Archive for February, 2013

VAR’s work pays off — transportation bill passes

We asked and you responded. Realtors from across the state put pressure on their representatives in the Virginia General Assembly, which — after much debate, arguing, and compromise — passed a bipartisan transportation bill that Governor Bob McDonnell is expected to sign.

Transportation is a critical issue for Virginia. Without reliable roads and public transportation systems, the state becomes less attractive for businesses looking to move or expand. Realtors asked VAR to help push for a change to the state’s transportation funding and we obliged.

The bill would eliminate the $0.175 per-gallon gas tax that consumers pay at the pump, and it raises revenues through a variety of new and increased taxes:

  • A new 3.5 percent tax on gasoline at the wholesale level (about $0.12 per gallon at current prices)
  • A new 6 percent tax on Diesel at the wholesale level
  • Raising Virginia’s sales and use tax from 5 percent to 5.3 percent
  • Raising the motor vehicle sales tax from 3 percent to 4.3 percent over five years
  • A new $100 annual tax for hybrid, electric, and alternative fuel vehicles (except for those powered by natural gas).

The plan is expected to raise about $880 million a year by 2018 (or $3.5 billion over five years) much of it earmarked for transportation.

There are also “Regional Congestion Relief “ plans for the Northern Virginia and Hampton Roads areas, which includes the following:

In Northern Virginia, (Planning District 8 to be exact), additional transportation revenue will be created by implementing:

  • An increase in the regional sales tax of 0.7 percent, for a total of 6 percent
  • An increase of 3 percent in the Regional Transient Occupancy tax (hotel/motel tax)
  • An increase to $0.35 per $100 in the regional grantor’s tax from the current $0.10 per $100

In Hampton Roads (click here to see areas included), additional transportation revenue will be created by implementing:

  • An increase in the regional sales tax of 0.7 percent, for a total of 6 percent
  • An increase in the local gas tax of 2.1 cents

These additional taxes are expected to raise between $300 to $350 million annually for Northern Virginia and between $175 and $219 million per year for Hampton Roads by 2018.

VAR is pleased that the General Assembly passed such a comprehensive transportation plan. Realtors want communities to thrive and we’ve used our political clout to help make that happen — thank you for your efforts in writing your legislators, urging clients and friends to take action, and participating in the process.

CLICK HERE to watch a video featuring VAR’s lobbyist Martin Johnson and director of political operations Heidi Schlicher talk about the transportation legislation on RealtorsChoose.com.

(Updated 2013-02-28 to correct some typos and such.)

Basic training is just that — basic. When you get a real estate license, it means (or should mean) that you have a solid, basic knowledge of how to conduct a real estate transaction. It’s the equivalent of knowing how to steer, accelerate, and break — it doesn’t mean that you’re ready to take on the Washington Beltway at rush hour[*].

So while new licensees may not be ready to practice real estate on their own, they should be ready to be ready. The foundation should be built; experience will take care of the rest.

That’s the theory. Does it work that way? It’s a question we posed: In 2009, we formed a workgroup to look at the issue of licensee competency. And early this year we polled nearly 4,000 Virginia brokers about what they thought of the quantity and quality of real estate education in the state.

We brought it all together at our GetActive legislative conference, with an open panel and town hall discussion. The questions before the panel and the audience: Do Virginia Realtors get enough training — and the right kind of training — before being licensed? And if not, what’s to be done?

Easy does it

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Brad Boland (VAR) , Christine Martine (DPOR), Blake Hegeman (VAR), Paul DiCicco (McEnearney Associates), and Greg Davis (Long and Foster)

“Could someone walk out of exam and help someone with the biggest investment of their lives?” asked Paul DiCicco, executive vice president of McEnearney Associates, rhetorically. (He’s since joined Keller Williams as regional director.) No, obviously. “They could be showing homes and writing contracts without knowing what they were doing.”

His issue is that real estate education is less about how to do real estate than about how to pass the course. Students learn how to get a good grade, he said, but “There was no way someone could come out of these classes and be able to sell a home.”

Greg Davis, a recently licensed real estate agent with Long & Foster in Richmond, agreed. While he said that the 60-hour prelicensing requirement is enough to pass the exam, “When I walked out of there, did I want to list somebody’s house? Did I want to help somebody buy a house? No.”

The issue, he pointed out, is that it’s not always clear to the newly licensed that they aren’t quite ready yet. A licensee’s got to know his limitations.

“I can see why some new licensees would want to rush out,” Davis said. “They think they need to start making money.” And while that kind of enthusiasm might be praiseworthy in a general sense, without some experience under their belts, new Realtors can be prone to making mistakes that can cost clients money, and do permanent damage to their reputations — not to mention the profession as a whole.

“The licensees are going to have to take some responsibility themselves,” he said. They’ll have to realize what they’re lacking. (Davis has an advantage in that regard — his wife Pam has been a Realtor for seven years.)

Members of the audience were quick to agree: Getting a real estate license is easy … too easy, for some. As one audience member groused, why are we giving somebody a license right after the finish a class? After all, student drivers first need a permit.

But what does that mean, ‘too easy to get a license’?

Continue reading Are new licensees ready for prime-time — and how can we get them there?

Be here the ides of March Have you used the Realtors Property Resource today? It’s one of the most powerful tools available to members, and to help you get the most out of it, VAR and NAR are offering a series of live webinars specifically to show Virginia Realtors the in-the-trenches uses of RPR.

The Realtors Property Resource is essentially a giant database — actually a set of databases — of every property in the country.

Pick an address or an area and you can find a ton of information about it from dozens of public and private data sources: community and demographic information, tax assessments, distressed properties, REO and foreclosure data, liens, mortgages, school ratings — and NAR is continually looking to add more.

Commercial Realtors can do business opportunity analysis, use it to help with site selection (can you say “market potential”?), even look up consumer trends and local demographic data.

Appraisers can use RPR to help find the best comps (and adjust for them), and even do forms-based analysis and assignment management. Oh, and RPR has tools for creating neighborhood statistics reports.

It’s even integrated into most MLS systems (all but two in Virginia), so not only is accessing the data easier, current listing information is integrated as well.

In short, RPR is an incredible tool for helping clients find, price, or compare properties. And because it’s paid for by your dues, it’s free for all Realtors.

So what’s the problem?

There is none. We just want to be sure as many Realtors as possible are taking advantage of it. So VAR and NAR are offering a series of live, quarterly webinars for Virginia Realtors to showcase the power of RPR.

The first one is aimed at brokers. It’s not just the typical “why your agents should use this” presentation. RPR has some powerful brokerage-specific tools —support for Affiliated Services Support, a data tool for customized market statistics (down to the agent and office level!), and company branding, for starters.

Mark your calendars:

Space is limited. Click here to reserve your Webinar seat now. (You’ll need your name and your e-mail address. That’s it.) 

And you can always get lots more information about RPR at narrpr.com.

imageThe Department of Professional and Occupational Regulation’s main computer system is down for a week — starting today, February 21 — so some productivity enhancements can be installed.

You need to be aware of what this means:

1. ONLINE license services, such as applications, renewals, address changes, upgrades, and reinstatements will not be available from February 21 through February 26. After that, due to the probable backlog, expect delays as well. Online services are expected to resume on Wednesday, February 27.

2. PAPER license services for the same things will be delayed by at least a week — after all, it’s the same computer system on the backend, someone is just entering your data for you.

If you’re updating your license, working with an applicant, or otherwise making changes to anything connected to real estate licensure, expect delays.

Forms filed by mail or online before close of business on February 20 should have been processed, according to Jeffrey Williams, board administrator for real estate at DPOR. “We’ve worked some pretty serious overtime in the past couple of weeks,” he said, in order to be caught up. Still, if you submitted something online or by mail after February 20, it will most likely not be processed for at least a week.

We know that it’s frustrating — in this age of one-click ordering and instant approvals, we’re used to administrative things happening quickly. But cut DPOR some slack. A system being used by thousands of people from hundreds of professions isn’t going to go online in a matter of minutes, and hiccups will happen.

Be prepared, leave some extra time, and soon enough things will be back to — or better than — what you’re used to.

So what will be new?

While much of the change will be on the back end — ways for DPOR to manage its staff more effectively and “make sure the team is operating as efficiently as possible,” as Williams put it — licensees will see some changes.

The online renewal process will be a bit different (it will require an e-mail address now), and the DPOR website will offer some new tools. Those include a more-robust license lookup system; you’ll be able to see quickly what continuing education you’ve completed, for example, and look up everyone affiliated with any firm. Those and other improvements will be rolled out slowly as DPOR gets comfortable with how the system is operating.

Worried? Try not to be. The changes won’t be earth-shattering, and Williams pointed out that there is already helpful information included with license-renewal cards. DPOR will also have a dedicated phone number — and a dedicated team available to answer questions (“Press 3 for online help and online renewals registration”).

Flood insurance premiums increase for some properties

Flood insurance premiums are going to start going up for second homes, and for properties that have had significant flood damage before.

Starting January 1 of this year, flood insurance premiums on second homes (including vacation homes) went up 25 percent. And in June, properties that have seen “severe repetitive loss” from floods will also see insurance rates increase.

That’s because federal subsidies for flood insurance are being reduced for those kinds of properties — part of the National Flood Insurance Program’s reauthorization last year.

Because private insurers rarely if ever offer flood coverage — and because climate change will mean more and more severe weather every year — the federal government is pretty much the only place property owners can go for flood insurance.

Until Hurricane Katrina, the NFIP actually turned a profit, but since then it’s been in the red. Hence, it can no longer offer such inexpensive coverage for those second homes and for properties that keep getting damaged year after year.

Click here for more information from NAR about flood insurance (PDF).

Exploding suburban meth labs are old news. The latest trend in drug-related detonations: hash oil explosions. So warns FEMA in a recent weekly Bulletin of Fear (aka “InfoGram” for emergency services personnel).

As FEMA explains, “Some explosions in residences and hotels around the country are being traced back to a process using butane to extract and concentrate compounds from marijuana.”

What madness is this? you ask. Since when does marijuana lead to explosions (other than when a Cheetos bag is opened too quickly)?

Basically, hash oil is derived from cannabis plants by soaking them in butane (you know, lighter fluid) and then carefully boiling off that butane leaving hash oil behind. The key word here is “carefully.”

As Wired eloquently puts it:

Butane is highly flammable and it tends to sink, meaning that if you use it indoors or don’t ventilate well, you’ll run into serious trouble. Let some butane puddle in your living room, throw in a thoughtless spark from a cigarette, stove, or — dare I suggest — bong hit, and suddenly your apartment is missing a wall.

There’s some good news. Unlike meth production, which leaves behind uninhabitable homes and seriously messed-up users, hash oil production, while dangerous, doesn’t taint the property (or wreck the users — the resulting drug is akin to really high quality pot, according to Wired.)

So while disclosing that a home used to be a meth lab will probably be a new law this year, at least you won’t have to ask if anyone ever made hash oil. On the other hand, the giant hole in the wall might be a hint.

Mortgage banker CEO praises (!) CFPB

Mortgage bankers aren’t exactly the most regulation-friendly group around, so when the CEO of the Mortgage Bankers Association (that’d be David Stevens) has good This guy things to say about a government agency that’s creating new regs, it’s worth noting.

In this case, Stevens told the MBA’s membership that, while he thinks many regulators are hindering progress, the Consumer Financial Protection Bureau is one doing policy right.

Why? Because it listened to the mortgage industry before it created its rules — most notably the recent qualified mortgage (QM) regulations and the national mortgage-servicing guidelines.

That doesn’t mean Stevens loves everything that CFPB does, but the agency earned his praise for at least taking his group into account.

“The [servicing] rule was done pretty well,” he said “It’s a recognition that the CFPB really listens and they got a lot right.”

Read the details from Housing Wire.

image Realtors in areas of Virginia that are dependent on government spending are not only bracing for the impact of the impending “sequestration” budget cuts — they’re already feeling the impact.

Potential home buyers are putting things off. Businesses thinking of moving to new spaces are re-thinking it. Hiring is slowing, and uncertainly is the rule of the day.

All because we never really avoided that “fiscal cliff.” It was more of a postponement —till March 1. That’s when the first $85 billion in across-the-board* spending cuts will take effect unless Congress can grow up and work with the President to craft a budget everyone can live with.

Some cuts affect just about everyone — kids potentially kicked out of after-school programs, teachers laid off, small-business loan guarantees no longer available, food production slowed for want of inspectors… you get the picture.

Virginia is a state that’s a bit more reliant on government spending than most.

But Virginia is a state that’s a bit more reliant on government spending than most, thanks in large part to that shipyard in Norfolk you may have heard about, not to mention the area around Washington, D.C.

In fact, today (Feb. 20) is the day the military lets Congress know what cuts it’s going to be making, including reducing the amount of shipyard work being done in Norfolk. For example, earlier this month, the Navy had said it was postponing the overhaul of the carrier USS Abraham Lincoln: “The Lincoln will remain moored at the Norfolk base until Congress resolves the shortfall created by its inability to agree on a budget,” the Virginian-Pilot reported.

Granted, not everyone thinks massive government cuts are a bad thing; there are plenty of “cut federal spending at all costs” folks out there. (Although most of them will clarify that with “unless it’s for something I like.”) But things are never that simple. The ripple effects of military cuts — even temporary ones — are enormous in Virginia.

Commonwealth cuts

Courtesy US NavySomething like 800,000 civilian employees of the military could each lose 22 days of pay because of the cuts. Then there are the businesses those people spend their money with: everything from grocery stores to plumbers to the kid who mows the lawn.

As Senator Tim Kaine pointed out, Virginia will lose about $48 million in federal funds for education, from pre-kindergarten through high school.

The Richmond Times-Dispatch quoted Mark Vitner, a senior economist with Wells Fargo, who singled out the Washington, D.C., and Norfolk regions as areas that would suffer the most.

“The potential impact from reduced federal outlays could affect everything from biomedical research to homeland security […] Cuts in nondefense outlays would likely trigger significant furloughs, layoffs at civilian contractors and generally less business for supporting services, including law firms, caterers, airlines and hotels.”

In areas like Hampton Roads that rely heavily on government spending for their economies, that means people rethinking budgets and holding off on major purchases like, you know, a house. Realtors throughout the Hampton Roads and Norfolk areas are reporting a sales slowdown as potential home buyers hold off, waiting to see what cuts are going to be made where, and how long they’ll last.

Commercial real estate is also under the gun. When no one knows how long military spending will remain sequestered, it’s hard to be willing to invest in a business expansion or move. Will you need to hire more people after all?

And here we were just beginning to enjoy the resurgence of the housing market.

Governor McDonnell even wrote to President Obama, asking him to find a way out of the impending crisis. (He may want to make another 535 copies of that letter.)

You could argue, of course, that we spend too much on our military, or that some programs really need to be cut. That’s certainly a discussion to have… but not right now. Economics 101 says that you don’t cut spending when there’s high unemployment; common sense says that some programs are more important than others. No reasonable person wants to see these massive, indiscriminate cuts. If you owe too much on your Visa, you don’t stop spending equally on food and movies.

But this is what happens when you play chicken with your future self. You really have to hope he lets you win.

 

* Well, almost. There are a few things that aren’t under the sequestration gun, such as Social Security, Medicaid benefits, military pay, some anti-poverty programs, and the ongoing wars.

So I just wrote how banks have found a loophole in the national mortgage settlement — one that lets them continue foreclosures while getting credit with the government for making modifications. (“Loophole in mortgage settlement means lenders continue foreclosures.”)

The problem of that, I explained, was not just their violating the spirit of the agreement, but that it would keep more foreclosures on the market and property values down.

Countering my argument, in part, is FNC’s February, 2013 Foreclosure Market Report.

Before the housing crisis, you see, a foreclosed home typically sold for about 12 or 13 percent below a similar ‘traditional’ sale. But the market collapse pushed prices down, and foreclosures were going for 25 percent below market value. Ick — and a good way to hurt an entire neighborhood.

That’s why, when lenders continue to foreclose, it’s bad for the market in general, as it pushes valued down. If people can stay in their homes, everyone wins.

But now foreclosure prices are back to what they were pre-crisis: about 12.2 percent below market value. That means that, while it’s still better for people not to lose their homes, the impact of foreclosures isn’t nearly as big as it was a few years ago.

So the $25 billion mortgage settlement deal that was supposed to help keep people in their homes? Turns out banks have found a loophole: They’re forgiving second mortgages while refusing to modify the primary mortgage.

Quick recap: Lenders were found to have forged documents, falsified signatures, and otherwise broken the law in an effort to foreclose on people as quickly as possible. As part of the settlements reached for doing that, they were required to use billions to forgive mortgages and help people stay in their homes.

Here’s the loophole, as the New York Times explains: Banks get credit for forgiving either first or second mortgages, so they’re choosing to forgive the second loans (which, in a short sale or foreclosure, would be worthless anyway).

So a lender can forgive a second mortgage — which in the event of foreclosure would be worthless anyway — and under the settlement claim credits for “modifying” the mortgage, while at the same time it or another bank forecloses on the first loan. The upshot, of course, is that the people the settlement was designed to protect keep losing their homes.

The five banks covered under last year’s settlement are wiping out second mortgages in record numbers. 

The result: Thanks to this loophole, foreclosures continue apace. People are still losing their homes, and property values are continuing to be held down by distressed properties on the market.

Read the details from the Times.