The 10-25-11 Newsletter of the Tennessee Association of REALTORS
Editor: Pug Scoville

1. Contract Failures Up This Year
2. New Program To Help Underwater Owners
3. Renters Outspend Owners for Housing
4. Finding the Best Day to List
5. HOT LINE: An Exclusive Agency Listing?
6. HOT LINE: Representing Buyers Late in the Transaction?
7. HAPPENINGS – This Week And Next
8. Rates Remain VERY Affordable, But…
9. Useful Web Links

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

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

1. Contract Failures Up This Year

Contract failures were reported by 18 percent of NAR members in September, unchanged from August; they were 9 percent in September 2010. Contract failures are cancellations caused by declined mortgage applications, failures in loan underwriting from appraised values coming in below the negotiated price, or other problems including home inspections and employment losses.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said access to credit is unbalanced. “All year we’ve been discussing the fact that many creditworthy home buyers are being denied mortgages,” he said. “On top of that, loan limits have been lowered, which means buyers of higher priced homes, including many in more expensive housing markets, now have to pay a higher interest rate for a jumbo mortgage than buyers who can qualify for a conventional loan. We need to remove the roadblocks to a housing recovery – not place more obstacles in the way of financially qualified buyers.”

For more from NAR’s report on the housing market in September, CLICK HERE.


2. New Program To Help Underwater Owners

The federal government on Monday announced new rules that would allow many more struggling borrowers to refinance their mortgages at today’s ultra-low rates, reducing monthly payments for some homeowners and potentially providing a modest boost to the economy.

The Federal Housing Finance Agency, working with the Obama administration, said that up to 1 million “underwater” borrowers might benefit from an expanded program that targets homeowners who owe more than their properties are worth.

But the program might not have a major impact on the economy. There are about 11 million underwater borrowers in the country. And under an illustrative example provided by FHFA, borrowers might reduce their payments by just $26 per month; the Obama administration is touting savings of up to $200 per month. It will depend on the fees charged to borrowers for taking part in the program.
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To learn more, CLICK HERE.

[SOURCE: Washington Post]

3. Renters Outspend Owners for Housing

Renters now spend five percent more of their household budgets on housing costs than do homeowners, and the difference is growing as rents rise.

Since 2005, homeowners’ expenditures for housing have risen from 31.9 percent of their household budget to 33.2 percent, but renters’ costs have risen even more from 35.6 percent to 38.4 percent, according to the October CoreLogic U.S. Housing and Mortgage Trends.

Since 1985, homeowners have increased their housing expenditure allocation by 12 percent, while renters increased by 22 percent.
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To read more, CLICK HERE.

[SOURCE: Real Estate Economy Watch]

4. Finding the Best Day to List

After analyzing 1.2 million listings in 16 markets across the country for 21 months, Redfin found that sellers have a better chance of moving their homes off the market if they list them on a Friday.

The brokerage’s study indicates that Friday listings were 12 percent more likely to change hands within 90 days. Additionally, 94.4 percent of properties listed on a Thursday or Friday sold for close to the list price; in contrast, only 93.3 percent of those listed on a Sunday or Monday sold for close to the list price. Friday listings were 18.8 percent more likely than Sunday or Monday listings to be toured, with Redfin noting that “homes listed on Fridays are the freshest in buyers’ minds when they’re making their weekend plans.”

Buyers also prefer to visit the newest listings first to beat the competition. The study concludes, “More tours leads to more offers, and more offers leads to a better price and a better chance of selling.”

[SOURCES: Inman News; Information, Inc.]

5. HOT LINE: An Exclusive Agency Listing?

QUESTION: I have an exclusive agency listing and have a seller who wants to advertise FSBO, no down payment, no closing costs. Is there anything wrong with the seller advertising this way while it is listed on the MLS with a certain loan type, etc.?

ANSWER: As long as the listing is an exclusive agency agreement, then this would be permitted, assuming that the MLS permits exclusive agency agreements (which most or all do). An exclusive agency agreement is an agency agreement in which the firm is the only one to represent the seller. HOWEVER, it differs from an exclusive right-to-sell listing in that, if the home is sold by the seller himself, no commission is due. However, if the home is sold during the listing period (or any extensions or carry-over terms) by the firm or any other real estate firm, then the seller owes a commission. This is also referred to as the “seller reserves the right to sell” listing agreement.

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

6. HOT LINE: Representing Buyers Late in the Transaction?

QUESTION: I have a couple that are buying a home in a nearby city. They presented an offer through an agent in that city, but they want me to represent them at closing. They did not sign a buyer’s rep agreement with the other agent. How can we proceed?

ANSWER: Unless the buyer has agreed to work with a particular company in the form of an agency agreement, then the buyer is free to work with whomever they choose. This is true even after an offer has been submitted and accepted. They do not have to have the permission of the agent to “jump ship”. HOWEVER, there are some things you must consider.

Just because you work with the buyer at this time, does NOT mean that you would be entitled to any cooperative compensation that’s offered. That would be a matter of procuring cause. We cannot determine who is the procuring cause of a transaction as that is a decision to be made by the local board inan arbitration hearing. In an arbitration hearing, procuring cause is determined by the local association after the property is closed, and that determination is based on a number of factors.  You can request the local board to have a hearing once the closing has occurred if there is a dispute between the two firms. Another option may be to have the principal brokers involved come to an agreement for a split of the commission. [A procuring cause hearing could result in an all or nothing situation; you either get all of the buyer’s commission or none of it.]

One option may be to get in touch with the other agency working with the buyer and arrange some sort of split of the commission. This way each party goes home with something. You can also try to work out an agreement with the seller’s agent to compensate you. However, at this point, they could already have an agreement with the other agent and may not enter into an agreement with you.

We would recommend that you get in touch with the buyer and make some sort of agreement in which they will agree to compensate you for your time if you are not paid some or all of the cooperative compensation.  Otherwise, you may not get paid at all.

You also indicated that you were members of different associations.  This could be an issue since you may not be entitled to the offer of compensation IF you are not a member participant of the same MLS. You will need to get in touch with your local MLS and/or association to determine whether this will be an issue.

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

7. HAPPENINGS – This Week And Next

Oct. 25: TransactionDesk Basic (3 hrs. CE) – TAR Office, Nashville. For more information or to register, CLICK HERE.

Oct. 25: Contracts 101 (4 hrs. CE) – TAR Office, Nashville. For more information or to register, CLICK HERE.

Oct. 27: REALTOR Town HallHave a question for NAR Leadership? On October 27, 2011, members of the 2011 NAR Leadership Team will hold an online Town Hall to answer member’s questions and provide an update on the recent housing conference, the REALTOR Party Initiative and other issues. Look for more information about registering for the Town Hall on:

Oct. 27-28: GRI 1, Professionalism in Real Estate (16 hrs. CE) – MAAR Office. Memphis. For more information or to register, CLICK HERE.

Nov. 3-4: GRI 3, Financing the Successful Transaction (16 hrs. CE) – WCAR Office, Cool Springs/Brentwood. For more information or to register, CLICK HERE.

Nov. 3 – Dec. 7: GRI 6, Sticky Situations (16 hrs. CE) – An E-Class distance-learning course. For more information or to register, CLICK HERE.

Nov. 3: 2011-2012 Residential Core Course (6 hrs. CE) – GNAR Office, Nashville. For more information or to register, go to:

Nov. 3: 2011-2012 Commercial Core Course (6 hrs. CE) – MAAR Office, Memphis. For more information or to register, go to:

Nov. 4: Effective Negotiating for R.E. Professionals (WCR-PMN Course, 8 hrs. CE) – GCAR Office, Chattanooga. For more information or to register, call: For more information or to register, call 423-698-8001.

The complete 2011 schedule of GRI courses (both Classroom and E-Class) is online HERE.

For information on the NEW 2012 GRI Program, go to:

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

8. Rates Remain VERY Affordable, But…

According to Freddie Mac, the rate on 30-year fixed mortgages edged down to 4.11 percent from 4.12 percent a week earlier. Average interest on 15-year fixed home loans, meanwhile, rose to 3.38 percent from 3.37 percent over that same time span, after hitting an all-time low of 3.26 percent two weeks ago.

Demand for home loans, however, slumped nearly 15 percent in the latest weekly survey from the Mortgage Bankers Association. The group’s composite index of mortgage applications was down 14.9 percent from the week before, with requests for purchase loans and refinancings sinking 8.8 percent and 16.6 percent, respectively. Refi demand accounted for 77.6 percent of all application volume, down from 79.1 percent in the prior week.

[SOURCES: Freddie Mac; Information, Inc.]

9. Useful Internet Links

Click on any of the following to access:

Back Issues of the TAR DIGEST
Tennessee Assn. of REALTORS
TAR Education
TAR on LinkedIn
TAR on Facebook
Follow TAR on Twitter
Online Risk Reduction Resources
Online Resources for Association Leaders
Tennessee Real Estate Commission