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


CONTENTS
1. Top Trends in Real Estate for 2009
2. Primary Causes of Complaints to TREC
3. Legislative & Budget Issues Dominate Directors Meeting
4. HOT LINE: A Credit in Lieu of Repairs?
5. HOT LINE: Two Buyers and One Property?
6. HOT LINE: Buying an Owner/Agent’s Property?
7. About the TAR HOT LINE
8. Upcoming Events & Courses
9. Rates Dip Below 5 Again!


1. Top Trends in Real Estate for 2009

The annual Swanepoel Trends Report for 2009 is out, and there’s now a video clip of the author, Stefan Swanepoel, elaborating on one trend — the explosive growth of Web 2.0 and social media as a force to be reckoned with in real estate’s future. To watch it online (it’s about 15 minutes long), go HERE.

Stefan Swanepoel is just one of the featured speakers at our 2009 TAR Annual Convention in Point Clear, Alabama, where he will brief everyone on current and upcoming trends in our industry!

NOTE: If Stefan’s praise of social networking worries you — “How will I find the time to do all of this stuff?” — check out a recent posting by Travis Broadwater on NAR’s Young Professionals Network:
“How Many Social Networking Sites Can You Keep Up With?!”

Travis Broadwater may have a time-saving solution for you!

[SOURCES: RealBlogging.com, YPN Lounge at NAR]


2. Primary Causes of Complaints to TREC

At a recent meeting of the Tennessee Real Estate Commission, the issues prompting complaints to TREC about real estate licensees and firms  were reported by category. The Commissioners repeated parts of this report at their Question-and-Answer Session at the TAR Spring Business Meetings this past week. The top six sources/causes of complaints are:

1. Misrepresentation (26%)
2. Misconduct (13%)
3. Fraud (13%)
4. Earnest Money Disputes (10%)
5. Disclosure (9%)
6. Contract Issues (8%)

[SOURCE: TREC]


3. Legislative & Budget Issues Dominate Directors Meeting

At the semi-annual meeting of the TAR Board of Directors last week, the primary issues discussed were TAR’s legislative agenda and the TAR budget.

TAR’s 2009 legislative agenda includes: an effort to protect the Anti-Copper-Theft legislation passed in 2008, opposition to any dismantling of the real estate license law, and a bill to strengthen educational and instructor standards for the state. A report on TAR’s legislative agenda will be posted for member reference on the TAR website in the near future.

The education bill grew out of recommendations made two years ago by a Presidential Advisory Group of REALTORS appointed by the TAR President at that time. That PAG felt that education for licensing in Tennessee needed improvement in several areas, and the majority of their recommendations were subsequently adopted by TAR’s Governmental Affairs Committee and were then approved by the TAR Directors.

Budget issues – specifically TAR’s budget situation in 2009 – also received much attention in the Directors Meeting. While TAR made many budget cuts in 2008, anticipating a reduction in membership, staff made additional cuts of approximately $200,000 this year when membership declined even more than expected. Despite these cuts, TAR’s anticipated budget shortfall will probably consume close to two-thirds of TAR’s reserves this year alone. This problem is shared by almost every association in the state.

The Tennessee Association’s dues are among the five lowest state association dues in the U.S., and TAR’s dues have not been truly increased since 1993. [An earmarked increase of $15 was passed in 2008 to fund an Issues Mobilization Fund, a restricted account that may only be used for public advertising, etc., related to a political issue. Issues Mobilization money may not be used to offset TAR expenses or fund other programs.] To address TAR’s financial situation, the Directors last week voted to add a one-time $20 assessment to TAR’s 2010 dues, while a new Presidential Advisory Group studies the association’s dues structure and recommends to the TAR Board of Directors what TAR’s future dues should be, to deliver needed services efficiently and economically.


4. HOT LINE: A Credit in Lieu of Repairs?

QUESTION: Can a seller give a buyer a credit at closing in lieu of correcting home inspection repairs as long as it is on the contract and closing statement? My thoughts are that this can not be done, but I am arguing with another broker.

ANSWER: This question has come up before. The proposed credit would have to be approved by the lender. Many times, the lender will not approve a situation in which the buyer receives cash back at closing. You will need to get verification from the lender as to whether this will be acceptable to them or not.

PLEASE NOTE that you will need to verification (always in writing for your protection) from the lender and NOT the mortgage broker! They are two very different entities. You need verification from the entity that is funding the loan. Many lenders consider this practice to be misrepresentation to the lender, if not mortgage fraud. These will also have to appear on the HUD1.

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


5. HOT LINE: Two Buyers and One Property?

QUESTION: I have a buyer that made an offer on a property. There were multiple offers on this property, and the seller did not accept my buyers’ offer.  I have another buyer wanting to look at the same property. I told the other buyer that there was already a contract in place. After speaking with the second buyer, the seller’s agent called me back and told me that the other deal fell through. Now I have two buyers wanting to put an offer on the same property. Would it be unethical for me to represent both buyers? How should I handle this situation?

ANSWER: In our conversation you indicated that you have a buyer’s representation agreement with the buyer that made the initial offer on the property but do NOT have a buyer’s representation agreement with the second buyer. Obviously, you have a fiduciary duty with the first buyer, but not with the second. The best thing to do in this situation is to have another agent work with this second buyer. This will prevent you from having any type of complaints filed against you.

The other alternative is to fully disclose that you are working with both buyers to all parties. We would make sure to get something in writing indicating that they two buyers understand that you represent buyer 1 and do not represent buyer 2. Make sure that both understand the implications of this. Buyer 2 must understand that you cannot offer assistance beyond writing up his offer (i.e., cannot give advice on what to offer, what contingencies to have, etc.). Buyer 2 must also understand that you cannot under any circumstances disclose the contents of Buyer 1’s offer. PLEASE understand that if you go with this option, it is possible that you could have complaints raised against you by one or both of these buyers.

Whichever alternative you exercise, however, should be dictated by your office’s agency policy. We suggest that you check with your managing broker to determine what your office policy would dictate in situations like this.

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


6. HOT LINE: Buying an Owner/Agent’s Property?

QUESTION: I have a buyer’s rep agreement with a client. They were riding around this weekend looking at houses. They stopped at a house and the owner/agent told them that if they didn’t use me, they could get the house for $3000 less than asking price. My client was skeptical and brought the contract back to me before signing it. We rewrote the offer and sent it to the seller/agent and they countered at full price. The MLS listing did not show the property as owner/agent. How do I handle this situation?

ANSWER: If the owner/agent knew that the buyers were represented and subject to a buyer’s representation agreement and was encouraging them to breach that agreement, this would constitute interference with a contract. You can file a complaint with TREC and the local board for this. In addition, your principal broker may have a legal action against this agent for interference. Your broker may wish to consult with an attorney about this issue. The important thing to remember is that you cannot impede the sale of the property based upon a commission dispute. You need to look at the buyer’s representation agreement to determine whether the buyer would be responsible for paying you a commission in the event that a cooperating commission is not offered. If it does, then you need to explain this to your buyer.

Secondly, the owner/agent should have advertised that the property was an owner/agent property. You can file a complaint with the local board if the agent is a REALTOR. Finally, if this fact was not disclosed to the buyers, then you can file a complaint with TREC and the local board, and possibly with your MLS.

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


7. About the TAR HOT LINE

As we published in our last TAR DIGEST, the TAR Legal & Ethics Hot Line is a service designed to answer members’ real estate related legal questions, as well as questions concerning the REALTOR Code of Ethics. It gives members direct toll-free access to a qualified attorney and is intended to provide legal preventative maintenance to all TAR members.

For informational purposes, the TAR DIGEST includes ONLY a select few of the questions and answers that our TAR Hot Line has handled …AND we edit all questions and answers that we publish, to conceal the identities and locations of those who use the Hot Line!

A somewhat misleading article in a private school’s newsletter recently suggested that “each and every question to the Hot-line should be published in the TAR Digest.”  We doubt that most REALTORS would have the patience or desire to read each and every Hot Line letter, since approximately 1,600 of them were written in 2008 alone!


8. Upcoming Events & Courses

March 26: E-Class GRI 4 – From Offer to Contract to Closing (a 5-week distance-learning course) begins – 16 hours CE. For more information, go HERE.

April 7-8: GRI 5 – Systems for Success (Franklin/Cool Springs), 16 hours CE. For more information, go HERE.

April 16: E-Class GRI 5 – Systems for Success (a 5-week distance-learning course) begins – 16 hours CE. For more information, go HERE.

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


9. Rates Dip Below 5 Again!

Freddie Mac reports a drop in the 30-year fixed mortgage rate to 4.98 PERCENT during the week ended March 19 from 5.03 percent the prior year, marking the lowest rate since 4.96 percent in mid-January. Experts say rates could fall further in response to the Federal Reserve’s announcement that it will add $1.2 trillion to the economy to alleviate the credit crisis.

[SOURCES: Freddie Mac; Information, Inc.]


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

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