For you REALTOR-types who own the requisite gas-guzzling land yacht (suitable for schlepping customers hither and thither), here’s some advice from today’s YOUR MONEY column in the NYT:

Your neighbors may turn up their noses, but keeping your gas-guzzling sport utility vehicle, or buying one coming off a lease, may be a smart move….

….Given the plummeting demand for big vehicles and the rise in gas prices that is responsible for the market turmoil, it is probably tempting to ditch your own large vehicle and trade down to something smaller.

But many experts suggest sitting tight, for a variety of reasons.

Here are some questions to consider if you are tempted to get rid of your gas guzzler, and some tips for figuring out whether it may be more financially sensible to hang onto it for a little longer….

Complete story here.

The following is an account of a loan horror story recounted by a Charlottesville lender.

First, a solution:
What Realtors can do to avoid a similar scenario: Work with lenders who have successfully closed at least five loans in the past twelve months of the type they are proposing. Work with lenders who have a reputation for ethical conduct. Choose your lenders based on factors other than glad-handing, happy talk or willingness to buy you lunch.

Take note of last-minute loan blowups and share that information with your business associates and clients. (I know many Realtors already do this when their client is proposing use of an on-line lender about whom the Realtor has already heard horror stories.) There are plenty of good lenders who would be happy to competently handle your deal, and there’s no reason for lenders who blatantly abuse their industry partners and clients to be making money.

What Buyers can do: ask lenders for names of satisfied clients who did the type of loan they are considering. This is perfectly reasonable. Don’t buyers and sellers ask Realtors for testimonials from happy clients? (ed. note: one of my more favorite questions of late is, “tell me about one of your dissatisfied clients, and why they were so dissatisfied”)

We’ve never seen a lender hauled before a panel of their peers on ethics charges (as happens in the Realtor community) though there’s certainly been ample cause. That’s unfortunate, but forewarned is forearmed.
Now, the tale:

Buyer (happens to be first-time but that doesn’t matter) and Seller enter into a contract, after two Realtors spend the usual hours marketing, showing, driving, negotiating and doing paperwork …

Buyer is going to do an FHA loan. They’re so popular now, for good reason. Buyer is hooked up with a lender. Don’t know how they connected, whatever, but if it was his Realtor who referred him to the lender we hope she’s learned a lesson.

The lender is not FHA approved. He’s pretty sure he will be, soon, so he originates the loan. Home inspection, appraisal done and paid for. Commitment letter issued (hearsay, I didn’t see it). Two weeks prior to closing the lender apparently gets worried that this FHA approval isn’t going to come through. It likely never will.

He contacts at least two local FHA lenders and attempts to refer the deal to them. One of them turns it down flat and the other takes the application, runs it through his underwriting system and can’t get an approval.

The lender doesn’t notify the borrower or Realtors at this or any point. Now we get into hearsay, in italics.

Two days prior to closing the lender told the borrower that they didn’t qualify for FHA (they didn’t, but the lender didn’t even have the option. If they’d been an experienced FHA lender they’d have know he didn’t qualify). The rate went from about 6% to 7.75 or higher. Closing costs/payment also went way up.

This is the problem with hearsay but you get the idea. The lender had flipped the loan to FNMA/conventional, got what’s called an expanded approval, which has high rates and high PMI. The payment was at least $200 higher and this was an “affordable” home.

On closing day the listing agent went to the closing table with the sellers expecting to sign. They were at the table when they found out the buyer’s loan wasn’t going to close.

At that point one more FHA-experienced lender was called in and ran the loan through his underwriting system- it wasn’t approved.

The listing agent is out all her marketing time and expense. The seller has lost valuable marketing time and now has a stale listing if they didn’t before. The buyer’s agent is out all the hours spent driving around a client who didn’t qualify, negotiating, doing paperwork etc. The potential buyer is out appraisal fee, cost of home inspection, maybe more, and has given up the lease on his rental unit so doesn’t have a place to live.

Oh, also, the lender didn’t get paid his commission. He put all these people’s time and money on the line in the slim hope that he might get paid. They all got screwed by this industry partner. (Sorry for the salty language.)

This is an easy problem to avoid. There are a lot of lenders out there now who don’t have what it takes to manage the current market. They might not be able to do the loan and not even know it. They might be able to but not know how. I hate to see you guys lose time and money. We are all in the same boat. There are a lot of good lenders who can get deals closed in this lending environment and will tell you if it’s not going to work.

I hope you can make this into a cautionary tale to help your readers- buyers, sellers and Realtors. Let me know if you have questions or need a referral to the other lenders or Realtors involved. I’m not sure they’d talk but I’d hope they would, to help someone else avoid a similar problem.

This story originally appeared on RealCentralVA.com and appears here by request.

Have you seen this article in the Washington Post?

Justice Department officials and others who have tracked the case said the agreement will result in more choices and better service for consumers, as well as lower costs because of competition over commissions. Many online firms offer savings because they provide limited services.

To start -

1) What business does the government have in regulating free enterprise?

2) Nothing is preventing others from starting their own MLS.

3) I’d like to know how much this investigation/suit/settlement cost the taxpayers.

4) Those who think the Realtor business isn’t competitive doesn’t know what they’re talking about.

Download the proposed settlement here (and actually read it!)

The Real Estate Bloggers write what I was thinking:

The amazing thing about monopoly and governmental lawsuits against companies over the issues of technology is that by the time the slow gears of justice run their course, the battle has long been over.

This is the case of the NAR. The opening of the MLS systems to online and virtual real estate companies has long been over. The bigger battle will be the viability of maintaining an expensive MLS in the age of Trulias and Zillows.

Zillow and Trulia and Cyberhomes and Roost, etc. didn’t exist in 2004.

And the XBroker wrote the headline I wish I’d written - DOJ vs NAR Lawsuit Turned Into an Exercise in Irrelevancy

Where will we go from here? Realtors will keep competing, buyers will keep searching online, sellers will still think that print advertising works (it does, but not to sell houses), and technology will continue to change at a pace much faster than behemoths like the NAR or the incompetents within our federal government can handle.

Innovation was just fine before the government stepped in, thank you.

Next up - the DOJ should go after Google for having the most dominant search engine.

——————

More coverage:

Agent Genius

Joe at Sellsius provides a legal perspective

An MLS perspective by Michael Wurzer

Bloodhound

Redfin

The original article appeared on Jim Duncan’s blog, RealCentralVA.com and has been republished here at VARBuzz by request.

Paul Krugman validates* what I’ve been saying to clients/readers/prospects for some time.

Any serious reduction in American driving will require more than this — it will mean changing how and where many of us live.

My belief is this - properties that are closer to urban cores - roughly defined as having a coffee shop/grocery store/park/gathering place - will appreciate at a greater rate than those that require more driving to get to said urban centers.

Using back-of-the-napkin math - if when gas costs five bucks a gallon -

If driving to the store/work/etc costs an additional ten to fifteen dollars for those properties not close to urban centers, and the properties the are close to urban centers are able to save that gas money - isn’t it reasonable to conclude that that theoretical savings of three to five hundred dollars a month would then be applicable to one’s mortgage payment?

I am seeing a contraction of the geographic area I service, and clients are now asking more and more about bikeabilty, walkability and public transport. Higher gas prices are likely to impact our business in fundamental ways - among them -

- Business models - buyers pay up front or do more legwork on their own. Hybrid Redfin models or derivations thereof may become more popular and prominent.

- Denser suburbs and fewer exurbs

- Increased taxes - property tax and sales tax - to increase infrastructure, thus affecting affordability

- Fewer Realtors and real estate agents as more discover that the Realtor pot of gold is harder to find.

- MLS’s may have to change their restrictions on neighborhood and area photos and videos - consumers (and Realtors!) want to see more than what is currently offered. If MLS’ want to remain the primary point of contact, they will have to adapt and provide more. Including or excluding properties without physically visiting properties will be more and more important.

- More boutique brokerages will emerge and thrive as the cost of doing business becomes too great for many of the bigger brokerages.

When we are looking back at this recession in five years with the benefit of hindsight, what opportunities will we be thankful we took advantage of? What opportunities will we wish we had seen and seized?

A question for the Virginia Realtors - are you seeing this trend happen now? Are you seeing your market area contract due to gas prices’ precipitous increase?

Could Realtors use this opportunity to advocate for alternative methods of transportation in new developments? Just a thought.

* Don’t shut down as soon as you see Paul Krugman’s name. Sure, the NYTimes has a unique slant, but that doesn’t necessarily mean the information presented in this article is not relevant, applicable and true.

The original article by Jim Duncan on 20 May 2008 on Agent Genius

Related reading:

Could Higher oil prices be a good thing?

High Gas prices are good

Downtown Real Estate Bypasses Housing Crisis: Gas Prices Are Making City Centers More Attractive

The Oil-to-Mortgage-Rates Chain Reaction

This post is part of a series covering my journey of discovery through the history of the National Association of REALTORS. As my guide and my inspiration, I am using a book published by NAR, “100 Years in Celebration of The American Dream,” celebrating the Centennial of NAR. The following was inspired by reading just the first ten pages.

The National Association of REALTORS turns 100 years old this year. That is pretty old, as organizations go. It is old enough that there is not one single member of our organization alive today that can remember the birth of NAR. This is both good and bad.

The Good

100 years is a long time. Here is some simple math:

1908 to 2008 = 100 years

1776 to 2008 = 232 years

NAR has been around for ALMOST HALF OF AMERICAN HISTORY!

The people who make up the membership of NAR have lived and worked through many of the significant events in American history.

The fact that our organization is 100 years old is a testament to the vision and hard work of the men who met together in Chicago 100 years ago with the idea of starting a national organization of “real estate men,” as they were then called. As a general rule, bad ideas don’t usually stick around for 100 years (I can think of a few exceptions, but most of them required a war or two for survival). Those men, and all those who have come and gone since, obviously did something right.

The Bad

100 years is a long time. Our culture has changed quite a lot over that time. Attention spans are much shorter, and so are memories. This means that much of what has been learned might have already have been forgotten. This fact is what makes the NAR Centennial book such an important publication. We should always be reminded of those who came before, we should always be willing to learn from their example and from their work. If we fail to do that, then the end result is that all of their hard work will have been in vain. I hope very sincerely that those of us who have chosen to bear the title of REALTOR today, will do our best to honor those without whom our privileges would not be possible.

Let’s Begin at the Beginning

I dare think that the practice of real estate at the turn of the 20th century would be almost completely foreign to REALTORS practicing today. When I say this, I’m not talking about the many technologies that make our daily work life more efficient. I’m talking about the actual cultural, professional, historical, and legal climate that was present 100 years ago for real estate men.

Some things to consider about the world of real estate 100 years ago:

1) Widespread private real estate ownership is brand new. I think it is pretty safe to say that the majority of you reading this post own the home in which you currently live. There is also a pretty good chance that you live in a suburb, or even a rural area (like me). 100 years ago, that was not the case. Most Americans did not own their homes, and the cities held the vast majority of the American population. The concept of the suburb hadn’t even been born yet. It was about this time, however, that many cities and towns were rapidly expanding. This meant that those expanding cities and towns needed a place for people to live, they needed real estate.

2) There were no licensees. 100 years ago, anyone, I mean ANYONE could call themselves a real estate dealer. There were people called “curbstoners.” These unscrupulous individuals would basically set up shop as a real estate dealer on the sidewalk (the curbstone), and bilk or swindle anyone they could. Have you ever been in a city and been approached by people handing out flyers for something, or saying, “psst– come check out these watches and handbags I have. . .” now imagine if those people were peddling real estate. Scary, but it was happening all over.

3) There were no rules or laws governing transactions. We live in a world with RESPA. 100 years ago, however, Real estate transactions were governed by simple contracts common law. All that was needed was an agreement between the buyer and the seller. No mountains of paperwork, no lengthy disclosures, no warrantees, and very little recourse if they whole thing went awry.

These Conditions Warranted A Solution

The ethical practitioners of real estate recognized there were problems. What they didn’t have was a viable way of solving them. They did recognize, however, that the problems were similar all over the country. As the number of real estate practitioners grew, so to did the need for cooperation and collaboration among them if they were to address the issues facing their profession.

It took the leadership and vision of some of the nation’s largest real estate boards at that time to address these issues and launch the organization that would eventually be known as the National Association of REALTORS. We all know, however, what can happen to the best laid plans of mice and men if there is no leadership to guide them.

The necessary leadership would come first from the man who would eventually be the 5th President of NAR. More on him, and the seed that he planted, in my next installment. . .

Here’s the agenda for tomorrow’s PPAG meeting at VAR’s Headquarters. For those who don’t know, the PPAG committee helps to set the VAR’s legislative agenda for the Association. I’m looking forward to the discussion about convicted felons. If anyone ever has any questions, please let me know. A lot happens in these meetings that directly affect Realtors’ businesses; it’s incumbent on all Realtors to pay attention to what happens here.

1. Call to Order – Chair Suzy Stone
2. Approval of Minutes
3. 2008 General Assembly Up-Date

a. 2008 VAR Legislative Agenda

b. Impact Fee bill

4. 2008 Voting Record

a. Staff Overview

b. Staff Recommendations

5. 2009 VAR Legislative Agenda

a. Timeline

b. Issues

i. License prohibition of convicted felons

ii. Recordation tax / grantor tax assessments – stated consideration

6. 2008 Virginia Housing Commission Work Schedule

This week I received an e-mail from the Virginia Real Estate Board that, among other things, advised the schools that the requirement for CE and PLE instructors have changed. This is a good start, but we must do better…

Up to this point, schools submitted their classes to VREB for credit and included an instructor’s name and bio. There wasn’t much more required than a loose idea that the instructor could teach the topic. The new requirements state that the instructor must have three years experience in their area of instruction, letters of reference, etc… I am a fan of high quality instruction, but I am not sure that we’re attacking the issue of practitioner competency from the correct angle. I fully agree that it starts with the instructor. Not everyone who is teaching is effective. These requirements, although a bit cumbersome, will help.

Beneficial Changes?

There are other changes going on this year as well. Two significant changes are coming up as of July 1, 2008. The first is that licensed Brokers (Associate, Supervising and Principals) will be required to earn eight additional hours, on top of the limited services two hour requirements and the 16 hours of Continued Education. It’s obviously a good move to require those who carry the title of broker to get that higher level of training that most consumers perceive the broker as having. I’ve been surprised at the number of Associate Brokers who have balked at this requirement. I don’t even know what to say about that, other than the fact that it’s necessary and it’s only one extra day out of the 730 that you have between license renewals.

The other significant change is that VAR and VREB worked together to have legislation passed to require agents licensed after July 1, 2008 to obtain 30 hours of Post Licensing credit in the first 12 months of licensing. The theory, as I understand it, is that there are obvious failings in the pre-license program, as the 60 hour requirement does not typically carry information about the practical practice of real estate. There is so much theory and principle that things such as drafting a contract, short sales and marketing simply don’t find their way into the training.

I fully support the idea that the 30 hours should be “everything that we should have learned in pre-licensing and did not” but I think we’re going to see the nature of unintended consequences. Having sat as an association staffer now for the past few months and getting many daily phone calls from agents who find the relicensing program complicated, I have found that many (most) are taking the path of least resistance and simply taking an all inclusive on-line program. Many of these agents are very honest that the 30 hours can be gotten in 10 hours and they can do it while watching television.

Online Education Isn’t Cutting It

I’ve ventured through some of these online programs, and they can be done in far less time, than the “learner” is given credit for. At some point I have to ask: “Why do we even bother requiring CE or PL hours?” Almost all adult learning studies I’ve reviewed show that online learners have a much lower retention rate than those who learn in a classroom. The relicensing process for many is too complicated and frustrating to keep track of and they feel that there is no other option but these online classes. To compel the issue even further, most schools only have a limited number of these classes approved and don’t offer them often enough.

Learners have to take 30 hours, with 15 of them being in mandatory topics and the other 15 in a variety of electives. No one can get credit for taking any one class more than once. So, if I take “Short Sales” and get my three hours, but feel I need to take it again, I will not get an additional three hours, unless I take that topic through a different school.

How To Gauge The Retention

However, even aside all these issues, my real concern is that we never establish a mechanism by which to gauge the retention of the student. How do we know that the student really learned anything? What’s the point of requiring the student to meet certain criteria, if we’re not evaluating the student to see if they retained the information? I know that by suggesting that written evaluations be implemented I will become the least favorite person here, but really, how can we otherwise gauge our effectiveness? If the student is required to pass a written evaluation, then the instructor will be sure to deliver that material better and the learner will pay more attention.

Here are my suggestions:

First, we should consider requiring all mandatory PLE and CE classes be in a classroom setting, with a written evaluation. (Otherwise, what’s to stop an agent from reading a romance novel or comic book for the three hours I am supposed to be taking ethics?)

Second, electives can be taken in a classroom or online, but if they are taken online than it should require some mechanism to ensure that the learner is interacting at intervals that equal the clock time of the program. So, maybe you have to have mouse or keyboard activity every five minutes for the three hours, or you have to start all over. The technology is out there. All online training should require written evaluations at the end of the course.

Third, licensing and relicensing should be more relevant to the discipline of the practitioner. I am curious to see if anyone else thinks that Commercial, Residential and Property Management should have different licenses, with separate pre-licensing and separate post licensing requirements. There are a lot of different litigious pitfalls involved with these various types of practice and it seems that most all of pre-licensing and post licensing programs are directed to residential.

There are folks smarter than I am looking at the issues and overhauling as we go, but I just don’t feel our current structure is as effective as it can be. I am sure that there are some solid objections to these concerns, but if we’re all interested in improving the competency of agents than we need to find a better way to proceed in the future.

Sure, it’s not easy being the new kid on the block. First of all, everyone else seems to know a lot more than you do about pretty much everything. And finding your own way can be really tough. Just ask any new REALTOR®. Getting a real estate career started under the best circumstances is not for the faint of heart. There are all of those regulations, trying to find clients, and then the awesome responsibility of all that money hanging in the balance between a client’s dreams and the harsh market realities.

Market challenges being what they are, we decided to find out from a few of our own new kids on the block – REALTORS® with fewer than three years’ experience under their belts – what it’s like being fresh on the scene of Virginia’s real estate profession.

With hundreds of fair-weather agents hanging up their spurs, we honestly expected to hear a lot about how hard life can be and maybe a little of what starvation feels like. So, imagine our surprise when five hearty souls gathered around a breakfast table recently to talk about their short experience in Virginia real estate, and nary a complaint was heard. In fact, these whippersnappers seem to have a few insights into carving out a successful real estate career that we think could help more than a few old-timers.

The latest to join the REALTOR® ranks are combining tried-and-true, traditional tactics with novel twists that come from having a fresh perspective on the business.

So, grab your own plate of scrambled eggs or bowl of oatmeal and see what these newbies had to say. We bet you’ll be surprised, too…

First things first: why did you become a REALTOR®?Is this your first career…or second, third or fourth?

Karen Newins, ABR, William E. Wood & Associates, Chesapeake I became a REALTOR® because I have a friend who is probably one of the top agents from our area. I had been in the medical fi eld for 15 years. It seemed like real estate would be a good fit for me, and my friend really encouraged me to get into it.

Karen Carpenter, 1st Choice GMAC Real Estate, Staunton My mom has been a REALTOR® for two decades, and I thought it would be a great way to subsidize my family income. I got my license in June 2007.

Bonnie Field, Real Estate III Crossroads, Charlottesville I retired from the medical field after 35 years. So I was looking for something I could do for myself. After working with patients for that length of time…working with people all the time, this is a good way to continue doing that in a different way.

Curtis Butterworth, Parr & Abernathy, Hopewell This is my third career. I practiced law for 19 years and then began to preach ten years ago. I am assistant pastor at Joy Fellowship Church in Hopewell. I received my real estate license in May 2006 and established a team, TheButterworthTeam, with my son, Brandon.

Willam Kimsey, GRI, ABR, ERA Kline & May Realty, Harrisonburg I became a REALTOR® in the spring of 2006. I had been interested in real estate for more than 10 years. Real estate is about helping buyers and sellers come together in a transaction that, ideally, allows both sides to get what they want by helping each other. In negotiation language this is called a win-win outcome.

My background as a teacher and trainer in communication and conflict resolution has prepared me well to serve as a VAR ethics instructor and a communication consultant for REALTORS® and brokers. In addition to completing my GRI and ABR, I am now working towards a broker’s license.

(more…)

It’s not even the “Gateway” anymore. What it is NOT is an MLS. It is not intended to be an MLS and is not designed to be an MLS. It is intended to be the one and only source of real estate information for Realtors to better do what they do.

Don’t be misled by the title “The Real Estate Channel” - it is a fill-in for what is a yet-to-be-determined name for what used to be the “Gateway.” Virginia was well-represented by Bob Blount and Tom Innes on the Presidential Advisory Group* that deliberated over and ultimately delivered the following report linked here (PDF).

Rather than explain what it “is” read the Questions and Answers document - I have omitted some of the questions to focus on those below that highlight the basics, MLS’ and cooperation and compensation. If you have further questions, please ask.

—————

“Q. 1 My MLS meets my needs. I don’t need information about property outside my market area. Why should I support TREC?

A. Comprehensive real estate information currently exists but that information is not always analyzed, categorized, or readily available in an easy-to-use, trusted format focused on the needs of REALTORS®. Consumer-focused real estate websites are gathering more and more information and REALTORS® will come increasingly to rely on those websites. Without convenient, immediate access to information to analyze/interpret for their clients and customers, REALTORS® will no longer be at the center of real estate transactions. TREC will also enable REALTORS® and MLS participants to access essential information about properties in their market area which may be “just outside” the area served by their MLS, and TREC information will be richer and deeper than what is available in MLS compilations.

Q. 3 How will TREC help me make money?

A. Time is money. TREC will ensure that REALTORS® and MLS participants have immediate access to the information they need to serve clients and customers in a “member-focused” format. Much of the information that TREC will deliver will not be otherwise available conveniently or economically.

Q. 4 How does TREC differ from Realtor.com?

A. TREC is not advertising and will not be publicly accessible; TREC will be revenue neutral and will not sell ads to its users.

Q. 6 What about cooperation and compensation?
A. Accessing TREC will not involve offers of cooperation or compensation. Cooperation is a Code of Ethics issue. All REALTORS® cooperate with other licensees except in those rare instances where cooperation is not in a client’s best interests. Cooperative compensation is an MLS issue. TREC is neither an MLS or an association of REALTORS®.

Q. 8 How will TREC impact current MLS vendors?
A. Data standardization may create a more competitive market for MLS.

Q. 10 Is TREC a national MLS?
A. No.

Q. 12 Will the public have access to property data through TREC?
A. No.

Q. 13 Can a property owner opt-out of having their property included in the TREC database?
A. No. TREC is not an MLS and is not an advertising vehicle. Information from the TREC database will not be publicly available on the Internet as are listings on MLS “public sites” or the Internet sites of third-party aggregators (e.g. realtor.com).

Q. 16 What control will individual MLSs have over the rules if they participate in TREC?
A. MLSs will retain complete control over their own rules and regulations, including the authority and responsibility of enforcing those rules.

Q. 18 Who is the “real estate community” that will be involved in TREC? Are they Zillow, Trulia, Google et al.?
A. No. The “real estate community” is MLSs and local and state associations of REALTORS.

Q. 20 How will the integrity of data in TREC be ensured?
A. TREC will rely on – and its success will depend on – quality data being provided
by MLSs and other information sources. Stringent technology safeguards will be
implemented to foreclose the possibility of unauthorized access.

Q. 23 How will duplication of property listings be avoided on TREC?

A. Every parcel of real property will be included on TREC – irrespective of whether it is currently available for sale or lease. Those available for sale or lease will be identified (“flagged”) accordingly.

Q. 24 How will NAR benefit?
A. TREC represents an opportunity for NAR to better serve its members and to facilitate a more efficient real estate marketplace. TREC will keep REALTORS® at the center of real estate transactions. TREC is revenue neutral and costs will be no more than what is necessary to develop and operate TREC. It will not be a revenue source for local associations, state associations or the National Association.
Copyright NATIONAL ASSOCIATION OF REALTORS®”

—————-

Know this - where we started with this project and where we are today is very, very different.
To get to where we are today, read some of the background on how we got where we are today.

FBS blog
RealCentralVA
BHB
Agentgenius

*The author of this post, Jim Duncan, was also a member of the PAG.

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