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

1. Closing Costs in Tennessee
2. Building Your E-Mail Marketing List
3. Brokers Urged to “Take Back Training”
4. HOT LINE: Disclosing a Bonus?
5. HOT LINE: Agent as Property Manager?
6. HOT LINE: Referral Fee to Unlicensed/Retired Agent?
7. TAR Education Calendar!
8. Rates Move LOWER, Refinancing Demand Grows!

To ask a TAR Legal and Ethics Hot Line question, CLICK HERE.

For other questions about this newsletter, please use the “CONTACT” form HERE.

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1. Closing Costs in Tennessee annually ranks every state in the country as to average closing costs, and – in 2010 – Tennessee ranks 32nd highest…a GREAT improvement over 2009, when our state ranked 12th highest! ranks all of the states, from most expensive closing costs to least expensive, by average closing costs charged by the lending industry for a mortgage in each state. [Researchers requested a good faith estimate for a $200,000 loan, assuming a 20 percent down payment and good credit.]

Actual costs will be higher than shown in their ranking because the most highly variable costs are not included: taxes, other government fees and escrow fees.

The most expensive state in 2010? New York
The least expensive state? Arkansas

To see the complete rankings, CLICK HERE.

To see a breakdown of average fees in Tennessee, CLICK HERE.


2. Building Your E-Mail Marketing List

According to a recent RISMEDIA article by Wendy Lowe (“Tips for Building Powerful E-mail Marketing Lists”), real estate professionals seeking to expand their businesses should look at  their e-mail marketing:

The start of a great list is one that is filled with clients and prospects who have said “yes” to receiving information from you. But your list needs to grow if you want your business to grow.
*** END QUOTE ***

The author gives readers six tips on how to grow their e-mail lists. You could find something useful here, and you can access the entire article by CLICKING HERE.


3. Brokers Urged to “Take Back Training”

RISMEDia recently published a recap of the remarks by RE/MAX Chairman and Co-Founder Dave Liniger to RE/MAX brokers at their annual conference. The focus of his remarks was preparation for the economic “turnaround” …regardless of when that occurs.

On the subject of training and coaching: “Coaches do an admirable job, and the reason they came about is because brokers stopped doing training,” he said. “Brokers don’t have time to do it, so agents are willing to pay thousands of dollars a year for it. In this market we have to be the trainers.”

To read the entire recap, CLICK HERE.


4. HOT LINE: Disclosing a Bonus?

QUESTION: Is an agent required to disclose if a builder is offering a bonus to the selling agent?

ANSWER: YES, agents are required to disclose any bonus paid or received. Pursuant to Tenn. Code Ann. 62-13-312(b)(17), an agent can be disciplined for “Paying or accepting, giving or charging any undisclosed commission, rebate, compensation or profit or expenditures for a principal, or in violation of this chapter.”

In addition, Article 7 of the NAR Code of Ethics states: “In a transaction, REALTORS shall not accept compensation from more than one party, even if permitted by law, without disclosure to all parties and the informed consent of the REALTOR’s client or clients.

ALSO, remember that any bonus paid must be paid through the agent’s principal broker.

Finally, if a bonus is being paid by the seller, this is subject to lender approval. It’s possible that the lender may not allow the seller to pay such a bonus to the agent.

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

5. HOT LINE: Agent as Property Manager?

QUESTION: I have an agent who has been asked to look after two rental properties. (I really do not like the idea of property management.)  I will not hold nor allow him to hold security deposits. He will collect rent checks made payable to the owners and deposit it into the owners’ bank accounts. He will not have any rent checks made payable to him.  Please tell me what I need to do to make this legal.

ANSWER: You have already addressed several of the main concerns – the deposits and the rent. HOWEVER, even with this type of arrangement, you will ultimately be responsible for the actions of your agent. It is also very important that there be an agreement between the firm and the landlord to clarify and set out the responsibilities of each party. TAR does not have this type of agreement for residential property. You would need to speak with your own attorney to have something drafted which would meet your specific needs in this regard. This agent would also have to be compensated for his efforts through the real estate company.

You should contact your E & O carrier to determine whether you will need additional insurance for property management coverage. In addition, the agent and yourself will need to familiarize yourselves with property management laws to ensure that you are doing everything required of you.

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

6. HOT LINE: Referral Fee to Unlicensed/Retired Agent?

QUESTION: Can someone unlicensed or with a retired license receive a referral fee? If an unlicensed assistant refers business to the broker for whom she works, how would she/her receive compensation?

ANSWER: It will depend upon whether the agent’s license was active when the property came under contract. An agent is deemed to earn their commission or referral fee when the contract is signed. Therefore, even if their license is inactive or in retirement when the property closes, they could still get their commission. HOWEVER, if the agent’s license was not active when the property went under contract, then that agent cannot be paid the commission or referral fee. Furthermore, whether the agent is entitled to a commission or referral fee will depend upon the terms of their independent contractor’s agreement.

You can give non-licensees a gift in order to induce them to do business with you. PLEASE NOTE, however, 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 of the Real Estate Commission, 1260-2-.33.

Also PLEASE remember that under state law, these gifts may NOT take the form of cash or converted into cash in any way. The statute states: “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.” Tenn. Code Ann. 62-13-302(b).

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

7. TAR Education Calendar!

Starting this month, readers of the TAR DIGEST will start receiving a twice-monthly TAR Education Calendar by e-mail, with courses being held during the next 30 days or so. Look for it in your email!

Courses this week:

Aug. 18-19: GRI 5, Systems for Success (16 hrs. CE) – Murfreesboro. For more information or to register, CLICK HERE.

Aug. 18: Homeownership Options for Tennessee’s Workforce (6 hrs. CE) – Clarksville. For more information or to register go to:

CLICK HERE for the complete 2010 schedule of Classroom and E-Class GRI Courses!

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

8. Rates Move LOWER, Refinancing Demand Grows!

Mortgage lenders have seen refinancing demand rise as the 30-year fixed rate tumbled to 4.4 percent last week — the lowest level in the nearly 40 years that Freddie Mac has tracked the statistic! However, experts say borrowers who would benefit most from a refi likely will not qualify for new loans due to income cuts, unemployment, low credit scores, or insufficient equity. Borrowers who already refinanced in the last 18 months, along with borrowers whose adjustable-rate loans are ready to reset, will account for most of the refi activity; and many will move into shorter-term mortgages to more quickly repay their debt.

[SOURCES: Wall Street Journal; Information, Inc.]

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