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


CONTENTS
1. New Year’s Revolutions!
2. The IRS & Reporting of Cooperative Commissions
3. HOT LINE: Violation of RESPA?
4. HOT LINE: Can I Provide Leasing Assistance?
5. Upcoming 2009 Events!
6. Rates Set Another New Low
7. SPECIAL DIGEST Next Week


1. New Year’s Revolutions!

That’s not a typo in the title of this article!

Every publication we’ve seen in the past few days trumpets a new article about resolutions for the New Year …how to make them, how to keep them, and what they should be. It’s an annual tradition!

One of the better articles on this topic showed up last week on RISMedia: “Transform Your Business with 2009 New Year’s ReVolutions” by Michael Guld. If you only dive into one of these articles, his seems just as worthy as others, if not more so.

*** BEGIN QUOTE ***
This year, consider creating New Year’s “reVolutions,” transformational actions that will lead to breakthrough results. New Year’s reVolutions can energize and invigorate by the thought of “what’s possible.”

…New Year’s revolutions are personal and broader in scope than the traditional resolutions. The framing of your revolutions requires stepping back and deciding what do you want to be as opposed to what you need to do. If someone were to introduce you to a large crowd recognizing you for your accomplishments, what would you want your bio to say? Are you on track to be that person? If not, what actionable steps can you take today that will help you get there tomorrow?

To help increase the chances of keeping inspired (vs. disciplined) with your New Year’s revolutions, follow these 10 tips…
*** END QUOTE ***

To read all 10 tips in Michael’s article, go HERE.

[SOURCE: RISMEDIA]


2. The IRS & Reporting of Cooperative Commissions

*** BEGIN QUOTE ***
The Internal Revenue Service (“IRS”) requires that listing brokers who pay a cooperative commission in excess of $600 to an individual who is not their employee must complete a Form 1099-MISC. While this is not a new law, it has come to NAR’s attention that not all real estate professionals are aware of this requirement. Below is a brief description of this issue and links to the necessary forms.

IRS Requirements

The IRS requires individuals that:

1) pay compensation of $600 or more to
2) an individual who is not an employee
3) for services provided
4) during the course of the payor’s trade or business

to complete Box 7- Nonemployee Compensation on Form 1099-MISC, give Copy B of the form to the individual who received the compensation, and file Copy A with the IRS. “Nonemployee compensation” includes fees, commissions, prizes, and awards, and so would include cooperative commissions and referral fees paid by real estate professionals because these payments are made during the course of their trade or business to nonemployees.

These filing requirements exist even if the listing broker is not directly paying the cooperative commission to the other broker. So, if the cooperative commission is paid by the escrow agent to the other broker, the listing broker may still need to file a 1099-MISC. This is because the funds constituting the cooperative commission are drawn from the listing broker’s portion of the commission and so the payment is technically made by the listing broker.

This requirement only applies to payments made to individuals, and does not apply when the payments are made to corporations.
*** END QUOTE ***

Brokers should familiarize themselves with this entire advisory, that can be found HERE on REALTOR.ORG.

[SOURCE: NAR]


3. HOT LINE: Violation of RESPA?

QUESTION: I would like to know if the practice identified below is ethical or violates RESPA rules. Realtor Remarks on a listing in our MLS reads as follows: “All offers to be submitted with a pre-qual letter from [name and phone no. of lender]. Free appraisal and credit report if financed by [above lender]. Buyer must use seller’s closing agency.” Does this statement violate RESPA?

ANSWER: A seller may require that a buyer obtain a pre-approval letter from a particular lender PRIOR to entering into a contract with them, even if they have been pre-approved by someone else.  However, they may NOT require that buyer to use that particular lender for the mortgage.

In addition, a seller can offer to pay for the appraisal and credit report if a particular lender is used. Again, they cannot insist that a lender is used, but they can offer incentives if that lender is used.

If the buyer is paying for the title insurance, then he gets to select the title company that is used under RESPA. However, if the seller is paying for the title insurance then it can be negotiated. Look first to the contract to determine if it indicates from which agency the title insurance will be purchased.  Another thing to keep in mind is who is issuing the policy. Often, the lender will dictate who will issue the lender’s policy.

However, if that title company is going to charge a high rate for the owner’s policy, then see if the two title companies will agree to have one company issue the policies and then to split the premiums.  If not, then you can indicate that the seller will bring their own owner’s policy.  Often this will encourage cooperation so as to avoid paying the higher rates for the lender’s policy.

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


4. HOT LINE: Can I Provide Leasing Assistance?

QUESTION: Can I help a seller find a renter for their home (long term: 6 months or longer) without the vacation lodging rental license?

ANSWER: You do NOT have to have a vacation lodging rental license in order to lease someone’s property for a long term basis.  Vacation lodging rental licenses are only required for those who “engage in the business of providing the services of management, marketing, booking and rental of residential units owned by others as sleeping accommodations furnished for pay to transients or travelers staying not more than fourteen (14) days.”  Thus, you can see that it is only applicable for short term rentals.

You will likely need to have a special rider to cover you on lease agreements. You will need to contact your E & O carrier for specific information concerning this. You are not required to have a separate license in order to engage in property management. HOWEVER, there is specialized knowledge in dealing with leases.  Before engaging in this, we recommend that you and your agent take a class concerning leasing.  Please keep in mind that certain counties are subject to the Landlord and Tenant Act.

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


5. Upcoming 2009 Events!

Our 2009 E-Class GRI Schedule kicks off with a new offering of E-Class GRI 1, beginning Jan. 22. Each coached E-Class GRI course includes 16 hours of CE credit, is five weeks long, and can be interchanged with classroom courses as you work toward your designation. The entire schedule — with a link to the registration page — is online in the “Education Information” section of the TAR website at:
http://tnrealtors.com/main/education_information/gri_course_schedule

Registration remains OPEN for all of our 2009 Leadership TAR Retreats, but enrollment will be limited. The schedule is online, along with a program description, at:
http://tnrealtors.com/main/education_information/

Another offering of the 2009-2010 Core CE Course Instructor Workshop (for instructor-licensing) is scheduled for Feb. 4, 2009. More information is available HERE.

Our popular 2-day instructor-training program — The Learning-Centered Instructor Workshop — is scheduled for March 5-6, 2009. More information is available HERE.

Our 2009 TAR Spring Business Meetings and Education Conference will take place March 16-19, 2009, at the Cool Springs Marriott and Convention Center, just south of Nashville.  The Education Conference and Trade Show will be featured on March 18-19. Online registration will be available SOON, but go ahead and mark those dates down on your calendars!


6. Rates Set Another New Low

Freddie Mac’s Primary Mortgage Market Survey showed the 30-year fixed-rate mortgage (FRM) averaging 5.10 percent with an average 0.7 point for the week ending December 31, 2008, down from the previous week when it averaged 5.14 percent. Last year at this time, the 30-year FRM averaged 6.07 percent. The 30-year FRM has not been lower since Freddie Mac started the Primary Mortgage Market Survey in 1971!

The 15-year FRM averaged 4.83 percent with an average 0.7 point, down from the prior week when it averaged 4.91 percent. A year ago at this time, the 15-year FRM averaged 5.68 percent. The 15-year FRM has not been lower since March 25, 2004, when it averaged 4.70 percent.

Interest rates for 30-year fixed-rate mortgages fell for the ninth straight week and represented a third consecutive all time record low since Freddie Mac’s survey began in April 1971,” said Frank Nothaft, Freddie Mac vice president and chief economist.

“Lower rates and falling house prices are also making homeownership more affordable to potential homebuyers. For instance, house prices fell 18 percent over the 12-month period ending in October, according to the S&P/Case-Shiller 20-city composite index.”

[SOURCES: Freddie Mac]


7. SPECIAL DIGEST Next Week

Next week, our entire TAR DIGEST will be devoted to TAR forms in a special issue! Buzz Steele (TAR’s Director of Marketing and Research) will review changes in TAR forms for 2009, being released later this week, and will highlight key changes that you should notice. Our General Counsel and the Residential Forms Committee encourage everyone to use the latest TAR forms for your own protection.


TAR’s Home Page: http://tnrealtors.com

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