2008_05-06_Commonwealth

THE SUBPRIME MELTDOWN: PAGE 19 • VIRGINIA REALTORS® ADAPT TO SHORT SALES

May/June 2008

A journal for real estate professionals published by the Virginia Association of REALTORS® • www.VARealtor.com

Thousands of Virginia homeowners are upside-down and REALTORS® must learn a whole new market

How did we get here?

VOLUME 15 ● ISSUE 3 MAY/JUNE 2008 1

THIS JUST IN

Need help educating clients and customers? VAR tools and resources available on demand.Have you been searching for copies of How to best buy or sell a home or VAR’s 5 Facts About Home Sales postcard? You’re now able to print professional quality versions of these publications from your desktop. VAR’s online publications (available under the Quick Links section of www.VARealtor.com) store opened April 15 offering members the oppor-tunity to choose and print brochures and publications they know will benefi t their clients and their busi-ness. High-quality prints of VAR’s 5 Facts About Home Sales postcard are now available through the site. Here’s a list of a few of the publications that will be available in the coming weeks:

• How to Best Buy or Sell a Home • A REALTOR’S® Role:

Understanding Your Options • 2008-09 REALTOR®

Designation Handbook • VAR’s Broker ToolKitCheck back every Tuesday to

see what’s new on our print-on-demand site and let us know what publications you’d like to see made available. The more copies you purchase the more you save, so stock up today on these tools designed to improve your business.

Virginia communities make Forbes’ foreclosure list As part of the Washington, D.C. metro area, Arlington and Alexandria recently made the top ten list in Forbes.com’s “Best Places To Buy Foreclosed Homes.”

According to the online business news organization, the nation’s 100 largest metro areas were considered in selecting the top 10.

Based on recent data from RealtyTrac, the report identifi es markets where properties in foreclosure may, in fact, be a good investment...because the markets in those areas are stabilizing. According to Forbes.com, “Foreclosures aren’t symptomatic of local economic ruin.”

In other words, making the list is good news for those who work in these markets. Here are the top 10:

Every year, NAR and the U.S. Congress of Mayors (USCM) recognize city governments and REALTOR® associations who work together to collabora-tively advance housing affordability efforts in their areas.

The Northern Virginia Association of REALTORS® and the Richmond Association of REALTORS® both received Ambassadors for Cities designa-tions for their work with the cities of Alexandria and Richmond, respectively. Both initiatives will receive an Ambassadors for Cities grant from NAR and USCM to continue the good work they’ve begun.

1. Charlotte, NC2. Raleigh, NC3. Nashville, TN4. Oklahoma City, OK5. San Antonio, TX

6. Albuquerque, NM7. Knoxville, TN8. Seattle, Wash.9. Indianapolis, Ind.10. Washington-Arlington-Alexandria ●

Two Virginia REALTOR® associations and cities share Ambassadors for Cities awards

2

PUBLISHED BY THE VIRGINIA ASSOCIATION OF REALTORS®

The Business Advocate for Virginia Real Estate Professionals

Pat Jensen, ABR, CRB, CRS, GRI VAR President

John Powell, GRI, ABR, CRB, CRS VAR President-Elect

Cindy Stackhouse, GRI VAR Vice President

Melanie Thompson, GRIImmediate Past President

John Dickinson, CCIM, GRITreasurer

R. Scott Brunner, CAEChief Executive Offi [email protected]

Lisa G. Noon, ABC, CAEVice President, Marketing & [email protected]

Ben Martin, CAEDirector of Communications & New [email protected]

Andrew Kantor Writer & Information [email protected]

For advertising information, Jeff Rhodes at(410) 584-1968 or email [email protected]

The mission of The Virginia Association of REALTORS® is to enhance its membership’s ability to achieve business success.Commonwealth magazine (ISSN#10681388) is published bi-monthly by the Virginia Association of REALTORS®, 10231 Telegraph Road, Glen Allen, VA 23059-4578; (804) 264-5033. Virginia Association of REALTORS® members pay annual dues with a one-year subscription included within their dues. Periodi-cals postage paid at the Glen Allen, VA post offi ce and additional mailing offi ces. USPS Per. # 9604. Postmaster: Send address changes to: Commonwealth magazine, 10231 Telegraph Rd., Glen Allen, VA 23059-4578.

Custom Publishing Services provided byNetwork Publications, Inc. Executive Plaza 1, Suite 900, 11350 McCormick RoadHunt Valley, MD 21031

Get it? Got it? Good!In addition to the print version of Commonwealth, VAR publishes these electronic newsletters at regular intervals. Among them:

If you’re not receiving these newsletters via e-mail from time to time, it may be that we don’t have your correct email address. Contact your local association of REALTORS® to enter your address in the database. Also, check the spam fi lter on your computer and authorize any email from VARealtor.com.

The online version of our print mag, published every month.

MAY/JUNE 2008 • Volume 15 Issue 3

1 This Just In4 Legal Lines

28 RPAC Report 34 Virginia Homeowners Alliance

35 Blogspotting36 VAR Update42 VAR Staff Directory44 The Last Word

DEPARTMENTS

10 Short Sales: Finding the upside in “upside-down”

Take a deep breath. Short sales are here to stay — at least for the time being. Rather than run for cover, there are a few smart and simple things you can do to take advantage of this brave new market. Learn the rules, stand your ground, and fi nd the ways to help smooth what can easily be a bumpy and confusing road for lenders, buyers, sellers — and you.

19 The subprime meltdown: How we got here and what we can do about it — a special report by Lem Marshall

It’s another fi ne mess they’ve gotten us into — “they” being America’s fi scal and monetary policies. VAR Special Counsel Lem Marshall offers a layman’s history of how the government infl uences the economy, and explains why decisions by the Fed really do impact your bottom line. You won’t watch the business news the same way again.

What’s the best way for Virginia brokers to handle the tough housing market? In our special brokers supplement we’ll give you a crash course on dealing with the media, for one — because if you can change the public’s perception, you can change the reality. And we talked to some brokers and managers and got some more good advice. You might feel things are out of your hands, but check out the supplement and get a grip.

VARbuzz.com. Your virtual café for real estate news, views, and issues. Read the perspectives of your fellow Virginia REALTORS®. Join the conversation at VARbuzz.com today.

MAY/JUNE 2008

26 Making short into sweet: REALTORS® fi nd ways to make short sales work for them

When you see “short sale” in an MLS listing, do you turn your back? Don’t. REALTORS® like you have found the right ways to work with buyers, sellers, and other agents to make the short-sale process a little less painful — and a lot quicker. Take their advice.

SPECIAL BROKERS SUPPLEMENT PULLOUT SECTION

MAY/JUNE 2008 WWW.VAREALTOR.COM4

A subprime and short sales salad

LEGAL LINESby Lem Marshall, VAR Special Counsel

THIS ISSUE OF Commonwealth focuses on the dodgy topics of the subprime mess and the proliferation of short sales. I hope you will fi nd my treatises elsewhere in this issue helpful as you attempt to navigate these troubled waters. But there are, happily, other problems confronting REALTORS® in their quotidian existences, like loan fraud, confl icts of interest, ethical dilemmas, closing conundrums, commission disputes – light and airy things like that.

Give and take

Q.A seller is under the foreclosure gun at the time a sale of the home is negotiated, and is still underwater at the

time of settlement. The seller is able to get some of the debt for-given, and manages to scrape up the remaining cash necessary to close. When the buyer conducts the walkthrough Monday, seller is still in the house. Buyer closes in escrow on Monday afternoon, with recordation and disbursement to seller to occur Tuesday and Wednesday, respectively. Buyer demands posses-sion Monday after closing, and when he sees that seller is still in the house Monday evening, he (i) blows a gasket, (ii) declares seller in breach of contract, and (iii) terminates the agreement. Buyer has generally been frustrated by the delays caused by seller’s need to work out a short sale with his lender. Is buyer within his rights?

A. So, seller loses his house and what’s left of his credit, buyer loses time, effort, expense, and, ultimately a deal, all because seller did not give buyer the house before seller had been paid for it. If someone can explain this to me, I will print it in a future column. For now I’ll just say that this is what happens when we ignore the simple rule in place everywhere else in the country that settlement under the contract is a two-sided event in which the buyer gets the house and the seller gets paid. I hope this buyer enjoys walking around with a noseless face. I also hope he enjoys the suit for damages he is likely to face for his breach.

Breaking up is hard to do

Q.An agent of the firm is going though a nasty divorce with her husband, as a result of which the couple has

agreed to sell the family farm. The firm has a buyer client who will buy it on terms favorable to the buyer. Does the fact of the wife’s affiliation with the firm mean there’s

Is it risky? Quick! To the Hotline…The VAR Legal Hotline is a free, members-only risk management tool that is among the top-rated services offered by the Virginia Association of REALTORS®. Through the Legal Hotline, you can receive timely legal information on the issues you confront day-in and day-out in your real estate practice. The VAR Legal Hotline has one major objective: to increase REALTOR® professionalism and decrease professional liability.

Guidelines for Legal Hotline calls:All principal or supervising brokers are eligible to use the Hotline. In addition, one other designated person from each offi ce (for example, an associate broker or offi ce manager) may register as designees of the principal broker.

Before you call:Please note that many of the routine questions the Hotline receives have previously been answered in Commonwealth articles; check the indexed Hotline archives at VARealtor.com before calling.

How to sign up:Registration is easy. Complete the form found under the Member Services tab at VARealtor.com. You must register before you call the Hotline.

Hours of operation:Monday through Friday (except holidays) from 10 a.m. to 4 p.m.

How to contact the Hotline:By phone: (800) 755-8271 or (804) 264-5033. By e-mail: [email protected]

Call handling process:When you call, please have your NRDS number ready, and include it with any e-mailed questions.

Questions?If you have questions about the Hotline, contact Anita Bean at (800) 755-8271 or (804) 264-5033, or by e-mail at [email protected]

The VAR Legal Hotline should not replace your own legal counsel. No questions will be answered on matters that are unrelated to real estate, real estate brokerage, or pending arbitrations.

VAR Legal Hotline: (800) 755-8271

May/June 2008 www.VaRealtoR.coM�

automatically a dual agency, or may the firm represent the buyer with nobody representing the sellers?

A. First, there is never an auto-matic agency, let alone an automatic dual agency. I would absolutely not attempt to represent all the parties here. Just representing the husband and wife on the listing side would be difficult enough, as the husband would always be suspicious that the firm favored the interest of its agent the wife. A single conflict is tough enough, two conflicts are worse, but three (divorcing couple – including an agent of the firm – on one side, buyer on the other) could well lead to mis-ery. This would be just about as bad as trying to represent a seller and two buyers competing to buy the listing.

I suggest the broker obtain the agreement of the sellers to permit a showing to the firm’s buyer client and a commission agreement, making clear, in writing, that the firm represents the buyer and not the sellers. The husband and wife might not be getting along, but he is prob-ably not going to be concerned that he and his wife will be left without professional guidance.

When four’s a crowd

Q. Speaking of conflicts, consider this little imbroglio. a seller lists

a commercial property jointly with the firm’s broker Sally and another agent of the firm Joe. Joe shows the property to a buyer who makes an offer and, at Joe’s urging, enters into a dual agency

agreement jointly with Joe and agent Bill as buyer’s agents. the irritated seller refuses to permit his agent Joe to work for the buyer in this deal. Joe offers to drop his representation of seller and work for the buyer as a designated agent, but the seller again refuses, demanding that Joe honor his pre-existing relationship with the seller. at this point, the humiliated Sally steps in and suggests that she act as the supervising broker and designate Bill alone to represent the buyer, and agent wally (with whom seller has a good relationship) to represent the seller. the seller agrees. Joe, of course, hits the roof, and demands either that he be desig-nated to represent the buyer or that he be the supervising broker to designate Sally and Bill to represent seller and buyer respectively. the seller once again refuses, as this arrangement also puts his agent Joe on both sides of the transaction. what should Sally do?

A. Sally should send Joe to his room, apologize to the seller for Joe’s behavior, and do the deal as she and the seller have agreed. Joe has tried to create a conflict of interest that his client will not accept, and the client is entirely within his rights to reject such a conflict. He hired the firm, and spe-cifically Sally and Joe, for their exper-tise and their commitment to serve their needs. He is paying a full-service fee, and he expects his agents to give undivided allegiance to him and his needs. His resistance to the abrogation of that commitment is understand-able, and it is his absolute right to reject any solution to the problem Joe has created that involves his agents having divided loyalties, unless he is entirely comfortable with it.

In all probability, Joe’s primary thought was to gain both sides of the commission here, and he is clinging to that hope in the crudest way. The irony for Joe is that the broker is

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now going to have to decide how Wally will be compen-sated for his service to the seller, and I’ll let you guess whose pocket that fee will come out of. Joe will just have to be satisfi ed with his portion of the selling fee.

When death does you part

Q.a listing agent has died with a deal pending that closes after his death. to whom should the broker pay the

agent’s share of the commission?A. Assuming the agent died testate, the fee should

be paid to the representative of his estate, probably his executor. The broker will need to fi nd out who that is, but a call to the widow or other family member, attorney or minister should get her there. The broker is not likely to have trouble because, after all, she has money to pay, and someone will step forward to take it. Also, the executor is usually an heir.

Bad news brokers, part 1

Q.a mortgage broker sends the principal broker a market-ing agreement offering to pay $500-800 of the firm’s

marketing costs per month in return for the firm’s referrals of mortgage business. May the broker participate?

A. This arrangement is patently illegal under Section 8 of RESPA. The broker should not only refuse but should warn her agents about this kind of offer. She should also let the mortgage broker know that if she hears again of this kind of offer, she will report him to HUD. If he’s offering it to her, he’s probably offering it to her competi-tors, giving them an illegal advantage in the market.

Bad news brokers, part 2

Q.Seller agrees in a contract to pay 6% of buyer’s closing costs. the mortgage broker later informs the listing

agent that the HuD-1 will show only 3% but will move some expenses of the buyer to the seller’s side of the statement to make up for the other 3% in the expectation that the inves-tor will not notice. It seems the 6% exceeds the lender’s limits on the concessions the buyer is permitted to receive from the seller. the listing agent refuses to have anything to do with this, whereupon the mortgage broker becomes indignant, saying that nobody will ever question it. How should the listing agent and seller react?

A. Some mortgage brokers put me in mind of Voltaire’s description of the Bourbon kings of France: “They learn nothing. They forget nothing.”

The mortgage broker could be suggesting the buyer, seller, listing agent, settlement agent, loan offi cer and mortgage broker commit loan fraud. The listing agent should hold his ground.

The next time you hear of this kind of behavior, con-sider reporting it to the Bureau of Financial Institutions at the State Corporation Commission. Contact me and I’ll give you the name and number to call.

continued on page 32

“the next time you hear of this kind of

behavior, consider reporting it to the

Bureau of Financial Institutions at the

State corporation commission.”

May/June2008 11

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Lenders today, especially those holding a snootfull of bad loans, are facing unique pressures. A 2002 Tower Group study found that the average cost to a lender of foreclosing, holding, and disposing of

a property was almost $60,000, and that number is likely a good bit higher today.

Adding to lender woes is the simple reality that the market still has a way to go before we see home prices back into historical balance with household incomes. (See “The subprime meltdown”, page 19.) A lender might not be anxious to take a property and try to sell it 12-18 months from now, when prices might well be lower.

Lenders are no fans of foreclosures. Taking owner-ship of a home means it has to add to its reserves, which reduces money available for lending and other income- producing investments. That damages its balance sheet

The ShorT Sale has become so commonplace in some

Virginia markets that we’re already able to draw on

substantial experience with these critters.

Not all of what follows will apply in all markets, or in

all sales within a market, or even in all sales with the

same lender in a given market. As the Romans used to say,

though, “Experiencia docet” — and experience really can

be the best teacher in short sales, perhaps the most taxing

transaction a residential ReAltoR® will have to deal with.

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even before considering the cost of maintenance, repairs, and real estate taxes.

Trying to offload REO into a saturated market can further depress values, starting a vicious cycle of decreased worth and further defaults by borrowers.

So if we do our homework and give the lender a deal it can’t refuse, it will have every incentive to take it.

(There is one thing to be prepared for: Short sales take a long time — anywhere from 30 to 90 days more than a typical resale. With lenders and loan servicers already overworked, it might even be longer. With short sales, patience is not just a virtue, it’s a necessity.)

Your first task is to get all the information you can about your seller and the property, and determine whether you’re likely to be dealing

with a short sale.That might mean making some probing questions

during your initial interview with the seller. You will have done a CMA, of course, but now you’ll need to know how much it will take to clear existing liens and deliver good title.

Often your seller will know, and be willing to speak candidly with you about the facts. Sometimes, however, the seller won’t know all the facts (whether there’s a judg-ment lien, the amount of late fees, penalties and accrued interest, the amounts owing on credit lines, etc.). Some-times the seller will know these things, but will not want to give you a candid response to your questions, either because of embarrassment or out of concern that if you know the facts you’ll urge a strategy that leaves the seller well short of the net needed to clear the title.

You’ll also want to know whether he’s current in his payments, and if not, how far behind is he? Has he received default notice? Has foreclosure begun?

If you are not 100 percent satisfied with the answers, consider doing your own lien search, or at least asking the seller to dig out his payment records.

You’ll want to know the seller’s motives for selling, and as much as possible about the seller’s financial condition. Is he unable to make his payments because his ARM has reset? Is he able to make his payments, but just doesn’t want to continue to throw good money after bad?

And don’t forget to ask your seller for a copy of his loan application and any other financial information he gave the lender when applying for the loan. (You’ll see why in a moment.)

You should also get as complete a picture of the

condition of the property as possible. You’ll likely have to structure the purchase agreement differently from the more common resale, and surprises about property condition will not be helpful.

It will also be helpful to know the area. Has it been classified “declining”? Are there nearby short sales? How many foreclosures have occurred in the last six months?

With most or all of this information in hand, you can begin to prepare a marketing strategy.

Your first decision is pricing, where you’ll run into the first counter-intuitive reality: Your pricing needs to meet your client’s urgencies,

but you must be relatively aggressive, at least if you have any time at all to do so.

Why? Consider the lender’s reaction if you present a low offer shortly after putting the house on the market. If the lender is not confident that the offer is reasonable, your change of approval is slim. And most lenders will want to see that you’re making a reasonable marketing effort, especially if there are few other dis-tressed sales in the area.

In fact, you might want to approach the lender as soon as you know you’re facing a possible short sale. Some lenders won’t talk to you if your seller isn’t well behind in his payments, and it’s important to know that up front. And lenders are increasingly willing to discuss strategy and, in some cases, even pricing, early on.

There are other benefits to early contact with the lender. You can find out who your point of contact is, what the lender’s list of requirements for approval are, and, possibly, how long the lender anticipates it will take to approve a request once submitted. (Knowing how long a wait to expect can smooth things over with buyers, too. They’re more likely to show patience if they know how long they will have to wait.) Some lenders will want to deal with the seller directly as well; they may have specific forms and requirements only he can provide.

Once you know what the lender needs, start putting it together. At a minimum that will mean a seller’s W-2 or proof of unemployment, the last two tax returns, financial statements, the last couple of years of bank statements, and a hardship letter. You will almost certainly have to give the lender your CMA or obtain an appraisal of the property as well.

Needless to say, be careful. If the seller obtained a stated-income or no-documentation loan, compare the

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information on the loan application with the what you are preparing to submit with the request for the short sale. Be especially alert to evidence that the seller falsified or overestimated income and/or assets, or lowballed or underestimated debt. Serving up to the lender evidence of seller’s loan fraud is probably outside the scope of your authority.

Along the same lines, be alert for evidence that the seller has frittered away his earnings or assets on a lavish lifestyle. Lenders respond favorably to legitimate hard-ship, but frown upon profligacy when they are being asked to take a haircut and forgive debt.

Whether you are certain you are dealing with a short sale or just suspect it will take a stroke of good fortune to avoid one, you might be tempted to note in the MLS that this is a short sale. In

fact, some MLSs have a field for this information. You can’t make this decision by yourself, regardless

of what you hear from other RealtoRs®. The Virginia Code requires you to “maintain the confidentiality of all personal and financial information received from the client during the brokerage relationship … unless otherwise provided by law or the seller consents in writing to the release of such information.” This cer-tainly includes the fact that the seller cannot pay off his mortgage(s) from the anticipated proceeds of the sale.

Your seller will need your professional guidance here. There might be an imperative that he get the best offer he can quickly (if he is already under the gun of foreclosure, or behind in his payments) even if it is well below what he owes. In such a situation, it might make sense to let participants in the MLS know how things stand.

On the other hand, he might insist on trying the market without letting prospective buyers know of his distress.

his might be the case if he has hopes of avoiding a short sale, or is hopeful of securing a workout with his lender — if he is moving to take a better job, for instance, and offering the lender an unsecured note for the deficiency.

If you do agree to notify the world of a possible short sale, be sure to get the seller’s consent in writing.

When you get an offer on the property, you’ll have to approach things somewhat differently from how you would with a more routine resale.

In the first place, the lender is not going to waste time on a deal that can’t close. This means

that your buyer will have to qualify to not one but two lenders — his own and the seller’s.

The seller’s lender is unlikely to be satisfied with just approval from the buyer’s lender, let alone a “prequalifica-tion” letter. Many payoff lenders will actually require the buyer to make a full-fledge loan application with it — not to borrow money, but to prove he’s actually able to get the loan he’s seeking.

Obviously, the better your buyer’s loan profile, the better the chance of approval. Whomever your buyer is, he must be able to close and convince the payoff lender of that fact. You might as well make that clear from the start of your dealings.

On the other side, if you’re a buyer agent, you’ll want to know your client’s tolerance for a short sale. And, of

“The Virginia Code requires you to

‘maintain the confidentiality of all

personal and financial information

received from the client during the

brokerage relationship.’”buyeR

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course, you’ll want to know when you’re about to enter one. If the listing agent has not made that clear in the MLS or otherwise, ask. If you don’t get a satisfactory answer, at least conduct a down-and-dirty lien search to find out if a short sale is in the cards. But don’t blame the listing agent for not telling you up front: he might not be able to.

A well-drafted is always central to a success-ful transaction, but this truth is magnified in a short sale. A contract with contingencies and

full of seller concessions and credits will probably grate on the payoff lender’s last nerve.

Do as much up front as you can: get approved, get inspected, and put all necessary credits and seller conces-sions in the price. A contract that comes to the payoff lender clean stands a much better chance of success. A leaky roof should be your seller’s problem, not the lender’s.

A short-sale contract is going to have a contingency for third-party approval. But how should it read? Most contain a provision along the lines of, “This contract is contingent on approval by seller’s lender.”

What does such language mean? It could mean that there is a ratified contract but that seller’s obligations are contingent on lender approval. In this case, the earnest money deposit must be placed in escrow (with all that means), and the buyer will find it difficult to back out of the deal while approval is awaited.

Or it could mean that there is no contract until the lender approves. In this case, either buyer or seller can back out before approval arrives. It also means that the earnest money should not be deposited until approval is received.

So which is it?It’s worth considering whether to be crystal clear on

this point. The contract might say: “Seller’s obligations under this contract are contingent on approval of seller’s lender” or words to that effect. Or “Acceptance of this offer and creation of a binding agreement is subject to written approval of seller’s lender.”

It’s especially important to consider the language if more than one contract/offer is being presented to the lender. I have heard of several instances recently where seller has received multiple offers, signed all of them, provided that “This contract is contingent on lender approval” and sent them to the lender for consideration.

This can create a great deal of ambiguity as to where the parties stand. In the first place, are all the contracts “ratified” or not? Does each escrow agent have to keep the deposit and await the lender decision and approval of the seller to release the deposit if the contract is not approved? Does the listing agent have to note in the MLS that a contract is pending with contingency?

If you don’t know the answers, you should.

Now we come to perhaps the most contentious issue of all: commissions. Some lenders will require, as a condition of approval, that the listing agent reduce his commission. Let’s say the seller has agreed to pay the

listing firm 600 chickens and that the listing firm has made an offer in the MLS of 300 chickens to the firm that procures the buyer. What happens if the lender requires the listing firm to accept only 400 chickens?

First, let’s dispose of the ethical issue here. Is the listing agent ethically obligated to accept the reduced fee to make his client’s deal happen? After all, the lender is offering to accept a deal that allows the seller to avoid foreclosure and possible bankruptcy, and to salvage something of his credit, if the listing agent will only concur.

The answer here is simple: A REALTOR® is never obligated to reduce the fee he has been promised to make his client’s deal work. You might find it in your interest — compelled by your conscience or your moral compass — but you have no legal or ethical duty, under the Code of Virginia or the Code of Ethics, to do so.

And if you agree to a reduction? Most of the time you’ll want to approach the buyer’s agent and request that she reduce her co-broke fee to 200 chickens from the 300 that were offered in the MLS.

Is she ethically obligated to do so? May you even ask her, within the strictures of the Code of Ethics, to accept less than was promised in the MLS?

It comes as a surprise to most REALTORS®, but the Code of Ethics does not prohibit a listing agent from using an purchase offer to renegotiate the terms of what’s in the MLS.

Standard of Practice 16-16 prohibits the buyer agent from using the terms of an offer to renegotiate the listing company’s offer in the MLS, but it does not work the other way around.

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But does the buyer agent have a duty to her client to accept the reduction to make the deal happen? Again, the answer is no. No REALTOR® ever has to accept a reduc-tion in the promised fee to achieve a client’s objectives. It’s entirely your decision as to whether to do so.

So if the buyer agent rejects the offer and even refuses to ask his buyer to pay the difference — or if the buyer refuses to pay the difference when asked — what happens to the listing agent? With the lender requiring the reduc-tion, and the buyer and buyer agent refusing to cooperate, can the listing agent count on the seller to support her? Remember that at this point, the listing agent has agreed to accept 400 chickens but finds herself having to pay out 300 to the recalcitrant selling agent, leaving only enough to make a couple of omelets.

Who do you think the seller, seeing only 100 stinkin’ chickens standing between him and foreclosure, is going to support? No, I’m afraid the listing agent is at the mercy of the buyer agent here, and that’s a shame for both.

The problem has not gone unnoticed. Some listing agents have taken to putting conditional offers of com-pensation in the MLS. They will offer something along the lines of, “300 chickens or one-half of the fee approved by the third-party lender.”

Let me be clear: Such offers do not belong in the MLS and probably violate NAR multiple listing policy, which has long required that a selling agent be able to calculate, from the offer, the amount of compensation she will receive upon procuring a buyer. When the offer of compensation is essentially “one-half of what I agree to accept” the selling agent has no idea what the compensa-tion, if any, will be.

What principle dictates and what reality dictates can be two different things. The NAR legal staff agrees that NAR policy does not permit this kind of offer. But the market is roiled and many agents are framing offers this way because they’ve been burned by uncooperative buyer agents. Virtually all MLSs are accepting them, so — are you ready for this? —we’ll just have to rely on the arbitration panels to sort it out.

When iT ComeS to mls listings that tie a buyer agent’s com-mission to what the seller receives (e.g., “one-half of what i agree to accept”), the NAR mls policy that prohibits it is right, and, more to the point, it is essential.

Already the signs are clear that it is discouraging buyer agents from bringing their buyers to these deals. Furthermore, it has led to contentious relations among ReAltoRs® and to a completely unpredictable outcome when we try to determine what the actual contract between the ReAltoRs® is.

At the end of the day, it requires us to subsume the certain-ties we look for in the mls to a belief that we can impose a find-ing that acceptance of an offer exists when the offer is not even articulated. it turns the underpinning of the mls on its head. i am not alone in believing the condition would not be enforceable under basic principles of contract law.

Further, it is unnecessary. lenders are now figuring out that to pit ReAltoRs® against one another and their clients, and to discourage them from taking listings and bringing their clients to the deals that offer lenders so many advantages, makes no sense. this is why we are seeing more and more lenders agree to permit the listing agent to receive the bargained-for commission.

chase, bank of America, washington mutual, wells Fargo and many others are now leaving commissions alone. Furthermore, many of the lenders that still condition approval on fee reduc-tion relent when the listing agent just says no and insists on the promised fee.

in the end, this is the strategy that ReAltoRs® should consider. instead of working twice as hard for less than promised — perverting the mls, breaking faith with selling agents, and throwing a possible deal killer into the mix at the eleventh hour — why shouldn’t we consider just saying “No, i demand my fee”? i performed. i have brought you a deal that offers you many benefits, and you should not stand in the way of my receiving the fee i was promised.

Finally, remember that when you agree to work for less than the market says our services are worth, the only beneficiary is the buyer, because our fee is the only settlement service fee that finds its way into the value of the property.

money maTTerSwhy you should get what’s coming to you

“No ReAltoR® ever has to accept a

reduction in the promised fee to achieve

a client’s objectives.”


There’s much more to say about short sales — how you deal with second mortgages or other junior lien hold-ers, for example — but then there’d be nothing for you discover on your own. So lets just say that the short sale requires us to know a lot — about lenders, the economic environment, the clients, the property, the neighborhood, the other party, the contract, the Code of Ethics, Virginia law, and ultimately, ourselves. Do we have the stomach for this unique opportunity to show expertise our clients desperately need? The answer is “Yes.” But they won’t last forever, so if you don’t want to miss the fun, you’d better get hopping. ●

In the world of the short sale, the buyer is already getting a good deal, and we should feel no compunction about saying to the lender that, if it insists on netting an additional 200 chickens, that’s fi ne with us, but it must come from the buyer.

Very few buyers will lose a deal at a typically steep discount over a stinkin’ 200 chickens. Why not give that alternative to the lender, if the lender absolutely insists?

We can work for less than we’re worth, demand selling agents take what they get, pervert the workings of the MLS, give up in frustration on the whole idea of involvement in short sales, and give buyers a better deal than they are already getting — or we can just say no. Experience increasingly shows we’re better off holding fi rm than succumbing to the pathologies that result from sacrifi cing fi rst principles. I expect to be paid what I’m worth. A pretty basic fi rst principle.

— Lem Marshall

Read and comment on this article atVARbuzz.com/upside.

Do you know your legal and ethical obligations

when representing a distressed seller? In this

brand new 29 minute webcast, VAR’s Special

Counsel Lem Marshall answers some of the most

frequently asked questions about the ethics of

foreclosures and short sales. Discover the

answers to questions such as:

Ethical Considerations

Short Salesin

Is it legal or ethical to require the seller to state that the home is a short sale listing in the MLS?

What happens when a ratified contract with a third party approval clause fails because the third party rejects the offer?

What are my obligations when the bank asks me to reduce my commission on a short sale?

Why aren’t lenders required to pre-approve the selling price before short sale listings are entered into the MLS?

Are “conditional commissions” permitted in the MLS?

www.VARealtor.com/ShortSalesWebcast

Countdown to Convention: This year’s convention

boasts nationally known keynote speakers that will challenge

your thinking and help you seize new opportunities. Word

of mouth marketing guru Andy Sernovitz, formerly CEO

of the Word of Mouth Marketing Association and author of

Word of Mouth Marketing will enlighten you with practical

insights on turning your customers into a volunteer sales

force. Innovation expert Douglas Rushkoff, author of Get Back

in the Box: Innovation from the Inside Out will challenge you to

spend more time improving on your service and less time on

branding. Robyn Waters, author of The Hummer and the Mini:

Navigating the Contradictions of the New Trend Landscape,

and a former Target executive will make you think big about

the paradoxes you encounter in business and help you make

wiser business decisions by understanding demographic

changes occurring in your market.

Register today at www.VARconvention.com

Like a diamond, real value is created under pressure...

As Target’s former Vice President of Trend, Design, and Product Development, Robyn Waters helped a small regional discount chain become a national

fashion destination. Seth Godin calls her “the woman who revolutionized what Target sells, and helped the company trounce Kmart.”Statistics, “expert” opinion, and consumer observation are all valuable input to consider when planning the next move for your busi-ness, but there’s nothing as valuable as being able to accurately interpret your environmen-tal factors and translate that information into good decisions.

Waters, in her keynote presentation based on her book The Hummer and the Mini, will help you understand the mind of consumers, the nature of many of the conflict-ing trends in today’s marketplace, and how you can make decisions that will ensure your business doesn’t fade away with the chang-ing of a fad.

Her presentation will challenge you to look at trends ‘from the inside out’ by focus-ing your attention on what’s important in the marketplace, instead of just what’s next.

Douglas Rushkoff is an author, teacher, and documentarian who focuses on the ways people, cultures, and

institutions create, share, and influence each other’s values. He founded the Narrative Lab at NYU’s Interactive Telecommunica-tions Program, and lectures about media, art, society, and change at conferences and universities around the world. Rushkoff writes a column for the music and culture magazine, Arthur. His commentaries have aired on CBS Sunday Morning and NPR’s All Things Considered, and have appeared in publications from The New York Times to Time magazine. He regularly appears on TV shows from NBC Nightly News to Larry King and Bill Maher.

Rushkoff is on the board of several new media non-profits and companies, and regularly consults on new media arts and eth-ics to museums, governments, synagogues, churches, and universities, as well as Sony, TCI, advertising agencies, and other Fortune 500 companies.

Rushkoff’s most recent book is Get Back in the Box: Innovation from the Inside Out.

A 16-year veteran of the interactive marketing business, Andy has spent years helping companies learn how to do better

marketing. Andy is cofounder and past CEO of the Word of Mouth Marketing Association (WOMMA), where he worked side by side with the geniuses pioneering the newest innovations in blogs, buzz, and word of mouth marketing. WOMMA is the official trade association for the word of mouth marketing industry, which is building a prosperous word of mouth marketing profession based on best practices, measurable ROI, and ethical leadership.

Andy taught at the Wharton School of Business, ran a business incubator, and started half a dozen companies. GasPedal, his consulting company, advises great brands like TiVo, Ralph Lauren, Sprint, and Kimberly-Clark. In the dot com days, he ran the Association for Interactive Marketing, the largest organization of Internet companies.

Word of Mouth Marketing is the title Andy’s most recent book and the subject of our second keynote presentation.

VoluMe 15 l Issue 3 May/June 2008 19

TheThesubprimemeltdown

How we got here and what we can do about it

IN A WONDERFUL scene in The Godfather, Don Corleone has convened a meeting to negotiate a peace among the fi ve warring crime families. He begins his address to the assembled mob bosses by asking: “How did things ever get so far? I don’t know. It was so — unfortunate — so unnecessary.”

It’s hard not to think of that sentiment when we examine the housing crisis we now face in so much of the country and in so many parts of Virginia.

How did things ever get so far?the question invites a history lesson, one that informs

so much of what we must do — and must not do — to see our way through.

as we try to make sense of our predicament, it is useful to understand the principal ingredients to economic policy, especially fi scal policy (established primarily by Congress and the president in formulating tax, regula-tory and other economic policy) and monetary policy (established by the Federal Reserve through its control of money supply and interest rates).

It is the interplay of policy decisions in these areas that provided the fertile ground for the highly questionable

by VAR Special Counsel Lem Marshall

This is an abridged version of the full article which can be read online at VARbuzz.com/meltdown


decisions of lenders, borrowers, and investors that led to the current unpleasantness.

So join me in an interesting stroll through recent economic history for the context that we need to under-stand how RealtoRS® should act both individually and as an association in the light of current events.

The power of the FedFirst, a brief explanation of how the Fed affects interest rates and money supply.

Interest rates are set mainly through the Fed’s mecha-nism of making funds available to member banks and other financial institutions. the main rate we hear about is the Federal Reserve Board discount rate, the rate at which member banks in need of liquidity can borrow from the Fed. this rate in turn affects everything from credit card rates to fixed and adjustable mortgage rates.

Money supply is manipulated in part by printing money or buying financial instruments (thereby increas-ing the supply of money in circulation) or selling assets from its balance sheet such as government notes and bills (thereby decreasing the supply of money in circulation).

the Fed’s purchase and sale of interest-bearing instru-ments such as t-bills and notes also affects interest rates, because rates move directly opposite the price paid for the instruments.

thus, flooding the market with t-bills — as the U.S. did during the Cold and Vietnam wars, and as it has recently with the Iraq War and the war on terrorism — lowers their price and thus drives interest rates lower. It’s basic supply and demand, with a lot of supply. and it can be painful.

In the 1970s, the Fed tried to ease the country’s economic pain by opening the monetary spigots and mas-sively increasing money supply.

the result? By the end of the Carter administration, gold and oil prices had skyrocketed and the dollar’s value had plummeted. Inflation was rampant. (adding to the misery was the fact that the music of the 1970s was really, really lousy. Remember disco? Remember “Disco Duck”?)

In the 1980s, the Fed switched gears and clamped down on the money supply. the economy then began a generation-long expansion that has continued largely unabated — with the exception of two mild and short recessions — until recently.

By the end of the 1980s, inflation was under five per-cent, interest rates were around eight percent, oil was $28 a barrel, and an ounce of gold fetched about $350 an

ounce, about half its price in 1981.

the 1990’s saw this economic growth continue, with stable prices and low interest rates. Mortgages rates slid to the six percent range, inflation averaged between two and three percent, oil traded at about $20 a barrel, and gold remained in a narrow trading range between $300 and $400 an ounce.

But there are things beyond the Fed’s control, and two of them brought about some major changes: the calendar and al Qaeda.

A one-two punchIn 1999, the Fed became overly concerned about the possibility of a global financial crisis threatened by — do you remember? — Y2K. It began pushing down interest rates further and supplying the economy with new money in part because policy makers believed that our technol-ogy would not be up to the change from 1999 to 2000. It wanted to assure adequate liquidity in case of a financial meltdown as the clock struck midnight on January 1.

at the same time, the technology sector was roaring, and technology stocks were selling at prices that defied reason, in part because of the loose monetary policy; at one point the tech-heavy NaSDaQ hit 5000.

then January 1, 2000 came and went with no Y2K crisis. the Fed reined in the money supply. Investors hesitated and the dot-com crash began.

then came 9/11. Stock markets around the world tumbled in response to both the terrorists’ attacks and fear of the repercussions. to stem the panic and the global financial crisis, and to assure financial markets that adequate liquidity would be available, the Fed opened the spigots aggressively; it not only kept interest rates low, but it continued to pump money into the world economy.

this was necessary, prudent, and effective — to a point. Beginning in 2005, though, many observers

“But there are things beyond the

Fed’s control, and two of them brought

about some major changes: the calendar

and al Qaeda.”

21

lenders get the money to make loans from several sources. they might borrow it, they might get it from income-producing assets on their books or other income (such as loans they have shelved, servicing fees, loan origination fees, and the like), or, more likely, they might liquidate the loan by selling it to investors and pocketing the servicing and various loan and origination fees.

to do this, the loan has to be bundled with loans of like kind. So the lender hies himself to a securities expert who bundles the loans into tranches (groups of similar assets in a pool) and who then creates a security for sale to investors. these securities are akin to bonds or pre-ferred stock and offer a return of a stated amount.

the collateral for the securities is the stream of mort-gage payments from the underlying loans. the securities are rated aaa, aa, a, BBB, etc. (but never the ZZZ some of them deserve) by agencies such as Moody’s or Standard and Poor’s.

In some cases, credit enhancement is obtained to make the securities more secure, such as insurance from bond insurance companies, but many lenders and investment bankers chose not to spring for the credit enhancement — unnecessary expense and all that.

Now the stage is set. the securities are ready for sale. the top tranches are the “senior” group, and will get paid the lowest interest rates, because they are the most secure. they, after all, are collateralized by the mortgages from the best borrowers, and will get paid first. Next comes the

B rated (higher return because of higher risk, collateral-ized by lower rated loans, paid after the first tranche), and finally the lowest, or “junior” tranche. these last securi-ties yield the highest return, because the investors have the subprime loans as their collateral and get paid last.

Guess which of these securities the Countrywides of the world sold and which they kept? they sold the first two because they paid the lowest return, and they kept the lowest tranches because they paid the highest return!

they didn’t see the risk, because, they assumed, the home will increase in value and the borrower will do whatever is required to protect his nest egg of equity he has built up. He might even refinance with the originat-ing lender, giving it the added incentive to make the first, dodgy loan.

How’d that work out? Countrywide had a market capitalization of $30 billion

18 months ago. It sold in December to Bank of america for $4 billion.

Who are the other investors who bought these rock-ribbed securities? Just about anybody with money to invest in rated, insured, credit-enhanced, never-going-to-fail securities: pension funds, villages in Norway, school boards in Kansas, retirement funds, money-center banks, Fannie Mae (and, by extension, its shareholders), the teamsters. think of someone looking for security and good return, and you’ll find the investor. Unfortunately, what you don’t find is someone who knew what was being offered.

and let us not forget the Bear Stearnses of the world, who established hedge funds and created derivatives of these securities that virtually nobody thoroughly under-stood, and, when the securities collapsed, couldn’t service their obligations and thus suffered a run on the bank. It was interesting, was it not, to have a front-row seat on a run on one of the world’s great banks?

How’d that work out?Bear Stearns stock was selling at $170 a share last year,

$65 in January of this year, $35 the Friday of the run, and $2 the following Monday.

I almost hesitate to say it, but should we add to our list of reckless investors the entity that ultimately agreed to guarantee the $30 billion in subprime securities obtained by J.P. Morgan when it bought Bear Stearns at the fire sale? I’m referring, of course, to the Federal Reserve. l

Reckless Investors

May/June 2008


began to wonder whether the Fed had overshot its targets. the Wall Street Journal, for example, began to caution that leading indicators of inflation were beginning to signal trouble brewing. the dollar had begun a steep slide against foreign currencies, gold burst through its long trading range between $300 and $400 an ounce, and oil prices hit levels well above those seen in the Carter and Reagan years.

We can now confidently say that the Fed’s decision to keep money supply increasing rapidly throughout 2005 and 2006 was a historic mistake. It contributed mightily to rapid increases in the price of commodities (including oil), to rocketing gold prices, and to a precipitous decline in the dollar’s value. the euro, trading at $.75 in the first years of the decade, now trades at over $1.50. For the first time in living memory, the U.S. dollar is below parity with the Canadian dollar. Gold has recently traded at more than a thousand dollars an ounce, and as of this writing, oil is trading at $115 a barrel.

Ripples and real estateMost importantly, however, Fed policy contributed greatly to a housing bubble that began in 2002 as Fed monetary policy kicked into high gear. Interest rates were pushed to historic lows, as the Fed discount rate hit less that 1 percent. Mortgage rates tumbled, adding to the demand

for housing, and accelerating price increases already under way.

In 2003, the Fed began to reverse its easy money policy, notably by raising the discount rate from under 1 percent that January to 6.25 percent by mid-2006.

a byproduct of this effort was the popping of the housing bubble. Since early 2007, home prices nationwide have declined by approximately 20 percent from their highs in 2006.

Monetary policy alone is not the cause of our current problems. a mess this big has a lot of muddy footprints, such as housing policies designed to increase the home-ownership rate and record government spending on the war on terror and the Iraq War. But most analysts now believe that Fed policy during this time was the sine qua non of the housing implosion we are now dealing with.

the Fed has, during the last 20 months or so, begun a rapid reduction of interest rates to the current 2.25-per-cent level, and has throttled open the money supply once again to try to support home values.

the effect? Gold, oil, and commodities are skyrocket-ing, inflation is hitting very disturbing levels not seen in many, many years, and the dollar is sinking further. echoes of the 1970s.

Worse, the Fed is probably just pushing on a string. You can make the money available to lenders, but you can’t make buyers buy or lenders lend when they expect the value of the home or the collateral to sink further.

this is just what buyers and lenders think, and despite what you may hear from certain trade groups, they are almost certainly right.

Riding the bubbleSo where does this leave us? to get the answer to this question, look at the nearby graph, “Home prices and household income.” (see page 22).

the bottom line shows the trajectory of average house-hold incomes nationwide since the end of 1999. It shows a fairly steady increase that’s in line with the pretty good economy we’ve had the last 25 years.

the top line shows average U.S. home prices. You are looking at a classic asset bubble. this graph tells us what we already should know: a situation in which home prices increase faster than the ability of households to pay them cannot — cannot — last.

It didn’t.looking closely, you can see there’s a lot more

information in the chart.the first thing to note is that home prices have not

yet returned to their historic relationship with household

0

50,000

100,000

150,000

200,000

250,000

HOUSEHOLD INCOME AVERAGE HOME PRICE

20072006

20052004

20032002

20012000

1999

Hom

e pr

ices

and

hou

seho

ld in

com

e

VoluMe 15 l Issue 3 May/June 2008 23

“to hold off the angry mobs, lenders turned

to that great invention of modern times:

the euphemism. These weren’t reckless

loans, they were just subprime.”

incomes; the gap between the lines remains large. In short, home prices still have a way to go on the downside. Most estimates put this number at around 15-20 percent, and that should also inform the decisions of policy makers.

We have a choice: we can take steps to reacquire equi-librium as quickly as possible, in a manner consistent with political reality and the need not to send the economy tumbling, or we can delay reaching that necessary equilib-rium by taking actions that keep prices artificially high.

one thing is strongly suggested by the graph: In many markets, buyers who are skeptical about buying now are probably more right than wrong. So are lenders who are hesitant to lend to borrowers who don’t have pretty good credit and who are not making a reasonable down payment. It just might be fair to say that anything we do to delay getting back to equilibrium will, per force, keep buyers out of the market. Why? Because in so many places, prices are unaffordable for average households.

If you can borrow money at one percent and lend it for five, six, or even nine percent, you’d have to be an idiot not to be in the lending business.

there were many idiots in the lending business. lenders sprang up like weeds, using, it seemed, a fogged mirror as the only criteria for lending someone a few hundred thousand dollars.

and why not? With home prices galloping to the up-side, there was little risk in making a loan, even to someone you wouldn’t trust to mow your lawn, because increasing home values would bail you out of your imprudence.

Needless to say, the geniuses in Washington did their part here, too. the goal was admirable (it always is) — require banks to loan more money to borrowers with less than stellar credit, giving them a chance to own their own homes. the result? let’s just say that the legislation proved yet again that the law of Unintended Conse-quences doesn’t take a vacation.

Many of the folks to whom the loans were made were not even required to document their financial condition. Before long the no-documentation or stated-income loan was in fashion. (and it’s not for nothing that these loans are known in the industry as “liar loans”.) as if this were not bad enough, the 100 percent loan came into vogue, in spite of the age-old wisdom that a borrower without any skin in the game is much more likely to default and just hand you the keys if his condition turns sour. With no protection against a decline in value (he has no equity in the property), and uncertain economic prospects, he’s a default waiting to happen.

“But we can do even better,” said lenders! “We’ll put these all together and make a 100 percent loan to a persons with marginal or lousy credit, and — just to show how broadminded we are — we won’t even require documentation of income, assets or debts. If the borrower can’t afford the interest rate dictated by his marginal

credit and financial condition, we’ll just give him a teaser rate to get him into the house, and we’ll set it to increase in two or three years.”

By then, of course, the home will have appreciated in value, and the borrower will either bust a gut to make the much higher payment, or will simply refinance at a lower fixed rate out of the equity he’s built up in his house.

that might have worked … if home prices had continued to rise.

to hold off the angry mobs, lenders turned to that great invention of modern times: the euphemism. these weren’t reckless loans, they were just subprime.

I prefer the dysphemism: sublousy. l

Reckless Lenders

“the most maddening policy decision of all

would be to rescue reckless lenders from

the consequences of their actions.”


the evidence that buyers understand this is compelling. a recent poll conducted for the associated Press-aol Money and Finance by abt SRBI Inc. found that a grow-ing majority say they will not buy a home anytime soon. Sixty percent of those interviewed said they definitely will not buy a home in the next two years, up sharply from the number who said the same thing 18 months ago, at the start of the downturn.

the poll notes that the growing reluctance is at least partly the result of the worry that housing prices will con-tinue to fall. Half of all those interviewed say that homes are still overpriced, a fact borne out by the graph. Not surprisingly, the number of those saying houses are about right has fallen to about a third of those sampled. the poll found that the biggest worriers are those expecting to buy soon. of that group, almost half believe that value will drop in the next two years.

Hard choicesanother thing you’ll notice while looking at the graph is that there are a lot of people on the inside of the bubble. these are people who are nameless and faceless to report-ers, who, for understandable reasons, focus on the sym-pathetic and identifiable families being forced out of their homes. But these people are nonetheless real. they want a home, but they can’t afford one. they were unwilling to gamble during the recent frenzy. and they will not have a home to buy unless someone is willing to sell at a price in line with their income.

one way to think about the “nothing down” subprime borrower is as a renter. For him, finding another rental is, financially, a reasonable demand if he can’t afford the ‘rent’ on this house. Somehow, subsidizing his payments means denying the other guy a house he can afford.

Instead, we can ask the current owner to leave and insist the lender put the house on the market at a reasonable price. this, in effect, is what the foreclosure does. as we will also see, it is what the short sale — as a proxy for the foreclosure and sale of the Reo — does even more efficiently.

another thing should also be clear in looking at the graph. anything that keeps the income line from continu-ing an upward trajectory will exacerbate the problem we now face. If anything, we should do everything possible to increase the slope of the line.

So here’s how we might order our thinking, if we under-stand our history and can believe the evidence we’re seeing. • Housing is still overpriced, and needs to return to the

levels that history says are sustainable and affordable.

In fact, they must, logically, return to those levels, unless we take action to prevent it. But if we take such action, it will only delay a recovery.

• Until the equilibrium is reached, many buyers will be locked out of homes they could otherwise afford. Buy-ers who have the option to do so will stay out of the market, unwilling to buy an asset they believe is likely to decline in value.

• lenders can read economic tea leaves as well, and will be hesitant to return to normal lending practices while they expect the asset they lend on to decline in value.

• Policy makers should acknowledge the realities we face and do everything possible to permit the orderly correc-tion of the market. Most of all, they should not make it their priority to keep prices artificially high.

If that means the current tenants/owners should be allowed to lose the house so it can find its proper level for the benefit of another buyer, that should happen. If that means the lender has to take a haircut, well, the lender made the imprudent loan.

the most maddening policy decision of all would be to rescue reckless lenders from the consequences of their actions.• Nothing that will cause average family incomes to

decline should even be contemplated in Washington or state capitals. In fact, policy should focus of giving the economy a fiscal push, as leaders of both parties have done successfully in recent history.

• Until these things happen, the Fed is unlikely to rein in the money supply and stop viewing its loose monetary policy as the sole bulwark against economic catastro-phe. But until that happens every gain we make in one way will be eaten up by the escalating costs of fuel, food and other commodities, as confidence in our currency erodes. Right now the biggest source of damage being done to family incomes comes at the gas pump, the grocery store, and wherever else necessities are bought.

Finally, RealtoRS® must do everything within their power — both politically and professionally — to move policy in the right direction. We must also learn how to deal with the difficulties we face in a professional manner. l

Volume 15 ● Issue 3 may/June 2008 25

In some ways, these folks are victims, in the way that folks who invest in Nigerian e-mail offers or dot-com companies that never made a dime are victims. Having saved no money, having built up marginal credit, and having decided to gamble on ever-increasing home values to bail them out of resetting loans they could not afford, they walked into a mortgage lender’s office and signed on the dotted line.

It would be a cause for pathos, if they weren’t now demanding to be bailed out by those of us who saved a down payment and bought a house we could afford on terms that made financial sense. But it would be cold indeed not to note that part of the reason for the reckless behavior was not just the herd mentality of getting in on a sure thing, but for some of these borrowers the real-ization that without taking big risks, they simply would not be able to afford a house, given the fact that housing was rapidly becoming unaffordable.

There’s not much more to say about subprime borrowers, because, after all, we do have a heart. It’s the consequences of too much heart that lead us astray. We need to remember the faceless victims of the last few years — the folks renting an apartment, living with the parents or staying in an unsuitable home while they save up enough to buy the right house — who have been priced out of the market by the incredible runup in prices over the last several years. ●

Reckless Borrowers

A longer version of this article, chock full of detail about the history of American monetary and fiscal policy, is available online in both HTML and PDF versions. You’ll find it at VARbuzz.com/meltdown.

Smart agents are learning they shouldn’t run from short sales anymore

Newton

Royce

Arko

Dykstra


Accept the reAlity: Short sales are here and, for the foreseeable future, they’re here to stay. And while some agents won’t go near them, the numbers are hard to ignore — as much as 40 percent of the market in some areas around Wash-ington, according to Jeanette Newton,

chief executive officer of the Dulles Area Association of REALTORS®.

It’s just not good business to ignore that much real estate. Even better, short sales, while not as simple as typical transactions, are starting to get easier to handle.

“In the very beginning of this, nobody knew what a short sale was, because it had been 15 years since the last ones.” So said Tony Arko of Market Advantage Real Estate in Loudoun County. Agents were reminded — the hard way — what makes a short sale different: bank approval.

“Agents were getting them sold, but they didn’t realize that the bank wasn’t willing to sign off on them,” Arko said. That led to some bad blood, and, once bitten, buyers and buyers’ agents weren’t anxious to give short sales another chance.

“They’re good for buyers who have the time to wait,” said Jeff Royce of RE/MAX Choice in Fairfax. But “your typical buyer probably should avoid them like the plague.”

And lenders aren’t helping much, to say the least.

“The management of these compa-nies was not telling their worker bees ‘You need to work harder to work these things out’,” said Mary Dykstra of RE/MAX Valley REALTORS® in Roanoke. “They have an old-time mindset that the agent is the enemy.”

So short sales picked up a bad rap, and agents learned to steer clear.

The times, though, are a-changing.

Smoother sailingWhen short sales first appeared on the radar, lenders weren’t interested. As Arko explained, “They were willing to take a risk of not selling it short because they could sell it for more on the foreclosure market.”

by Andrew Kantor

Making intoshort

“

VoluMe 15 ● Issue 3 May/June 2008 27

That might have worked when foreclosures were relatively rare, but as more and more ARMs reset and more and more owners defaulted, the foreclosure market became saturated. Plan A wasn’t working so well.

“[Lenders] are finding that every month or every quar-ter the prices keep dropping and dropping and dropping,” Arko said. “So ’round about the fourth quarter of last year, the banks finally got the message.”

That message: Short sales might be better for your bottom line. Time to make nice with those REALTORS®.

“It’s actually easier to get the banks to agree to a short sale right now,” Arko said. “The problem is, the buyers agents don’t believe it.”

Short sales still aren’t as simple as typical transactions, but they don’t have to be a nightmare, either. You have to handle them properly, starting with the owner — make sure he’s spoken with his lender (or lenders) and started the short-sale process on that end.

“As a listing specialist, I want to at least know the bank is in the loop,” Arko said. “I would only talk to owners who have already established a working relation-ship — some kind of communication — with the lenders.” Especially, he cautioned, any second lender. “Nine times out of 10 it’s going to be the second one that holds up the sale.”

Next, you — as a listing agent — need to get into that loop. Dykstra said she’s had successful short sales using a specific technique: “The minute I can establish a relation-ship with the actual person [at the lender] who’s doing the workout, it becomes a personal relationship and I become much more successful.”

By building a relationship, Dykstra said, “my client’s plight becomes something she cares about. That will move my client’s paper to the top of the desk.”

Showing your handHow should you market a short sale? First and foremost, remember the law: You can’t disclose a client’s financial information — including that a home is up for short sale — without the seller’s permission in writing.

But should you get that permission and list it as a short sale?

“There are two schools of thought on that,” Dykstra said. By listing it as a short sale, “you can attract a bargain hunter, perhaps,” but “you push a buyer away who wants a timely close.”

Arko is clear about which side he falls on: “My advice is to always be up front with what you put in the listing,” he said. “Because if you don’t put that it’s a short sale, you’re going to really tick a lot of people off.”

If you’re going to put your cards on the table, have as many things in place with the lender as possible.

“When I’m marketing a house as a short sale,” Dykstra said, “if an agent calls me who doesn’t want to get into it, I can say ‘Don’t worry — we’ve got things in place. It can be a quick closing’.”

Some lenders are better about it than others, which is why it pays to establish a relationship early on. National City Mortgage, for example, will send out an appraiser at the beginning of a short-sale process, even without an offer on the table. It will even give at least a ballpark figure of what it’s willing to accept in a contract, which can smooth the road considerably.

That isn’t to say that, as a buyer’s agent, you should jump in eyes closed.

Buyers beware Know your client, obviously. Some are better suited to a short sale, even one that looks to be smooth. On the top of that list are people who are looking for rental properties or long-term investments.

“If you’re an investor and you don’t really need the house,” Royce said, “then I think [you] might want to jump in and get a good deal.”

Arko recognized the kind of buyer who wouldn’t be a good bet for a short sell. “If you’re a buyers agent, and your buyer is not patient,” he said, “it’s going to be very, very tough to keep them patient long enough to get the deal done. It could take months.”

When Dykstra has acted as a buyer’s agent, “I want to know that the listing agent knows what she’s doing,” she said. If she does, and if she’s been working with the lender, it could be a quick trip from contract to closing.

Regardless, be up front to your clients when you first see “short sale” in the MLS. Think about the listing agent, the lender, and the grapevine. “Tell them it could be that we get a response in a week, or it could be longer,” suggested Arko. “But they have to know that there’s a process they have to go through and they might not get any answer.” ●

If you’re going to put your cards on

the table, have as many things in place

with the lender as possible.”


GOLDEN R INVESTORS ($5,000)

Dennis CronkPoe & Cronk Real

Estate GroupRoanoke

John McEnearneyMcEnearney

Associates, Inc. Alexandria

Michael MinneryRE/MAx Allegiance

Woodbridge

Patricia JensenReal Estate III - North

Charlottesville

Angela DoughertyWilliam E. Wood

& Associates Williamsburg

Fredericksburg Area Association of REALTORS®, Fredericksburg

Northern Virginia Association of REALTORS®, Fairfax

Richmond Association of REALTORS®, Richmond

Roanoke Valley Association of REALTORS®, Roanoke

GOLDEN R ASSOCIATION ($5,000)

2008 RPAC Report

CRYSTAL R INVESTORS ($2,500)

William ChoreyChorey &

Associates RealtySuffolk

Joseph Funkhouser, IIColdwell Banker

FunkhouserHarrisonburg

Dorcas Helfant-BrowningColdwell Banker

Professional Virginia Beach

Thomas Jefferson, III*Joyner Fine Properties

Richmond

Steve HooverMKB, REALTORS®

Roanoke

Tom JewellCarter Braxton Real Estate Co.

Leesburg

Tom Stevens*Coldwell Banker

Residential Vienna

Stanley PalivodaCentury 21 Battlefield

- Tappahannock Dahlgren

Melanie ThompsonCentury 21

AdVenture Realty Fredericksburg

Jack TorzaLong & Foster REALTORS®

Mechanicsville

As of MAy 10, 2008, the following REALTORS® and local associations have joined RPAC of Virginia as Major Investors. For more informa-tion on the value of RPAC and how your investment works to protect your business, contact Meredith Cox at [email protected] or (804) 264-5033. Or, if you want to get invested today, please visit RPACofVA.com.

* Hall of Famers have contributed a cumulative amount of at least $25,000 to RPAC.

Commission ExpressCommission Express

Woodbridge


Mary Ann BendinelliWeichert REALTORS®

Manassas

Patricia BillheimerLong & Foster

Real Estate, Inc. Sterling

Karen BohlkeRE/MAx Select

Hampton

R. Scott Brunner Virginia Association of

REALTORS® Glen Allen

Florence Chittenden Long & Foster

Real Estate, Inc.Nokesville

Beth Dalton Coldwell Banker

Townside Blacksburg

John DickinsonHall Associates Inc.

Union Hall

Kit HaleMKB, REALTORS®

Roanoke

Margaret HandleyM.C. Handley, Ltd.

McLean

Rita Huggins-HalsteadLong & Foster

Real Estate, Inc. Sterling

STERLING R INVESTORS ($1,000–$2,499)

Lilian JorgensonLong & Foster

Real EstateVienna

Barbara Jean LeFonRivah Realty LLC

Montross

STERLING R ASSOCIATION ($1,000–$2,499)Greater Augusta Association of REALTORS®, Staunton

New River Valley Association of REALTORS®, Christiansburg

Southside Virginia Association of REALTORS®, Colonial Heights

Williamsburg Area Association of REALTORS®, Williamsburg

Sandee FerebeeGSH Real EstateVirginia Beach

Jerry BartlettJobin RealtySpringfield

Charles BurnetteBurnette &

Company, Inc.Blacksburg

Julie CristGSH Real Estate

Hampton

Angela EliopoulosLong & Foster

Real Estate, Inc.McLean

Claire Forcier-RoweColdwell Banker Elite

Fredericksburg

Katy GilliamColdwell Banker

TraditionsWilliamsburg

Lynn GrimsleyRE/MAx Peninsula

Newport News

Eugene HobartLong & Foster

Real Estate, Inc.Haymarket

Jo Anne JohnsonWestgate Realty

Group, Inc.Falls Church

Luis LamaLong & Foster

Real Estate, Inc.Alexandria

Andy MasonMason-Davis Company, Inc.

Onancock

Amy HudsonLong & Foster -

Christiansburg/BlacksburgBlacksburg

Betty JasmundColdwell Banker Elite

Stafford


2008 RPAC Report

Vinh Nguyen Westgate Realty

Group, Inc.Fairfax

Kathy Nunnally Re/Max Valley REALTORS®

Roanoke

Lee OdemsBuyer’s Advantage

Real EstateWoodbridge

Forrest Odend’halLong & Foster

Real EstateManassas

John PowellLong & Foster

Real Estate, Inc.Colonial Heights

Jane Quill Re/Max Presidential

Fairfax

Gene Sampson Jobin Realty

Fairfax

Dee SprakerKeller Williams

RealtyDumfries

Trudy SeveraLong & Foster

Real EstateReston


Cindy StackhouseCentury 21 Stackhouse

& AssociatesDumfries

Suzy StoneCentury 21

AdVenture RealtyFredericksburg

Peter Rickert Coldwell Banker

Residential BrokerageAlexandria

Gwen Pangle Long & Foster

Real Estate, Inc.Woodbridge

Gail PenmanCentury 21 Team

Real EstateStafford

Kayvan Mehrbakhsh

Sperry Van Ness Vienna

Contributions are not deductible for income tax purposes. Contributions to RPAC are voluntary and are used for political purposes. The amount suggested is merely a guideline and you may contribute more or less than the suggested amount. You may refuse to contribute without reprisal and the National Association of ReALTORS® or any of its state associations or local boards will not favor

or disfavor any member because of the amount contrib-uted. 70% of each contribution is used by your state PAC to support state and local political candidates. Until your state PAC reaches its RPAC goal 30% is sent to National RPAC to support federal candidates and is charger against your limits. ●

Susan Mekenney Re/Max Allegiance

Fairfax

G. Edmond “Ned” Massie, IV

Grant Massie Land CompanyRichmond

Tom MeyerCondo 1, Inc.Falls Church


Thomas “Mack” Strickland, Jr.

Strickland RealtyChester

Patricia SzegoERA - Elite Group

REALTORS®

Haymarket

Christine Todd Northern Virginia

Association of REALTORS®

Fairfax

Drake Van de CastleEnvirian of

Charlottesville Charlottesville

Glenda von DameckLong & Foster -ChristiansburgChristiansburg

Robert WaringGSH Real EstateVirginia Beach

Karen WilkinsonFirst Horizon Home LoansWoodbridge

RPAC’s good to you

Get invested today at www.RPACofVirginia.com

When you’re good to RPAC...



LEGAL LINES

continued from page 8

Legal Lines is written by VAR Special Counsel Lem Marshall. Please note that answers to Legal Hotline questions are informational only. Consult your own legal counsel if your situation requires legal advice. More Legal Hotline questions and answers are indexed at VARealtor.com for your reference.

Can money talk?

Q.A curious MLS entry has been spotted in one of our larger services. It seems some listing agents are placing

property in the MLS with a comment such as “$3,000 paid to buyer if unrepresented.” Is such an entry permissible?

A. You’re going to have to help me with this one, because I’ve puzzled over it and can’t fi gure it out. How would unrepresented buyers, who presumably don’t have access to the MLS, know of the offer? I presume there was no ordinary offer to buyer agents along with it, because what buyer agent would see an offer of, say, three percent, and then notify his client that the client could make out like a bandit by abrogating the agency relation-ship and dumping the agent? And why would selling agents without a buyer agency relationship be satisfi ed to report this to unrepresented buyers with the hope of earning whatever portion of the payment the buyer would agree to split with them? If selling agents aren’t likely to use this information, how is it getting to buyers?

Even if it is, it seems to me that it violates the NAR MLS policy that requires offers to cooperating brokers as a condition of acceptance in the MLS. If the MLS is not a REALTOR® MLS that might not be a concern, but it cer-tainly seems inimical to the purpose of the MLS, which is to encourage selling agents to bring buyers to the listing.

Can anyone explain this to me? I’d really like to know how it makes sense for any MLS to permit buyers to see solicitations not to use agents. ●


If another statewide increase in the grantor’s tax were to be proposed in the General Assembly…

If your local officials decide to increase real estate assessments…

If eminent domain and “takings” become a problem in Virginia…

What could we do?

REALTORS® ARE uniquELy positioned to advocate for the homeowners and future homeowners they represent. With this comes the opportunity to speak up when your profit-ability, as well as property owners’ rights, is threatened.

With 36,000 REALTORS® behind us, VAR and the local associations of REALTORS® are effective in repre-senting your interests at the General Assembly. But there is room for improvement.

Over the next year, you will see an increased effort by REALTORS® to take advantage of opportunities to inter-act with their local elected officials and their representa-tives to the General Assembly. Building these relationships will provide the foundation for REALTORS® to become even more influential in the realm of public policy.

Virginia Homeowners Alliance to launch in ‘08In addition, VAR is launching the Virginia Homeowners Alliance this year. This initiative will provide REALTORS® and homeowners the opportunity to work hand-in-hand to shape public policy at both the local and state levels. VAR decided to offer this service to Virginians because the results of a 2007 VAR survey of property owners showed that interest in a homeowners’ organization is high, and that homeowners currently don’t believe they have a unified voice or anyone who represents their interests as homeowners.

“We look forward to offering the Virginia Homeowners Alliance to homeowners,” said John Powell, VAR president-elect and chairman of the program’s steering committee. “The Virginia Homeowners Alliance web site will provide user-friendly and relevant tools to all

homeowners in Virginia. It’s our hope that homeowners will see that their interests are aligned with the interests of REALTORS® and that REALTORS® are looking out for them.”

What does the Virginia Homeowners Alliance mean for you and your clients? First, the Alliance provides REALTORS® the opportunity to introduce this new resource to their former, current, and future clients. It’s a chance for you to connect with current clients and to re-connect with past clients and offer them a service that will be of ongoing interest to them. Members of the Alliance will find regular updates on issues important to homeowners and the investment they’ve made. The Virginia Homeowners Alliance will provide members resources that will better equip them to increase the value of their home, their most important investment.

Second, homeowners’ and REALTORS®’ interests are often the same: strong communities, an improved qual-ity of life, and an environment where more people can achieve the American Dream of homeownership. This initiative will help homeowners recognize their shared interests, resulting in a deeper trust and confidence level in you, their REALTOR®, and REALTORS® as a whole.

Third, when issues come up that threaten your bottom line, adding homeowners to the strong REALTOR® voice can vastly increase the credibility and influence of REALTORS® at the General Assembly.

The relationship between homeowners and REALTORS® does not end at the closing of a new home. It’s time that we begin to work together. After all, looking out for homeowners’ interests is in your best interest as well. Stay tuned for more information on how you and your local association can get involved with the Virginia Homeowners Alliance. l

VirginiAHomeowners

VAr launches the

VOLUME 15 ● ISSUE 3 MAY/JUNE 2008 35

Is print advertising worth the money? Jim Duncan of the Real Central VA blog in Charlottesville doesn’t think so (“there is no method by which to track print advertising’s ROI”), but he’s willing to give it a shot.

“This week marks the second week of an ongoing experiment that I have entered with the C-Ville [the local alternative weekly newspaper]. Can I increase the number of subscribers to my blog through a print ad — consis-tently placed — in a popular local print publication? In partnership with local real estate search site CurbPlacesand C-Ville, a similar ad will run — time will tell.”

He also writes: “Who knows? I doubt I will sell a house directly from this ad, but I wouldn’t be totally sur-prised if I gain a subscriber who in nine months decides to contact me about something real estate related.”

Shortcut: www.VARealtor.com/08051

The Boomers are here, and they want things their waySo writes Dave Macklin on allvirginiabeachrealestate.com. In Virginia Beach, he says, they may be the latest trend-setters when it comes to real estate.

How’s that? They might want a house with some concessions to the over-60 — stoves that monitor pots to prevent boiling over, adjustable appliance control panels, levers instead of knobs, and so on.

“According to the latest data, most Boomers plan to remain in their own homes as opposed to moving into retirement or ‘assisted living’ communities as they age. Recently, this ‘aging in place’ phenomenon has triggered home renovations and new construction ... [N]ow, the technology behind home appliances and fi xtures is catching up.

Shortcut: www.VARealtor.com/08052 ●

BLOGSPOTTINGby Andrew Kantor


VAR UPDATE

Awards presented to newspapers for excellence in real estate reporting Brian McNeill and Jeremy Borden of The Daily Progress(Charlottesville) are the recipients of the 2007 President’s Award for Excellence in Real Estate Reporting for a series of stories. The award, which is organized and presented by the Virginia Association of REALTORS® in conjunction with the Virginia Press Association, recog-nizes outstanding work in newspaper reporting of real estate-related issues.

The Daily Progress series, which focused mostly on affordable housing in the Charlottesville area, showed a comprehensive knowledge of housing issues, said the judges. The series touched on tax assessments, quality of life, commuting costs, and the plight of civil servants who can’t afford to live in the community that they serve. The stories were well-researched, with perspective provided from local offi cials as well as a large number of residents.

An Honorable Mention went to Meghan Hoyer and Matthew Jones of The Virginian-Pilot (Norfolk) for their series on blight issues and property decay. The problems related to violation of city codes can be far-reaching, said the judges. The series was well-researched and well-writ-ten, explaining well what can happen when a developer goes bankrupt.

Good news and bad news in Virginia’s Q1 housing statsFIRST THE BAD news: Statewide, home sales in Virginia were down 27 percent in the fi rst quarter of 2008 compared with the fi rst quarter of 2007. The statewide median sales price is also down nine percent for the same period. A possible national recession, foreclosures on the rise, tight credit markets, potential federal legislation—all of these factors make it diffi cult to predict where the market is going.

Here’s the good news: Some areas of the Common-wealth saw a double-digit increase in the median sales

Got listings to show this weekend? Want to show them in the most time-effi cient and fuel-effi cient way possible? With gas prices in some areas of Virginia exceeding $4 a gallon and a personal life to tend to, we know you do!

Check out IdealRoute.com, a new mapping service from VAR that computes the most effi cient route between three or more properties.

Here’s how it works:• Park your web browser at IdealRoute.com. • Type or paste addresses into the text box below the

map one by one, clicking “Add!” after each • Click on “Calculate Fastest Roundtrip”

The service automatically computes the optimal route between the properties and gives you comple-mentary turn-by-turn directions to all locations using Google Maps.

There’s a short video tutorial near the bottom of the page that you can watch for more detailed instructions.

There’s already been good buzz from Inman News and The Boston Globe about the service, so check it out for your next round of showings.

price in the fi rst quarter, including Charlottesville and Lynchburg. The state’s mid-sized metros (Hampton Roads, Richmond, and Roanoke) saw their median home prices unchanged over the same period. Virginia’s housing market is performing better than many other states, and our diverse economy is a key factor in Virginia’s ability to weather a downturn.

Download this selling tool to spread the word about Virginia home sales facts what and what they mean to REALTORS®, their clients, and citizens statewide.

Read more about VAR’s quarterly home sales report at www.VARealtor.com/HomeSales.

Stop chasing your tail: VAR’s free route optimizer saves you time and money

Need help highlighting

the good news? VAR’s

5 Facts About Home Sales

postcard is available at

www.VARealtor.com


RealtoR®-to-RealtoR®

VAR UPdAte

To advertise in Commonwealth magazine, contact Jeff Rhodes at (410) 584-1968 or [email protected]

Brokers can now track agents completing online ethics trainingVirginia brokers and managers may now see which of their agents have completed, or are in the process of completing, the series of 16 lessons on the Code of Ethics at the VAR website (which are good for one CE hour).

After logging in, brokers can now see a section in the lower left corner headlined “For Brokers.” Those who

click the link are taken to a page called “Broker Report Summary.” Here you’ll see which of the agents in that firm have taken the lessons and where they are in the series. Also avail-able now is the ability for the broker to send a reminder e-mail with a simple click to each of his or her agents. l


“If you question the value of a good reputation, try building a business without one.”Suzy StoneREALTOR®, Fredericksburg, Virginia

Your reputation is your most valuable asset. Without a good reputation, you cannot hope to advance your career. Of course, you build your reputation by your actions, so understanding and living the REALTOR®

Code of Ethics is the surest way to be successful in this business. Open the Code and you really will close more deals.

To see how the Code can improve your business, visit www.codeisgoodbusiness.com

Earn more business and CE credits to boot. Find out how at www.codeisgoodbusiness.com/va/lessons

Live the Code. Lead the Industry.

FREE GAS(Seriously)

Here’s the deal:Go online to www.varealtor.com/crossword.Print out the crossword puzzle (it’s a PDF file). Complete it correctly — it even has REALTOR®-related clues! — and fax it to 866-291-1497 by July 18.

If you get the answers right, you could be one of four random-chosen winners who will each receive a $25 gas card to help keep you on the road to Baltimore for VAR’s Convention & Expo 2008 Sept. 24-28. (Winners can pick up their free-gas cards at the registration desk.)

Win $25 in free gasoline in our crossword contest

VAR 2008 LEADERSHIP TEAMPat Jensen, ABR, CBR, CRS, GRIPresident

Real Estate III - NorthCharlottesville(434) [email protected]

John Powell, GRI, ABR, CRB, CRSPresident-ElectLong and Foster Real EstateColonial Heights(804) [email protected]

Cindy Stackhouse, GRIVice PresidentCentury 21 Stackhouse and Associates Prince William(703) [email protected]

John DickinsonTreasurerHall Associates, Inc.Roanoke(540) [email protected]

Melanie Thompson, GRIImmediate Past PresidentCentury 21 AdVenture RealtyFredericksburg(540) [email protected]

R. Scott Brunner, CAEChief Executive Officer (804) [email protected]

EXECUTIVER. Scott Brunner, CAEChief Executive Officer(804) [email protected]• Strategic Direction• Governance (including Leadership

Team, Policy Board and Delegate Body)

• Virginia REALTOR® Leadership Academy (VLA)

• NAR Activities• Member Outreach

Anne B. TaylorExecutive [email protected]• Governing Documents• Policy Board, Delegate Body, NAR

Director & VLA Logistics• Leadership Team Support• Travel Planning

ADMINISTRATIONDebbie Talley, CPAVice President for [email protected]• Financial Management & Budgeting• Local Association Liaison• Investment Management Committee• Facility Management• Special Projects

Anita BeanMember Services [email protected]• Receptionist and Concierge• Information Central

Robbie MartinMailroom [email protected]• Mailroom• Copying

Accounting/Member RecordsAnn [email protected]• Accounting• Budgeting• Financial Records and Reporting

Kim MartinMember Records [email protected]• Membership Records (NRDS)• Receivables

Mike ShepherdInformation Systems [email protected]• Technology Systems• Website Management

Meghana BhatiaAccounting [email protected]• Accounts Payable• Accounts Receivable

MARKETING AND COMMUNICATIONSLisa G. Noon, ABC, CAEVice President for Marketing & [email protected]• Media Relations• Communication/Marketing Strategy• Virginia Home Sales Report• ‘The Code is Good Business’

Program• Research

Ben Martin, CAEDirector of Communications & New [email protected]• Member Outreach• Social Media• Publications• Information Management

Advocacy Group

Jovan HackleyMarketing [email protected]• Marketing Communication• Publications

Amanda ArwoodSales [email protected]• Sponsorship Opportunities• Affiliate Memberships• Trade Expo Management• Member Service Partners

Andrew KantorWriter & Information [email protected]• Publications• Web content

Career DevelopmentTracey R. Floridia, CMPDirector Professional [email protected]• Conference Management• Education Program Development• Professional Development Advocacy

Group• Instructor Training

Lili PaulkProfessional Development [email protected]• Education Program Management• Continuing & Post-License

Education • In-house Systems Trainer• Conference Services

Glenda PuryearConferences [email protected]• Graduate, REALTOR® Institute

(GRI) Administration• Conference Services

Amy HaferProfessional Development [email protected]• Education Program Implementation

Member ServicesCarole Umbel, RCEDirector of Member Services [email protected]• Membership Policies (Rules and

Regulations) • Specialty Education• Special Interest Group Liason• Membership Services and

Recognition

Lynne WherrySpecialties [email protected]• Specialty Affiliate Records & Dues• Special Interest Group Liason• Specialty Education and Event

Management

Scottie BosworthProfessional Standards & Member Policy [email protected]• Professional Standards Education

& Administration• NAR Member Policy• VAR Standard Forms Logistics

LAW & POLICYJohn BroadwayVice President/Law & [email protected]• Public Policy Development

and Outreach• General Counsel• Broker Relations• Regulatory Relations• Coalition Building

Martin JohnsonDirector of GovernmentRelations/Chief [email protected]• Legislative Representation /

Lobbying• Political Strategy• Public Policy Advocacy Group• RPAC Trustees

Lawrence “Lem” E. MarshallSpecial [email protected]• Legal Hotline, Principal• Risk Management Education• Virginia Real Estate Board Liaison

Meredith CoxPolitical Communications [email protected]• RPAC Fundraising and

Administration• Public Policy Communications• Federal Political Coordinator

Program

Blake HegemanAssociate [email protected]• Policy Analysis• Local Issues Resources

& Management• Legal Hotline, Secondary• Risk Management Advocacy Group• Standard Forms Working Group

VAR Staff Directory

VAR MEMBER SERVICE PARTNERSPossibleNOW – DNC Solutions(770) 255-1020 (Security Code SC1795VR) www.VARealtor.com/DNCsolution

Advanced Access (800) 335-1563www.VARealtor.com/AdvancedAccess

Cultivate – Professional Developmentwww.VARealtor.com/InternalAudio

Pearl Insurance (800) 289-8170www.VARealtor.com/Pearl

Liberty Mutual Insurance(800) 468-6634 ext. 245(group number 4624)www.VARealtor.com/LibertyMutual

Broadwing, Inc. (866) 564-6279www.VARealtor.com/Broadwing

UPS (800) 325-7000www.VARealtor.com/UPS

Bank of America(866) 438-6262 (priority code K22V)www.VARealtor.com/BankofAmerica

FBRDirect (888) 200-4350, Option 2www.VARealtor.com/FBRdirect

Office Depot(301) 943-4762, Account 44618691www.VARealtor.com/OfficeDepot

Outstaffing(888)-OUTSTAFF (888-688-7823)www.VARealtor.com/Outstaffing

NAR Store (800) 874-6500(Promotional Code VAR2)www.VARealtor.com/REALTORstore

LLE Language Services(877) 405-8764 x. 207www.VARealtor.com/LLE


THE LAST WORD

THE CURRENT HOUSING slump comes with practically everything: drama and pathos, sharpies and frauds, exaggeration and understatement, victims and villains, seers and sages, excuses and alibis, forecasters and fault-fi nders.

Everything, that is, but a soundtrack. And that’s a shame. For if, as they say, “Music hath charms to sooth a savage breast” (later reinter-preted by Elton John as “Sad songs say so much”). I’m betting a bunch of folks could use a tune or two.

Accordingly — with input from our readers of VARBuzz.com, and tongue planted fi rmly in cheek — I present herewith some musical suggestions for those who brought about or are forced to endure these tough economic times.

For those yearning for the good old days, circa. 2003-2006• Glory Days• If I Could Turn Back Time• It Must Have Been Love

(“…but it’s over now…”)• I Wanna Go Back (“…and do

it all again, but I can’t go back, I know.”)

• Guess I Had Your Leavin’ Comin’

For the economists and Wall Street types who didn’t see this coming• I Have Confi dence In Me• Always Too Late• I’m Beginning to See the Light

For the sleazy subprime lenders who took the unsuspecting for a ride• Making Love Out of Nothing at All• How Could You Believe Me When

I Said I Love You When You Know I’ve Been a Liar All My Life?

• How Come Your Dog Don’t Bite Nobody But Me?

• If I Fall, You’re Going Down With Me

• Baby, You’re No Good

Songs of lenders who gave no-income, no-asset loans to folks who didn’t remotely qualify• Come and Get It (You know:

“If you want it anytime, I can give it, but you better hurry ’cause it may not last.”)

• Don’t Stop ’Til You Get Enough• Santa Claus Comes Tonight• Little Pink Houses (“Ain’t that

America?”)

For current short-sellers who thought their no doc, no-money-down A.R.M. was too good to be true (and it was)

• It Ain’t Easy Bein’ Easy• Livin’ in Fast Forward• Call Me Irresponsible• (Was I) Out of My Head• I Am a Man of Constant Sorrow• Short People (got no reason

to live)

For unrealistic sellers and the REALTORS® who agree to overprice them• Don’t Know Much• Crazy• What a Fool Believes• You Can’t Always Get What

You Want

For those homeowners who walk away from their foreclosure• Upside Down• This House Ain’t a Home• Bye Bye Love• She Used to Be Mine

For those in search of a federal bailout• If You Got the Money, Honey,

I Got the Time

Finally, for those who truly were defrauded by unscrupulous, preda-tory lenders, there’s this lyric, from Paul Simon:

“It’s outrageous to line your pockets off the misery of the poor,Outrageous the crime some human beings must endure.”Some sad songs get it exactly

right. ●

Soundtrack for a slump What this housing downturn needs is a good theme song or two

Scott Brunner is VAR’s CEO. There’s a free VAR Convention registration for the fi rst VAR member who can correctly identify the artist for each of the songs listed above. Email your entries to [email protected].