The 8-7-12 Newsletter of the Tennessee Association of REALTORS
Editor: Pug Scoville


UPCOMING TAR COURSES & EVENTS:
Aug. 8: Budget & Finance Committee Meeting – TAR Office, Nashville.
Aug. 8: REALTOR of the Year Committee Meeting – TAR Office, Nashville.
Aug. 9 – Sept. 12: GRI 403-404, Smart Marketing (16 hrs. CE) – an E-Class distance-learning course.
Aug. 9: TAR Nominating Committee Meeting – TAR Office, Nashville.
Aug. 15: Residential Forms Committee Meeting – TAR Office, Nashville.

To see a complete calendar of other courses around the state, go to: http://tnrealtors.com/education/realtor-courses/

HOT LINES IN THIS ISSUE:
1. HOT LINE: Disclose Property Owner’s Bankruptcy?
2. HOT LINE: Incentives to Use Builder’s Closing Company?
3. HOT LINE: Can Agent Sue When the Firm Doesn’t?
4. HOT LINE: Definition of “Water Intrusion”?

IN OTHER NEWS:
5. Signs That Housing Is on the Mend
6. Saying No to a Listing
7. False Internet Rumor Worries Taxpayers
8. An Alert About the TAR Convention Hotel!
9. Rates Inch Up …to 3.55%!
10. To Ask a Hot Line Question…

NOTE: If you are reading a hard-copy of this DIGEST, and want to access some of the links cited, simply go to http://www.tardigest.com to access the current issue with “live” links!


1. HOT LINE: Disclose Property Owner’s Bankruptcy?

QUESTION: Does the listing agent on a homeowner listing have to disclose in our MLS that the homeowner is in the process of bankruptcy? The listing agent says this is “personal information” and that does not have to be disclosed.

ANSWER: This will depend upon the terms of the bankruptcy. If the property is in danger of being surrendered if it does not close by a certain date or if the bankruptcy court must approve the contract, then it should be disclosed. If it does not, then it would likely not have to be disclosed.

The seller should speak with their bankruptcy attorney in order to determine what types of hurdles must be cleared and whether there is a time frame to close which buyers of which buyers should be notified.

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


2. HOT LINE: Incentives to Use Builder’s Closing Company?

QUESTION: Is it ethical for a builder to ask a buyer to use the builder’s preferred closing company in exchange for some closing costs?

ANSWER: A builder CAN offer an incentive to use a particular closing company. Builders are permitted to offer incentives to buyers to use their preferred closing company. However, they ARE NOT allowed to require them to use a particular title company if the buyers are purchasing the title insurance. The rule currently in place states:

*** BEGIN QUOTE ***
Required use means a situation in which a person must use a particular provider of a settlement service in order to have access to some distinct service or property, and the person will pay for the settlement service of the particular provider or will pay a charge attributable, in whole or in part, to the settlement service. However, the offering of a package (or combination of settlement services) or the offering of discounts or rebates to consumers for the purchase of multiple settlement services does not constitute a required use. Any package or discount must be optional to the purchaser. The discount must be a true discount below the prices that are otherwise generally available, and must not be made up by higher costs elsewhere in the settlement process. (24 CFR 3500.2(b)).
*** END QUOTE ***

This means that the builder can offer the incentive, but cannot require that this particular company to purchase the property. In addition, any discounts offered must be true discounts.

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


3. HOT LINE: Can Agent Sue When the Firm Doesn’t?

QUESTION: Can an agent of a firm sue a seller when the firm is not joining the lawsuit?

ANSWER: Lawsuits will likely have to be brought in the name of the real estate firm. For example, if a seller has violated the provisions of a listing agreement, this suit would have to be brought in the name of the firm rather than the individual agent because all listings are the property of the firm, not the agent.

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


4. HOT LINE: Definition of “Water Intrusion”?

QUESTION: Can you please explain what the “water intrusion” means? Is it a dishwasher or water tank leaking, etc. or flood, sewer backup?

ANSWER: This is a provision that was added by the Forms Committee due to lawsuits in this area. The committee intended this to include water which entered the home from outside such as flooding, basement water, leaking roofs, septic or sewer backup, etc.

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


5. Signs That Housing Is on the Mend

An article in this past week’s Wall Street Journal – nicely summarized by REALTOR Magazine Online – identified eight (8) different reasons to conclude that the housing market is improving at last:

*** BEGIN QUOTE ***
1. Housing prices are on the rise across the country.
2. Foreclosures have slowed. Analysts suggest that as the supply of distressed homes slows, buyers will be forced into higher-price properties too.
3. Inventories of for-sale homes on the market are decreasing. In fact, inventories of for-sale homes have dropped 24 percent from a year ago.
4. Mortgage rates are at ultra record level lows, for those who can qualify
5. Housing starts rose 6.9 percent in June. Also, existing-home sales were up 4.5 percent higher in June compared to one year ago.
6. Home building stocks are on the rise.
7. For investors who are buying homes, rents are soaring, allowing them to cash in on their investments. Rental prices are at a 10-year high as medium units rent for $710 a month.
8. Home affordability is at record highs for the median income family, due to falling home values and super low mortgage rates. In fact, a recent study found that it is cheaper to buy a home than rent in basically ever major city in the U.S. For those who buy, you can save the cost of renting by owning the home for five years or less.
*** END QUOTE ***

To access the REALTOR Mag Online article, CLICK HERE.

To access the original Wall Street Journal article, CLICK HERE.

[SOURCES: NAR; Wall Street Journal]


6. Saying No to a Listing

While property professionals have been known to go to lengths to get a deal done, the most successful real estate agents recognize when to turn away a listing. A client who refuses to make home repairs that are needed for the residence to sell, for instance, is grounds for a savvy agent to walk away.

Perhaps the biggest reason that practitioners decline to represent a particular owner, however, involves unrealistic price expectations. Top producers say they derive appropriate pricing based on current market conditions, but they will try to work with sellers who insist on a slightly inflated price. If the number is not overpriced by much, they will list the home on the seller’s wishes as long as the appraiser is able to hit that value or if the seller agrees to lower the asking price if the home does not move within a specified period of time. Besides walking away from unproductive listings, top-selling real estate agents also hold open houses periodically; return phone calls; derive most of their income from listings; and never give up.

To read more, CLICK HERE.

[SOURCE: The Tennessean]


7. False Internet Rumor Worries Taxpayers

The National Association of Realtors (NAR) warns that recent chain e-mails indicating that a 3.8 percent federal sales tax will be applied to all real estate transactions beginning Jan. 1 are false. NAR spokeswoman Stephanie Singer calls the e-mails “grossly inaccurate” and insists that the 3.8 percent Medicare tax on unearned income effective next year is “not a sales tax on all properties.”

Under the provision of the federal healthcare law, taxpayers with modified adjusted gross incomes above $200,000 for singles, $250,000 for married couples filing jointly, and $125,000 for married couples filing separately will pay a surtax on gains from the sale of a principal residence if those gains surpass the thresholds in Sec. 121. Real estate practitioners must be aware of these facts in order to explain them to clients and dispel falsehoods.

To read more: http://www.journalofaccountancy.com/News/20126130.htm

[SOURCES: NAR; Journal of Accountancy]


8. An Alert About the TAR Convention Hotel!

Hotel reservations MUST be made at the Meadowview Resort – site of the 2012 Convention – by August 20, just two weeks away! After that date, our room block will be released, and another group using the hotel has already indicated that they will use any rooms not taken by that date!

For more information on the Convention: http://tnrealtors.com/meetings-and-events/convention/


9. Rates Inch Up …to 3.55%!

Last week, average interest on 30-year fixed mortgages according to Freddie Mac inched up to 3.55 percent (with an average 0.7 point), after setting or matching record LOW rates for 13 of the previous 14 weeks!

And 15-year rates remained very low at 2.83 percent!

To see current mortgage rates, go to: http://www.mortgagenewsdaily.com/mortgage_rates/

To see THDA rates and programs, go to: http://tn-tennesseehda.civicplus.com/index.aspx?NID=8


10. To Ask a Hot Line Question…

To ask a TAR Legal and Ethics Hot Line question, go to: http://tnrealtors.com/services-support/legal-ethics-hotline/