The Weekly Membership Newsletter of the Tennessee Assn. of REALTORS
Editor: Pug Scoville

1. The House of the Future
2. HOT LINE: Which Records To Keep?
3. HOT LINE: Refund Part of Commission?
4. Protect Yourself from Scams!
5. WORKING SMARTER: 4 Useful Cybertips
7. Rates Inch Upward, Still VERY Low

1. The House of the Future

While new housing starts “plunged to an all-time low in December, capping the worst year for builders on records dating back to 1959,” builders DID get a more optimistic look at what the future holds — in terms of product — at the recent International Builders Show in Las Vegas.

The “First to the Future” National Demonstration Home was unveiled last week.  The 5,300 square-foot home was designed by Aronson & Associates and is intended to showcase the latest in building practices and modern technology:

Imagine a bathroom where you can brush your teeth while watching the morning news on an HD television built into the bathroom mirror. And that water coming out of the sink? It’s heated by a hot water delivery system that saves up to 12,000 gallons a year and costs less than a dollar per year to operate.

If you’re more interested in home design, imagine a room floored with leather tiles made entirely from recycled BMW car seat scraps. Or a kitchen counter that resembles granite but is actually made from everything from old traffic lights to beer bottles.
*** END QUOTE ***

To read more, go HERE.

On NAR’s Styled, Staged, & Sold blog, an article (“10 Trends in Home Design” by Melissa Dittmann Tracey) offers another report from the International Builders Show that you may also find interesting! It covers a variety of innovations in lighting, use of space and storage, amenities, windows, etc.  To read Tracey’s report, go HERE.

[SOURCES: Texas A&M Real Estate Research Center; NAR]

2. HOT LINE: Which Records To Keep?

QUESTION: It is my understanding, according to the TAR attorneys, that I must maintain my files for seven (7) years. What are documents in my files that must be maintained? Do I have to keep everything?

ANSWER: The firm must have a copy of all records for a minimum of three years.  According to the Tennessee Real Estate Commission, these records must contain, at a minimum, the following: listings; offers (even those that do not become contracts); contracts; closing statements; agency agreements; agency disclosure documents; property disclosure forms; correspondence; notes; and any other relevant information.

Based upon issues that have arisen in the errors and omissions cases our firm has handled over the years, we strongly recommend that licensees keep each and every document that comes into their hands while representing a client or customer, regardless of whether they are working as sellers’ agents, buyers’ agents, or facilitators. We cannot stress how important it is to keep documents that evidence contact with clients, customers, cooperating agents, and/or inspectors. Such documents include email and facsimile confirmations.

Although the Brokers’ Act requires that records be retained for only three years, it is a good business practice for licensees and firms to maintain their records for at least six years following the consummation of a transaction. The reason why is that the statute of limitations for breach of contract actions is six years. In other words, if a former customer or client brings a cause of action against a licensee or a firm under a breach of contract theory, he/she has six years from the date of the breach to do so.

Also, the statute of limitations for negligent misrepresentation, intentional misrepresentation, negligent nondisclosure, and/or concealment regarding the condition of property is three years from the “date of discovery”.  With these causes of action, a buyer has three years from the date he discovers a problem with the property to file a lawsuit.

EXAMPLE: Let’s say that a closing occurs on December 31, 2007. In June of 2008, cracks start to appear on the buyer’s walls.  A structural engineer hired by the buyer informs him that the house has structural damage and that it will cost him $15,000 to remedy the problems. The buyer has the problems fixed. Several years later, he talks to a neighbor who experienced the same problems. The neighbor just won a lawsuit against the seller of his property and the seller’s agent because of their failure to disclose structural problems of which they were aware.  Inspired by the neighbor, the buyer files a lawsuit against the seller and the seller’s agent on May 31, 2011. Since he did not discover the structural problems until June of 2008, his lawsuit is filed within the applicable statute of limitations. The seller’s agent, who was not aware of any structural problems, purges her records every January. Just a few months before the lawsuit was filed, she purged all records relating to this transaction, including the property condition disclosure form and notes of conversations she had with the seller. These records, which would assist greatly in establishing the fact that the agent was not aware of any structural problems, are gone.

[SOURCE: TAR’s Legal & Ethics Hot Line Attorneys]

3. HOT LINE: Refund Part of Commission?

QUESTION: A buyer approached me saying that other states are allowing a flat fee on contracts, refunding the remainder of the commission to the buyer, who does not have a real estate license. Is that legal?

ANSWER: NO, not in Tennessee. This would be in violation of Tennessee state law. According to Tenn. Code Ann. 62-13-302(b), “A real estate licensee shall not give or pay cash rebates, cash gifts or cash prizes in conjunction with any real estate transaction. As part of the Tennessee Real Estate Commission’s general rulemaking authority the commission may regulate the practices of real estate licensees in regard to gifts, prizes or rebates that are not otherwise prohibited by law.” The refund of the commission to the buyer would fall into this category.

You can give non-licensees a gift in order to induce them to do business with you. Please note that the gift must be as an inducement for THEM (not their friends, family members, etc.) to do business with you. If you wish to proceed in doing this, you will have to follow the gifts and prizes rule. This falls under TREC Rule 1260-2-.33.  It states:

(1)  A licensee may offer a gift, prize, or other valuable consideration as an inducement to the purchase, listing, or lease of real estate only if the offer is made:
(a) Under the sponsorship and with the approval of the firm with whom the licensee is affiliated; and
(b) In writing, signed by the licensee, with disclosure of all pertinent details, including but not limited to:
1. accurate specifications of the gift, prize, or other valuable consideration offered;
2. fair market value;
3. the time and place of delivery; and
4. any requirements which must be satisfied by the prospective purchaser or lessor.

Pursuant to the statute above, this gift CANNOT take the form of cash. You may give gift cards, but they cannot be convertible into cash. In addition, you cannot offer to pay closing costs for your client.

[SOURCE: TAR’s Legal & Ethics Hot Line Attorneys]

4. Protect Yourself from Scams!

Last week, RISMedia published a VERY worthwhile article (“Save Your Hard-earned Cash from Scams” by Nicole Paitsel) that provides a number of great tips about scams to avoid, both online and in your mail.

The author also includes phone numbers and addresses you can use to take yourself OFF of direct mail and solicitation lists.  Visit the article, print it out, and follow the advice to save yourself some future headaches (and time)!

You can read what she has to say HERE.


5. WORKING SMARTER: 4 Useful Cybertips

Smarter use of the Internet can save you time and money …and BOTH are critical assets you don’t want to squander in a slow economy!

In his “January Cybertips”, REALTOR Jack Peckham covers four FREE Internet services that enhance your Internet know-how. From sending faxes for free to searching for folks online, they are probably worth checking out.

You can read Jack’s tips HERE.

[SOURCE: Realty Times]


Feb. 4: CORE CE INSTRUCTOR LICENSING — Another offering of the 2009-2010 Core CE Course Instructor Workshop (for instructor-licensing). More information is available HERE.

Feb. 12: E-Class GRI 2 – Smart Marketing (a 5-week distance-learning course) begins. For more information, go HERE.

Feb. 12, 19, & 20: REGIONAL LEADERSHIP MEETINGS — A meeting of TAR’s elected leadership and staff representatives with local association leaders has been scheduled in each of Tennessee’s three Grand Divisions for February:

  • West Tennessee — Feb. 12, 1-3PM at the Central West TN Assn. office in Jackson
  • East Tennessee — Feb. 19, 1-3PM at the Knoxville Area Assn. office in Knoxville
  • Mid-state — Feb 20, 1-3 PM at the Middle TN Assn. office in Murfreesboro

Feb. 25-26: GRI 1 – Professionalism in Real Estate (Memphis).  For more information, go HERE.

Feb. 25-26: GRI 2 – Smart Marketing (Knoxville). For more information, go HERE.

March 5-6: INSTRUCTOR TRAINING WORKSHOP — Our popular 2-day instructor-training program — “The Learning-Centered Instructor” Workshop. More information is available HERE.

March 18-19: TAR EDUCATION CONFERENCE & TRADE SHOW.  [TAR’s Spring Business Meetings will be held at the same location — the Cool Springs Marriott & Convention Center, just south of Nashville — on March 16-17.] Online information & registration is located HERE.

Watch each week’s TAR DIGEST for schedule changes and additions!

7. Rates Inch Upward, Still VERY Low

Freddie Mac says the 30-year fixed mortgage rate climbed to 5.12 percent during the week ended Jan. 22 from 4.96 percent the prior week, marking the first increase in 11 weeks.

The 15-year fixed mortgage rate climbed as well, reaching 4.8 percent from 4.65 percent over the same period. While the one-year adjustable mortgage rate rose to 4.92 percent from 4.89 percent, the five-year ARM slipped to 5.24 percent from 5.25 percent.

[SOURCES: Information, Inc.; Freddie Mac]

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