2013-02-Commonwealth

A journal for real estate professionals published by the Virginia Association of REALTORS® • www.VARealtor.com

February/March 2013

the fights on capitol square (p. 28) • Don’t be that guy (p. 30)

The Real Estate Numbers Game:What Matters, What Doesn’t

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1VOLUME 20 � ISSUE 1 FEBRUARY/MARCH 2013

Andrew Kantor, [email protected]

Once upon a time, I was a mild-mannered business reporter for a great metropolitan newspaper. My beat was technology, but we all took turns writing up the small, general stories that came through. One of those was the monthly unemployment report.

About reporters: A good one will always look for a di� erent angle to write about, especially in the Internet age when so many people can see the same stories.

Typically I would simply write a short piece based on the Bureau of Labor Statistics numbers and that was that. But at one point — sometime in 2007 — I pulled up the BLS’s actual numbers to see if there was a more-interesting angle. Maybe I could write about 20-something Laotian men doing particularly well or something.

When I ran the numbers I found that the overall unemploy-ment rate in the data didn’t jibe with the press release. The number everyone was reporting (at the time I think it was something like 5.1 percent) was signifi cantly lower than the “real” number.

The culprit was a BLS practice going back years: The bureau didn’t count as “unemployed” any jobless people who had used up their benefi ts. So a signifi cant number of people who had been out of work a long time weren’t being fi gured into the equation.

Naturally, I reported the real number. No more reprinting press releases.

From then on, I trusted no one until I checked out the numbers. “The largest family-owned busi-ness in the area,” you say? What “area” do you mean?

You’re bringing 250 jobs to the region? Great. What’s the median salary*? Are they full-time? Are they permanent? (Quite often the answer to the last two was “Um… not at fi rst.” That’s rather important.)

I continue to carry that cyni-cism whether the source is the government, NAR, a private company, or wherever. It doesn’t serve my ‘customers’ — Virginia Realtors — to report less than as accurately as possible.

That’s why this year’s numbers issue is focused not on what all the data are, but on how to get more out of them — how to have a healthy dose of cynicism without becoming a cynic.

Real estate numbers come from all quarters. It’s easy to be over-whelmed, or to simply take them at face value. Don’t. Read inside for a quick lesson on what to look for — and how many grains of salt to add. �

Trust ... but verify

fi rstwordANDREW KANTOR

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The Business Advocate for Virginia Real Estate ProfessionalsMary Dykstra, ABR, CRSPresidentRoanoke

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For advertising information, Brittany Sullivan at (410) 584-1968 or e-mail [email protected] mission of The Virginia Association of REALTORS® is to enhance its membership’s ability to achieve business success. Commonwealth magazine (ISSN#10888721) is published bi-monthly by the Virginia Association of REALTORS®, 10231 Telegraph Road, Glen Allen, VA 23059-4578; (804) 264-5033. Virginia Association of REALTORS® members pay annual dues with a one-year subscription included within their dues. Periodicals postage paid at the Glen Allen, VA post offi ce and additional mailing offi ces. USPS Per. # 9604.

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A journal for real estate professionals published by the Virginia Association of REALTORS® • www.VARealtor.com

February/March 2013

the fights on capitol square (p. 28) • Don’t be that guy (p. 30)

The Real Estate Numbers Game:What Matters, What Doesn’t

10231 Telegraph Road, Glen Allen, VA 23059-4578

*Not average, where one high-paid exec would skew things, especially if the rest were minimum-wage positions.

2 FEBRUARY/MARCH 2013 WWW.VAREALTOR.COM

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FEBRUARY/MARCH 2013VOLUME 20 � ISSUE 1 contents

in every issue

departments4 quickhits

The latest news and announcements for Virginia’s Realtors®

8 statswatchThe numbers thatshape your world

10 legallinesQuestions and answers about Virginia realestate law

14 lifelessonsWhen real estate pros break the law ... and get caught

20

VAR’s 2013 Legislative AgendaThe 2013 General Assembly is now in session. Read the bills we’ve introduced — and why they’re critical for your business.

features

28

How to pick and understand the real estate numbers that matter mostDon’t be fooled by numbers — check out our guide to real estate statistics. Know which ones matter, and which to take with a grain of salt.

Nick LibertEXIT Strategy Realty, Chicago, IL

Out of the box solutions

THIS CORRESPONDENCE IS NOT INTENDED AND SHALL NOT BE DEEMED TO CONSTITUTE ANY OFFER TO SELL A FRANCHISE. FRANCHISE OFFERING SHALL ONLY BE MADE BY A FRANCHISE DISCLOSURE DOCUMENT. PLEASE DISREGARD IF YOUR COMPANY IS CURRENTLY UNDER A FRANCHISE AGREEMENT.

Nick LibertNick LibertNick Libert

I purchased an EXIT Realty

Franchise in 2009 and have been

absolutely delighted by the experience.

I previously owned an independent

brokerage and felt that every day I

was "reinventing the wheel" in terms

of TEChNOLOgy, TRaININg,

INNOvaTION and standards for my

agents. I was exhausted daily and knew

that I was not providing the best possible

environment for my agents to build

their business. I knew that I needed

systems and models that I could actually

implement versus trying to build my

own from scratch.

all of those things came "in the box"

with my EXIT Realty franchise. I have

experienced phENOmENaL gROwTh

with my agency and I was the 3rd fastest

growing brokerage in Chicago in 2011.

we have training, TEChNOLOgy, and

transaction management all from EXIT

Realty Corp. International and my job is

to implement and promote the systems

rather than invent them all together. It's

been fantastic working in a collective

learning and growth environment.

I have been far more SuCCESSFuL

by being part of a system and franchise!

Nick LibertNick LibertNick Libert

ll of those things came "in the box" ll of those things came "in the box" ll of those things came "in the box" ll of those things came "in the box"

with my EXIT Realty franchise. I have with my EXIT Realty franchise. I have with my EXIT Realty franchise. I have with my EXIT Realty franchise. I have with my EXIT Realty franchise. I have

wwwTTThhh

with my agency and I was the 3rd fastest with my agency and I was the 3rd fastest with my agency and I was the 3rd fastest with my agency and I was the 3rd fastest with my agency and I was the 3rd fastest with my agency and I was the 3rd fastest

growing brokerage in Chicago in 2011. growing brokerage in Chicago in 2011. growing brokerage in Chicago in 2011. growing brokerage in Chicago in 2011. growing brokerage in Chicago in 2011.

and and and and

transaction management all from EXIT transaction management all from EXIT transaction management all from EXIT transaction management all from EXIT

Realty Corp. International and my job is Realty Corp. International and my job is Realty Corp. International and my job is Realty Corp. International and my job is Realty Corp. International and my job is

to implement and promote the systems to implement and promote the systems to implement and promote the systems to implement and promote the systems

rather than invent them all together. It's rather than invent them all together. It's rather than invent them all together. It's rather than invent them all together. It's rather than invent them all together. It's

collective collective collective collective collective

by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!by being part of a system and franchise!

Does Nick’s story resonate with you? If you’re tired of going it alone, find out how EXIT Realty can be your track to run on. Call Nancy & Tom Shaver, Regional Owners - EXIT Realty Virginia, today to find out more! 1.804.387.4758

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4 february/march 2013 www.Varealtor.com

Mortgages

New mortgage rules from CFPB aim to protect consumers, reassure lenders

quickhitsANDREW KANTOR

The Consumer Financial Protection Bureau has released its Qualified Mortgage (QM) rules. They take effect in January 2014 and set mini-mum qualifications for borrowers — at least if lenders want govern-ment backing and protection from consumer lawsuits.

Put another way: For the vast majority of loans, this will be the standard for borrowers to meet.

There are two levels to the rules: Ability to Pay and Qualified Mortgages.

Ability to Pay Ability to Pay is the standard that all new mortgages must meet. As the CFPB explained, “[L]enders too often offered mortgages to consum-ers who could not afford them.”

There are eight things a lender must consider by looking at con-sumers’ financial records and verify-ing them:• Current income or assets; • Employment status; • Credit history; • The monthly payment for the

mortgage; • Monthly payments on any

other loans associated with the property;

• The monthly payment for other mortgage related obligations (such as property taxes);

• Other debt obligations; and • The monthly debt-to-income ratio

the borrower would be taking on.

Further, lenders have to consider the borrowers’ ability to pay over the longer term — five years — not just during a teaser-rate period.

Qualified MortgagesOK, those rules apply for every loan. But if a lender wants a mortgage to be “eligible to be purchased, guaranteed, or insured by” the Federal government (e.g., Fannie, Freddie, HUD, VA, etc.), that loan must also meet the CFPB’s Qualified Mortgage standards. The important ones:No excess upfront points and fees: Points and fees are fine, as long as they are for the loan itself, not “to compensate loan origina-tors, such as loan officers and brokers.” And they cannot exceed three percent of the total loan amount in most cases.

No “toxic” features: Terms can’t exceed 30 years; interest-only and negative-amortization pay-ments (where the principal amount increases) are banned. Debt-to-income limit: A bor-rower’s debt-to-income ratio must be less than or equal to 43 percent. (But also see “When less is more.”)

Diff’rent strokesKeeping those rules in mind, the CFPB created two types of QMs: prime and sub-prime. Why?

Consumer groups wanted borrowers to be able to challenge a lender that didn’t underwrite properly, while lenders wanted a “safe harbor” from lawsuits if it followed the rules. So the CFPB did something for everyone. Sub-prime QMs: higher priced, but borrowers can challenge.

tl;dr — too long, didn’t read?Here’s the absolute minimum you need to know for your clients. • New qualified mortgage (QM) rules from the CFPB will be the stan-

dard for most mortgages. They take effect next January.• Smaller lenders will likely have more leeway with approving loans.• Lenders will continue to make detailed examinations of borrowers’

income, credit, and expenses.• A borrower’s debt-to-income ratio must be 43% or lower (although

rural areas may have some flexibility).• No more loans more than 30 years, or points/fees of more than 3%.• The new standards allow for both prime loans (lower cost, more

bank protections) and sub-prime loans (higher cost, more consumer protections).

5Volume 20 ● Issue 1 february/march 2013

These loans are for folks with lower credit ratings. They still meet all the standards, but if the borrower ends up defaulting, he can can attempt to prove that the lender shouldn’t have qualified him.

This is known as “rebuttable presumption,” meaning the lender is presumed to have complied; the borrower must prove otherwise. If he does, the government can require the lender to buy back the loan.Prime QMs: lower priced, with safe harbor for the lender. These are for your less-risky consumers. With these loans, if the lender meets the QM underwriting criteria it has “safe harbor” — the government can’t force the lender to buy back the loan if the borrower defaults.

Finally, there’s a temporary exception to that 43-percent rule. CFPB was concerned that there are loans that might not meet the specific QM requirements, but still qualify for government backing. “[S]uch loans are better evaluated on an individual basis under the ability-to-repay criteria,” it wrote.

So the bureau created a

temporary category of loans “that have more flexible underwriting requirements” but still satisfy the general QM rules; this will be in effect for the next seven years (or less, if Federal agencies issue their own guidelines) and the details will be available soon.

Higher cost, tighter restrictionsOn the heels of its definition of qualified mortgages, the CFPB also released its new rules for high-cost mortgages, defined thusly:• A first mortgage with an APR

more than 6.5 percentage points higher than the average prime offer rate.

• A second mortgage with an APR more than 8.5 percentage points higher than the average prime offer rate for a similar mortgage.

• A mortgage for less than $50,000 for a personal property dwell-ing (e.g., a mobile home) with an APR more than 8.5 percentage points higher than the average rate for a similar mortgage.

• A loan for less than $20,000

where the points and fees are more than either eight percent of the loan or $1,000.

• A loan for $20,000 or more where points and fees are more than five percent of the loan.

And here are some of the notable new rules that apply: • Consumers must obtain housing

counseling before they can take out a high-cost mortgage.

• Balloon payments are banned. • Borrowers cannot be penalized for paying off these loans early. • Late fees are capped at four per-

cent of the past-due payment. • Lenders cannot charge fees for

modifying the loans. • Closing costs cannot be rolled

into the loan amount. • Lenders can only charge limited

fees to provide consumers with payoff statements.

• Certain high-priced loans will require the lender to establish a five-year escrow account (instead of one year, which is required today).

When less is more: benefits for small lendersWithin the new rules released by the CFPB — and in its proposed amendments to those rules — are some key benefits for smaller lenders such as community banks and credit unions.

When it comes to high-cost loans, especially those with balloon payments, lenders that make at least half their mortgages in rural counties are exempt from

the new rules. So, too, are those in areas with two or fewer major mortgage lenders. And the CFPB has proposed that, for banks with less than $2 billion in assets — and that keep the loans on their

books — be exempt from that 43 percent debt-to-income ratio requirement. (Ditto for “certain nonprofit creditors that work with low- and moderate-income consumers” and “certain homeownership stabilization programs.”)

Pointing out that “Community banks and credit unions did not cause the financial crisis,” the CFPB is hoping the exemptions not only help those smaller lenders, but also ensure that residents of low- and moderate-income com-munities are able to get home loans.

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quickhits

Government in action

So CongreSS Sorta kinda reached a deal to avert the “fiscal cliff” — well, at least for a year. Pick your favorite reliable news source to read how it affects most things; we’re just going to look at real estate issues here.

There are some provisions of the bill that affect real estate spe-cifically, and others that affect tax deductions in general (including the mortgage interest deduction). Here are the most notable.

Real-estate specific things: Someone who has had part of

his mortgage principal reduced — e.g., by a short sale or loan modifi-cation — will not have to pay taxes on that reduction… at least if it happens before January 1, 2014, when that provision will expire.

Homeowners who earn less than

$110,000 annually can continue to deduct any mortgage insurance premiums through 2013; it was also made retroactive for 2012.

General things that may affect real estate for the very wealthy:

If you earn more than $250,000 ($300,000 for couples), you have a limit on the total value of your tax deductions — that includes the mortgage interest deduction. The more you earn over $250,000, the less you can take in itemized deductions. • If you earned $251,000, for

example, you would reduce your itemization by $30.

• If you earned $300,000, you would reduce your itemization by $1,500.

• If you earned $500,000, you

would reduce your itemization by $7,500. So it’s noticeable for the very

wealthy, but not earth shaking.(These limits aren’t actually new.

They were originally put into place during the first Bush administration back in 1990, but were phased out starting in 2001.)

Capital gains that put you above $400,000 in income will now be taxed at 20% instead of just 15%, except for the sale of your princi-pal residence. That’s still exempt — at least up to $250,000 in profit ($500,000 for couples).

You can leave your estate of up to $5 million ($10 million for fami-lies) to your kids, and they won’t pay any tax. Anything you leave above that $5/$10 million, though, will be taxed at 40%.

What the “fiscal cliff” deal means for real estate

Zillow: Almost 30% of homeowners are mortgage freeWhen the folks at Zillow did their analysis, they found that “Almost 21 million Americans, or 29.3 percent of homeowners, own their homes outright.” Unfortunately, only one Virginia-area city was mentioned specifically in the report, and that was for having a low number of mortgage-free homeowners: Washington, D.C., with the lowest percentage in the country at 15.5 percent.

Personal finance

A number of elements influence the percentage of free-and-clear homeowners in a given area, including median home values. Zillow found that areas with lower home values generally have higher outright homeownership rates, as smaller loan amounts are easier to pay back more quickly.”

“


Eminent domain

Distressed sales having less of an effectSome good sales news courtesy of economics blog Calculated Risk. Specifically, it shows that not only are sales increasing (as we already knew), but much of that increase is coming from conventional sales as opposed to distressed sales.

For example, as economist Bill McBride put it, while NAR reported that sales in general were up 14.5% in November (year over year), conventional sales were actually up almost 21%.

Further, he explained, “the percent of distressed sales over the last 6 months is at the lowest level since mid-2008, but still very high. This is the lowest percent of distressed sales for November since 2007.”

Related to that, McBride also looked at the ratio of

sales of new homes compared to used existing homes over the past 18 years or so.

Before the market collapse — going back at least to 1994 — for every new home sold there were about six existing-home sales. I.e., there was a 6:1 ratio of exist-ing to new homes.

Thanks to all the distressed homes hitting the market starting in 2008-ish though, that ratio shot up as new homes took a hit. From late 2009 until mid 2011, more than 14 existing homes sold for every new home.

Eventually we’ll (probably) get back to that 6:1 ratio of existing to new homes, and — coincidentally — to a lower percentage of distressed sales. But that’s going to take time. The recovery is still a work in progress.

Economic effects

Henrico loses eminent domain caseHenrico County has lost an eminent domain case brought by a developer who had a chunk of her land acquired/seized by the county. A jury unanimously awarded the the (former) property owner an additional $236,750 for the land, which had been taken as part of a road-extension project.

Quickly put: • Emily Sterling owned a half-acre plot — acquired by

her father in 1997 — at what is now a rapidly growing section of western Henrico.

• The county offered Sterling $126,000 for the 1/5th of an acre it needed for the project.

• Sterling declined, but offered the full half acre to Henrico for $253,000.

• The county said no and took its 1/5th acre via eminent domain.

• Sterling sued, contending that not only was the price too low, but by taking only part of the parcel what’s left couldn’t be developed.

• The jury agreed, awarding her $236,750. So Henrico ended up paying $362,750, not counting legal fees. And another, similar case is pending against the

county.

Migration to Virginia slowing, but DC remains popularMoving giant Atlas Van Lines keeps track of which states have people moving in and which have people moving out. It found that Virginia, which had been an “inbound” state in 2011 became “balanced” in 2012. (That is, about the same number of households moved in as moved out.)

This is despite the fact that mid-Atlantic coastal states like ours are, along with the Southwest, the most popular place to move. Well, maybe the other mid-Atlantic coastal states are; North and South Carolina were both in the top five.

Meanwhile, both Atlas and United Van Lines found Washington, D.C., as the most popular destination — in Atlas’s case for the seventh consecutive year — with 63 percent of moves being inbound. l

Demographics


Virginia housing 2012: the year in review

statswatch

Our end-of-year data for 2012 is in, and it tells many stories — all of them showing a housing market that continues to recover steadily.

Here are a couple of charts we wanted to feature, but we have lots more data and analysis in our annual report, “Pieces of Home.” It includes details charts on a wide variety of Virginia housing stats from 2012, with expert com-mentary from across the Commonwealth. Grab your copy at VARealtor.com/homesales.

Here’s a telling trend: Sales were up almost across the board in 2012 compared to 2011, with one notable exception. Homes priced at less than $100,000 saw sales drop in 2012, and sales of homes between $100,000 and $200,000 were virtually unchanged.

What does that mean? It means that we’re seeing

distressed sales drop (they tend to be at the lower end of the market) while traditional sales continue to climb. Big jumps in the sales of mid- and higher-priced homes are good news for the long term — they allow people in moderately-priced homes to move up, and thus keep the market moving.

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What’s selling

ANDREW KANTOR

9VOLUME 20 � ISSUE 1 FEBRUARY/MARCH 2013

Change in Home sales 2011 vs 2012

The trend in month-to-month numbersIn general it’s better to watch year-to-year numbers to get the bigger picture. But here’s a case where 12 monthly fi gures give a clear indication of an improving economy.

If you look at the graph showing 2011 vs. 2012 sales, it doesn’t look like much at fi rst; there’s barely a gap between the two years. But there is a gap, and that’s the point. Except for March (which was about equal year to year), every month in 2012 saw an increase over 2011.

The message we can take is that the recovery isn’t a sporadic thing — it’s solid and it’s continuing. �

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Keep up (and impress your cli-ents) with the Virginia Home Sales Report from VAR. Find the latest monthly and quarterly report data in a colorful, printable format, at VARealtor.com/homesales.


Disclosures make the RealtorVirginia Realtors’ disclosure obligations are governed by state law and the Realtor Code of Ethics (not to mention the simple idea of doing the right thing). The Legal Hotline gets plenty of questions about what needs to be disclosed and when; here are some common ones.

Q: I am the listing agent and my client told me the

house was connected to the pub-lic sewer system. I included that information in the MLS. Several months after closing the buyer contacted my firm with the news that the house was not on public sewer and the septic system just drenched his front yard. Do I face any liability? A: No. In 2011 VAR supported legislation to limit your liability in such cases, specifically, sec-tion 54.1-2142.1 of the Virginia Code, “Liability for false information”:

…[A] licensee shall not be lia-ble for providing false infor-mation if the information was (i) provided to the licensee by the licensee’s client; (ii) obtained from a governmen-tal entity; (iii) obtained from a nongovernmental person or entity that obtained the information from a govern-mental entity; or (iv) obtained from a person licensed, certified, or registered to provide professional services in the Commonwealth, upon which the licensee relies, and the licensee did not (a) have actual knowledge that the information was false or (b) act in reckless disregard of the truth.

legallinesBLAKE HEGEMAN

Q: Listing agents must disclose material adverse facts pertaining to the physical condition of the property of which they have actual

knowledge to the buyer. Do I, as the listing agent, have a duty to discover these facts? For example, am I required to investigate whether a house has defective piping?A: No, you have a duty to disclose material adverse facts of which you have actual knowledge – not to discover the adverse facts. If the seller doesn’t tell you about the problem, or it’s not obvious, you have no way of knowing about the condition and do not have a disclosure obligation.

This is not to suggest you should ever discourage your client from tell-ing you of adverse facts. Oftentimes, problems may be corrected up front instead of days before closing.

Article 2 of the Realtor Code of Ethics provides further guidance on your discovery obligations.

Realtors shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction. Realtors shall not, however, be obligated to discover latent defects in the property, to advise on matters outside the scope of their real estate license, or to disclose facts which are confidential under the scope of agency or non-agency relationships as defined by state law. (Amended 1/00)

And Standard of Practice 2-1 clarifies:Realtors shall only be obligated to discover and disclose adverse factors reasonably apparent to someone with expertise in those areas required by their real estate licensing authority.


Q: There was a mold problem that was remedi-ated by a qualified professional; do I as the

listing agent have to disclose that?A: The listing agent must disclose problems that exist, and not repair or remediation history, unless that history itself suggests an ongoing problem. (For example, 10 roof patches in the past year would likely suggest that a bigger problem still exists.) It is not always easy to know whether a problem has been fixed; but if it has been, you need not disclose it.

The key with mold is to understand that the underlying moisture problem must be addressed successfully. If it has not, no amount of remediation of the mold itself will matter. If it has, and the mold has been removed, there is nothing to disclose.

Q: When does the Virginia Resi-dential Disclosure Statement

have to be provided? A: The law requires the disclosure to be given to the buyer before contract ratification. Virginia law says, “The owner … shall deliver to the purchaser the written disclosure statement required by this chapter prior to the acceptance of a real estate purchase contract ….”

If this is not done, and the seller delivers the disclosure after the exe-cution of a contract, the purchaser has three days after receipt of the disclosure (or, if it was mailed, five days after the postmark) to rescind — but not later than settlement. Thus the statute affords buyers the opportunity to know of issues (e.g., sex offenders) and to check things out before being bound by the contract.

Q: What is the purpose of VAR’s “Summary of Rights and Obligations of Sellers and Purchasers Under

the Residential Property Disclosure Act” form?A: It’s a form we at VAR have prepared to assist agents in complying with the act’s requirement that all agents inform the parties they work with of those parties’ rights and obligations under the act.

The act does not require this form to be used, and doesn’t even require that the agent inform the parties in writing, but we think this form is a prudent way to proceed. We strongly suggest you use it, but if you have another way to inform the parties you works with, you can use that. Also note that your forms provider may have a similar form.

Q: I am a buyer’s agent on a foreclosed property owned by a bank. Before it will sign an offer to purchase, the seller is requiring the

buyer to sign a lead-based paint form that has not been filled out or signed by seller; likewise the disclosure form. How do I handle this? A: The seller wants your buyer to make the seller’s disclosures to him-self? This is not good, and your buyer should not do it. How on earth will your buyer fill out the lead paint disclosure, for example? When it asks whether the seller is aware of any lead paint hazards, or has copies of reports, how will the buyer fill that in?

Furthermore, when the buyer signs, he’s signing that he has received the disclosure required by law. He has not received it, of course, and to say that he has might work a forfeiture of his right to allege later that he did not get what the law required.

Requiring the buyer to fill out the seller disclosures or to sign the blank lead paint and disclosure forms before the seller fills them out is dangerous for the buyer, and, frankly, ridiculous for the seller to require.


Monday through Friday, 10 a.m. – 4 p.m.The VAR Legal Hotline is a free, members-only benefi t for brokers.

You can receive answers to questions about Virginia real estate law, and timely information on legal and regulatory issues concerning the real estate industry.

The Legal Hotline provides legal information, not legal services. You should consult your attorney if you need representation or advice.

You must register for the Hotline before you can call. Registration is free and quick. Go to www.VARealtor.com/legalhotline; you will need your NRDS ID number.

Who can use the Hotline?• You must be a principal or supervising broker.*• You must be a VAR member.• You must have registered for the Hotline

(see above).• You must have your NRDS ID number available

when you call.(* Each offi ce can have one other person designated by the principal broker for Hotline access.)

E-mailing the HotlineYou can e-mail your questions to [email protected].• Responses will be by phone; we no longer

provide written answers to Hotline questions.• You must include your full name, phone

number, and NRDS ID. We cannot respond to messages that do not include all three.

• We will try to respond within 24 hours, but response time depends on Hotline activity.

Not a broker or member?If you aren’t eligible to use the Hotline, you can browse and search our Hotline archives at www.VARealtor.com/hotlinearchive and fi nd more legal and risk management information in VAR’s Legal Resources Center at www.VARealtor.com/legalresources.

You will need your NRDS ID number to log into the site.

Questions?If you have questions about the Hotline, contact VAR at (800) 755-8271 or (804) 264-5033, or by e-mail at [email protected]

The VAR Legal Hotline should not replace your own legal counsel. We will not answer questions on matters unrelated to real estate or real estate brokerage, nor can we help with pending arbitrations.

VAR Legal Hotline(804) 622-7955

Legal Lines is written by VAR legal counsel Blake Hegeman. Please note that answers to Legal Lines questions are informational only. Consult your own

legal counsel for legal advice.You can fi nd more Q&A from the archives of our Legal Hotline in our Legal Resources Center at VARealtor.com/legalresources.

legallines

Q: An agent in my office is selling his own home, and he has heard that he doesn’t have to use the Owner/Agent sign any more. Are Owner/

Agent signs still required?A: The policy of the REB on this issue is that the public has a right to be informed if they are dealing with a real estate professional on the other side of the deal.

So let’s assume a licensee is selling his own property. Suppose he has listed his property with a licensed real estate brokerage

fi rm. If so, then all fi rm ads will have the fi rm’s name displayed, and the public will know a real estate professional is on the seller’s side. In these cases, the fi rm signs do not need to say “Owner/Agent” or the equivalent.

Suppose the owner is not listing the property with a fi rm. Now all signs will be the equivalent of FSBO signs, and unless the signs and ads give the appropriate notice, the public will not know they are dealing with a pro-fessional. Thus, the signs/ads must so state. This would also be true of the agent’s individual advertising/signs done outside the fi rm even if it is listed.

So in the usual situation, if it’s listed, the fi rm signs do not have to say “Owner/Agent.” However if not listed, all signs/ads do have to have this disclosure.

Also please remember that in all cases, the contract must contain the disclosure.

Good luck out there. �

Virginia Housing Development Authority | 877-VHDA-123 | vhda.com

Looking for a way to help new clients take that first step with confidence? Tell them about VHDA’s free

First-Time Homebuyer Class. It’s a great way to learn the entire homebuying process from start to finish,

and how to stay on track as a responsible homeowner. The class is offered in English or Spanish, in person or

online. And it’s free, with no obligation. For information, visit vhda.com or call 877-VHDA-123.

Does Your Client Need Real Answers About Homeownership?Here’s The Starting Line.



Does Your Client Does Your Client Does Your Client Does Your Client Need Real Answers Need Real Answers Need Real Answers Need Real Answers About Homeownership?About Homeownership?About Homeownership?About Homeownership?Here’s The Starting Line.Here’s The Starting Line.Here’s The Starting Line.Here’s The Starting Line.



lifelessonsKathleen toler

The tangled webs we weave

Helping yourselfWhen crime increased in their neighborhood, John and Mary Wright became desperate to move to a safer place — not to mention that John was facing deploy-ment overseas and Mary was pregnant. A Gulf War veteran herself, Realtor Marcy Sweeney was eager to help the Wrights find a new place to live.

Sweeney already had another client, Kurt Blake, who owned a house that the Wrights wanted to buy, so she acted as dual agent between them. The Wrights signed a contract to buy Blake’s home, and they agreed to take possession in early January with closing sched-uled for the end of February.

In order to obtain financing, the Wrights needed to sell their current home. Unfortunately, Sweeney didn’t stipulate this in the contract, so Blake was unaware that the sale of his property to the Wrights hinged upon their ability to sell their home and thus obtain a loan.

About that…

Before putting their home on the market, Sweeney had insisted that the Wrights needed to renovate it. Conveniently, she hired her husband to do the work, but never put anything in writing. Sweeney had also promised the Wrights she would buy their home if she couldn’t sell it.

The house of cards fell apart when Sweeney couldn’t sell it. Then she couldn’t get a loan to buy it as prom-ised. That left the Wrights with no choice but to void their contract with Blake and move back into their old house… where they had a $21,000 bill for the renova-tions Sweeney’s husband had made.

To add insult to injury, Sweeney’s husband was licensed as a Class C contractor, which limits the amount of work his company can to do $7,500 per job. He only had an Electrical Contractor classification and not the Home Improvement Contracting specialty necessary to perform the work.

Meanwhile, Blake had wasted several month while dealing with Sweeney and the Wrights, and now had to find another buyer. Needless to say, he wasn’t happy; he filed a complaint with the Board.

In her efforts to help the Wrights, it seems Sweeney set herself up to reap the most reward: She stood to profit from the commission of two deals, as well as her husband’s renovation work (that he wasn’t even qualified to do). Her excuse? “I just screwed up.”

She was fined $2,100 and her license was put on probation pending continu-ing education.

licensees who run afoul of Virginia real estate regulations can find themselves in the crosshairs of the Virginia real estate Board, facing punishment ranging from a small fine to loss of their license. here are a few real-world examples taken from the actions of VreB. these narratives are based on the Board’s official findings; participants may disagree with VreB’s conclusions and version of events. they are provided solely as examples of Board actions. all of the names have been changed.

Another great member service brought to you by the Virginia Association of REALTORS®

Coverage and protection.Some things you shouldn’t take chances with — and your real estate license is one of them. VAR helps protect you from being put in the penalty box by a lawsuit with our Legal Resources Center.

Search legal columns from our extensive library, read articles, and watch videos that can help you know what’s a safe move — and what’s likely to hurt.

Visit us at VARealtor.com/LegalResources


Bleeding to deathAna and Martin Rivera trusted Dolores Villano, an agent with Ocean Breeze Realty, to help them buy a home — not only because they knew her from church, but also because she spoke Spanish, their native language.

When the Riveras found a home they wanted to buy, Villano accepted their $500 earnest money deposit, but she never actually wrote the offer. Another couple ended up purchasing the home.

When the Riveras found another home they liked, Villano refused to write the offer because she claimed she wouldn’t make any commission on the transaction.

Villano finally wrote an offer for a third property that her clients wanted to purchase, but she wouldn’t give them a copy of the contract. She was, however, more than willing to take their money: $250 for the home inspection and an additional $500 for the EMD, both in the form of money orders.

Villano also told the Riveras that she would need money for closing costs. When she came to the Rivera’s home to collect those funds, Martin Rivera was still bleeding from a work-related injury. His worried wife told Villano that she needed to take care of him, but Villano refused to leave without the funds for closing in cash. When Villano wouldn’t relent, Ana Rivera went with her to the bank and gave her several money orders totaling $2,000.

The mortgage company denied financing for the Riveras. Then Martin Rivera became gravely ill and was hospitalized. For a month, Ana Rivera called Villano daily to ask to be released from the contract and for Villano to return their money. When Villano finally responded, she gave a string of excuses: The check was in the mail, she would drop it off at their house, or there was a clerical error in getting the check

from her company. As it turns out, she had left Ocean Breeze Realty after working there for only six months.

Then Martin Rivera died. Ana Rivera filed a report with the police department in an attempt to get her money back from Villano. The police also contacted the Board.

When interrogated by the Board, Villano was full of excuses and lies about what happened to the money. She claimed that all of the money orders that Ana Rivera had given her were a repayment for cash loans that she had given to the Riveras to help pay their electric bill and buy groceries.

When the Board’s investigators asked Villano why she would think that the Riveras could afford to pur-chase a home if they couldn’t even pay their bills, she said that perhaps she had misunderstood their Spanish and she thought that Martin Rivera’s disability income was $6,000 per month when it was actually only $600.

Villano was convicted of obtaining money by false pretense — a felony. She was also fined $7,500 by the Board and her license was revoked. l

lifelessons


formfactorANDREW KANTOR

DPOR has released new versions of all its real estate-related applica-tions (and other such forms), from “Salesperson License Application” to “Settlement Agent Registration Application” to “Firm Name/Address Change Form” to “Signature Authority Form” and more. (Some examples are at right.)

The purpose of the change, accord-ing to DPOR agency director Gordon Dixon, is to make the forms less con-fusing to both applicants and staff.

“Applicants often did not know which box to check off,” he said in a letter. “And if certain blocks were not checked off, the forms would be returned and the application process would have to start over again.”

The new forms also collect more information, such as individual and fi rm e-mail addresses “so we can bet-ter [communicate] with the regulants in the future,” according to Dixon.

You must begin using the new forms immediately — the Board will only accept the most recent ver-sions; using an older one can slow down your application. So make sure the form you’re using has a date of 01/17/2013 or later. (Look in the lower-left corner.)

You can fi nd all the new forms at DPOR.Virginia.gov/Boards/Real-Estate. �

DPOR launches new VREB formsSalesperson License Application

Settlement Agent Registration Application

Firm Name/Address Change Form

Signature Authority Form

Forms — they’re the bread and butter of a deal. They’re full of fi ne print and legalese, and not everyone “gets”

the details. And that often ends up as a call to our Legal Hotline. (Shameless plug: (804) 622-7955.) So we asked

our intrepid legal counsel (read: lawyer), Blake Hegeman, to take one of the forms the Hotline gets the most questions

about and illuminate it for us. They’re all available, free for download, at: www.VARealtor.com/standardforms.


Don’t guess.Lots of people try to predict the market, and it seems like everyone has an opinion about what’s happening. Stick with the facts: the monthly Virginia Home Sales Report. It’s got clear charts, insightful analysis — and it’s all in the numbers, not under the middle cup.

Visit us at VARealtor.com/HomeSales

february/march 2013 www.Varealtor.com20

Volume 20 ● Issue 1 february/march 2013

21

Ever notice that the real estate statistics you hear on the news are sometimes completely dis-

connected from reality? You don’t even need to do any research — you know what the market is doing in your area because you live it every day.

Clients, however, don’t. And con-vincing them to ignore that trusted talking head on the news (or byline in the news paper) isn’t easy; “Trust me, I know the area,” doesn’t seem very convincing.

Knowing and understanding the numbers, though, can help tremen-dously. Accurate market data can be a powerful tool not only to help clients directly, but to cement your place as the local-housing expert.

“I use market stats constantly when working with buyer and seller clients,” says Scott Rogers, a broker with Funkhouser Real Estate Group in Harrisonburg and author of VAR’s Home Sales Reports.

“My clients often have questions such as, ‘Should I put my house on the market now, or later?’ or ‘How long should I expect it to take for my house to sell, given my price range?’ Market stats can shed light on all of these questions.”

In other cases, though, clients think they know what the market is doing because of the headlines they read or the sound bites they hear.

Everyone who follows the news knows (or thinks they know) that prices and sales are up, and that mortgage rates are down — at least in general, at least nationwide. But you’re a Realtor. You need to set yourself apart by knowing things beyond what everybody else does.

That means knowing which stats to keep an eye on, as well as which numbers to be cynical of — and why. Let’s start with a look at the kinds of mistakes many people make, and that you should be ready to explain.

How To

Pick Out &Understand

The Real Estate Numbers That Matter Most

Andrew Kantor


Why does what’s being reported dif-fer from what’s actually happening? Despite what the tin-foil hat crowd might say, there isn’t a conspiracy among the media, nor do reporters prefer to write about negative things.

What happens is simple laziness. There’s more to most numbers — espe-cially economic ones — than meets the eye, but when a press release comes out from a respected source, a rushed reporter may not take the time to look behind the scenes.

You, on the other hand, can do better. It’s a matter of knowing what numbers matter, which ones don’t, and how to be sure you know what you’re reading about.

Easy mistakes to makePerhaps the most obvious error is assuming that nationwide numbers reflect the local market.

“I tell my clients that the numbers from the NAR, the Census Bureau, Zillow — national numbers — are just that, national,” said Charlottesville Realtor® and numbers wonk Jim Duncan of Nest Realty. “We can use them as guides to gauge the senti-ment of the national market psychol-ogy, but these numbers simply aren’t particularly relevant with respect to the Charlottesville real estate market.”

Not that there isn’t a place for senti-ment. Consumer psychology can be a powerful thing over the long term. Market optimism can lead to a market worthy of optimism — but on any given day, in the trenches, it doesn’t mean much.

Another common error: Forgetting that there are always ups and downs over the long haul, no matter which direction the market is headed. Put another way, even though a road may be heading north, it’s going to have a few curves here and there.

An incautious reporter or analyst might react to a short-term dip (“Sales down 12%!”) not realizing it’s just a small bump and still part of a long-term gain. Focus on trends, not points.

An easy way to do that is to watch year-to-year housing numbers, not month-to-month.

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23

If you want a peek at the future of the housing market, you need to think about the 20-somethings that are going to make it. Hopefully. They’re not only the next in line to buy those starter homes, they’re the ones that by doing so will allow the previous cohort of owners to move up.

Will they buy? That depends on the survey you believe. (See “Feelings, nothing more than feelings” on page 23 for a reminder why to take those with a grain of salt.) Some say they’re itching to buy. Others say they’re not interested.

Forgetting the social issues for the moment — kids these days want to be mobile, they don’t need to put down roots, they rent everything — two related issues you need to keep an eye on are the amount of student debt they’re carrying, and the cost of renting vs. owning. Because no matter what someone wants to do, economic reality might have something to say about it.

Student loans are a tremendous bur-den on 20-somethings — we’re talking a trillion dollars nationwide. In Virginia, about 59 percent of college graduates have significant debt on the day they

receive their degrees — an average of $24,717.

When you consider the dearth of good-paying jobs for recent grads, you realize they’re not only starting off 20 or 30 grand in the hole, they’re looking at putting a significant portion of their income toward paying for school.

Result: Rental vacancies are at their lowest level in a decade, says NAR.

And as Kirsten Salyer wrote for Bloomberg, “Commitment phobia isn’t a fad. For most, it’s an economic reality. Renting isn’t a choice when you can’t afford to buy, or qualify for a loan, or count on being in the same job for more than a few months.”

Think home ownership is less expensive?

A recent Census Bureau/HUD study found that owners typically pay more for housing than renters — $927 per month vs. $845. Certainly owners get more bang for their buck in the long run, when a home has built some equity. But $90 or $100 a month right now is a big deal for someone with a crippling loan and questionable job prospects. l

• The number to watch: the cost of renting vs. owning• The news to look for: student loan debt

Generation Rent

+ There are two kinds of statistics, the kind you look up and the kind you make up. —Rex Stout


Housing is cyclical — sales (and prices) go up through the middle of the year and down after the summer. It’s not news… or it shouldn’t be.

To see why, look at the (fictional) chart on the opposite page. Imagine you’re talking about that blue dot. You could focus on the fact that it’s down from the month before (the red line). In reality, it’s up from the year before (the green line); the dip is just part of the annual cycle.

Feelings, nothing more than feelingsIf a client mentions something he heard on the news, determine whether the numbers he’s quoting are based on reality, someone’s estimate, or on a poll of people’s feelings. The differ-ences are huge.

As statistics guru Nate Silver showed during the 2012 election, the harder the data, the more accurate the result. Facts about housing count for a lot more than even the most well-con-sidered opinions; beware stories such as the recent, “Expert believes housing starts will double in 2013.”

Even more suspect are numbers based on polls. One recent AOL Real Estate story was “Renters Looking to Own Are Ready to Buy.” Home builder Pulte Group, it seemed, found a dramatic increase in the number of renters who say they intend to buy a home “in the near future.”

How valuable is that? Well, if you poll Americans, you find that they report watching about eight hours of television a week. If you actually track them, though, you find it’s closer to 34 hours. So when people say they ‘intend to buy in the near future,’ they may simply be saying what sounds good.

Finally, there’s the awful hybrid of the two: stories based on what regular Joes predict for the housing economy.

“47% Expect Higher Interest Rates One Year From Now,” reads one headline. “43% of Americans expect home prices to rise” reads another. No offense, but who cares what a group of random non-experts think will hap-pen? You shouldn’t.

Context countsKeeping a cynical eye out in general is a good idea, as is not taking head-lines at face value. But there are some statistics you’ll see that may in fact be accurate, but that require some (miss-ing) context to be useful.

Mortgage rates: Watch your apples and oranges“Mortgage rates are at their lowest point in forever” — that’s a headline you could run for weeks on end. And it’s true. Just make sure your clients aren’t fooled by the headlines into thinking that they can borrow at 3.4 percent (or whatever it is by the time you read this).

+ ...he uses statistics as a drunken man uses lamp-posts — for support rather than for illu-mination. —Andrew Lang


25

Once upon a time, there was a big worry that there were too many proper-ties in the foreclosure pipeline — homes in or near foreclosure that had yet to make it onto the market. This “shadow inventory,” housing pundits predicted, would stop the recovery in its tracks as it caused prices to plummet.

It didn’t happen. Foreclosures entered the listings, certainly, but never in a tsunami — more of a gently rising tide that was absorbed by the market.

Still (to continue the metaphor), the water level is higher than is good for the business. Foreclosure sales do keep prices down, and they also hit the home-building industry by reducing the demand for new homes.

These distressed properties are mak-ing up less and less of the market, but they bear watching. For example, in October 2011 foreclosures made up 16 percent of the market in MRIS territory (which includes a lot of Virginia). A year later, in October 2012, that number

was down to a bit more than nine percent.

Further, NAR stats show that, as sales continue to increase, most of that gain is coming from conventional sales, not distressed ones. (In fact, the numbers lately have shown the lowest level of distressed sales since 2007.)

Homebuilders in particular should be happy. Before the housing bubble and burst, new home sales accounted for about 16.7 percent of the market (one new home was sold for every six existing homes). That figure held true for decades. But when the crash came, new homes weren’t nearly as popular; new home sales slipped to about 7.1 percent.

So keep an eye on those new-home sales — not just the number, but the percentage of the market. That’s a good gauge of the effect of short sales and foreclosures, and will hopefully make its way back to that 16.7 percent norm. l

• The number to look for: percentage of distressed homes sold in a market

• The number to look for: percentage of new homes sold in an area (16.7% was typical until the crash)

+ Definition of Statistics: The science of producing unreli-able facts from reliable figures. —Evan Esar

Foreclosures

distressed salesand


For one thing, that 3.whatever percent (which typically comes from Freddie Mac) is an average across the country. For another, it’s for someone with near-perfect credit. And finally, it will often depend on putting points down. As I write this, Freddie Mac reports an average rate of 3.34 percent for a 30-year loan… with 0.7 points.

So while the rates you see reported are a good gauge of the general direc-tion of the market, they aren’t some-thing you can count on in reality.

Building permits and starts (from Census Bureau): Beware the asteriskTwo measures of the health of the upcoming housing market are the number of home-construction per-mits being issued, and the number of new homes being constructed. Those figures come monthly from the Census Bureau, they are reported in all the business media, and they’re almost always hogwash.

The numbers that make the head-lines almost always have an (unre-ported) margin of error, and it’s often huge. For example, one month last year the bureau reported that starts were up 3.6 percent, plus or minus 13.1 percent. So the figure could actually be down 9.5 percent, up 16.7

percent, or somewhere in between.If your child told you he got a 65

on an exam, plus or minus 30 points, would you be proud or embarrassed?

Delinquencies: Cut some slack RealtyTrac and other companies post information about the number of mortgages that are delinquent, with the implication that they’ll go into foreclosure and be added to the dis-tressed inventory.

But often those numbers lump together borrowers who are 30, 60, and 90 days past due, as well as those in which foreclosure has begun. While technically all of them are “delin-quent,” there’s a world of difference between missing one payment (i.e., being 30 days past due) and skipping three months — or actually being in foreclosure.

Unfortunately, you have to look at the data from these reports to get a more accurate picture, because the summary or press release typically doesn’t break the numbers down. So when a report says that ‘delinquencies are up 10 percent’ it might sound bad, but it might also be a big jump in the “30 days behind” category — and (as anyone who has accidentally missed a bill payment will tell you) that’s not necessarily something to worry about. l

+ Say you were standing with one foot in the oven and one foot in an ice bucket. According to the percentage people, you should be perfectly comfortable. —Bobby Bragan


27

The real estate market can’t recover if there’s nothing to sell, so inventory is critical. More and more markets are finding that the buyers are there but the sellers aren’t; inventory is too low.

Unfortunately, it can lead to a vicious cycle. Low supply means rising prices — which is exactly what we’ve seen. Sellers who have seen their property values tank in the last few years are finally seeing them rise. They realize the bottom of the market is behind us, but they want to wait for prices to get away from near bottom. (Especially if they’re underwater. They may not be able to sell until they can get enough to cover their mortgage.)

So watch inventory numbers. As prices rise, more sellers should come off the fence, easing the pressure. And as inventory then begins to increase (from conventional sales, foreclosures, new homes, or whatever), prices will stop rising quite so quickly. And that may well convince yet more sellers to jump in, fearful of missing the market peak, and swing the pendulum back. l

• The number to look for: months of inventory

Inventory

Low unemployment is a good thing. The more Americans working, the more stuff we produce and the more taxes get paid. Everyone wins when everyone works.

These days, though, we’re at an offi-cial rate of about 7.7 percent nationally and about 5.6 percent in Virginia. (Real unemployment is actually much higher, because of the way the BLS has calcu-lated it for the last few decades.)

But there’s been a thin silver lining to higher unemployment: Low interest rates. The Fed has kept them so low in part because so many Americans are out of work, hoping low rates will encour-age businesses to borrow and expand.

And at one point, the Fed had said it

wouldn’t raise rates until at least 2015. It’s since backed off from that, and now says it won’t raise rates until unemploy-ment hits 6.5 percent (or inflation gets above 2.5 percent).

And unemployment has been going down. When it gets low enough, the Fed will act and mortgage rates will probably start going up.

When will that happen? It depends who you ask — 2018 according to the Brookings Institution; sooner according to economists surveyed by Bloomberg.

So watch that unemployment figure. When it hits 6.5-percent we could start to see a very different market. l

• The number to look for: the official Bureau of Labor Statistics unemployment figure

+ I can prove anything by statistics ex-cept the truth. —George Canning

Unemployment


As the General Assembly begins its 2013 session, VAR has already been working on a list of bills designed to make our members more successful and their business easier to conduct.

Some may seem minor or technical, but every one of them will have a significant and direct effect on the real estate industry. As always, our agenda is aggressive but sensible, and stands to help Realtors, the public, and the Commonwealth.

Occupancy Standards for Residential UnitsSB 841; Senator Mamie Locke

This bill confirms the two person per bedroom limit originally established by HUD and is the appropriate standard for landlords to use in determining the maximum number of occupants for a dwelling unit. Passage of this bill brings overcrowding provisions of the Uniform Statewide Building Code into accord with federal standards, enabling landlords and their agents to limit the number of occupants of a resi-dential unit.

Authority for the Real Estate Board to Hear Fair Housing ViolationsHB 1480; Delegate Peter Farrell

Currently in Virginia, there are two regulatory boards with juris-diction in fair housing cases, and which board hears a case depends on in whether it involves a real estate licensee or a non-licensee property manager. This bill would give the Virginia Real Estate Board jurisdiction in any case involving a licensed real estate agent or agents, including those that might have been heard by the Fair Housing Board. It avoids a potential situa-tion where the same fair housing case could end up being heard by two regulatory boards.

Landlord/Tenant and Failure of Electronic PaymentHB 1509; Delegate Greg Habeeb

More and more landlords and property managers are beginning to accept electronic payments from tenants. This legislation would give the recipient of a failed or stopped electronic payment the same right to pursue civil action as if it had been a bad check.

Dangerous Drug Lab DisclosureHB 1593; Delegate David Bulova

With the more residential properties being used in the manufacture of illegal methamphetamines, it isn’t clear what a property owner or landlord must disclose to a potential buyer or tenant. This bill would amend the Virginia Residential Property Disclosure Act to require dis-closure if a property had been used as a meth lab, unless that property is cleaned to Department of Health standards. This legislation is mod-eled after existing legislation for the disclosure of Defective Drywall.

POA/Condo Act and Disclosure of Qualification for Federal FinancingHB 1807; Delegate Jackson Miller

Sellers and buyers of residential condo units and lots in a property owners association are often restricted from using FHA financing because of the of the number of rental units in the community. This bill would require POA/COA disclosure packets to include information on how many units are owner occupied vs. rented, to help prospective buy-ers determine whether FHA financing might be available.

VAR’s 2013 Legislative Agenda“Man is the only animal that laughs and has a state legislature.”

—Samuel Butler


29

VAR is pleased to offer its support for Governor Bob McDonnell’s plan to help fund transportation in Virginia. Members have asked us, as part of our political efforts, to work on issues with a clear and direct effect on real estate. Transportation, because it impacts neighborhoods, commut-ing, and commerce, is obviously one.

VAR President Mary Dykstra of Roanoke said in support of the governor’s plan: “Transportation is a quality of life issue for every Virginia community. It is one of the first questions a Realtor is asked about when someone is looking to buy a home anywhere in the Commonwealth. And until the General Assembly addresses the funding challenges we face, Virginia communities can’t thrive as they should.”

Virginia Residential Landlord Tenant Act; technical amendmentsHB 1734; Delegate Manoli Loupassi

This “umbrella” legislation makes several technical amendments to the VRLTA, including clarifying the difference between an application deposit and an application fee, allowing landlords to refund a security deposit at the end of a lease with a single check for all tenants, to an address provided by the tenants (if forwarding the refund isn’t possible within a year, the money would go to the Virginia Housing Partnership Revolving Fund), and authorizes a landlord to send a seven-day notice of abandonment regardless of whether the lease contains a provision to that effect.

Protection of Escrow Funds by Real Estate LicenseeHB 1736; Delegate Peter Farrell

This bill addresses escrow requirements related to rental transactions. First, pre-paid rent has to be placed in the escrow account, but current rent does not. Second, the bill makes a distinction between the han-dling of security deposits vs. application deposits. Last, the bill would require that security deposits and pre-paid rent given to a landlord or broker be placed in an escrow account within five business days or receipt, and remain in the account.

First Time Homebuyers Savings AccountHB 1868; Delegate Tag Greason

This bill would create “first-time homebuyer’s savings accounts” into which individuals could contribute funds tax-free to be used for a first property purchase. This is similar to the structure of a Virginia 529 col-lege savings plan and is designed to promote the value of home-ownership to a new generation of Virginia homebuyers.

Real Estate Licensee Reliance on Public RecordsHB 2073; Delegate David Yancey

Realtors frequently rely on public information, information from the client, and information from other professionals — such as a surveyor or engineer — for use in advertising property for sale, and sometimes this information is inaccurate, through no fault of the Realtor. This bill would shield Realtors and brokers from civil or regulatory action if they provide information from a reliable source that turns out to be incorrect.

Regulating Appraisal Management Companies; technical amendmentsHB 2222; Delegate Gordon Helsel

Legislation was passed previously to set up regulation of AMCs by the Virginia Real Estate Appraiser Board, as required by laws stemming from the Dodd/Frank Act. The main goal was originally to authorize regulation of AMCs that man-age residential appraisers, but did not address AMCs manag-ing commercial appraisers. This legislation would extend that regulation to include com-mercial AMCs. l

TRAnSPORTATiOn FUnDing: A PLAn wE CAn SUPPORT


Guess what? Chances are you do at least one thing that annoys the people who receive your messages.

I’m not talking about hitting “Reply All” when you should just reply, or forwarding too many not-as-funny-as-you-think jokes. These are more subtle. The good news is that once you’re aware that there’s a better way, you can make your clients, co-workers, friends, and family a bit happier.

Use your wordsEnglish is, without a doubt, the coolest language on Earth. It’s flexible, detailed, lyrical, and it’s absorbed words, grammar, syntax, and more from every other tongue on the planet. So use it.

That doesn’t mean every message has to be gram-matically perfect. But you’ll look a lot more profes-sional when you take the time to write a full sentence, check your spelling, and put in punctuation.

Yes, it means taking an extra moment when you reply to an e-mail — or waiting a bit to respond to a text message. But it’s worth it to look like you graduated from grammar school (figuratively if not literally).

Oh, and if you’re over the age of 16, don’t

even think of using text-speak or silly abbreviations (other than the occasional “ASAP”). The message it sends is not “Look how quickly I responded to you!” It’s “Look how sloppy I can be!”

A picture is worth a thousand cursesKeep unnecessary images out of your e-mail — and that includes logos, signatures, and stationery.

It’s one thing if you’re sending a picture as part of

the message (“Here’s a photo of the back of the build-ing”), but if you typically include a company logo, an image promoting an organization or policy, or any little picture at the top or bottom of your message, stop.

Depending on your recipients’ mail settings, there’s a good chance that cute little company logo of yours will end up as a red X or be listed as an attachment. Some e-mail programs won’t display images by default (for bandwidth or security reasons), which means your message ends up looking, well, messy.

And if you’re sending anything other than simple black text on a blank white background, don’t. (All right — Outlook users might have to use blue for replies.) That means no fancy stationery and no background colors. There’s no telling how those will look when your message gets through or is forwarded, especially for users on smartphones or tablets.

Clean your forwards and repliesWe’ve all been part of e-mail chains that go on through reply after reply. Unfortunately, after the second go-round, they also get clut-tered with re-re-re-indented messages, with the original somewhere at the bottom and multiple replies above it.

Clear the clutter. Unless you have a pressing need for your recipient to read the original message and every single reply, delete the often-huge chunks of older messages. It makes for a much easier read, especially if someone in the

Don’t be that guy

accessibletechANDREW KANTOR

Never ever ever.


conversation includes a signature every time. (Note: There are times, of course, when you want to keep all the replies and re-replies together. In those cases, you — and they — will just have to live with it.)

Speaking of signatures, keep yours short. You have legal requirements, of course (your name, your firm name, its location, and where you’re licensed), but beyond that keep it short. A quick line about you is fine, but don’t go crazy.

Today I received a two-line note that included 14 lines of legalese at the bottom — legalese that was, frankly, nonsense: (“The information in this electronic mail message is the sender’s business confidential…”). It was a request for a back issue of Commonwealth. Hardly confidential, and hardly needing of 144 words of legal disclaimer. Bottom line: Reduce those bottom lines if you can.

Paste cleanlySometimes, when you paste some text that you cut from another source — e.g., a message or a Web page — you’ll end up pasting the formatting as well. A mishmash of fonts isn’t exactly the professional look you want to cultivate.

You might have the option to “Paste without for-matting” or “Paste Special,” but there’s also a simple workaround: First paste the text into your browser’s address bar, then cut it from there and add it to your message. (You can also paste it into Notepad, or a search box, or many other places.)

That ends up removing the formatting, so whatever you paste will fit cleanly into your message. Speaking of which….

Keep your fonts fewThere are seven fonts permitted in an e-mail message: Arial, Courier New, Georgia, Tahoma (Geneva on a Mac), Times New Roman, Trebuchet, Verdana. Period*.

Those are the only ones your recipient is guaranteed to have. Anything else (Bookman, Franklin, Palatino, etc.) will not show up properly on a lot of devices — and there’s no telling what it will end up looking like.

So don’t get fancy, no matter how much you like Futura Condensed.

Everyone make’s mistakes If you post something to your Web site (blog or other-wise), and then realize something needs to be changed — maybe you need to correct a factual error, or change an incorrect date — there are a couple of common and well-respected ways to make the change. And yes, you should make the change to the original, not to a sepa-rate message or post.

You want current readers to get the correct informa-tion, and returning readers not to be confused.

Method one is to add a phrase to the beginning of the post/article/entry explaining succinctly what happened: “This article updated on 8/15 to correct the price of the paneling.” Simple and clear.

The other is to use a strikethrough — a line through the text that’s being replaced, with the new text next to it bold or colored red. That has the added benefit of letting readers see the original, warts and all.

Now that you know better, it’s time to share the knowledge. Grab this column online and send it to a few dozen of your closest friends. They’ll thank you for it… eventually. l

* Technically, Comic Sans is also compatible with just about everything. But that should never be used for a recipient over the age of six.

John DickinsonHall Associates Union Hall

John McEnearneyMcEnearney Associates Alexandria

rpacreportAs of JAnuAry 15, 2013, the following Realtors® and local associations have

joined RPAC of Virginia as Major Investors. For more information on the value

of RPAC and how your investment works to protect your business, contact

Heidi Schlicher at [email protected] or (804) 264-5033. Or, if you want to

get invested today, please visit www.realtorschoose.com/contribute.

Golden R Investors ($5,000)

Charles BurnetteBurnette Real Estate Sales, Blacksburg

Billy ChoreyChorey & Associates Realty, Suffolk

Joe FunkhouserColdwell Banker Funk-houser, Harrisonburg

John PowellLong & Foster Real Estate Colonial Heights

• Charlottesville Area Association of Realtors®, Charlottesville

• Roanoke Valley Association of Realtors®, Roanoke

• Williamsburg Area Association of Realtors®, Williamsburg

Golden R Associations ($5,000)

Trish Szego ERA-Elite Group, Realtors®, Fairfax

Jane Quill RE/MAX Presidential Fairfax

Crystal R Investors ($2,500)

Forrest Odend’halLong & Foster Real Estate, Gainesville

Bill WhiteJoyner Fine Properties Richmond

Deborah BaisdenPrudential Towne Realty Virginia Beach

Dennis Cronk Poe & Cronk Real Estate Group, Roanoke

Hall of Famers have contributed a cumulative amount of at least $25,000 to RPAC.

Thomas Jefferson, IIIJoyner Fine Properties Richmond

Tom StevensColdwell Banker Residential, Vienna

Melanie Thompson Century 21 AdVenture Realty, Fredericksburg

Jack Torza Long & Foster, Realtors® Mechanicsville

Dorcas Helfant-Browning, Coldwell Banker Professional, Virginia Beach

Steve HooverMKB, Realtors® Roanoke

Cindy HawksKeller Williams Realty Virginia Beach

WHY I INVEST

Sterling R Investors ($1,000)

— Cindy Stackhouse, GRI, Century 21 Stackhouse & Associates, Prince William Area

For me, it was a transfer tax fi ght that made its way to the state level that got me

involved. I realize now more than ever that as Realtors we must be proactive in protecting our business, and that’s why I stroke that check every year.”

VAR’s lobbying can only be as effective as the REALTOR® support behind it. RPAC and VAR work everyday to ensure that your business, and your clients, are protected from laws that threaten the American dream of homeownership.

Visit RealtorsChoose.com/RPAC-101 to hear about what inspired Cindy to become an RPAC investor.

See how your RPAC investment is paying off: Visit www.RealtorsChoose.com!

Sterling R — Hall of FameSandee Ferebee Prudential Towne Realty, Virginia Beach Tom Innes RE/MAX Commonwealth, Richmond

Robert Adamson McEnearney Associates, Inc., ArlingtonLaura Benjamin Roanoke Valley Association Of REALTORS®, RoanokeMary Bayat Bayat Realty Inc, AlexandriaTracy BaynardMary Ann Bendinelli Weichert Realtors, ManassasBradley Boland Keller Williams Realty, RestonBeckwith Bolle Carter Braxton Preferred Properties, Leesburg, VASuzanne Brady Century 21 Adventure Redwood, FredericksburgMoon Choi Re/Max Presidential, FairfaxVic Coffey RE/MAX All Stars Realty, LLC, DalevilleClaire Forcier-Rowe Coldwell Banker Elite, FredericksburgVirgil Frizzell Long & Foster Real Estate, RestonBeverly Frowen Long & Foster Real Estate, Inc, ManassasAnne Gardner Charlottesville Area Association of Realtors, CharlottesvilleLynn Grimsley RE/MAX Peninsula, Newport NewsGeorge Grundy George Grundy & Assoc Realty, PetersburgAmy Hudson RE/MAX 8 - Blackburg, BlacksburgKaren Kidwell Long & Foster Real Estate, Falls ChurchBetty Kingery Mountain to Lake Realty, Rocky MountPatricia Kline Avery Hess Realtors, Locust GroveKeith May Cottonwood Commerical, HarrisonburgShane McCullar Keller Williams Realty, AlexandriaJim Mellen RE/MAX Peninsula at New Town, New Town, VABrooke Miller Long & Foster Real Estate, Inc, FredericksburgPercy Montague Montague Miller & Co Westfi ed, Charlottesville

Fred Morgan 1st Choice Real Estate, StauntonMuraji Nakazawa Olympic Realty, Inc., HerndonSusan Oh New Star Realty & Investment, Mc LeanJason Outten The Buyer Brokerage LLC, AshburnGwen Pangle Pangle and Associates, Leesburg, VAKimberly Plourde Exit Realty Central , NorfolkDenise Ramey Roy Wheeler Realty Co., CharlottesvilleAnne Rector Rector-Best Property Management AlexandriaKaty Richards Joyner Fine Properties, MidlothianFetneh Schacht Long & Foster Real Estate, HerndonHenry Scholz MKB, Realtors, RoanokeKatrina Smith Long & Foster/Webber & Assoc., WinchesterKaren Smith RE/MAX Commonwealth, RichmondPatricia C. Snyder Coldwell Banker Four Seasons, Mt. JacksonSusan Spellman Long & Foster, Realtors, WilliamsburgPatricia Steele Coldwell Banker Professional, Virginia BeachSuzy Stone Century 21 AdVenture Realty, FredericksburgMack Strickland Strickland Realty, ChesterPatricia Sury Montague Miller & Co. Downtown, CharlottesvilleChristine Todd Northern Virginia Association of Realtors, FairfaxMary Ann White RE/MAX Commonwealth, MechanicsvilleShanna Wiseman Parr & Abernathy, Hopewell

• Fredericksburg Area Association of Realtors• Greater Augusta Association of Realtors• Harrisonburg-Rockingham Association of Realtors• New River Valley Association of Realtors

Sterling R Associations ($1,000)

Invest In RPAC, Invest In youR

ChIldRenFAmIlyFutuReBusInessneIghBoRhoodsChoolsCommunItyFRIendsClIentsFellow ReAltoRsAmeRICAn dReAm

Contributions are not deductible for federal or state income tax purposes. Contributions to RPAC are voluntary and are used for political purposes. You may contribute more or less than the suggested amount. You may refuse to contribute without reprisal and the National Association of REALTORS® or any of its state associations or local boards will not favor or disfavor any member because of the amount contributed. Up to 100% of your contribution is sent to National RPAC and is charged against your limits under federal law (2 U.S.C. 441a); National RPAC returns up to 70% of your contribution to Virginia RPAC for use in connection with the election of state and local candidates in Virginia.

VISIT REALTORSCHOOSE.COM FOR MORE INFORMATION.


contactvarWe’d love to hear from you

We’re online at www.VARealtor.comour official blog is varbuzz, at www.VARbuzz.com

If you have questions, we’re ready to help. during normal business days, our receptionist is available from 8:30 a.m. to 5:00 p.m.

For membership and dues questionsask for amy hafermembership records manager [email protected]

If you’d like to have someonespeak at your association or brokerageask for lynne Wherry director of member outreach [email protected]

To find out about conferences, seminars, and professional educationask for Glenda Puryear Conferences Specialist or lili Paulk, director of education glenda or lili @varealtor.com

For questions about professional standards and the Code of Ethics ask for erika almsteadProfessional Standards [email protected]

If you need to know about professional designationsask for Kim martin, Specialties and Chapter manager [email protected]

For information about RPACask for heidi Schlicher director of Political operations [email protected]

If you’re interested in marketing or advertising opportunitiesask for Christine hodgesmarketing and Communications mgr. [email protected]

If you have comments or questions about Commonwealth magazine or our Web sites ask for andrew Kantor, editor and Information analyst [email protected]

To reach our Legal Hotline Call (804) 622-7955*

* you must register first at

VARealtor.com/LegalHotline

Our CEO is Scott Brunner(804) 249-5702 [email protected]

Mary Dykstra, ABR, CRS President mKB, realtorS®

roanoke(540) 989-4555 [email protected]

Bradley Boland President-elect Keller Williams realty reston (703) 437-1717; [email protected]

Deborah Baisden, GRI vice-President Prudential towne realty, virginia Beach (757) 486-4500 [email protected]

Bill White treasurer Joyner fine Properties richmond (804) 967-2740 [email protected]

Trish Szego, CRB, CRS Immediate Past President era elite Group haymarket (703) 359-7800; [email protected]

R. Scott Brunner, CAEChief executive officer (804) 264-5033; [email protected]

VAR Member Service Partners

VAR 2013 Leadership Team

(804) 264 -5033our phone number is

See your member discounts at www.VARealtor.com/ discounts

Liberty Mutual, home, auto, and renters insurance

Pearl Insurance, e&o, medical, life, and dental insurance

Phone Tag, voice to e-mail transcription

Realtors Federal Credit Union

T-Mobile, wireless service

UPS, shipping and more

Zipform, electronic forms solutions

Vertical Response, social media management platform

36 FEBRUARY/MARCH 2013 WWW.VAREALTOR.COM36 FEBRUARY/MARCH 2013 WWW.VAREALTOR.COM

VARworksVARworksWhat do we need to pay atten-tion to while tracking the housing recovery? What numbers are really important to our members as we counsel homeowners?

We’re all aware that we are inun-dated with data, and that consum-ers can fi nd a statistic to support any position they’re wanting to take — the seller who’s certain how much more his house is worth, or the buyer who’s certain how much less than list price she should o� er.

As professionals, we are the experts in how the tsunami of sta-tistics actually infl uences the value of that 3/2 split level on the corner that was purchased in 2007 and still needs a bath remodel and new carpet. We are the ones who have to cut through the noise of numbers to fi nd the reality.

Why numbers matterVAR President Mary Dykstra, Roanoke

Used judiciously, we can help our clients make wise decisions based on past performance and future-casting. Our sta� at VAR spends hours assembling and analyzing housing data, and then presents it to us in a user-friendly format.

Read those numbers and under-stand what they mean. It’s one of the most important benefi ts of our association membership, and it’s critical to our continued positioning

as the respected resource for all things related to housing. �

More than 900 Virginia brokers participated in a recent survey on licensee competency. Hear what they had to say at the VAR town hall meeting, Wednesday, February 6, at the Get Active conference. (VARealtor.com/getactive).

More than half of the brokers surveyed think that Virginia’s pre-licensing curriculum needs to be updated to teach a broader skill set to compete in today’s market.

What do new licensees need more training in? Contracts, agency, and ethics topped the list, brokers said. What do you think? Come share your thoughts at GetActive.

Upgrade yourself.1. Realtors® who earn their GRI earn an average of twice as much

as those without a designation.

2. Many of the courses you take for your GRI count toward your post-licensing and continuing education requirements.

3. What are you waiting for?

The Graduate Realtor® Institute is the most popular designation among successful Realtors®.

To find out how you can upgrade your career, visit us at VARealtor.com/GRI


Alexandria/Kingstowne, Alexandria/Old Town, Arlington, Chantilly, Charlottesville, Chesapeake/Greenbrier, Chesapeake/Western Branch, Fairfax, Fairfax Gateway, Fredericksburg, Great Falls, Lakeridge, Leesburg, Loudoun Gateway, Lynchburg, Manassas, Martinsburg, McLean, Midlothian, Newport News,

Reston/Herndon, Richmond North/Hanover, Richmond West, Stafford, Tysons/Vienna, Virginia Beach/Hilltop, Virginia Beach/Town Center, WinchesterEach Keller Williams® Realty office is independently owned and operated. | If you are currently a franchise owner, please disregard as this is not intended as a solicitation.

Virginia and West Virginia Region 703-335-8000 • [email protected]

Find out if Keller Williams is right for you as an agent or as an owner. Call or email your confidential inquiry today!

A Powerful Partnership.Your Business. With Our Backing.

businesses worth owning

lives worth livingKW … It’s where you belong.

83 percent of KW offices are profitable

$38 million in profit share (that’s $100,000 a day, every day last year)

#1 real estate franchise, Entrepreneur Magazine

Overseas global expansion underway

Average agent commissions increased 16%

84% increase in leads delivered to our agents

50 percent of the top 250 teams in REAL Trends/WSJ’s “Thousand Report” are with KW

4 hours saved in each transaction thanks to eEdge

$3.3 million raised for KW Cares

Almost 200,000 hours given back to communities during annual RED Day

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