkit state ofinWisconsin due toand receive nearly this year’s annual convention at theThe Kalahari Wisconsinis Dells flip video cameras and smartphones. Wisconsin REALTORS® Association (10/30/08) million in federal funds to stabilize neighborhoods United Way of Danethe County recognized the Stark energy and enthusiasm I saw during these three days made me and stave off a spate of abandoned homes. According Family with the 2008 Tocqueville Society Award for NAR and theMike WRATheo are eager to help you meet the proud to be part of this organization. I want to extend a personal On the public affairs side, addresses to HUD and Gov. Jim Doyle, the funds are separate outstanding service to the Dane County community thank-you to all the attendees. And for those of you who weren’t able the troubling proposal to move from an ownership current challenges of the troubled economy. We from approximately $9.2 million the government is and United Way. The Tocqueville Society Award to make it this time, Wisconsin’s economy day by where day, the foreclosure to a renter society and you Tomneed Larson provides awarding theimproving city of Milwaukee, celebrates and acknowledges people orwith families, know that resources that an can help you I hope youmade can join us next year on rate September 13-15, overview transfer fees, including why home is currently 9.92011. percent. HUD is awarding the of private such as the Starks, who have a major impact close transactions, and you need them at little or no and REALTORS® should be familiar with them. funds via its Neighborhood Stabilization owners Program, on the quality of life in Dane County through Three things I’d like to note from this year’s convention: cost. NAR has just released an all-new FHA Toolkit under which almost $4 billion is being allocated to their exceptional service and commitment to the Also featured online this month is an article Urhina on for FREE to help youby getRob clients the financing local and state governments for the redevelopment community. First, I would like to personally thank Beth Jaworski and her Distance Learning onneed Demand, a service whichenvironment. gives you theIt is of abandoned and foreclosed houses. Bill Malkasian they in a credit-strapped committee for putting the time and effort into making this year’s option of taking education courses on your own time from any CityPresident Housing Authority Receives WRA one of the most comprehensive toolkits NAR has event a success. I would also like toSites: thank Not our newly-appointed Vice Just for Personal location. As many of you already know, DLOD frees you up from 100-Unit Grant ® President of Business Services Kristi Mikalsen and Anymore the entire WRA available to all else’s REALTORS Milwaukee Journal Sentinel (09/25/08) Pabst, Georgia Connections having to travelever longproduced, distancesand or it’s be on somebody clock team for the hours they spent organizing, marketing and staffing the Minneapolis-St. Paul Business Journal (09/29/08) by visitingimportant the link below. also have toGrayson, take classes.right Thisnow is especially as theThey December 14 The city of Milwaukee’s housing authority is due event. Finally, I would like to extendKatharine my appreciation to the sponsors continuing education deadline approaches. launched a new page called “NAR Helps You Navigate to receive $6.7 million in federal Hope VI money and exhibitors who supported us this one of you played® aTeresa Boardman St. year. Paul, Each Minn.-based REALTOR to build 100 new housing units. The 100 units will the Current Economy” where you can find dozens of key role in making convention happen. As we return to our regular Also coming up in December is our annual Management Conference, says Flickr, Facebook and other social networking be constructed in a 2.5-mile area and will include great products anddelighted resources,that likethe theopening FHA Toolkit, here at the WRA,units; we continue taking place December 9. I am speaker sitesto receive make itgreat easyfeedback to meet from people who might 29 public housing routines and affordable rental for free or at a steep discount. Visit www.Realtor. folks who attended. will be our “very own” Richard Green, who will be kicking off the eventually become clients. While many professionals nine affordable housing units for income-eligible are using these sites to make businessconference contacts with an economic update. org/NARHelpsYou for links to these great programs families; and 62 moderately priced, open-market Moving to this month’s magazine, fall areuse on their and andelections companies themway to conduct background condominiums. HUD Secretary Steven C. Preston and products. we havehousing a number of articles keep you informed and prepared. A bitwant earlier, on November 5-8, is the annual NAR Convention. or recruit new workers, many simply comments, “Milwaukee’s authority hasto helpchecks This month, the made some important including convention is an opportunity to join REALTORS® from around to connect withdecisions, people who have similar The interests. demonstrated it has thepast leadership to board lead and Loanslearn Going Albeit the unanimous decision lives. to endorseAccording Scott Walker for governor. You sell isthe country share ideas, aboutStrong, other markets anda ensure to Boardman, “The hard dead. It to Home revitalize neighborhoods and transform doesn’t work door-to-door, and it doesn’t work on Bit Tighter, in Area read and about Walker’s record Wisconsin has a voice in the dialogue. You will be well represented Cities like Milwaukeecan change grow and need to and the board’s choice in our feature social networks.” On Flickr, Boardman connected revitalize housing toarticle make by sure many aren’t priced Joe Murray and Mike Theo. there. Wisconsin State Journal (10/17/08) Balousek, Marv Milwaukee Business Journal (WI) (09/30/08)
with a fellow photographer who eventually used her out.” Milwaukee is one of a half-dozen housing ongoing national crisis,Dream, property One to of the interesting things this fall’s electionsa home. is that there Finally, to build Despite on Mikethe Theo’s article on thecredit American I want to purchase authorities nationwide receive new Hope VI aboutservices are an exceptional number of empty seats, which means we’ve had to let you know that the WRA leadership will remains be working closely grants. professionals say mortgage money available
Foreclosures Rents Higher, some work to do in figuring out which candidates will Push best represent with lending trade associations andWisconsin building to trade associations throughout southern home buyers Housing Studyyour Delay Frustrates Squeezing Income Familiesto educate policymakers and the public about the challenges needs and interests. I am happy to say thatLow a number of local with solid credit. Ron Steinhofer, manager of Minnesota ® Public Radio (MN) (09/21/08) Olson, Dan Advocates board GADs, WRA officers and REALTORS facing the housing market and the ongoing importance of home have joined together to Marshall & Ilsley Bank’s regional home lending work on this. Be on the lookout overIntheMinnesota’s next few weeks an array Twin for Cities, a wave ownership. of home In 2010-2011, as we emerge from admittedly rocky states, plentytoofrealize moneythat for home home foreclosures pushed With more these people into times, the rental Two years after promising the Milwaukee we will group, help you help“There’s your clients of information on whichmetro candidates the WRA has supports. apartment sector. Theand result area’s first major housing in Ithree decades, loans aout there. slightly more difficult ownership remains vital partItofisthe American Dream.to qualify efforts study in mind, encourage you to be part of the process vote ison an intensifying demand on Minneapolis and St. Paul’s rental housing the Southeastern Wisconsin Regional November 2. Be a partPlanning of democracy in action. than two or three years ago, but if you have a good stock, so much so that the vacancy rate isUntil verynext low time, Commission (SEWRPC) is still struggling to get the credit score, a good job and a down payment, money rentsfiscal are on the for rise.the This,WRA. in turn, means loweffort launched. Proponents hope the will of and October marks the study beginning a new year Milwaukee Journal Sentinel (10/07/08) Williams, Scott
income working families face higher serve as a catalyst for improving This means affordable we have ahousing new leadership team in place charged with monthly rents even though their opportunities throughout the city’s suburbs. overseeing the WRA and But its efforts. A big thank youincome to Johnhovers Flor at unchanging levels. Since 2005, the Twin apartment commissioners haveand yet his to team assemble an advisory for their tremendous work over the past year, and Cities a vacancy rate has dipped from 7 percent toBill closer to committee to oversee the research a specific warm welcomeortoset John Horning, who was installed as the WRA’s new 4 percent. Average monthly rents over that same timetable for conducting the survey. Phil Evenson, chairman at convention. time span are up more than $25, rising to more the commission’s executive director, said other issues than our $850. Theteam, St. Paul-based Wilder Foundation keep getting in the way. The delays have frustrated Returning to this month’s articles, from legal Tracy Rucka recently reviewed income data for several Twin Cities housing advocates brings the most. Bethany Sanchez, us a Best of the Legal Hotline focusing on property inspections, counties. The organization’s research found that the vice president of the Metropolitan Milwaukee Fair limited service listings and getting the accepted offer to closing. Cori number of people in those markets paying too much Housing Council, laments, “It’s been a long time LaMont provides tips for listing a home with basement issues, and for their rental housing will double from around coming.” The Pewaukee-based commission has Debbi Conrad explores deficiency judgments. OurtoSales Tip this 70,000 currently a whopping 140,000 by 2010. not conducted a comprehensive review of housing ® month walks you through buildingSome a successful REALTOR say a partial solutiontoolkit, would be for the U.S. patterns since the 1970s. government to reverse course on housing policy and substantially increase funding for rental assistance, Wisconsin Receives Millions to Ease
wisconsin real estate magazine wisconsin real estate magazine
october 2010 october 2009
is available.” Steinhofer adds that banks still are
making loans via such programs as Fannie Mae and Freddie Mac. Furthermore, credit standards remain about the same as they were six months ago, meaning that qualified home buyers can get loans if they have the proper income verification. On the downside, banks have been less willing to make loans with higher loan-to-value ratios. In addition, conventional financing without a down payment has indeed disappeared. However, 100 percent financing is still available with Veterans Administration and Rural Development home loans.
Wisconsin Real Estate Magazine™ is published by the WISCONSIN REALTORS® ASSOCIATION. Trademark issued pursuant to Wisconsin state statute; federal trademark is pending.
notes from the wra
John Horning, Chairman email@example.com
RPAC Large Donor Council Recognized
Robert Keefe, Chairman-Elect firstname.lastname@example.org Renny Diedrich, Treasurer email@example.com William E. Malkasian, cae, President firstname.lastname@example.org Editorial Staff:
William E. Malkasian
The Wisconsin RPAC Large Donor Council was created by NAR 2010 Major Donor Whip Jim Imhoff of First Weber Group, Inc. Members of the Council have contributed $1,000 to RPAC and/or the Direct Giver Program. As of September 30, 2010 the Council has 77 members. The Council was recognized during the Opening Ceremonies of the WRA’s State Convention in Wisconsin Dells.
Back Row from L to R: Joe Horning, Kevin King, Dave Stark, Roger Rushman, Tom Larson, Michael Theo, Daniel Lawler, Jerry Lyons, Rich Chronquist, Matt Miller, Tim Stemper, Mike Spranger, Kevin Donnell, Steve Lane, Lewis Thomson, Tom Sykora
Middle Row from L to R: Bill Malkasian, Jim Mulleady, Peter Shuttleworth, Joe Murray, Chuck Olson, Hiam Garner, Dennis Midthun, Peter Didier, Becky Merwin, Barbara Clinard, Eric Sjowall, Otto Bytof, Rob Keefe, Jeff Kitchen, Renny Diedrich, Kitty Jedwabny, Roger Stauter, Larry Gleasman
Seated from L to R: Bob Weber, Joan Seramur, Karen Pavlicek, John Flor, Joyce Bytof, John Horning, Tammy Maddente, Corky Hellyer, Dan Lee, Rita Blenker
Senior Designer Wisconsin Real Estate Magazine, USPS 597-850, ISSN 1548-0526, is published monthly by the WISCONSIN REALTORS® ASSOCIATION, 4801 Forest Run Road, Ste. 201, Madison, WI 53704. Periodical postage paid in Madison, WI and additional mailing offices. An annual subscription rate of $5 is included in membership dues and a copy is mailed to every paid REALTOR® and affiliate member of the association. Nonmember subscription rate: $60. POSTMASTER: please send address changes to the WISCONSIN REALTORS® ASSOCIATION, 4801 Forest Run Rd., Ste. 201, Madison WI 53704-7337.
Thank You to the Following Companies for Making Convention a Success! Aflac All Title Services Inc Alpha Graphics American Home Shield AmeriSpec Home Inspection Service Ascentives - Madison Associated Bank Axley Brynelson LLP Beijo Handbags Best Assets Inc - M & M 3 Contractor Brook Furniture Rental Centralized Showing Service Century 21 Chicago Title Chula Vista Resort Commission Express of Wisconsin Computer System Innovations, Inc Conley Publishing - Appleton Crowne Plaza - Madison Cutco Cutlery Damon’s Grill – Wisconsin Dells Dean Health Plan Dee Sign Company Department of Veterans Affairs St Paul Regional Loan Center Emmons Business Interiors Fairway Independent Mortgage Fidelity Land Title - Jefferson Field’s at the Wilderness First American Title Insurance Co First Fidelity Home Mortgage of Wisconsin Gain 1031 Exchange Company, LLC Godfrey & Kahn Great Midwest Bank Greater Milwaukee Association of REALTORS® Hampton Inn E - Madison Heidel House Resort & Spa - Green Lake HMS North Central
Permission to reprint or quote any material from this issue is hereby granted, provided the Wisconsin Real Estate Magazine is given proper credit in all articles or commentaries, and the WISCONSIN REALTORS® ASSOCIATION is provided with a copy of any reprint. Advertising of third party products and services herein does not imply endorsement by the WRA unless specifically stated. Furthermore, the WRA does not endorse, approve, or otherwise warrant the accuracy or legality of any information or content contained in advertisements. Any questions regarding advertising policies should be directed toward the editor.
Contact Us: 4801 Forest Run Rd., Suite 201 Madison, WI, 53704-7337 (608) 241-2047 • (800) 279-1972 legal hotline: (608) 242-2296 • (800) 799-4468 general fax: (608) 241-2901 products/education fax: (608) 241-5168 legal hotline fax: (608) 242-2279
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3 wisconsin real estate magazine
Ho Chunk Casino Hotel & Convention Center HomeFinder.com Homestead Realty Inc. Homewood Suites W - Madison HSA Home Warranty HUD HYS Marketing Products LLC Inspections Unlimited Kalahari Resort & Convention Center Kennedy Communications Lake of the Torches Landmark Credit Union Liberty Mutual Insurance Lowen Sign Company Lowe’s Companies Inc M & I Bank Magnets USA® Marshall & Swift Miche Bag MLS, Inc. National Oilheat Research Alliance North Central Group – Madison North Shore Bank Oakley Signs and Graphics Obeo Office to U Outstanding Signs P J Master International Pearl Insurance Pillar To Post Professional Home Inspection Platinum Printing & Packaging PostYourListings.com Preferred Title LLC Public Opinion Strategies R & R Inc Radisson Paper Valley Hotel - Appleton RE/MAX North Central Red Crown Lodge/Trout Lake Golf Club
REGIT, Inc. Royle Printing Screaming Logos Shorewest REALTORS® Showhomes Southeast Wisconsin ShowingTime Simple Day Snap Fitness Sullivans Cleaning & Restoration Summit Credit Union Superlative Inc SUPRA Teuteberg Inc. The Cheese Factory Restaurant - Wisconsin Dells The Madison Club – Madison The Osthoff Resort Tri Tech Corporation of America / Xerox Universal Home Protection LLC US Bank Home Mortgage – Madison US Bank Home Mortgage – Milwaukee USDA Rural Development Virtual Properties, Inc. Weber Bros. Jewelry, Inc – Lancaster WHEDA Wilderness Territory – Wisconsin Dells Wisconsin Association of Home Inspectors Wisconsin CRS Chapter Wisconsin Department of Veterans Affairs Wisconsin Legal Blank Co Inc Wisconsin Mortgage Corp. Wisconsin Onsite Water Recycling Association Wisconsin Restaurant Association – Madison Wisconsin Visitor & Convention Bureau Women’s Council of REALTORS Wood Communications Group ZipLogix
Convention Scrapbook The Drum Café opens convention on Sunday morning with an invigorating session of chanting and drumming.
Newly installed WRA Chairman John Horning speaks at Monday night’s Chairman’s Dinner after a warm introduction by his brother Joe.
Scott Walker discusses Wisconsin’s future with John Horning and John Flor at the WRA’s rally in support of Walker.
A friendly reception for RPAC contributors to thank them for their support and commitment over the past year.
wisconsin real estate magazine
Beth Jaworski, Chair of the Convention Committee, and John O’Leary, Tuesday’s general session speaker, after John’s inspiring presentation.
P e a r l
This benefit reimburses up to $15,000 for public relations expenses incurred while responding to negative media resulting from a qualified event ($50,000 maximum per policy period). Eligible public relations events include, but are not limited to, the departure, incapacitation, illness, or death of any partner of the named insured, or a workplace accident resulting in negative media coverage.
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For more information about Pearl’s WRA-endorsed E&O program, call your E&O Specialist, Lewis Thomson, today at 888.619.1883 or visit www.pearlinsurance.com/eo This information is intended to provide a general overview of the services described. Only the insurance policy can give actual terms, conditions, and exclusions.
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REALTOR NEWSWIRE ®
Top News Stories in and Around the Industry
Milwaukee Homes 62nd Cheapest Out of 300 Cities
lenders, nonprofit home-buying counseling agencies, educational institutions, and the City of Milwaukee. Together, they have built a network of resources to help homeowners facing foreclosure. They are working with homeowners on a one-on-one basis, free of charge, to help them navigate through this often complicated process. Take Root members have succeeded in helping hundreds of Milwaukee homeowners save their homes from foreclosure. In those cases where that is not possible, members provide homeowners the benefit of being aware of all of the facts and exploring all options available to them to help minimize the long-term impacts associated with losing a home via foreclosure.
Milwaukee Business Journal (WI) (09/28/10)
A national survey of home listings by Coldwell Banker Real Estate LLC shows that Milwaukee’s average home price of $186,327 makes the area affordable compared with other U.S. communities. Milwaukee ranked 62nd cheapest among the 300 communities surveyed but was the most expensive market in Wisconsin. By comparison, Fond du Lac’s average price of $119,838 was the cheapest statewide. All of the 10 most affordable home markets in the United States are in the Midwest.
In-Floor Heating Becoming a Welcome and Popular Green Addition for Many Homes
8 Must-Have WordPress Plugins for Your Real Estate Blog BiggerPockets.com (09/23/10) Bynes, Shae
Appleton Post-Crescent (09/25/10) Hoh, Toni
REALTORS® using the WordPress blogging platform would be wise to consider several free plugins. Akismet flags spam comments, for example, while WordPress Database Backup automatically backs up blogs to facilitate file recovery. To make social media sharing easier, they should consider TweetMeme, which offers a user-friendly “Retweet” button; the Facebook Like Button; Sexy Bookmarks, which permits posts to be shared with numerous social media and bookmarking sites; and a comments plugin to engage with visitors. Agents also can download Platinum SEO Pack to ensure their blogs are optimized for the search engines and Google Analytics for WordPress to gauge traffic and determine which keywords are bringing people to the site. Another helpful analytics plugin is WordPress. com Stats, which places a dashboard within their WordPress admin sites.
In Wisconsin and other cold-weather states, infloor heating is becoming an increasingly popular green addition for both new and existing homes. Most systems are equipped with a programmable thermostat, allowing the system to be activated both by room and by time of day. This feature increases its energy efficiency because it is not heating a littleused room nor is the entire system left running while the home’s occupants are away. Ryan Kuhlow, owner of Kuhlow Builders in Neenah, Wis., has radiant heating in his house. He states, “When you stand on those floors, you think, ‘Oh, that feels good.’” Nevertheless, Kuhlow does not advise the system as the main heat source. His company installs in-floor heating mostly in bathrooms, but has also done some kitchens and flow areas. He comments, “The reason is some of those other rooms get pretty large and once you get so large, it’s more economical to do hydronic heat and put a boiler in there. [Radiant heat] is not a system where you’re going to do the whole house.”
Tips to Create an Effective Recruiting Plan RISMedia (09/23/10) Shyiak, Todd
Together, We Can Treat the Pain of Foreclosure
Real estate brokers seeking to boost their bottom lines should focus on agent recruitment. Research shows that four to five experienced agents will generate the same amount of revenue as 25-plus new agents, who require more time and effort on the part of the broker to achieve success. Brokers will need to implement a plan that takes into consideration the added amount of work and skill necessary to recruit successful agents. This plan should involve developing a target list of agents they would like to recruit, training to improve their telephone skills to secure appointments with these agents, and interview techniques that emphasize listening over talking. In addition to establishing best practices for
Milwaukee Journal Sentinel (09/25/10) Prioletta, Maria; Sanchez, Bethany; Schmidt, Raymond
A task force has urged wind farm developers in Every month, an average of 500 foreclosure actions are filed in the City of Milwaukee. Many involve long-term homeowners who refinanced their homes to make necessary repairs but have since lost their jobs or otherwise been impacted by the down economy. Others are retirees on fixed incomes with escalating medical costs. Enter the “Take Root Milwaukee” campaign, a partnership of housing service providers that include local REALTORS®,
recruitment, brokers must be ready to devote plenty of time to prospecting, meeting with agents, and following up with them.
Don’t Take Shortcuts With Real Estate Contracts Inman News (09/23/10) Boardman, Teresa
REALTORS® must take all possible steps to ensure a transaction is performed correctly to avoid being sued, and this should include correctly completing contracts. When contracts have a blank space where the interest rate is to be named, some agents insert the word “market” to mean the market interest rate. An actual number is supposed to be written there. Some REALTORS® may not number the pages in a purchase agreement, but others number the pages to prove their existence and inclusion in the agreement. Agents would be wise to write their contracts in such a way that if they were questioned by a lawyer they could defend each step of the contract process. While most states do not require that licensees attend courses on real estate forms as part of their continuing education, some experts recommend such classes to ensure REALTORS® understand what constitutes a correctly written contract.
More Construction Planned for Northeast Wisconsin WLUK-TV (09/22/10) Leland, Mark
Since the first of the year, the city of Green Bay has issued permits that account for more than $77 million worth of development. A year ago at this time, the total was closer to $46 million. Derek Lord, the city’s economic development director, points to commercial development as the key to turning economic conditions around. Indeed, commercial property development so far in 2010 has comprised the bulk of the total construction activity. He notes, “We expect five ground breakings yet this year just in the I-43 Business Center alone.” New homes currently make up a smaller piece of the construction pie, but even homebuilders are seeing more business. Scott Puyleart, president of the Brown County Homebuilders Association, confirms, “We’re on the upswing. We’re improving from what we’ve had the last couple years.” Puyleart’s company recently completed a 2,300-square-foot home in Bellevue, one of 40 homes in the area’s Showcase of New Homes.
REALTOR® Newswire is a monthly news service prepared exclusively for the Wisconsin REALTORS® Association by Information, Inc. Reproduction, use, or inclusion of this material in other publications, products, services or Web sites is not allowed without prior written permission from the Wisconsin REALTORS® Association.
wisconsin real estate magazine
2010-2011 Board of Directors Executive Committee John Horning, Shorewest REALTORS® �������������������������������������WRA Chairman of the Board Robert Keefe, Keefe Real Estate ������������������������������������������������WRA Chairman-elect Renny Diedrich, Coldwell Banker The Real Estate Group������������������������������������ WRA Treasurer William Malkasian, CAE ����������������������������������������������������������������� President Beth Jaworski, Shorewest REALTORS® ����������������������������������������������������������Vice President Jerry Lyons, Shambeau & Lyons Real Estate ����������������������������������������������������������Vice President Steven Lane, First Weber Group Northern Wisconsin, LLC�������������������� Director-Vice President
Tim Stemper, Shelter Real Estate �������������������������������������������� Director-Vice President
Left to right: William Malkasian, Renny Diedrich, Steven Lane, Rob Keefe, John Horning, Jerry Lyons, Tim Stemper, Beth Jaworski
Statewide Company Directors
Arthur Mays – Region Three��������������������������������������������������������Realty Among Friends, LLC
Joyce Bytof�������������������������������������������������������������� Coldwell Banker The Real Estate Group
Sonya Mays ���������������������������������������������������������������������������������������Keller Williams Realty
Casey Clickner����������������������������������������������������������������������������������Shorewest REALTORS®
Timothy Stemper������������������������������������������������������������������������������������Shelter Real Estate
Tamara Maddente�������������������������������������������������������������������� First Weber Group, Realtors
John Drzweiecki�������������������������������������������������������������������������������Century 21 Acre Realty
Patricia Kaster – Region Four������������������������������������������������������������� River City REALTORS®
Regional Company Directors Sharon Smolensky – Region One����������������������������������������� Keefe Real Estate of Burlington Robert Weber – Region Two�������������������������������������������������������������� First Weber Group, Inc. Judy Hearst – Region Three������������������������������������� Coldwell Banker Residential Brokerage Jeffrey Jones – Region Four����������������������������������������������������������������� Adashun Jones, Inc. Steven Lane – Region Five���������������������������������First Weber Group Northern Wisconsin, LLC
Rita Blenker – Region Five�������������������������������������������������� Century 21 Gold Key Realty, Inc. Ronald Jones – Region Five��������������������������������������������������� Coldwell Banker Action Realty Jeffery Theisen – Region Six������������������������������������������������������ J. Theisen, Inc. REALTORS® Krag Bromberg – Region Six��������������������������������������������������������������������� RE/MAX Affiliates Roy Ramos – Region Seven����������������������������������������������������HouseWorks Real Estate, LLC
Michael Brenizer – Region Six����������������������������������� Coldwell Banker Brenizer REALTORS®
Past Chairman Directors
Steve Hamer – Region Seven����������������������������������������������������������ShoreWEST REALTORS
John Flor����������������������������������������������������������������������������������������������������Six Lakes Realty
Terry Hilgenberg����������������������������������������������������� Coldwell Banker Hilgenberg Real Estate
Regional-Representative Directors Rose Bogosian – Region One��������������������������������������������������������������Gonnering Realty, Inc.
Michael Spranger����������������������������������������������First Weber Group Northern Wisconsin, LLC
Daniel Kruse – Region Two ������������������������������������������������������������������Century 21 Affiliated
Terry Monroe – Region Two������������������������������������������������������ Stark Company REALTORS
Kenneth Dickson�������������������������������������������������������������������������������������������� Johnson Bank
Paul Schieldt – Region Two�����������������������������������������Realty Group of South Central WI LLC
Miles Meidinger���������������������������������������������������������������������������������������������The Title Team
Mikel Kollmansberger – Region Three�����������������������������������������������Shorewest REALTORS®
Stephen Provancher���������������������������������������������������������������������NAI MLG Commercial, Inc.
wisconsin real estate magazine
wisconsin real estate magazine
REALTORS® Endorse Walker For Governor Members Support Walker over Barrett 66% to 19% By Michael Theo and Joe Murray
The WRA Board of Directors voted to endorse Scott Walker for Governor and Rebecca Kleefisch for Lieutenant Governor in the allimportant 2010 general elections on November 2nd. Their unanimous decision followed unanimous recommendations from the WRA Political Strategy Group, who analyzed the candidates’ stands on past and future issues, as well as the unanimous decision by the Trustees of the REALTORS® Political Action Committee to give the candidates maximum financial support.
Why Walker? The Record. The decision to endorse Scott Walker for governor followed a thorough review of each candidate’s record of support for past real estate-related issues, as well as their responses to questions regarding key pending issues important to homeowners, property owners and REALTORS®. While REALTORS® have enjoyed a very good working relationship with both Tom Barrett and Scott Walker, the records and responses clearly show that Walker is the better choice for REALTORS®. For example, while in the state legislature, both Walker and Barrett have strong REALTOR® voting records – with Walker supporting REALTOR® issues 91% of the time and Barrett supporting us 87% of the time. (Barrett served in the state legislature from 1987-1992 and Walker served from 1993-2002.) However, a deeper look shows Walker supported REALTORS® on key, sometimes more controversial, legislation, showing a deeper affiliation with core REALTOR® positions over time than Barrett. For example, Walker supported REALTOR® issues on important tax policy, private property rights, property tax relief, license law revisions, campaign finance reform and landlordtenant issues, some of which were decided on very close votes. Tom Barrett tended to vote with REALTORS® on less controversial legislation that passed on nearly-unanimous, bipartisan votes. This trend continued when Tom Barrett went to Congress as well, but with a more disturbing composite record – voting with NAR only 29% of the time and voting against NAR 71%. Again, on most tough issues during his years in Congress from 1993-2002 – issues dealing with property rights, VA and HUD appropriations, health insurance, estate and other taxes – Tom Barrett voted against the REALTOR® positions. In reviewing the executive records of Tom Barrett as Milwaukee Mayor and Scott Walker as Milwaukee County Executive, the pattern continues. On key issues dealing with tax levies, landlord licensing, abandoned properties, mandates on development and construction benefits, prevailing wages, and sick leave (to name just a few), Scott Walker backed the REALTOR® position more than Tom Barrett. And finally, in response to a written WRA questionnaire, the two wisconsin real estate magazine
candidates addressed issues regarding job growth, taxing and spending, chronic budget deficits, private property rights, and property tax relief. While Walker gave specific answers, nearly all of which were consistent with WRA positions, Barrett gave generally abbreviated, rhetorical responses that made it difficult to determine whether or not they were consistent with REALTOR® positions.
Members Overwhelmingly Support Walker The morning after the September 14 primary election, the WRA sponsored a professional survey of all members to determine their preference in the governor’s race. The result was an overwhelming preference for Scott Walker – with 66% saying that they are voting for Scott Walker, versus just 19% supporting Tom Barrett (with 15% undecided). The lopsided pro-Walker support was even greater when considering the intensity of the Walker support, with 56% of members saying they would “definitely” be voting for Walker (the other 10% said “probably” Walker). Importantly, independent REALTORS® (i.e., not self-identified as Democrats or Republicans) favor Walker over Barrett 57% to 22%. This support was consistent across every region of the state. When asked if they have a favorable or unfavorable impression of the candidates, members’ preference for Walker was even greater, with Walker enjoying a 70%-25% favorable to unfavorable impression with members and Barrett having a 32%-60% favorable to unfavorable ratio. Finally, when members were asked whether the WRA should endorse one of the candidates, 66% of members said yes and 34% said no. When asked which candidate the WRA should endorse, 75% said Walker and 25% said Barrett.
Take Action The WRA endorsement of Scott Walker is based on real estate-related issues. While other, non-real estate issues will certainly be important considerations for individual REALTORS®, our recommendation is based on business and economic issues critical to homeowners, property owners and REALTORS® in Wisconsin. All REALTORS® who share this support for Scott Walker are asked to take action in the crucial days remaining before the November 2nd election. All members should consider financial and volunteer support for Walker, as well as helping with other grassroots campaign activities such as volunteer work, yard sign placements, campaign mailings, get out the vote phone banks, etc. For more information on how you can help, contact the WRA or your local board. Michael Theo is Senior Vice President of Legal and Public Affairs and Joe Murray is Director of Political and Governmental Affairs for the WRA.
best of the legal hotline
Working with Limited Service Listings
Limited service brokers are licensed brokers who offer their seller-clients something different than the traditional full range of brokerage and related administrative services. These brokers may provide little or no property marketing or brokerage services other than submitting the property listing to the Multiple Listing Service (MLS). The listing typically requires the seller to pay the listing broker any fee owed the co-broke when a cooperating broker procures the buyer.
Re: Limited service listings. Does the broker listing the property have to actually view the property?
When cooperating brokers interact with a limited service listing, some of them may become frustrated because the listing broker may not participate in the transaction in the traditional manner and the cooperating broker may need to find a way to step in and help with forms, disclosures, showings, negotiation and offer implementation and closing coordination. Although Wisconsin allows the parties to decide the scope of the broker-seller relationship, the broker needs to do more than just list the property on the MLS. Licensees have certain duties to clients and customers that cannot be waived.
with tracy rucka
wisconsin real estate magazine
Wis. Admin. Code § RL 24.07(1)(b) requires that a broker perform a reasonably competent and diligent property inspection and ask the owner about the condition of the structure, mechanical systems and other relevant aspects of the property – before executing the listing contract. The broker must also ask the seller for a written response to the broker’s property condition questions. License law does not provide any exception for limited service listings. The information the broker obtains from the inspection is compared to the seller’s property condition report to determine if the broker needs to disclose any material adverse facts.
Disclosure of Material Facts and Material Adverse Facts What disclosures does a limited service broker need to make? Does the limited service broker need to disclose material adverse facts? The seller and the limited service listing broker are free to negotiate a listing contract which excludes all but the elements of brokerage services required by law. License law, however, does not allow a
broker to avoid or circumvent disclosure duties. A broker cannot waive the duty to disclose material facts to his or her client. Nor can a broker waive the duty to provide timely written disclosure of material adverse facts to all parties in a transaction.
Negotiation Are Wisconsin brokers offering limited services required to negotiate on behalf of the seller? The Wisconsin license law changes that were adopted in 2006 give sellers the option to waive negotiation services in limited service listings. The legislature, concerned about consumer protection, requires the broker to explain to the client the ordinary services a client needs to successfully reach closing and to provide written notice to ensure that consumers understand the significance of waiving negotiation services.
Trust Accounts and Record Retention When the broker has a limited service listing and the property is sold directly through the seller, what is the listing broker required to have in their files? And what about trust accounts? Wisconsin trust account rules require any real estate broker who receives client funds to establish an interest bearing common trust account. The standard WB offers provide that the earnest money will be paid to and held by the listing broker. Therefore, unless the offer is modified to have the earnest money held elsewhere, a limited service broker would establish a trust account and hold earnest money. A limited service listing may provide that the broker will not hold the funds and that the terms of any offer will be modified to make other arrangements for earnest money. Likewise, the broker must retain copies of documents, correspondence and trust account records related to transactions for three years for licensing purposes per Wis. Admin. Code § RL 15.04. Brokers may consider longer holding periods for tax audit and possible litigation purposes. In addition, § 15.03 requires that closing statements accounting for all funds paid and received by the broker be delivered to the parties by the listing broker or the broker’s designee. A flat fee or limited service broker who does not create or receive the closing statements may need to create a strategy for obtaining these materials.
Limited Service and Advertising The limited service broker has entered the client’s property in the MLS and provided a simple “For Sale” sign that includes the client’s phone number. Must the broker’s company name appear on the sign in addition to the words “For Sale” and the client’s phone number? If the answer is yes, can the broker avoid having his or her name appear on the sign by not providing the sign at all? Buyers and other brokers may be confused when they see a listing
wisconsin real estate magazine
broker’s MLS listing and then see a yard sign with the owner’s telephone number in the front yard of the listed property. Whether a seller may advertise on his or her own beyond any advertising done by the listing broker will typically depend on the terms of the listing that the seller and listing broker have entered into. There is no way to tell for sure without seeing the listing contract. In an exclusiveagency listing, for example, the seller will typically have the right to do his or her own advertising, concurrent with the listing broker’s advertising. The seller might also have the ability to advertise in a flat-fee listing or in other limited service listings. Although Wis. Admin. Code § RL 24.04(2) provides that the listing broker must be named in all advertising done by the broker or any of his or her sales associates, sellers are not subject to § RL 24.04 or other license law regulation. It may be that the seller is authorized to do this advertising even though the property is listed and is in the MLS.
Exclusive Agency Listings The seller wants to hire the broker to market the property but also wants the right to look for buyers on his or her own. Is there a listing contract for this purpose?
By definition, in Wis. Admin. Code § 16.02(2), an exclusive agency listing is one where the property is listed with only one listing broker, and the seller retains the right to sell the property by him or herself without owing a commission to the broker. A broker may modify a WB listing contract to accomplish this result because there is no specific form created for exclusive agency. To modify the 2008 WB-1 Residential Listing Contract-Exclusive Right to Sell to produce an exclusive agency listing, the following items should be modified or deleted: 1) delete the phrase “right to sell” from the title and line 1 of the Listing and insert in its place the word “agency;” 2) add a provision under Additional Provisions to the effect that “Broker’s commission is not earned based on lines 42-45 of the Commission section if the offer accepted, option granted or exchange agreement entered into by Seller is with a purchaser procured by Seller;” and 3) delete the words “by Seller” from line 46 in the Commission section.
Cooperating Brokers Working with Limited Service Listings Offer Presentation and Cooperative MLS Compensation The seller has a For-Sale-By-Owner (FSBO) sign in the front yard. The buyer’s agent knows the property is in the MLS with a limited service broker. Can the agent write the offer and submit it to the listing broker? What if the buyer goes to the seller directly? A buyer’s agent may draft and negotiate the offer for the buyer and may be able to submit it to the listing broker for presentation to the seller. Whether a buyer’s agent can negotiate directly with the seller depends on the terms and conditions of the listing. With the listing broker’s consent, a buyer’s agent may negotiate with the seller directly and enter into an agreement to provide nonbrokerage services to the seller for a fee. Any time a broker enters a property in the MLS, the broker should carefully consider the compensation provisions. Because the listing broker, not the seller, makes the MLS offer of compensation, the listing broker will be obligated to pay any cooperating broker who procures the buyer for the sale. The listing broker will want commission provisions in the limited service listing that clearly require the seller to compensate the listing broker in the amount of the MLS offer of compensation if it is earned by a cooperating broker.
Negotiation Directly with the Seller Can the cooperating broker contact the seller directly if the seller has a limited service listing? Wis. Admin. Code § RL 24.13(5) provides that licensees may not negotiate the sale of a property with the seller directly if the party has an unexpired written contract in connection with the real estate that grants another broker an exclusive right to sell.
wisconsin real estate magazine
In certain circumstances, a broker may negotiate with the seller directly if he or she is reasonably compelled to do so or with the consent of the listing broker. Because each limited service business model is different, the cooperating broker should check with the listing broker before approaching a seller directly.
Getting the Accepted Offer to Closing The offer has been accepted and the seller isn’t doing anything to get the transaction closed because they don’t understand what is required. What should the cooperating broker do? The agent can recommend the seller hire an attorney or other service providers to help them coordinate the closing. If the seller is unwilling, some cooperating brokers take on these responsibilities without compensation in order to get the deal done. Depending on whether the seller needs brokerage services, administrative services or other professional services, the broker may be able to assist the seller and charge a fee. The broker may not, however, charge a fee for the completion of real estate transaction documents because Wis. Admin. Code § RL 16.05 prohibits licensees from making a “separate charge for completing an approved form in connection with a transaction.” The agent is also prohibited from engaging in the unlicensed practice of law. What can the cooperating broker charge the seller for the extra work needed to close the transaction? A cooperating broker may develop a closing services package which provides the necessary services the seller needs to get to closing. A subagent could develop a service agreement listing the services the licensee is not legally required to provide but would be willing to provide to the seller for a fee. The agreement would ideally also list services the broker is prohibited from providing. The seller would be free to accept or reject the package. Note that this concept is not a recommendation but merely a reflection of one way to address potential issues that might arise. It is recommended that legal counsel review such an agreement to ensure that there are no legal problems. Do buyer’s agents have any other options? Buyer’s agents may wish to consider modifying the buyer agency agreement so they may charge buyer clients buying a property subject to a limited service listing the same fees that would ordinarily be charged on a FSBO. Logically, the issue is the same: absent a listing broker providing services, the buyer’s agent may have to do more work and the compensation schedule should reflect that. If this is done, the buyer is free to pass this cost along to the seller by asking the seller to pay all or part of the buyer’s agent’s fee in the offer. Tracy Rucka is Director of Professional Standards and Practices for the WRA.
Determining Deficiency Judgments: By debbi conrad
When a property owner stops making mortgage payments, the lender files a foreclosure action in court, seeking to have the loan paid in full. Through a series of hearings the lender strives to legally eliminate the interests of the borrower and those holding any junior or subordinate liens, and have the property sold to raise the money needed to pay the entire balance due on the mortgage loan.
foreclosure judgment confirms that the borrower is in default and the lender has the legal right to have the property sold by a sheriff ’s sale, gives the time and place of the sheriff ’s sale and indicates whether the lender has reserved the right to secure a deficiency judgment. A deficiency judgment is a judgment for the lender against the borrower for any amount still owed on the mortgage loan after the proceeds of the sheriff ’s sale are applied to the debt. The foreclosure judgment also specifies the length of the borrower’s redemption period; that is, the amount of time given to pay the entire mortgage debt and thus prevent the sheriff’s sale. In a foreclosure action, the lender often has the choice to ask for a deficiency judgment or forego the deficiency in exchange for a shorter redemption period for the borrower. For example, the redemption period for the foreclosure of a single-family home will be 12 months if
wisconsin real estate magazine
the lender seeks a deficiency judgment and 6 months if the lender does not pursue the deficiency. After the property is sold at the sheriff’s sale (see “Let’s Make a Deal: Purchasing Properties at Auctions and Sheriff’s Sales” in the August 2010 edition of the Wisconsin Real Estate Magazine at http://news.wra.org/story. asp?a=1349), the final step in the foreclosure process is a hearing for judicial confirmation of the sheriff’s sale. The primary purpose of this final hearing is to allow the court to ensure that the process was conducted in accordance with the law and that the property sold for a fair value.
Deficiency Judgments While the common assumption is that any deficiency judgment against the borrower will equal the difference between the total amount the borrower owed and the winning bid at the sheriff’s sale, this is not what happens unless the court is satisfied that the successful bid was for “fair value.” “Fair value” does not mean “fair market value,” the value that the property might have at some remote future time, or the assessed value of the property. “Fair value” is a value that is not so inadequate as to shock the conscience of the court. It is the price that a person who is willing and able to buy the property would reasonably pay for it, not for purposes of speculation, but for the use to which the property has been put, or reasonably may be put. For example, in one Wisconsin case, the court denied confirmation of a sale for $2,350 where the fair value was set at the amount of the mortgage debt ($4,800), the property was assessed at $4,525 and two real estate brokers had testified that the property could bring in $4,500 - $5,000 at a private, as opposed to a distress, sale. In another case, the lender bid $23,000 on a restaurant/ news.wra.org
bar property that had about $23,000 in unpaid real estate taxes. The lender’s appraiser valued the property at $46,800 but he appraised the property as a vacant building while the owner’s appraiser valued the property at $131,000. The trial court order confirming the sheriff’s sale was reversed and the matter was remanded for a new hearing because the court erroneously relied on the “vacant shell” appraisal. Under Wis. Stat. § 846.165(2), if the property sells for less than the total amount due plus sale costs, the sale will not be confirmed and no judgment for deficiency rendered until the court is satisfied that the fair value of the property has been credited against the total mortgage debt. If the court finds that the price from the sheriff’s sale is inadequate, the court may determine the fair value and enter a deficiency judgment in the amount of the total mortgage debt (including interest and costs) less the fair value. On the other hand, the court may choose to order a resale of the property. In the event of a resale, the court may set the fair value as the “upset,” or minimum, price. Many of these principles were illustrated in the recent case of M&I Marshal & Ilsley Bank v. Peterson (No. 2010AP1093-FT, Ct. App. 2010) found at http://www.wisbar.org/res/capp/2010/2010ap001093.htm). In 2009, M&I Marshall & Ilsley Bank (M&I) brought an action to foreclose the mortgage it held on Peterson’s residential rental property. The circuit court entered a judgment of foreclosure and granted M&I the right to pursue a deficiency judgment. M&I purchased the property at the sheriff’s sale for $96,485.39 and then sought judicial confirmation of the sale and a deficiency judgment against Peterson for $22,822.75. At the judicial confirmation hearing, Peterson’s real estate broker testified that the property’s fair market value was $120,000, noting that its “fair value” would be somewhat less. M&I submitted a Broker Price Opinion (BPO) which estimated the sales price at $115,000 after 120 days or at $94,500 after a thirty-day quick sale. The court found the property’s fair market value was $120,000. The court then subtracted closing costs and commission and concluded the most Peterson could have reasonably expected on a sale was $112,000. Since the property would likely never sell for $120,000 in a distress sale and the property had been listed for six months without any offers, the court pegged the fair value at $110,000. $110,000 was credited against Peterson’s mortgage debt and M&I was awarded a deficiency judgment for the balance. The order confirming sale stated the fair value of the property was $110,000, but it also deducted $3,663.93 in unpaid property taxes so the credit against the mortgage debt was only $106,336.07. Peterson appealed to the Wisconsin Court of Appeals, arguing the circuit court erred by reducing the property’s fair value from $112,000 to $110,000 and by subtracting the unpaid property taxes. Under Wis. Stat. § 846.165(2), whenever a mortgaged property sells for less than the mortgage debt, the trial court must make a specific finding of the property’s fair value and must determine that the fair value has been credited toward the total amount due before confirming the sheriff’s sale. The Court concluded that the trial court properly exercised its discretion by setting the property’s fair value at $110,000. The Court found this was the product of a logical reasoning process that relied on M&I’s BPO, the testimony of Peterson’s real estate broker and the distressed sale situation. The court’s $2,000 reduction in fair value was only a 1.8% decrease and the Court indicated that is de minimis. The Court of Appeals found that the circuit court erred when it subtracted the unpaid property taxes because the court never received
wisconsin real estate magazine
the tax statements into evidence. Furthermore, M&I did not introduce any evidence at the confirmation hearing that the unpaid taxes affected the property’s fair value. Therefore the case was remanded to the circuit court with the instruction to set the fair value at $110,000. Under those circumstances, M&I had the option to agree to credit Peterson’s mortgage balance with $110,000 and accept the judicial confirmation of the sheriff’s sale on those terms. If M&I declined to do so, a resale would have to be ordered by the court.
Lenders apparently do not always bid in the total loan balance due at sheriff’s sales – in this case they bid in less.
The amount of the highest bid at a sheriff’s sale is not necessarily going to be the amount credited against the borrower’s loan balance. Instead it may be the fair value determined by the court that is offset against the debt.
In the Peterson case, the court looked to the lender’s BPO and the testimony of the property owner’s broker to establish fair value.
Resources: For a review of the mortgage foreclosure process, visit the Wisconsin Foreclosure Assistance Resource Center at www.wisconsinforeclosurekit. org/index.html and review the May 1999 Legal Update, “Mortgage Foreclosures,” at www.wra.org/LU9905 and the March 2009 Legal Update, “Working with Distressed Sales,” at www.wra.org/LU0903. Debbi Conrad is Senior Attorney and Director of Legal Affairs for the WRA.
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By cori lamont
Watch Your Step: Tips for Listing a Home with Basement Issues
As in any fall following a rain-filled summer, licensees have questions about basements ranging from leaking to foundation issues. And without fail, listing agents ask, what is my responsibility when it comes to disclosing basement issues? The following is a collection of scenarios listing agents are often confronted with when listing a home with basement defects. For further reference of leaky basement cases and other real estate related cases, review the August 2010 Legal Update,” Case Law Update 2010” at www. wra.org/LU1008. Additional Resources include the October 2009 Legal Update, “Diligent Disclosure,” at www.wra.org/LU0910 and the July 2002 Legal Update, “Duty to Disclose,” at www.wra.org/LU0207.
misrepresentation – a party’s actions may fulfill that element in the right circumstances.
Scenario 1. During the pre-listing walk-through, the listing agent noticed the basement walls were recently painted.
Wis. Admin. Code § RL 24.07(1)(b) requires the listing broker prior to the execution of the listing contract to inspect the real estate and make inquiries of the seller on the condition of the structure, mechanical systems and other relevant applicable aspects of the property. This rule also requires the licensee to ask the seller to respond in writing. This inquiry and the seller’s written response generally take the form of the Real Estate Condition Report (RECR).
Response: Be alert when inspecting the property prior to executing the listing contract if you see nicely painted basement walls. It may be wise to ask questions about whether there have been any basement water problems or when the painting occurred. A false advertising claim under Wis. Stat. § 100.18 does not necessarily require a written or a verbal
With respect to the listing broker’s inspection of the property, no written record is required, but prudent listing brokers will require all agents to keep a written record of their observations, using a form like the WRA Listing/Selling Visual Inspection Form. This form, WRA-LAI, is available in ZipForm.
wisconsin real estate magazine
Scenario 2. The seller asks the listing agent to complete the RECR, including disclosing seepage in the basement. Response: The listing agent should remember that the responsibility to complete a RECR falls solely upon the shoulders of the seller. If the seller wants specific guidance as to what to disclose or not disclose, the agent should refer him to his attorney for legal advice. An agent who tells a seller how to answer RECR questions risks liability as to the validity and correctness of the information. This act is also considered providing a party legal advice and would subject the licensee to both litigation and discipline by the Department of Regulation and Licensing (DRL). § RL 24.06(1) prohibits licensees from engaging in activities that constitute the unauthorized practice of law.
Scenario 3. The seller disclosed to the listing agent that last month their basement took water but does not want to disclose the information on the RECR. Response: If a seller fails to disclose a defect and it is not disclosed elsewhere, the licensee must promptly disclose the information or condition in writing if it constitutes a material adverse fact (§ RL 24.07(2)). The licensee is required to make this disclosure to all parties in the transaction, even if the client directs the licensee not to disclose. This includes if a party to the transaction were to so indicate, or if a competent licensee would generally recognize that this fact is of such importance that it would affect a reasonable party’s decision to enter into a contract or would affect the party’s decision about the terms of the contract. A material adverse fact: (1) has a significant adverse affect on the value of the property; (2) significantly reduces the structural integrity of the property; (3) presents a significant health risk to the occupants of the property or; (4) is information that indicates that a party to the transaction is not able to or does not intend to meet their obligations under the contract. If the licensee knows or is aware of information suggesting the possibility of a material adverse fact, § RL 24.07(3) states that the licensee will be practicing competently if the licensee makes timely written disclosure of the information suggesting the material adverse fact to all parties to the transaction, recommends the parties obtain expert assistance to inspect or investigate for the possible material adverse fact, and, if directed by the parties, draft appropriate inspection or investigation contingencies. Since there is not a state-approved form for a licensee to make this disclosure, the WRA has created the disclosure of material adverse fact letter. A sample material adverse fact disclosure letter is available on page 26 of the October 2009 Legal Update at www.wra.org/LU0910. This document, WRA-DMAF, is also available on ZipForm. Another helpful resource is the April 2007 Broker Supervision Newsletter, “Material Adverse Facts: Disclose What? Disclose When?”at www.wra. org/online_pubs/broker_supervision/2007/br0704.asp.
wisconsin real estate magazine
Scenario 5: The seller completed the RECR at the time of the listing. 30 days later, heavy rains left standing water in the basement. Response: Wis. Stat. § 709.035 requires the sellers to amend the RECR prior to the acceptance of a contract if the sellers obtain information or become aware of any condition that would change a response on their RECR. The sellers may choose to attach a copy of an inspection report or test results to the RECR to accomplish disclosure for future transactions. If the sellers amend the RECR, it gives the buyer the right to rescind the offer to purchase. In addition, if the seller makes a full disclosure on the RECR, a disclosure by the licensee is not needed. If the seller does not amend the RECR, the broker in the transaction has a duty to disclose material adverse facts to all parties, in writing and in a timely manner.
Scenario 6: The seller has never lived in the home and believes they are not legally required to disclose the basement foundation issues to a buyer. Response: Chapter 709 generally applies to all persons who transfer real estate containing one to four dwelling units, including condominium units, time-share property, living quarters in a commercial property, etc. Unless the buyer agrees to waive rights under Chapter 709, all sellers subject to Chapter 709, whether broker-assisted or FSBO, must complete a Chapter 709 RECR or risk rescission of the offer to purchase. Chapter 709 allows the buyer to waive the right to rescind and the right to receive a RECR.
DRL Discipline – Don’t Do This! The salesperson listed a property and the sellers accepted an offer. Several days later the salesperson learned there was some amount of water in the basement, and the buyers noted the basement carpet had been removed and the basement floor had been freshly painted. The salesperson verbally informed the buyers that there had been water in the basement, but did not do so in writing. • LAWS/RULES VIOLATED: By failing to inform the buyer, in writing, that the property had had a build-up of water in the basement, as required by § RL 24.07(2), the salesperson demonstrated incompetency to act in a manner which safeguards the interests of the public. • PENALTY IMPOSED: The salesperson’s license was reprimanded, and he was required to pay costs of $450 to complete seven hours of education including study of a licensee’s disclosure duties.
Cori Lamont is Director of Brokerage Regulation and Licensing for the WRA.
Realtor® sales tip
REALTORS® Toolkit Successful tradespersons accumulate quite the toolkit over time, and one key to their success is keeping their most frequently used tools handy and razor-sharp. As professional REALTORS®, a primary responsibility is to keep our toolkit handy, but more importantly, to keep our toolkit stocked with the proper tools to work today’s market.
By marcus a. wally
Our fast-moving industry requires us to rotate our tools to capture the current market’s opportunities. So change is a constant and using old tools will put us out of business. My car contains a hammer (or rubber mallet) to place a sign into hard ground or a boundary marker stake; Phillips and flat head screwdrivers for screwing sign/name riders in place; and several different-sized screws and nuts for the riders as well. I’ve got: •
a flashlight, as it might be dusk when I show, plus some houses are boarded up (foreclosures) and there is no electricity available;
plastic bags for covering the ends of the signs when you pull them from the ground so you don’t get dirt in your clean car; a pair of pliers as they are always useful in a variety of situations;
a spare phone book in case you have to call a number that’s not in your cell phone; and
a car phone charger for your cell phone so that those dozens plus messages don’t drain your battery life.
Digital cameras offer a means of recording video as well as still photographs. However, even a two-minute video requires a large chunk of memory and many Internet providers will not be able to handle that, so keep this limitation in mind. Depending on the model, flip video cameras can take differing lengths of video (e.g., 30 minutes, 60 minutes, 2 hours, etc). The camera has its own built-in software and the video is “compressed” so that it does not exceed the Internet provider’s limitation. They cost $125 and up depending on the recording length required. Connection to a computer is via a pop-out USB connector on the side of the camera, without the need for a cable. They are simple to use. Switch it on, press the “record’ button and that’s it! There is a control for zooming in and out. When the video is completed, pop out the USB connection, plug it into your laptop and the software appears automatically. You can choose to have no sound, spoken voice narration or a music selection overlay.
Here are a few additional items that should be in your personal toolkit:
Using the software provided, you can send to any email address (for example, directly to your customer who may be thousands of miles away). The FLIP video can also be saved to your hard drive. This is the wave of today!!
1. Digital Camera. Today the majority of buyers and sellers shop online before they contact us. So having as many, high-quality photos as your MLS will allow will separate you from the pack. Pictures can be inviting or disqualifying. Make sure you photos are clear and unique. Take pictures of surroundings as well as the exterior/interior of a property to give a sense of its value to the neighborhood/community.
3. Tape measure. Tucked into the pocket of my driver’s door sits a dependable tape measure, ready to take the measurements of all the properties I list and sell. My golden rule is to never remove it from my car as I use it almost every day. One of the first lessons I learned in real estate was to always create my own listing data and to never copy another agent’s information.
2. Flip Video. If a picture is worth a thousand words, then a small, compact video camera must be worth a million words! Or, said another way, one video is worth a thousand pictures!
A Wisconsin licensee can be found liable to a buyer for inaccurate statements made by the broker which appear to the buyer to have been made from the broker’s own personal knowledge. Wisconsin law provides that a buyer should be entitled to rely on the factual statements made by a professional. Accordingly, when a broker receives data from the seller, the county treasurer’s office, or another third party
One approach I use to market my showcase listings is to film a short video of each one. With the technology available, I can film the entire property and upload the video to a number of
online avenues including, YouTube and MySpace.
wisconsin real estate magazine
and restates the information in the MLS, data sheets or other advertising as if it were fact, the broker may be responsible for the accuracy of the information. Accordingly, licensees are urged to specifically attribute data used in advertisements, such as acreage, square footage, and assessed values, to its source. 4. Business cards. Another one of my golden rules is to always have a large stack of my business cards rubber-banded together in my glove box. Although I keep my business card case with me at all times, I frequently find it empty and am glad I have the safety net of the glove box. Business cards are, in my opinion, our single most valuable marketing tool. And, as many of us were trained to do, I always give two. Why two? I give one to the prospect in front of me and then I ask for their help in sharing one business card with someone they know needs the services of a professional real estate broker. THIS CAN BE MAGIC! 5. Listing and Selling packets. Preparation is key to any professional and having a stack of pre-made listing and selling packets (file folders containing all the documents I need to list or sell a home) ready for my use is a huge timesaver. My office staff keeps us loaded with all of the required paperwork that any of my agents can grab on the fly and run out the door. My commitment is to keep a few of each type in my car so that no matter where I am I am ready to do business (write up a listing or fill in the contract for sale and purchase).
down in South Florida. As we drove through one community, the buyers asked about a particular home that had a sign out front but was not on our list of homes to view that day. I quickly wrote down the information from the sign and reassured them that upon my return to the office I would look up this property in the MLS and email them the data sheet. By the time I got these words out of my mouth, the buyer in the back seat had the data sheet of the property up live on her phone. Well, that did it for me, so off to the Apple Store I ran. Besides awesome apps like REALTOR.com, which allows me to view any property listed for sale in the range of my current location, the phone was super handy in facilitating currency exchanges when I recently taught in India. It also provides cultural apps, restaurant apps, financial apps, movie apps, and more.
8. Lock box key card. Charged and ready to go, my Supra lock box key card is always with me, but I’m extra careful not to leave it in my car where exposure to extreme hot or cold can damage it. Without immediate access to all lockboxes, I am out of business.
7. Laptop computer. My laptop is my life. Even though my iPhone is capable of handling most tasks, I still carry my laptop computer with me. I can’t imagine my life on the road as a broker without having my laptop. It contains my contact management database, my calendar, etc. No desktop for me! I only roll with my small, lightweight, but very powerful, laptop.
Marcus A. Wally, MBA, is an active Florida REALTOR® in St. Augustine, Florida. Marcus is the founder and broker of New World Realty, which also manages coaching and facilitation of education classes around the world. Marcus earned his MBA from the University of North Florida in Jacksonville. He can be reached at (904) 669-1081 or by e-mail at marcuswally@ comcast.net.
9. Name badge. No doubt one of the most important marketing tools for any salesperson, the name badge goes hand-in-hand with my business cards. As I get dressed for success each morning, I never forget my name badge! These tools keep me competitive even in the most challenging markets. Having them at my disposal saves time (money) and allows me to perform on the spot! Today, customers seek immediate gratification and keeping sharp puts me ahead of the curve and ready to capture the business that’s all around me!
6. Smartphone. One of my most recent purchases is my new Apple iPhone. I decided to step it up and purchase what I now consider to be one of my most treasured tools. What threw me over the edge was working with a recent customer who also happened to be a broker
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wisconsin real estate magazine
608-797-0337 email@example.com www.JoBaldridgeRealtor.com
Serving Clients on Both Sides of the Mississippi
SAVE BIG $ $ $! A conference designed specifically for Brokers, Owners and Managers!
Country Springs Hotel | Pewaukee, WI December 9, 2010 General Sessions Ten Things You Might Not Know About Wisconsin’s Economy Richard Green, Ph.D. Professor, School of Policy, Planning & Development, University of Southern California Director, University of Southern California Lusk Center for Real Estate
Out of the Dark and Into the Light…Preparing for the Calm After the Storm Ron Peltier Chairman and Chief Executive Officer, HomeServices of America
Wisconsin REALTORS® Association
Designation WEEK Many Courses, One Location!
The Base Is the Middle Howard “Hoby” Hanna, IV, Howard Hanna Real Estate Services
Looking to Newer Operation Models for Success in 2011 Jack O’Connor, RE/MAX Professionals
Mortgage Lending – Past, Present, Future Don Lickel, M&I
Seven Leadership Tips to Retain Top Producers Jack O’Connor, RE/MAX Professionals
Kalahari Resort & Convention Center
Branding: It Should Speak For Itself Howard “Hoby” Hanna, IV, Howard Hanna Real Estate Services
Regulatory Boot Camp Michael Theo and Tom Larson, Wisconsin REALTORS® Association
A $500 airline travel certificate sponsored by Travelog will be given away at the end of the conference. You must be present to win!
Success register today!
February 8-11, 2011
Wisconsin Dells, WI
What is Designation Week?
According to the National Association of REALTORS®, designations can almost double your income in real estate. Whether you have a designation, want to earn more or are working towards your first one, Designation Week offers you an opportunity to take multiple courses in one week and make significant progress towards earning nationallyrecognized designations – all in one location. This year’s Designation Week will be held at the Kalahari Resort & ConvenSave with WRA’s tion Center in Wisconsin Dells on 3 Easy Payment February 8-11, 2011. Get yourself Options & Multiple on track to success by putting Registration your education dollars to work at Discount. Designation Week.
Four Ways to Complete Your Mandatory Continuing Education
www.wra.org/cecourse LIVE The Wisconsin REALTORS® Association is the top provider of real estate education in Wisconsin. Complete your 2009-2010 Continuing Education requirements by attending one of our live courses. The WRA hosts Continuing Education in all corners of the state. Course dates and locations vary. Visit www.wra.org/cecourse for a complete listing of course options.
THREE DISTANCE LEARNING OPTIONS If attending a live course does not fit your schedule, complete your CE through the WRA’s Continuing Education Distance Learning program. Courses are available in three formats: On Demand, DVD and self-study booklets.
On Demand Continuing Education – On Your Schedule! Distance Learning On Demand gives you the autonomy to take courses on your schedule – at your own pace – anytime – anywhere – from your own computer. Using a Web browser, watch “on-demand” education from the comfort of your own home, office or wherever there is a broadband connection. Best of all, there’s no need to travel or experience sales downtime to meet your CE requirements. $27/members | $35/non-members
Save Even More with Four-Pack and Six-Pack Discounts (Residential On Demand Only) All real estate licensees must renew their license before December 14, 2010. The Department of Regulation and Licensing requires all real estate licensees to complete 18 hours of continuing education each biennium, an increase from 12 hours. There are four mandatory courses and a list of six electives. Licensees must complete the four mandatory courses and two DRL-approved electives. At the time of renewal, licensees will now need to provide the following information for the 18 CE hours they have completed: Course Date, Course Title, Sponsor, Number of Hours.
Save up to 22 percent on CE costs by purchasing “on demand” education as a six-pack or four-pack.
Six-Pack Discount The six-pack option allows you to take the four mandatory classes and two elective courses of your choice. Get the courses and electives for only $126/members and $180/ non-members.
Four-Pack Discount Choose any combination of the mandatory and elective courses for only $92/members and $128/non-members. Pricing applies to residential Continuing Education On Demand ONLY. Package pricing is not available in other residential formats or commercial courses.
Mandatory Courses (All licensees must take courses 1-4.)
Course 1 - Listing Contracts Course 2 - Offer to Purchase Course 3 - New Developments Course 4 - Buyer Agency Agreements
These comprehensive, preparatory study guides allow you to study your CE curriculum at your own pace and then take the corresponding exam online when you are ready. Courses 1, 2, 3, 4 and Elective A and C are available in this handy format. It’s easy to use, and covers the material required to pass the exam. $27/members | $35/non-members
Elective Topics (Licensees must take two of the following.) Elective A - Risk Reduction Elective B - 1031 Exchanges and Exchange Opportunities Elective C - Condominiums Elective D - Landlord/Tenant and Property Management Elective E - Financing the Sale Elective F - Broker Supervision
wisconsin real estate magazine
DVD Complete your CE requirements in the comfort of your home with the WRA’s DVD distance learning education option. This program involves watching a DVD and taking the corresponding exam online All the 2009-2010 CE courses are available through this program. Simply watch a video, take an online exam, score and print your certificate. $27/members | $35/non-members
education CRS 111: Short Sales & Foreclosures November 12, 2010 Lake Geneva Complete core course for your SFR certification (Short Sales & Foreclosures Resource) and earn one core credit toward your CRS Designation plus you can earn your CRS faster with the Pro-Program with 10 years’ experience and 150 transactions plus one other CRS core course. Upon the successful completion of this course, you will be able to: 1.
Give competent advice and counsel to homeowners who are in danger of losing their home through foreclosure.
Negotiate successfully with financial institutions and other owners of REO properties.
Sell and list REO and short sale properties.
Help clients maintain possession of their homes by creating “short sales” on qualified properties that will lead to the successful sale of those properties.
Learn the new rules to short sales and loan modifications.
Demystifying Income Property Appraising October 20, 2010
Broker Pre-license November 1-4, 2010
This course covers contracts, approved forms, trust accounts, escrow and closing statements, business management and marketing, financial and office management, personnel business ethics, consumer protection, and specialty areas.
WRA Headquarters - Madison
In this class, you will: 1.
See how risk affects the value of an income producing property.
Learn about how “Net Operating Income” and “Operating Expenses” are calculated.
Be introduced to “Discounting” and “Future Value.”
See how “Capitalization Rates” are calculated based on the various relationships of Financial Components (Debt and Equity) & Physical Components (Land and Building)
Sales Pre-License Course January 4-7; 10-13, 2011
Personally calculate the value of properties.
WRA Headquarters - Madison To obtain a real estate license in the state of Wisconsin, you must first complete 72 hours of approved education courses such as our sales pre-licensing course. Second, you must pass a state-administered exam. The WRA is offering an eight-day accelerated, 72-hour sales program on January 4-7 and 10-13, 2011 in Madison. For more information, visit: www.wra.org/SalesPL
Compliance with USPAP (Record Keeping) November 29, 2010 WRA Headquarters - Madison An improper or inadequate workfile is one of the most common deficiencies noted by regulatory agencies. A properly developed and well-maintained workfile is the best way for an appraiser to limit their liability and protect themselves. This course is designed to equip participants with a thorough understanding of the USPAP and client requirements for creating and maintaining a workfile that supports their conclusions and demonstrates compliance with relevant standards and guidelines. Student must bring a current version of the 2010-2011 USPAP. If you need a copy, contact the WRA (800-279-1972) to order one.
wisconsin real estate magazine
QuickStart On Demand The QuickStart program assists agents in learning the business of real estate. Courses focus on contract issues, agency relationships and negotiating strategies. The program is designed to help agents become confident in their practice as well as focused on their personal business plan. Completion of the QuickStart program (four days) and passing the exams fulfills the requirements for GRI Course 1. Visit: www.wra.org/QuickStartondemand
Visit wra.org/CourseSchedule for full schedule.
***Includes Convention Registration.
Sales & Marketing Management Date Course Location
$ Early Reg.** $Reg. $ATD *Fulfills core education for NAR new Short Sales October 20, 2010 203K Specialist Designation Program Madison ***$199 $209 $229 and Foreclosure Resource (SFR) certification registration applies two weeks prior to October 21, 2010 At Home with Diversity Course Madison ***$69 $79 $99 ** Early the start of the course. November 12, 2010 CRS 111: Short Sales & Foreclosures: Protecting Lake Geneva *$145 $155 $275 # Appraiser section members receive a discount. Your Clients Interests (CRS Core 1-day class ) ***WI CRS Chapter Members receive a $20 discount on each course + an additional $20 off if registered for both classes. Non-WI CRS Chapter Members qualify for $20 off when registered for both classes.
Conference and Conventions Date Event December 9-10, 2010 Managment Conference February 8-11, 2011 Designation Week
Location Pewaukee To register call 800-279-1972 Wisconsin Dells To register call 800-279-1972
Real Estate Continuing Education
Classroom offerings of the 2009-2010 Approved for Minnesota Real Estate Credit.
October 18, 2010 October 19, 2010 October 20, 2010 October 20, 2010 October 20, 2010 October 21, 2010 October 21, 2010 October 22, 2010 October 25 & 29, 2010 October 27, 2010 October 27, 2010 October 27, 2010 October 27, 2010 October 28, 2010 October 28, 2010 October 28, 2010 October 28, 2010 October 28, 2010 November 1, 2010 November 3, 2010 November 3, 2010 November 4, 2010 November 4, 2010 November 4, 2010 November 5, 2010 November 5, 2010 November 5, 2010 November 5, 2010 November 8, 2010 November 8, 2010
2009-10 Course 2 (DVD) 2009-10 Electives C & E 2009-10 Courses 2 & 1 2009-10 Electives A & E 2009-10 Electives A & C 2009-10 Courses 4 & 3 2009-10 Courses 2 & 1 2009-10 Course 4 (DVD) 2009-10 Course 3 & Elective C 2009-10 Electives A & C 2009-10 Courses 4 & 3 2009-10 Courses 1 & 2 (DVD) 2009-10 Elective A (DVD) 2009-10 Elective C (DVD) 2009-10 Course 3 (DVD) 2009-10 Electives A & D 2009-10 Courses 3 & 4 2009-10 Courses 3 & 4 (DVD) 2009-10 Course 1 (DVD) 2009-10 Commercial 1 & 2 2009-10 Course 2 (DVD) 2009-10 Electives C & E 2009-10 Course 3 (DVD) 2009-10 Electives A & C (DVD) 2009-10 Course 4 (DVD) 2009-10 Courses 1 & 2 2009-10 Courses 1 & 2 2009-10 Courses 1 & 2 (DVD) 2009-10 Courses 3 & 4 2009-10 Course 4 (DVD)
La Crosse Green Bay Madison Rice Lake Grafton Madison Brookfield Sheboygan Mosinee Madison Brookfield Woodruff Sheboygan Sheboygan La Crosse Brookfield Appleton Woodruff Racine Brookfield Racine Appleton Racine Woodruff La Crosse Madison Brookfield Woodruff Brookfield Racine
Appraisal Continuing Education
October 19, 2010 October 20, 2010 November 29, 2010 November 30, 2010
out the Appraisal Continuing Modules available Check by DVD and Online.
Pre-License * Plus books Available online!
608-785-7744 920-739-9108 800-279-1972 715-835-0923 262-375-4730 800-279-1972 800-279-1972 920-457-7908 715-693-7325 800-279-1972 800-279-1972 715-356-3400 920-457-7908 920-457-7908 608-785-7744 800-279-1972 920-739-9108 715-356-3400 262-637-4426 800-279-1972 262-637-4426 920-739-9108 262-637-4426 715-356-3400 608-785-7744 800-279-1972 800-279-1972 715-356-3400 800-279-1972 262-637-4426
$27/m; $35/nm $27/m; $35/nm $27/m; $35/nm $27/m; $35/nm $27/m; $35/nm
$27/m; $35/nm $27/m; $35/nm $27/m; $35/nm
Blueprint Reading Madison Demystifying Income Property Appraising Appleton Compliance with USPAP (Record Keeping) Madison Neighborhood and Market Analysis Brookfield (Approved for Wisconsin Appraiser and Assessor CE & Submitted for MI & MN CE Approval)
Date Course Location November 1-4, 2010 Broker Pre-License Course 8:00 - 5:00 Madison January 4-7; 10-13, 2011 Sales Pre-License Course 8:00 - 5:00 Madison
Member 260* 325*
Non-Member 280* 325*
QuickStart sales training program
wisconsin real estate magazine
Over the past several years, the federal and state governments have been attacking problems they perceived caused the Great Recession. Washington has passed stimuli, bailouts, clunker cash, home buying incentives, banking and investing “reforms” and states have nipped and tucked, taxed, and cut and borrowed in efforts to fix the economy and keep governments operating. But there is a new “attack” brewing in Washington that should make every REALTOR®, and every homeowner and would-be homeowner, shudder. There is now growing talk that the aggressive pursuit of homeownership in America is what caused our economic problems and that the fix is to move from an ownership to a renter society. This change in national policy and purpose is both wrong and potentially devastating and the debate only heightens the importance of the November elections.
wisconsin real estate magazine
By michael theo
Attacking the American Dream As Congress now moves from Wall Street reforms to housing and mortgage finance reforms, some in the Obama administration, Congress and academia, believe that our past use of the tax code and federal agency policies to promote homeownership has perverted the tax code and misappropriated federal government resources. They also argue those policies put unqualified people into homes they couldn’t afford over the long haul. They argue that capital gains tax laws, the mortgage interest deduction, regulations of mortgage markets through government sponsored entities (Fannie and Freddie), and the operations of FHA, should all be changed to deemphasize homeownership and thus reduce the risk of a future “housing bubble” like the one that caused the Great Recession when it popped.
homeowners reap financial gains from any appreciation in the value of their home, they also tend to spend more time and money on maintaining their residence, which also contributes to the overall quality of the surrounding community, according to numerous studies. •
Homeownership and health benefits: Homeowners are happier and healthier than non-owners. While ownership is also correlated with other positive health factors like income and education levels, studies that have controlled for these factors conclude that homeownership is a positive catalyst. Lower income people who became homeowners reported higher life satisfaction, higher self-esteem and higher control over their lives. In another study, economically challenged families reported that their inability to purchase a home negatively impacted their health.
Homeownership and crime: Homeowners have a lot more to lose financially than do renters. Because property crimes create direct losses to the victims and violent non-property crimes negatively impact property values of whole neighborhoods, homeowners have more incentive to deter crime by forming and implementing voluntary crime prevention programs, according to many studies. Moreover, it is easier to detect a perpetrator of crime in a stable neighborhood with extensive social ties including high incidences of homeownership.
Homeownership and property maintenance and improvement: Another key benefit received by homeowners is the structural quality of their housing. Studies have demonstrated that because homeowners have a financial interest in ensuring that their unit is well maintained and repaired, more mobile occupants may ignore damage and thus hurt property values.
But this response would be wrong! Wrong for the American economy, communities and families. Here’s why: •
Research has consistently demonstrated the importance of the housing sector not only to the economy as a whole, but also to the long-term social and financial benefit to individual homeowners and families.
Economically, the housing sector directly accounted for some 14 percent of total economic activity in the U.S. in 2009.
Household real estate holdings totaled $16.5 trillion (yes, with a “t”), in the first quarter of 2010. After subtracting mortgage liabilities, net real estate household equity totaled $6.3 trillion.
In addition to tangible financial benefits, homeownership also brings substantial social benefits for families and their communities. These benefits include: •
Homeownership and educational achievement: Homeownership has a significant positive impact on educational achievement of children. Whether this is caused by homeownership itself or the stable housing and favorable neighborhood characteristics caused by homeownership, both contribute to better educational outcomes. Moreover, homeownership is a positive contributing factor to teenagers staying in school, lower incidence of teenage pregnancies and higher affiliation with money management and good behavior, to name a few. A recent study even concluded that these links are so strong that government policies to improve education should consider policies to promote homeownership. Homeownership and civic participation: Because they have a much greater financial stake in their neighborhood, homeowners tend to be more involved in their communities than renters. Homeowners are more politically active, with one study finding 77 percent of homeowners vote compared to 52 percent of renters. Homeowners also have a higher incidence of membership in voluntary organizations and church attendance. Again, these studies can’t say whether ownership or neighborhood stability has a stronger correlation, but it’s clear homeownership is a key element because owners move less often than renters. Moreover, because
wisconsin real estate magazine
Together, these studies clearly demonstrate the financial and social benefits of homeownership and thus support the numerous national policies that promote it. And, one last statistic that Congress should keep in mind: there is nearly a 100% correlation between homeownership and voting. That is, homeowners vote. There’s no doubt that reforms are needed in the secondary mortgage market and other aspects of past federal housing policies, and now is a good time to do just that. But to establish a new national policy goal of de-emphasizing homeownership and promoting a rental society holds the potential for serious damage to some of the fundamentals of the American family and financial system. All REALTORS®, and the millions of homeowners and would-be homeowners we represent, must be prepared to defend this important national goal. (Note: Studies sited are contained in a white paper by NAR’s research division titled “Social Benefits of Homeownership and Stable Housing,” dated August 2010.) Michael Theo is Senior Vice President of Legal and Public Affairs for the WRA.
wisconsin real estate magazine
Private Transfer Fees:
Coming Soon to a Real Estate Market Near You? By tom larson
Home buyers in some parts of the country are discovering a new and unexpected transfer fee when they go to the closing table. In states like California and Colorado, this new fee, called a “private transfer fee,” has appeared in real estate transactions and has caused problems for unwary buyers. This article will provide an overview of private transfer fees, explain some of the potential problems for homeowners and REALTORS®, and discuss what the Wisconsin REALTORS® Association is doing to stop them from appearing in Wisconsin.
What are private transfer fees? A private transfer fee (PTF) is a fee that attaches to a property (generally, new construction) and is triggered every time the property is sold. In most PTF scenarios, a covenant is attached to the deed of a new home which requires the fee to be paid every time the property is sold. Unlike a typical real estate transfer fee, a PTF is paid to a developer, home owners association, or group of investors, rather than to the government. Generally, the fee is calculated as a percentage of the sale price and often runs between 0.5 and 2 percent. The money generated by a PTF can be used for a variety of purposes, including a public park or conservation area, or to increase profits for the developer. Like other private covenants, each PTF is different and terms must be determined by reading the individual covenants. In some cases, the original buyer may be exempt from the PTF and therefore unaware of its existence. This may create problems for the home owner when he or she attempts to sell the property because he or she won’t know to disclose it. When this happens, the buyer becomes aware of it only after a title search is performed.
Potential problems with PTFs PTFs can have both long-term and short-term impacts on real estate sales. For example, PTfs may: •
Increase the cost of homes and make housing less affordable for buyers. For example, if a new home sells for $250,000 and has a 1% PTF, a homebuyer would have to pay an additional $2,500 to purchase the home. Limit the ability to obtain financing. In some cases, lenders have refused to finance transactions involving PTFs because
wisconsin real estate magazine
they are restrictions on the deed and are not considered among the standard exceptions from the title recognized by lenders. Moreover, when Fannie Mae and Freddy Mac discovered that some private entities were using the fees to increase profits and not adequately explaining them to buyers, the lenders refused to make loans for property to which the covenants attached because of the resulting deed restrictions. •
Result in litigation related to disclosure. Because many sellers are unaware of the PTF covenants attached to the title, they often fail to disclose the fees to prospective buyers, which may result in lawsuits based on fraud and nondisclosure.
Efforts to stop PTFs from coming to Wisconsin Because PTFs could have a negative impact on the real estate market in Wisconsin, the WRA is working on legislation for the upcoming 2011-12 legislative session that would prohibit PTFs from being applied to any real estate in the state. So far, fifteen other states have passed similar legislation banning PTFs in whole or in part. Also, the National Association of REALTORS® (NAR) has been working on this issue at the federal level. Recently, the Federal Housing Finance Authority (FHFA) proposed a regulatory guidance that would restrict Fannie Mae, Freddie Mac and the Federal Home Loan Banks from investing in mortgages with PTF covenants. This guidance would extend to mortgages and securities purchased by the Federal Home Loan Banks or acquired as collateral for advances, as well as to mortgages and securities purchased or guaranteed by government sponsored enterprises (GSEs). This action would end the use of private transfer fees in 60 to 70 percent of the real estate market. The proposed guidance has been published in the Federal Register and the public comment period ends on October 15, 2010. NAR is asking all state and local REALTOR® associations to send a letter to the FHFA opposing private transfer fees and their use in GSEs. For more information on PTFs, please contact Tom Larson at tlarson@ wra.org or (608) 240-8254. Tom Larson is Chief Lobbyist and Director of Legal and Public Affairs for the WRA.
Fitting CE into Your Schedule….The “No Complicated” Solution Introducing CE On Demand
By Rob Uhrina
Notes Tool Take notes while you watch your videos.
Register Today! Members: $27/course Nonmembers: $35/course
Outline Tool Navigate and jump quickly to specific topics.
Practice Quizzes Sharpen your skills with review exercises.
Full Screen Video Watch in compact or full screen modes.
Powerful Controls Cue videos with pinpoint accuracy.
s the end of the biennium approaches on December 14th, remember you don’t have to leave your home or office to meet your state-mandated real estate education requirements. Most REALTORS® lead busy lives and “on a dime” have to adjust their schedules for their clients. That’s why the WRA designed our Continuing Education curriculum with options in mind. If you enjoy classroom MORE ATweWRA.ORG/DLOD instruction, have live offerings all across the state, from Green Bay to Milwaukee, from Hayward to Madison and all places in between.
All you need is an Internet connection and Web browser. Just hop online at your convenience, log into the WRA website and choose your CE course. All coursework is streamed to your site online through a video media player, complete with indices, notetaking tools and chapter outlines. CE On Demand supports all Web browsers. Whether you’re using Microsoft Internet Explorer, Mozilla Firefox, Apple Safari orAssociation. Google Chrome, CE On Copyright 2010 Wisconsin REALTORS® All rights reserved. Demand is built for the widest range of compatibility.
If you need more flexibility with no sales downtime, check out the WRA’s award-winning distance learning program that takes CE and delivers it to you on demand. On demand means you can take education whenever you want, wherever you want and in the blocks of time you want – whatever works best with your schedule. Best of all, you can stop and start as much as you wish and pick up where you left off. If you need to take a breather or have a demanding schedule, your work-in-progress is never lost.
Join over thousands of students who have taken CE On Demand over the past two bienniums. With over a 99% passing rate, CE on demand includes enhanced features to fine tune your real estate skills, including quizzes, practice exams and more.
wisconsin real estate magazine
>> To learn more about CE On Demand and test drive our demo, please visit www.wra.org/dlod.
Homeownership is more than just a roof and four walls. Itâ€™s the community, quality of life, and the availability of jobs that make a difference. Employers can have an impact. Team up with a local employer today and tell them about Wisconsin Housing Works, a unique project designed to educate employers on workforce housing and how they can set up quality housing programs for their employees. Working together, the dreams of homeownership can be achieved by more Wisconsin families.
Visit WisconsinHousingWorks.com for more information. LIKE US! facebook.com/WisconsinHousingWorks FOLLOW US! twitter.com/WIHousingWorks A program developed by the Wisconsin REALTORSÂŽ Association and Wisconsin Housing and Economic Development Authority.
What is our WHEDA® Advantage? A low interest rate.
ake advantage of WHEDA’s new lower interest rates and new pricing options. Depending on your customer’s down payment amount or private mortgage insurance preference, the WHEDA Advantage now has various interest rate choices to match your first-time
home buyer to the WHEDA mortgage that best fits their needs. Discover the WHEDA Advantage! Income and purchase price limits apply and home buyer education is required. Interest rates are subject to change daily. To learn more, go to wheda.com/NewAdvantageRates/. Wisconsin Housing AnD Economic DEvElopmEnt AutHority 201 West Washington Ave n Madison, WI 53703 800.334.6873 n www.wheda.com