March 2012 - Wisconsin Real Estate Magazine

HOME INSPECTION RULESRules regulating Wisconsin home inspectors.

DID yOU kNOw?Mortgage traps and tips you should know.

$5.00March 2012 MAGAZINE

Causeand

Effect:The Home Inspection

and Mortgage Relationship

Find your highest calling in real estate with RE/MAX.

The peak of success.GET VISIBLEWhen you’re with RE/MAX, half the introduction is already over. RE/MAX is the most recognized brand in real estate, and consumers know our network sells more real estate than anyone else. Leverage the visibility of the RE/MAX brand to build your business.

GET MORE BUSINESSOur business model is focused on your success. The RE/MAX organization is built by top producers, for top producers. Earn more listings and write more offers, and boost your repeats and referrals by tapping into the most powerful branding in the real estate industry.

GET TRAININGReal estate is a fast-moving business where the rules are constantly changing – so keeping your knowledge base up to date is vital. RE/MAX University lets you access unparalleled education materials, including more than 1,000 business-building videos. The more you learn, the more you earn.

Interested in a RE/MAX franchise?Visit JoinREMAX.com or call 800.878.8138.

North CentralHome of the Best Agents®

RE/MAX received the highest numerical score among full service real estate firms for home sellers and home buyers in the proprietary J.D. Power and Associates 2011 Home Buyer/Seller StudySM. Study based on 3,861 total evaluations measuring eight firms and measures opinions of individuals who bought a home between March 2010 and April 2011. Proprietary study results are based on experiences and perceptions of consumers surveyed March-May 2011. Your experiences may vary. Visit jdpower.com

“Highest Overall Satisfaction For Home Sellers and Home Buyers Among National Full Service Real Estate Firms.”

JD_Peak_ad.indd 1 9/23/11 9:56 AM

Find your highest calling in real estate with RE/MAX.

The peak of success.GET VISIBLEWhen you’re with RE/MAX, half the introduction is already over. RE/MAX is the most recognized brand in real estate, and consumers know our network sells more real estate than anyone else. Leverage the visibility of the RE/MAX brand to build your business.

GET MORE BUSINESSOur business model is focused on your success. The RE/MAX organization is built by top producers, for top producers. Earn more listings and write more offers, and boost your repeats and referrals by tapping into the most powerful branding in the real estate industry.

GET TRAININGReal estate is a fast-moving business where the rules are constantly changing – so keeping your knowledge base up to date is vital. RE/MAX University lets you access unparalleled education materials, including more than 1,000 business-building videos. The more you learn, the more you earn.

Interested in a RE/MAX franchise?Visit JoinREMAX.com or call 800.878.8138.

North CentralHome of the Best Agents®

RE/MAX received the highest numerical score among full service real estate firms for home sellers and home buyers in the proprietary J.D. Power and Associates 2011 Home Buyer/Seller StudySM. Study based on 3,861 total evaluations measuring eight firms and measures opinions of individuals who bought a home between March 2010 and April 2011. Proprietary study results are based on experiences and perceptions of consumers surveyed March-May 2011. Your experiences may vary. Visit jdpower.com

“Highest Overall Satisfaction For Home Sellers and Home Buyers Among National Full Service Real Estate Firms.”

JD_Peak_ad.indd 1 9/23/11 9:56 AM

march 2012 | vol. 28, no. 6

14

table of contents

Cause and Effect: The Home Inspection and Mortgage RelationshipThe critical relationship between two common elements in every real estate transaction.

Did You Know? Basic Mortgage Traps and PointersBe mortgage-savvy: a guide for mortgage basics and pointers with a refresher on mortgage terminology.

Best of the Legal Hotline: Inspection ContingencyWith a focus on inspections, this hotline addresses follow-up inspections, notice deadlines, short sale inspections and more.

Rules and Regulations Governing the Home Inspection Industry in WisconsinLearn the specifics of inspection standards of practice in the state of Wisconsin.

Inspections and Money: Two Critical Elements!This month’s sales tip highlights the referral relationships with loan officers and home inspectors.

features articles

14

2 TimetoEngage REALTORS®: it’s time to contact legislators.

23 ProductShowcase The WRA offers products that help you gain financial

know-how to help your clients in the lending process.

26 WalkerRecallUnderWay Updates of the recall, including the signature gathering

process, John Doe investigation and much more.

28 LegislationIntroducedtoPlaceLimitsonDevelopmentMoratoria

The purpose, duration and process of the development moratoria bill currently in the state legislature.

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6

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wisconsin real estate magazine | march 2012 1

18

25

United Way Honors tHe stark Family For service to commUnityUnited Way of Dane County

United Way of Dane County recognized the Stark Family with the 2008 Tocqueville Society Award for outstanding service to the Dane County community and United Way. The Tocqueville Society Award c e l e b r a t e s and acknowledges people or families, such as the Starks, who have made a major impact on the quality of life in Dane County through their exceptional service and commitment to the community.

city HoUsing aUtHority receives 100-Unit grantMilwaukee Journal Sentinel (09/25/08) Pabst, Georgia

The city of Milwaukee’s housing authority is due to receive $6.7 million in federal Hope VI money to build 100 new housing units. The 100 units will be constructed in a 2.5-mile area and will include 29 public housing and affordable rental units; nine affordable housing units for income-eligible families; and 62 moderately priced, open-market condominiums. HUD Secretary Steven C. Preston comments, “Milwaukee’s housing authority has demonstrated it has the leadership to lead and revitalize neighborhoods and transform lives. Cities like Milwaukee change and grow and need to revitalize housing to make sure many aren’t priced out.” Milwaukee is one of a half-dozen housing authorities nationwide to receive new Hope VI grants.

HoUsing stUdy delay FrUstrates advocatesMilwaukee Journal Sentinel (10/07/08) Williams, Scott

Two years after promising the Milwaukee metro area’s first major housing study in three decades, the Southeastern Wisconsin Regional Planning Commission (SEWRPC) is still struggling to get the effort launched. Proponents hope the study will serve as a catalyst for improving affordable housing opportunities throughout the city’s suburbs. But commissioners have yet to assemble an advisory committee to oversee the research or set a specific timetable for conducting the survey. Phil Evenson, the commission’s executive director, said other issues keep getting in the way. The delays have frustrated housing advocates the most. Bethany Sanchez, vice president of the Metropolitan Milwaukee Fair Housing Council, laments, “It’s been a long time coming.” The Pewaukee-based commission has not conducted a comprehensive review of housing patterns since the 1970s.

Wisconsin receives millions to ease ForeclosUre crisis Milwaukee Business Journal (WI) (09/30/08)

The state of Wisconsin is due to receive nearly $39 million in federal funds to stabilize neighborhoods and stave off a spate of abandoned homes. According to HUD and Gov. Jim Doyle, the funds are separate from approximately $9.2 million the government is awarding the city of Milwaukee, where the foreclosure rate is currently 9.9 percent. HUD is awarding the funds via its Neighborhood Stabilization Program, under which almost $4 billion is being allocated to local and state governments for the redevelopment of abandoned and foreclosed houses.

sites: not JUst For Personal connections anymoreMinneapolis-St. Paul Business Journal (09/29/08) Grayson, Katharine

St. Paul, Minn.-based REALTOR® Teresa Boardman says Flickr, Facebook and other social networking sites make it easy to meet people who might eventually become clients. While many professionals are using these sites to make business contacts and companies use them to conduct background checks or recruit new workers, many simply want to connect with people who have similar interests. According to Boardman, “The hard sell is dead. It doesn’t work door-to-door, and it doesn’t work on social networks.” On Flickr, Boardman connected with a fellow photographer who eventually used her services to purchase a home.

ForeclosUres PUsH rents HigHer, sqUeezing loW income FamiliesMinnesota Public Radio (MN) (09/21/08) Olson, Dan

In Minnesota’s Twin Cities, a wave of home foreclosures has pushed more people into the rental apartment sector. The result is an intensifying demand on Minneapolis and St. Paul’s rental housing stock, so much so that the vacancy rate is very low and rents are on the rise. This, in turn, means low-income working families face higher monthly rents even though their income hovers at unchanging levels. Since 2005, the Twin Cities apartment vacancy rate has dipped from 7 percent to closer to 4 percent. Average monthly rents over that same time span are up more than $25, rising to more than $850. The St. Paul-based Wilder Foundation recently reviewed income data for several Twin Cities counties. The organization’s research found that the number of people in those markets paying too much for their rental housing will double from around 70,000 currently to a whopping 140,000 by 2010. Some say a partial solution would be for the U.S. government to reverse course on housing policy and

substantially increase funding for rental assistance,

particularly help for working families.

nar releases Free FHa toolkit Wisconsin REALTORS® Association (10/30/08)

NAR and the WRA are eager to help you meet the

current challenges of the troubled economy. We

know that you need resources that can help you

close transactions, and you need them at little or no

cost. NAR has just released an all-new FHA Toolkit

online for FREE to help you get clients the financing

they need in a credit-strapped environment. It is

one of the most comprehensive toolkits NAR has

ever produced, and it’s available to all REALTORS®

right now by visiting the link below. They also have

launched a new page called “NAR Helps You Navigate

the Current Economy” where you can find dozens of

great products and resources, like the FHA Toolkit,

for free or at a steep discount. Visit www.Realtor.

org/NARHelpsYou for links to these great programs

and products.

Home loans going strong, albeit a bit tigHter, in area Wisconsin State Journal (10/17/08) Balousek, Marv

Despite the ongoing national credit crisis, property

professionals say mortgage money remains available

throughout southern Wisconsin to home buyers

with solid credit. Ron Steinhofer, manager of

Marshall & Ilsley Bank’s regional home lending

group, states, “There’s plenty of money for home

loans out there. It is slightly more difficult to qualify

than two or three years ago, but if you have a good

credit score, a good job and a down payment, money

is available.” Steinhofer adds that banks still are

making loans via such programs as Fannie Mae

and Freddie Mac. Furthermore, credit standards

remain about the same as they were six months ago,

meaning that qualified home buyers can get loans

if they have the proper income verification. On the

downside, banks have been less willing to make

loans with higher loan-to-value ratios. In addition,

conventional financing without a down payment has

indeed disappeared. However, 100 percent financing

is still available with Veterans Administration and

Rural Development home loans.

News

Top News Stories in and Around the Industry

Bill MalkasianWRA President

eareentering thefinal stagesof a long legislativesession, which began in January 2011 and isscheduled to end in mid to late March. And inthis recall-stressed, hyper-partisan legislative

environment, good public policy can easily get stalled as timeticksofftheclock.

ToensurethatthemanyremainingissuesontheWRA’slegislativeagendaareaddressedbeforethefinallegislativebellrings,nowisthetimeforallREALTOR®memberstogetengaged!

Action Required

Inthecomingweeks,youwillreceiveseveralWRACallstoActionvia e-mail on pending legislation, asking you to contact yourlegislators and explain why they should support specific bills.Yourfollow-upiscrucialtothepassageofthesebills.Withafewsimple clicks of your mouse, you will be providing lawmakersvaluable insight as to why these bills are important and howWisconsinwillbenefitasaresultoftheirsupport.Investingjusta fewminutesof timewillhelpyour legislatorsmake therightdecisionandhelpWisconsinhomeowners–andREALTORS®–allatthesametime.

Important Issues

Whilethefocusthissessionhasoftenbeenonissuesotherthanthose related to real estate, the legislature has passed manysignificant laws in support of homeowners and REALTORS® inthelastyear.Theseissuesinclude:Afreezeofthepropertytaxlevy statewide; the creation of a state income tax deductionfor health savings accounts for REALTORS® and otherindependent contractors and small businesses; restructuringof theRealEstateExaminingBoardand theentireDepartmentof Safety and Professional Services – which was formerly theDepartmentofRegulationandLicensing; theeliminationof theanti-development farmland conversion penalty; the prohibitionof local landlord-tenant laws that are more restrictive thanstatestandards; the restorationofahousing impactstatementforeverybillconsideredbythelegislature;theextensionofthepier registration deadline; and the restructuring of the state’sbusinessdevelopmentdepartmentintotheWisconsinEconomicDevelopmentCorporation.

But there’s more - much more - left to be done. Still pendingon theWRA’s legislative agenda are the following bills dealingprimarily with regulatory reforms: wetland regulation reform;presumptive approval deadlines for DNR permits; simplifying

pier grandfathering standards and modifyingother navigable waterway regulations; brokerexperience requirements; development moratoria;nonconforming structures and substandard lots;municipal utilities collecting tenant arrearages fromlandlords;righttorentlegislation;windsitingrules;andshorelandzoningrules.Whilenotalloftheseissueswilladvance,thosethatdowillneedyoursupportiftheyaretobecomelaw.

Our Success Depends on You

Mobilizingourmemberstocontactlawmakersonkeyissueshas longbeen the strength of our association and thebasisforoursignificantbipartisanlegislativesuccessoverthepastthree decades. In addition to member mobilization, theWRAdeploys a highly regarded team of professional lobbyists; weprovidefinancialsupportandendorsecandidateswhosupportREALTOR® issues; and we engage the public through issueadvocacyandgrassrootslobbyingefforts.AttheendofFebruary,wehad500memberscometoREALTOR®&GovernmentDayinMadisontovisittheirlawmakersintheCapitoltolobbyonkeybills.

Together, this portfolio of advocacy tools has helped theWRA advance one of our core missions - to pass good lawsanddefeat bad laws.Thanks to your personal contactswithlawmakers,yourvoluntarypoliticalcontributionstoRPACandthe Direct Giver Conduit Program, and your dues supportfor the Wisconsin Homeowners Alliance (WHA), our issueadvocacy and grassroots lobbying efforts, the WRA hassucceeded in helping preserve, protect and promote theinterestsofWisconsinhomeownersandpropertyowners,onehomeatatimeandonebillatatime.

They say politics is a contact sport. Legislativeadvocacy is too. That means it’s time for allREALTORS® to contact their legislators andhelp pass the key legislation still pending thislegislative session. Stay tuned and stayengaged.

MikeTheo

with mike theo

W

inside the wra

Time to Engage

2 wisconsin real estate magazine | march 2012 www.wra.org/wrem


rob keefe, [email protected]

renny diedrich, [email protected]

steve lane, [email protected]

michael theo, cae, [email protected]

editorial staff:

michael theoPublisher

robert UhrinaManaging Editor

lauren bizorikEditor

Joe leschisinSenior Designer

Wisconsin Real Estate Magazine, USPS 597-850, ISSN 1548-0526, is published monthly by the WISCONSIN REALTORS® ASSOCIATION, 4801 Forest Run Road, Ste. 201, Madison, WI 53704. Periodical postage paid in Madison, WI and additional mailing offices. An annual subscription rate of $5 is included in membership dues and a copy is mailed to every paid REALTOR® and affiliate member of the association. Nonmember subscription rate: $60. POSTMASTER: please send address changes to the WISCONSIN REALTORS® ASSOCIATION, 4801 Forest Run Rd., Ste. 201, Madison WI 53704-7337.

Permission to reprint or quote any material from this issue is hereby granted, provided the Wisconsin Real Estate Magazine is given proper credit in all articles or commentaries, and the WISCONSIN REALTORS® ASSOCIATION is provided with a copy of any reprint.

Advertising of third party products and services herein does not imply endorsement by the WRA unless specifically stated. Furthermore, the WRA does not endorse, approve, or otherwise warrant the accuracy or legality of any information or content contained in advertisements. Any questions regarding advertising policies should be directed toward the editor.

contact Us:

4801 Forest Run Rd., Suite 201 Madison, WI, 53704-7337(608) 241-2047 • (800) 279-1972

legal hotline: (608) 242-2296 • (800) 799-4468general fax: (608) 241-2901 products/education fax: (608) 241-5168 legal hotline fax: (608) 242-2279 president fax: (608) 242-2267 e-mail: [email protected] website: www.wra.org

Wisconsin Real Estate Magazine™ is published by the Wisconsin realtors® association. Trademark issued pursuant to Wisconsin state statute; federal

trademark is pending.Real estate

notes from the wra

facebook: www.facebook.com/wisconsinrealtorstwitter: www.twitter.com/wirealtorslinkedin: www.wra.org/linkedinyoutube: www.wra.org/youtube

Wra nominating committee seeks candidatesTheNominatingCommitteeisseekingapplicationsforthepositionsof2012-2013ExecutiveCommitteeVicePresident,NARDirectorandWRABoardofDirectorRegionalRepresentative.Pleasenotethat thenumberofopeningsforRegionalRepresentativeisdeterminedbythemembershipasofFebruary28,2012.TheapplicationdeadlineisMarch15,2012.

Region Preliminary Number of OpeningsOne 1Two 2Three 2Four 1Five 0Six 1Seven 1

Areyouoneofthe10,000babyboomersturning65eachday?AreyoutryingtodecidewhatstepstotakewithMedicareandsocialsecurity?TheWRA’spartnerforhealthinsuranceproducts,REGIT,notonlymakesavailableMedicareSupplementandPartDprescriptiondrugcoverage,butthestaffatREGITalsoservesasaresourcetohelpyounavigatetheMedicaresystem.

Individualsturning65shouldstillenrollforMedicarealthoughtheagetoreceivefullsocialsecurityretirementbenefitsisgraduallybeingraised.YouareeligibleforMedicarebenefitsatthefirstofthemonthinwhichyouwillturn65,evenifyourbirthdayfallsattheendofthemonth.YoucanenrollinMedicarethethreemonthsbeforethemonthofyourbirthdayaswellasthreemonthsafter.IfyouwishtohaveMedicarebenefitswhenyouturn65,youshouldapplyinthethreemonthsbeforeyourbirthmonth.

TherearevariousPartsofMedicare:

• PartAcovershospitalinsurance.

• PartBcoversmedicalinsurance.

• PartCisofferedthroughinsurancecompaniesandservesasanalternativetoMedicareSupplementpolicies.

• PartDisofferedthroughinsurancecompaniestoprovideprescriptiondrugcoverage.

ThereisnocostforPartA,butyoupayforPartB.Youarealsoresponsibleforthepremiums,whetheryouelectPartCMedicareAdvantageoraMedicareSupplement,andforPartDprescriptiondrugcoverage.Ifyoudonotelectcertainpartswhenyouarefirsteligible,youwillbesubjecttoapenaltyforlateenrollment.Visitwww.medicare.gov/Publications/Pubs/pdf/11038.pdfforageneraloverviewanddetailsregardingwhichbenefitstoapplyfor,whenandwheretoapply,andwhichPartshavepenaltiesforlateenrollment.

ToreceiveapersonalizedquoteforMedicareplansorforassistancenavigatingMedicare,contactMarilynSmaronorDonnaFreestateatREGITat(800)[email protected].

are you Prepared for medicare?

mark the date for annual convention - september 9-12, 2012TheWRAannualconventionistheWRA’sshowcaseeventoftheyearwherethousandsofREALTORS®gathertogetherfromallcornersofthestateforclasses,networkingandfun!Eachyear,weassembletop-namespeakersfromaroundthecountrytoinspireandenergizeourbusinessandtoprovideupdatesonimportantissuesthatimpactourbusiness.Thisyear’sconventionwillbeheldattheRadissonPaperValleyHotelinAppleton,WI.


If you have worked in other states or know someone in real estate who has, then this is something that you

have heard before loud and clear. For those of you who haven’t seen how our profession is practiced elsewhere, I might humbly suggest that you don’t know how good we have it. Let’s highlight just a few different things that we have here in Wisconsin:

Standard forms: In many parts of the U.S., including our neighbor to the south, each brokerage drafts their own forms, and there is no such thing as a statewide standard form. Our forms feature numerous homeowner and REALTOR® liability protections and are blessed by our state regulators. When each brokerage is free to draft their own forms, the process becomes weighted with legal risks for practitioners, buyers and sellers, and attorney involvement becomes essential.

Listing protection: Yes, believe it or not, “protected buyers” do not exist in many other states. Do buyers view a property, wait until it expires, and cut a deal with the seller? Of course they do.

Property condition reports: We have very carefully crafted property condition reports that clearly identify where the liability for hidden conditions lies. In other states, this is less clear with REALTORS® unknowingly assuming some degree of liability.

Attorney assistance with closings: In Wisconsin, attorneys generally act as team

members with specific roles to play in the transaction. In many other states, the offer to closing process is shepherded by and almost entirely under the purview of attorneys with REALTORS® acting in a much smaller role.

This pro-REALTOR® and pro-consumer environment did not happen by accident. It came about through the tireless efforts of generations of REALTORS® and association staff communicating important issues to legislators, defending our positions in the court of law and public opinion, supporting good legislation and defeating bad legislation. And, yes, an important part of this effort is helping elect legislators who are pro-property rights and pro-REALTOR® in orientation. As professionals in an industry heavily regulated by state government, we have an obligation to get involved in state politics to protect the interests of ourselves and our homeowner clients. We don’t have the luxury of standing aside and watching events unfold.

We owe a debt of gratitude to those who came before and helped make Wisconsin the best state in the country to buy, sell or broker real property. Your WRA board, staff and officer team are committed to keeping that legacy renewed into the future.

Respectfully,

Robert KeefeChairman’s Corner

Rob Keefe

It’s Great to Practice Real Estate in Wisconsin!


monthly wisconsin housing reportnews

>

ByDaviDE.Clark,EConomist,C3statistiCalsolutions

HoME SalES UP In JanUaRy bUT MEdIan PRIcES dEclInE

View all housing statistics at www.wra.org/housingstatistics

Home sales in Wisconsin continued to improve in January, with sales up a substantial 10.8 percent

compared to January 2011, according to the latest monthly report by the Wisconsin REALTORS® Association (WRA). The report also showed a decline in home prices, which fell 7 percent to $119,500 over the same period.

The report notes that Wisconsin home sales are highly seasonal, and few buyers historically choose to close on homes in January. “Last year, just over 5 percent of home sales took place in January, which is about right for what is usually the slowest month of the year for sales volume,” said Rob Keefe, Chairman of the WRA board of directors. A normal seasonal pattern for Wisconsin shows sales volume steadily growing through June; tapering off slightly in the latter part of the summer, and then slowing throughout the remainder of the year. “While we wouldn’t want to draw too many conclusions from strong January sales figures, it is encouraging to see some the strong growth patterns of the last three months continue into 2012,” said Keefe.

Four of the six regions within the state experienced solid growth in home sales

between January 2011 and January 2012, with the remaining two down over the period. The strongest growth was seen in the Northeast region, where home sales rose 22.8 percent over the period. Also up by double-digits was the South Central region, where sales increased 16.7 percent in January compared to the same month last year. Home sales rose 10.3 percent in the West, and they were up 10.1 percent in the Southeast region. “It’s tempting to attribute these strong sales numbers to the relatively warm winter we’ve had this year, but most closings are scheduled weeks in advance,” said Keefe. Home sales in the North region were down 1.6 percent, and sales in the Central region fell more substantially, down 6.7 percent, over the period.

The report also showed another reduction in the statewide inventory of unsold homes. The January figure stands at 11.8 months of unsold homes, meaning that it would take nearly a year to sell the current inventory of homes available for purchase given the average pace of sales over the last year. “In the 20 months that we’ve tracked this measure, this is the first time we’ve been below 12 months, which is a good sign,” said WRA President and CEO, Michael Theo, who noted that new listings are also down, which should continue to bring

inventories down. “In a balanced market, we see about six months of unsold inventory, so this is still very much a buyer’s market,” said Theo.

Consumers do remain skittish, as indicated by a modest decline in January consumer confidence reported by the Conference Board. “With all of the uncertainty in the world economy and talk of a possible meltdown in Europe, that’s not surprising,” said Theo. Still, it’s important to note that with median prices down 7 percent statewide over the last year, and 30-year fixed-rate mortgages in the area of 4 percent, home affordability in the state is very high. The Wisconsin Housing Affordability Index, which shows what percentage of a median-priced home that a buyer with the median family income can afford, stood at 272 in January, which is substantially higher than the index value of 243 back in January of last year. “There are some incredible deals for buyers who can obtain credit, and anyone even remotely considering a home purchase will find great opportunities in this market,” said Theo.

For more information, contact David E. Clark, Economist, C3 Statistical Solutions Office phone: (414) 803-6537

WISCONSIN HOUSING STATISTICS MONTHLY ACTIVITY - JANUARY 2012 Statewide JAN-2012 JAN-2011 % Change YTD-2012 YTD-2011 % Change

NewListings 7,175 8,587 -16.4% 7,175 8,587 -16.4% ClosedSales 2,862 2,584 10.8% 2,862 2,584 10.8%MedianSalesPrices $119,500 $128,508 -7.0% $119,500 $128,508 -7.0%

Median Price Existing Home Sales Region JAN-2012 JAN-2011 % Change JAN-2012 JAN-2011 % Change

Southeast $124,000 $134,200 -7.6% 1,059 962 10.1%SouthCentral $135,000 $145,950 -7.5% 602 516 16.7%West $125,950 $117,000 7.6% 290 263 10.3%Northeast $113,200 $117,400 -3.6% 490 399 22.8%Central $99,000 $109,900 -9.9% 167 179 -6.7%North $90,000 $116,500 -22.7% 250 254 -1.6%


Cause and Effect: The Home Inspection and Mortgage Relationship

ByCorilamont

Two of the most common contingencies in a residential real estate transaction are financing and home inspection, and often one has a direct effect on the other. This article will focus on

a few select situations that are a direct result of the relationship between the financing and home inspection contingencies.

What Happens When the Lender Suggests an Improper Resolution to a Discovered Defect?

Let’s look at the following example. An offer includes a home inspection contingency, and the home inspector’s report notes an issue with the basement walls; there is a structural soundness problem that will cost approximately $15,000 to $18,000 to fix. There are a number of resolutions that may be used.

One possible resolution, the seller and buyer agree in an amendment to the offer that the buyer will receive a $5,500 cashier’s check from the seller at closing, accept the building as-is, and pay the balance for the repairs. On occasion, however, the lender may not agree with the parties’ resolution, and the lender may provide a resolution.

For instance, one lender resolution, requiring that the repairs be made before the loan will be funded. Sometimes however, the lender’s suggested resolution may raise a red flag for the licensees and the parties. For example, when the lender suggests that the buyer and seller handle the repairs separately outside of the transaction without a trace of evidence to be discovered by the underwriter is mostly likely fraud. It would appear that such suggestion to address the basement issue outside of the transaction paper


trail that a likely frauid is being committed on the underwriter/secondary market.

Licensees cannot participate in the act of fraud under Wis. Admin. Code § REEB 24.085, “False portrayal of interest, prohibited. No licensee shall draft or use any document which the licensee knows falsely portrays an interest in real estate.”

In addition, the licensee may also have the duty to disclose any side deals between the parties under Wis. Admin. Code § REEB 24.07 (4): “Disclosure of Side Agreements. A licensee, when engaging in real estate practice, who becomes aware of the fact that a party to the transaction has not disclosed that party’s entire agreement regarding the transaction to that party’s secured lender, shall disclose this fact, in writing and in a timely manner, to the party’s secured lender.”

If the licensee warns the parties and the lender about continuing forward with this apparent fraud, and the parties continue without heeding the licensee’s warning, the licensee should cease all participation. When a fraud is being perpetuated, the Wisconsin Department of Financial Institutions should be notified. For more information, including the complaint process, visit www.wdfi.org.

Why Does the Lender Care About the Condition of the Property?

Although the lender clearly has a vested interest in the condition of the property, the lender’s greater interest is in the appraisal and the appraised value of the property. The home inspection is to help the purchaser understand the condition of the property by hiring an expert to help them identify concerns relating to the property’s condition. To understand more the roles of the home inspector review Michael Von Gunten’s Article “Rules and Regulations Governing the Home Inspection Industry in Wisconsin” on page 18.

The appraisal, on the other hand, is to help lenders understand the condition of the property as it relates to the property’s value in relationship to the amount of money being loaned to the purchaser. In a traditional mortgage transaction, the property is the collateral for the loan; meaning if the borrower defaults on the mortgage, the lender may force the sale of the property for repayment of the debt. Therefore the lender needs confirmation from the appraiser that the value of the collateral is equal to or exceeds the loan amount. While the property

“In a traditional mortgage transaction, the property is the collateral for the loan; meaning if the borrower defaults on the mortgage, the lender may force the sale of the property

for repayment of the debt. Therefore the lender needs confirmation from the appraiser that the collateral is worth

the amount of money of the mortgage.”


condition is obviously not the only factor an appraiser takes into account, it does play a role in the appraisal process.

Is the Home Inspection Necessary in a Transaction with a FHA and VA Loan?

Another element to highlight in the home inspection and lender relationship is the role the condition of the property plays in specific types of loans, such as Federal Housing Administration (FHA) and Veterans Administration (VA) loans.

FHA loans require a home appraisal that is similar to a home inspection. The FHA appraisal does not guarantee the condition of the home and therefore it is imperative that the buyer does not rely on the FHA appraisal in place of the Wisconsin home inspection and should still include a home inspection contingency so that the buyer has an independent third party providing an unbiased opinion about the condition of the home.

In an FHA loan, it’s the responsibility of the FHA appraiser to confirm that the property meets FHA standards. The appraiser will note property condition defects on the property and suggest repairs or changes on the FHA appraisal report. Often these defects must be repaired as a condition of the FHA loan. FHA appraisers are not experts as to roofs, basements and structural issues.

Buyers that are receiving, for instance, an FHA loan should understand that just because the FHA appraiser did not highlight any specific condition issues with the property, it does not mean that the property is defect-free. If the buyer does not include a home inspection contingency, the buyer will not be afforded

the rights provided by the contingency. Licensees should make sure the buyers understand the importance of having a home inspection on every property they are purchasing, including those funded by FHA and VA loans.

Rehab and Repairs

There is hope, however, for purchasers looking to buy a home that requires repairs. The Department of Housing and Urban Development (HUD) offers the 203(k) program. HUD proclaims that the 203(k) program is an FHA-insured loan specifically designed for homebuyers planning on repairing and occupying “handyman-specials and fixer-uppers.” The 203(k) program allows borrowers to purchase or refinance a property and include the cost of repairs and improvements in the loan.

Below are some highlights of the program from portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/203k/sfh203kc:

In addition to the down payment requirement of approximately 3.5 percent of the property acquisition and repair costs, the 203(k) loan includes the following steps:

• A potential homebuyer locates a fixer-upper and executes a sales contract after doing a feasibility analysis of the property with his or her real estate professional. The contract should state that the buyer is seeking a 203(k) loan and that the contract is contingent on loan approval based on additional required repairs by the FHA or the lender.

• The homebuyer then selects an FHA-approved 203(k)


lender and arranges for a detailed proposal showing the scope of work to be done, including a detailed cost estimate on each repair or improvement of the project.

• The appraisal is performed to determine the value of the property after renovation.

• If the borrower passes the lender’s creditworthiness test, the loan closes for an amount that will cover the purchase or refinance cost of the property, the remodeling costs and the allowable closing costs. The amount of the loan will also include a contingency reserve of 10 to 20 percent of the total remodeling costs and is used to cover any extra work not included in the original proposal.

• At closing, the seller of the property is paid off and the remaining funds are put in an escrow account to pay for the repairs and improvements during the rehabilitation period.

• The mortgage payments and remodeling begin after the loan closes. The borrower can decide to have up to six mortgage payments (PITI) put into the cost of rehabilitation if the property is not going to be occupied during construction, but it cannot exceed the length of time it is estimated to complete the rehab.

• Escrowed funds are released to the homeowner during construction through a series of draw requests for work that is completed. To ensure completion of the job, 10 percent of each draw is held back; this money is paid after the homeowner informs the lender that the work has been completed

and after the lender determines there are no additional liens on the property.

What is the Role of the Real Estate Licensee?

Lastly, we wrap up the discussion with the timeless scenario often presented to the WRA Legal Hotline attorneys: a defect discovered during the home inspection and the deal has fallen apart. If the seller does not disclose this defect to the next buyer, must the listing agent disclose?

If a licensee knows or is aware of information suggesting the possibility of a material adverse fact, the answer is yes. Wis. Admin. Code § REEB 24.07 (3) states that the licensee will be practicing competently if he or she makes timely written disclosure if the information suggesting the material adverse fact to all parties to the transaction, recommends the parties obtain expert assistance to inspect or investigate for the possible material adverse fact, and, if directed by the parties, draft appropriate inspection or investigation contingencies. The duty to disclose has priority over any duty to the client.

For further discussion, see the following Legal Updates: the August 2004 Legal Update, “Effective Home Inspections,” at www.wra.org/LU0408; the October 1999 Legal Update, “Home Inspections,” at www.wra.org/LU9910; and the National Association of REALTORS® field guide for Home Inspections may be viewed at www.realtor.org/libweb.nsf/pages/fg311.

Cori Lamont is Director of Brokerage Regulation and Licensing for the WRA.

“In an FHA loan, it’s the responsibility of the FHA appraiser to confirm that the property meets FHA standards. The appraiser will note defects and conditions on the property and suggest repairs or changes on the FHA appraisal report.”


legal

did you Know? basic Mortgage Traps and Pointers

ByDEBBiConraD

Mortgage Basics

What is a mortgage? In legal terms, a mortgage is a conveyance of a security interest in real property to secure the payment of a debt, typically evidenced by a mortgage note. The note imposes personal liability for the amount of the note on the person or persons who sign the note. The mortgage is a lien on the property.

From a REALTOR®’s perspective, a mortgage may be viewed in a variety of ways: as that “necessary evil” that the buyer typically needs to arrange so that the buyer can purchase a property, or maybe as part of the long lists of items printed in a title insurance commitment, or the major obstacle in the way of a smooth short sale. There is no end to the trouble that mortgage loans can cause, but REALTORS® can’t conduct a successful real estate practice without them!

There are two basic varieties of mortgages: fixed-rate and adjustable-rate mortgage (ARM). Fixed rate payments are steady and predictable, while the ARM payments start at a much lower rate yet pose the risk of dramatically higher payments later on. Beyond that basic distinction, mortgages comes in a whole array of

varieties including FHA loans, VA loans, interest-only loans, home equity credit loans, Rural Development loans, reverse mortgages and so on.

For those embarking on the quest for a mortgage loan, or assisting a party in that endeavor, there are many traps for the unwary. The following practical pointers may help them steer clear of pitfalls, minimize the pain and derive the optimum benefits from the mortgage loan.

Consumer Misconceptions

Buyers, particularly first-time buyers, may often have misconceptions about the mortgage loan process, including the following:

1. Mortgage lenders are required to give borrowers the lowest rate available. That would be wonderful, but currently there are no federal or state laws requiring a mortgage lender to give a borrower the best rate available.

2. The principal balance will go down each month as long as the borrower makes the required monthly payments.


While this is true with a fixed-rate mortgage, with some option-ARMs and interest-only loans with teaser rates, for instance, the balance may not fall and instead may go up. This is the result of negative amortization that occurs when monthly payments cover only a part of the monthly interest owed and none of the principal. The interest not paid is added to the principal balance and thus the balance due actually increases.

3. The monthly payment will stay the same from month to month. Unfortunately a borrower’s monthly payments could increase dramatically, if the borrower does not have a fixed-rate mortgage loan. Interest-only loans and option-ARMs feature lower initial payments but also carry a significant risk of payment shock – a large and sudden increase in the monthly payment amount when, for example, the interest rate adjusts or the interest-only period ends.

4. If the lender is willing to lend the money for the home, then the borrower must be able to afford it. While reputable mortgage lenders will not lend beyond a person’s means, some others will. They may not consider the borrower’s ability to repay the loan over the long haul.

5. Discounted interest rates are a good deal because they lower the monthly payments. Paying “discount points” or a “discount fee” in return for a lower interest rate may be beneficial in the short term, but the lower interest rate may only last until the first payment amount of interest rate adjustment.

MORTGAGE TERMINOLOGY 101

Adjustable-Rate Mortgage (ARM):Amortgagewherethe

interestratesaretiedtoaninterest-rateindex.Iftheindexrises

orfalls,themortgageinterestrateandthemonthlypayment

amountgoupordownaccordingly.

Debt-to-Income Ratio (DTI): Thisratiorepresentsmonthly

fixedexpensesdividedbygrossmonthlyincome,whichisthe

incomebeforetaxesanddeductions.Thelenderusesthisratio

tohelpdeterminehowmuchtheywilllendapotentialborrower.

Ifthepercentageisgreaterthan36,theratiocouldnegatively

impacttheabilitytoobtainamortgageloanbecausethelender

considersthattheborrowerhastoomuchdebt.

Interest-Only Mortgage: Theborrowerisrequiredonlyto

makeinterestpaymentsforaspecifiednumberofyears.When

thisinitialperiodexpires,themortgagemaybegintofully

amortizeandmonthlypaymentsofprincipalandinterestmake

thepaymentamountincreasesignificantly.

Loan-to-Value Ratio (LTV):Thisratiocomparesthevalueof

theloanwiththefairmarketvalueofthehome.

Negative Amortization:Ifthemonthlypaymentamountdoes

notcovertheinterestowedeachmonth,sometimesasthe

resultofateaserrate,theunpaidinterestbecomespartofthe

principal.Thus,theprincipalbalanceincreasesandmay

eventuallyexceedwhatwasborrowedinthefirstplace.

Option-ARM:Thisloantypicallyofferstheborrowerthree

differentmonthlypaymentoptions:1)paymentsofprincipaland

interest,2)interest-onlypayments,or3)minimummonthly

paymentsthatdon’tcoverthemonthlyinterestsuchthatthe

unpaidinterestisaddedtotheprincipalloanamount.Toensure

thattheloanisrepaidwithintheagreed-upontime,theseloans

“recast”afterasetnumberofyears(usuallythreeorfive)and

monthlypaymentsincreasesignificantlysothattheloanfully

amortizes.

Payment Shock:Paymentshockisalargeandsudden

increase–sometimesasmuchasdoubleortriple–inmonthly

payments,oftenseenwithinterest-onlyloansandoption-ARMs.

Private Mortgage Insurance (PMI):PMIisrequiredbylenders

whenaborrowerhaslessthan20percentdown.PMIprotects

thelenderfromdefaultlossesintheeventaloanbecomes

delinquent.

Teaser Rates:Thesearelowratesthatlendersoffertomake

mortgageproductsmoreattractive.Whenthe“teaserrate”

periodexpires,thelenderraisestheinterestrateforthe

remainderoftheloanperiod.


Mortgage Practice Pointers

Lock-In Policy

Savvy consumers ask the lender to “lock your loan,” which is basically an agreement from the lender that states that the loan applicant is entitled to a certain interest rate through a certain closing date, and get the lock in writing. Most companies have a rate lock form that spells everything out. If the lock expires, any changes will not be to the applicant’s benefit and the applicant will likely need to accept a higher rate. The lender generally cannot increase the loan fees to cover the cost of the higher rate.

PMI Tips

If borrowers put down less than 20 percent on a house, they should expect to be required to purchase private mortgage insurance (PMI), which protects the lender in the event the borrower defaults on the mortgage loan. That means the borrower will have to pay PMI premiums, roughly $50 to $100 per month on average, in addition to the monthly mortgage payments.

• Getting the PMI tax deduction Starting with loans issued or refinanced in 2007, and continuing through 2011, borrowers can deduct each year’s premiums paid on PMI for the principal residence and for a non-rental second home. Unless it is extended again, the deduction won’t be available beyond the 2011 tax year. In general, the borrower can deduct PMI premiums in the year paid if the borrower itemizes deductions on his or her income tax return. However, if the borrower prepays PMI premiums for more than one year in advance, the borrower can deduct only the part of the PMI payment that will apply to that year. Rules can vary for mortgage insurance provided by the FHA, VA and Rural Housing Service, so it is always best to consult a tax adviser with any questions. The deduction begins to phase out once the adjusted gross income reaches $100,000 ($50,000 for married filing separately) and disappears entirely at an AGI of $109,000 ($54,500 for married filing separately). Depending on the specific circumstances, this can potentially save a few hundred dollars each year. For more information, see the Internal Revenue materials at www.irs.gov/publications/p936/ar02.html.

Types of Mortgage Loans

Rural Development:www.rurdev.usda.gov/HAD-HCFPLoans.html

FHA loans:www.hud.gov/buying/loans.cfm[TheFederalHousing

Administration(FHA),whichispartofHUD,insurestheloan,so

thelendercanoffertheborrowerabetterdeal,aswellaslow

downpayments,lowclosingcostsandeasycreditqualifying.]

VA loans:www.benefits.va.gov/homeloans

Home Equity Credit Lines:www.ftc.gov/bcp/edu/pubs/

consumer/homes/rea02.shtmandwww.federalreserve.gov/pubs/

equity/equity_english.htm[Ahomeequitylineofcreditisaform

ofrevolvingcreditinwhichthehomeservesascollateral.]

Reverse mortgages: www.ftc.gov/bcp/edu/pubs/consumer/

homes/rea13.shtm[Those62yearsoroldercanconvertpartof

theirhomeequityintocashwithoutselling.]

Interest-Only and Option-Payment ARMs:www.fdic.gov/

consumers/consumer/interest-only/index.html


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• PMI cancellation Canceling the PMI as soon as a borrower is entitled can save thousands of dollars. Under the Homeowners Protection Act (HPA) of 1998, when a home is purchased after 1999, the lender is required to automatically cancel the PMI once the mortgage is paid down to a 78 percent (0.78) loan-to-value ratio (LTV), or once the homeowner has 22 percent equity. To figure the LTV, divide the outstanding loan amount by the original price of the home. When the LTV reaches 80 percent, the homeowner can submit a written request to the lender to end the PMI. This can be a lengthy process and the lender may require an appraisal or other property valuation to confirm the property has not declined in value. See the Federal Reserve materials at www.federalreserve.gov/boarddocs/caletters/2004/0405/CA04-5Attach1.pdf for more information.

Debbi Conrad is Senior Attorney and Director of Legal Affairs for the WRA.


best of the legal hotline with tracy rucka

Hotline Q and A relating to the “who,” “what” and “when” of the Home Inspection Contingency.

What is covered in the Inspection Contingency?

The broker and buyer are sitting down to write the offer. The seller’s RECR states that there has been water in the basement, and the buyer and broker observed cracks in the basement walls. The buyer wants a home inspection but also wants an engineer or foundation specialist to look at the basement. Can the broker just use the Inspection Contingency?

The Inspection Contingency in the WB-11 offer is a three-prong contingency that allows for: 1) a home inspection conducted by a Wisconsin-registered home inspector, 2) a component inspection conducted by a qualified independent inspector or an independent qualified third party, and 3) a follow-up inspection resulting from the results of one of the aforementioned inspections. The broker may include the foundation or basement inspection as a component inspection at lines 413-414 in the Offer to Purchase. Alternately, it is also possible that the buyer uses the Home Inspection Contingency for the home inspection and negotiates an independent inspection contingency for the foundation. A separate contingency would be used if, for example, the buyer and seller wanted a different timeline for the inspection, a different choice about right to cure or not, a limit on costs for potential repair, or a different definition of defect.

What will be inspected at the follow-up inspection?

A buyer’s Home Inspection Contingency provided for the general home inspection and then listed the roof, electrical and furnace as component inspections. The buyer had the home inspection and gave notice of defects to the seller. The seller has the right to cure and now has 10 days to decide if they will cure or not. The buyer, still within the time allowed for the inspection, is asking for access to the property for follow-up inspections saying they have the right to have additional inspections done. Because the seller has received a notice of defects, the seller is refusing access for further inspections. Can the seller refuse access?

The terms of the WB-11 Residential Offer permit a buyer to have follow-up inspections if the inspections are recommended in a written report resulting from an authorized inspection, as long as those inspections are completed before the deadline on line 421 of the buyer’s offer. So long as the home inspection report recommended follow-up inspection - not testing - the buyer may conduct the follow-up. The right to have follow-up inspections is not dependent on whether the buyer has already provided a notice of some defects. Additional inspections may reveal additional defects. In order to prevent additional inspections, the seller could make the offer null and void with the delivery of a notice to the buyer stating


the seller will not cure, since the buyer issued a notice of defects and the seller has the right to cure.

The buyer, by initiating the notice of defects, gave the seller the power to terminate the offer by electing not to cure.

What does the buyer use: an Amendment or Notice?

THE BUYER’S CHOICE

The broker wrote an offer as a buyer’s agent on an FSBO condominium. The home inspection gave the sellers the right to cure. The buyers are objecting to several things in the inspection report that the inspector noted as needing repair or replacement immediately. The buyers submitted an amendment to the sellers for a $5,000 price reduction in the purchase price to compensate for the items that the inspector noted as needing immediate repair or replacement. The sellers rejected the amendment the day before the Inspection Contingency expired.

The buyers prepared a notice of defects the day the Inspection Contingency expired and delivered it before the deadline. The broker told the buyers that the sellers will have 10 days to decide if they want to cure or negotiate an amendment to the offer. The sellers are saying that the buyers did the notice and amendment in the wrong order; the notice should be given first so that the sellers know what the buyers want cured followed by an amendment to negotiate the cure. Who is right and who is wrong?

It is the buyer’s choice to initiate a notice or an amendment and in what order. Per the offer, the buyer is obligated to promptly provide the seller with a copy of the home inspection report, regardless if the buyers will give an amendment or a notice of defects or purchase the property in its current condition. There are no rules regarding what must be done in what order in the time before the contingency deadline. If the buyer is unwilling to have the seller terminate the offer, the buyer will not give a notice of defects when there is a seller right to cure. By delivering the notice, the seller can terminate the deal. So long as there is time in the contingency, the buyer may try an amendment based on information contained in the home inspection report. If the seller agrees, the parties move toward closing; if the seller does not, the buyer may try a different amendment or notice as time allows. The decision to give a notice or amendment must be made on a case-by-case basis, taking the buyer’s situation into consideration.

THE SELLER’S CHOICE

After the home inspection, the buyer gave the seller a notice of defects and the seller has the right to cure. Can the seller try to negotiate by using an amendment before the end of the 10-day timeline, and then use a notice if necessary like the buyer can before serving their notice regarding the home inspection?

Yes. At any time, either party may attempt to modify the terms of the contract by amendment. If the amendment is not agreed

upon, then the party still has, given the timing in the offer, the options to give notice per the offer. If the parties agree to amend, the amendment should show that the parties agree that the notice of defects is withdrawn, otherwise the offer would become null and void by passage of the 10-day timeline.

In the described scenario where the buyer has delivered a notice of defects, the seller has 10 days from the delivery to reach an agreement by amendment with the buyer, give notice of the seller’s election to cure the listed defects, give notice that the seller will not cure, or the seller may do nothing. If the seller gives notice that they will not cure, or if the seller does nothing and the 10 days pass, then the offer will be null and void.


hotline highlights cont’d

What are the testing standards?

A selling agent provided a notice of defects for a testing contingency due to a high level of radon. The agent understands that with a Home Inspection Contingency, if notice is served to the seller, the seller has the option to declare the offer null and void. Is this also the case for a testing contingency? The buyer gave notice, but wants the property. However, the seller has a better offer in the wings. How to proceed?

Don’t assume what the standard may be for any testing contingency since each contract must be reviewed to determine the particular terms and conditions that the parties have included - in this case, the Radon Testing Contingency. In general, there are three ways such a contingency might be drafted: the seller has no right to cure, the seller has a right to cure, or the seller is obligated to cure.

If the offer includes a typical “seller right to cure,” the buyer must understand that by delivering a notice regarding elevated radon levels, the buyer is giving the seller the ability to choose to either cure the defect, by mitigating the radon, or terminate the offer. A seller with another buyer may choose not to cure and make the offer null and void. Most often, a buyer cannot withdraw the notice without the seller’s permission. Therefore, a buyer delivering the notice must be willing to lose the property.

The parties may consult with legal counsel to review the specific testing contingency used and discuss the parties’ options.

Who attends the inspection?

Since home inspectors are registered, does a licensed real estate agent need to be present at the home inspection?

There is no one right or wrong analysis or answer on this issue because there are pros and cons to justify attending or not attending the inspection. The Department of Safety and Professional Services has not taken a position on the issue, other than that the Administrative Code rules do require real estate licensees to make a reasonable inspection of the property during the course of a transaction. See Wis. Admin. Code § REEB 24.07(1).

As far as agents who do accompany home inspectors, there are dangers of potential liability coming from different directions. If the agent actually starts assisting or supervising the home inspector, the agent could face possible liability for negligence for a defect that is missed, as was the case in a 2002 REALTOR® Magazine article titled “Pass the Baton: Do Your Job and Let Inspectors Do Theirs.” Liability may also arise in the context of negligent hiring or supervision of an inspector or other professionals.

An agent accompanying an inspector could also face problems if the home inspector oversteps his or her authorization and, for example, engages in sampling for radon or mold tests. The agent has responsibility to stop any unauthorized procedures. On the other hand, if the agent is not there, no one is on-site to monitor the


inspector - the fact that they must be registered does not eliminate the possibility that an inspector might overstep his or her authority. One way to control the scope of the inspector’s activity is to have the broker attend the showing or have the buyer who hires the inspector enter into a contract that specifically sets the parameters of the inspection.

Timing?

The buyer and seller have an accepted offer that includes a Closing of Buyer’s Property Contingency and a 14-Day Home Inspection Contingency. At the time of acceptance, the buyers do not have an accepted offer on their home. The selling agent has indicated that he believes the 14 days for inspection notice delivery begins when the buyers sign off on their home sale contingency. The listing agent thinks the date of inspection runs from date of offer acceptance, without regard to the buyer’s home sale contingency. Please advise.

As per line 423 of Inspection Contingency in the WB-11 Residential Offer to Purchase, “This contingency shall be deemed satisfied unless Buyer, within ___ days of acceptance ...” The WB-11 also states on lines 173-175, “‘Deadlines,’ expressed as a number of ‘days’ from an event, such as acceptance, are calculated by excluding the day the event occurred and by counting subsequent calendar days.” Therefore, unless otherwise stated in the contract, the Inspection Contingency runs from the date of acceptance, not the date of the Closing of Buyer’s Property Contingency.

The buyer is thinking about writing an offer on a short sale property. Can the buyer wait until the short sale is approved to have all the inspections and tests?

The timing of any tests and inspections is a matter of negotiation. When the cooperating broker drafts the offer and the listing broker presents the offer, the brokers should understand the buyer’s and seller’s concerns regarding the timing. The buyer does not want to pay for the inspections unless the buyer has confirmation that the lender will approve the short sale. There are potentially two ways to accomplish this: have the inspection and testing contingencies time frame run from lender approval of the short sale, or alternately, to have the inspections paid for by the seller. Given it is a short sale, the seller may not have the funds to pay for an inspection or repair any defects. Therefore, the seller would want the inspections paid for by the buyer and conducted earlier in the transaction to identify defects that need repair or allow the seller to terminate if they will not repair. Even if the seller is selling “as-is” and does not intend to repair any defects, the buyer will want to conduct inspections to know the condition of the property.

End of Useful Life

Is a roof that is considered to be at the end of its useful life, but is not leaking and is still working, considered a “defect?” If a buyer gives notice in regard to the roof, can they remove themselves from the contract under the Home Inspection Contingency?

The terms of the Home Inspection Contingency in the WB-11 Residential Offer to Purchase allow the buyer to give a notice of defects if the home inspection identifies defects. A “defect” is defined on lines 182-184 of the WB-11 Residential Offer to Purchase as “a condition that would have a significant adverse effect on the value of the property; that would significantly impair the health or safety of future occupants of the property; or that if not repaired, removed or replaced would significantly shorten or adversely affect the expected normal life of the premises.” Pursuant to the Inspection Contingency, the written Notice of Defects need only contain the list of those defects identified in the written home inspection report to which the buyer objects. The parties may review the terms and conditions of the home inspection report to determine if the inspector considered the age of the roof as a defect. The fact that an item is old does not, per se, make the item a defect, however other roof conditions may factor into the evaluation.

If the seller does not have the right to cure, the offer will become null and void if the buyer delivers timely a written Notice of Defects accompanied by a copy of the home inspection report. If the seller has the right to cure and the buyer delivers a Notice of Defects, the seller may choose to cure the listed defects or to allow the offer to become null and void.

Resources:

November 2009 Legal Update, “WB-11 Residential Offer to Purchase - 2010 Edition” at www.wra.org/LU0911.

February 2007 WRA Broker Supervision Newsletter, “Proper Use of the Home Inspection Contingency” at www.wra.org/bsnFeb07 .

August 2004 Legal Update, “Effective Home Inspections” at www.wra.org/LU0408.

Tracy Rucka is Director of Professional Standards and Practices for the WRA.


RUlES and REGUlaTIonS Governing the Home Inspection Industry in WisconsinBytomkrusEanDmiChaElvonguntEn

The Wisconsin Association of Home Inspectors (WAHI) is a nonprofit organization formed in 1994. Founded primarily in response to state licensing proposals, WAHI helped to ensure

that any new regulations included language establishing standards of practice to protect the independence of home inspectors as well as strong ethical requirements to protect the consumer.

State Law Sets Standards

The state standards of practice are the legal guidelines by which all Wisconsin home inspectors must conduct their inspections. By law, the inspection is a non-invasive and non-technical review of the home. Home inspectors are required to “observe and describe” in an objective way, regardless of the personal or professional ramifications of such commentary.

A quick glance at the state standards can help Wisconsin REALTORS® understand in detail what home inspectors do every day. The following quotations and summaries are from Wisconsin Chapter RL 134.01 through 134.04.

According to state statute, “A home inspector shall perform a reasonably competent and diligent home inspection of the readily accessible installed systems and components ... to detect observable conditions of an improvement to residential real property. A reasonably competent and diligent home inspection is not required to be technically exhaustive.”

The standards also state clearly what inspectors are not required to do: offer a warranty, move snow or leaves or personal items, inspect for pests

or hazardous substances, or predict future conditions, as well as nine other similarly explicit limitations.

However, home inspectors are clearly permitted to go beyond the state standards or exclude a component if requested by the client.

Observe and Describe

The law goes on to describe the structural and mechanical components included in a home inspection, such as roofs, exteriors, interiors, foundations, columns, flooring systems, plumbing and electrical systems, heating and central air condition systems, and insulation and ventilation systems.

For each component, the standards describe in detail what inspectors must observe and describe. As an example of this feature in the standards, the roofing section notes, “A home inspector shall observe and describe the condition of all of the following: Roof coverings, including type. Roof drainage systems. Flashings. Skylights. Chimneys and roof penetrations. Signs of leaks or abnormal condensation on building components. A home inspector shall describe the methods used to observe the roof.”

Also in the roofing specifics, the standards clearly state what a home inspector is not required to do: “Walk on the roofing. Observe attached accessories, including, but not limited to, solar systems, antennae and lightning arrestors. Observe internal gutter and downspout systems and related underground drainage piping.”


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As you can see by this example, the standards are very specific as to what home inspectors must report on and what they are not required to do or report on. Again, some inspectors do exceed the basic standards in this section by carrying a ladder, and others go farther by walking on the roof when possible.

The Written Report

The standards also state what the inspection report must contain, and how it is to be delivered. A home inspector must submit a written report to the client that lists both 1) the items the inspector was required to inspect, and 2) the items that the inspector did inspect. The inspector must describe the condition of those items, including the condition of any items that, if not repaired, will have “significant adverse effect” on the life expectancy of the item. And the report must list any “material adverse facts that the inspector has knowledge of or has observed.”

The standards also state what the inspector is not required to report on, such as the life expectancy of items, the reason for a major repair, or the methods, materials or cost of any repair.

The standards also state very clearly that an inspector may not report, either in writing or verbally, on the market value or marketability of a property or whether a property should be purchased.

Inspectors Are Consumer Advocates

In our view, the best home inspectors will have two undying characteristics: the understanding that building science is constantly changing, and the humility to never stop learning.

A good home inspector knows that listening and learning come first. When visiting with WAHI members across Wisconsin, we found that these inspectors are committed to both professionalism and continuing education. Above all, WAHI members strive to do the right thing. We speak for the organization when we say that members understand that creditability is a precious commodity that is easily lost and not readily regained.

WAHI has grown a great deal since 1994. What began as a small group of committed inspectors has grown into a consumer advocacy organization where inspectors’ desire for education and sharing our professional experiences serves both our clients and the real estate community as a whole. This commitment to education and professional growth makes hiring a WAHI inspector a wise choice for all parties involved in any real estate transaction.

Tom Kruse is the past President of the WAHI and Michael Von Gunten is the present WAHI President.


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Broker Pre-license CourseApril 23-25, 2012WRA Headquarters - Madison

Broker pre-license education may increase from 36 to 72 hours, effective July 1, 2012. Also on the horizon is a proposed change to job experience requirements to become a broker. Under the proposal, Wisconsin broker applicants would be required to show two years of documented experience as a real estate salesperson within the four years preceding application.

This course covers contracts, trust accounts, escrow and closing statements, personnel business ethics, fair housing, specialty areas and more. Completion of sales pre-license education and passing the real estate sales exam are prerequisites. Completion of the Broker Pre-license Course, passing the broker exam and receiving the broker’s license fulfill the 2011-2012 Continuing Education credits. Fore more, visit www.wra.org/Broker_career.

2-Day ABR CourseMarch 21-22, 2012WRA Headquarters - Madison

Do you like working directly with buyer clients? If so, this course is for you! You’ll discover how to represent buyer clients with the same level of service that sellers enjoy. You’ll also learn about methods for building your buyer representation business. Complete two of the three days required for the ABR designation and fulfill nine hours of the 2011-2012 CE with one course. Visit www.wra.org/ABRcourses for additional information.

Illinois Changes Real Estate License RequirementsDo you hold an Illinois sales or broker real estate license? If so, please note that Illinois licensing requirements have changed. No longer will there be a salesperson license; only a broker license for selling/non-managing broker or managing broker. Licensees must transition to a new broker license type by the April 30, 2012 renewal date.

Through a partnership with the Illinois Association of REALTORS®, home study courses for transitioning from salesperson to broker or broker to managing broker are now available for purchase through the WRA’s website at www.wra.org/OutofStateLicensee. No transition course is required for licensees holding a broker license who wish to remain selling brokers. However, they must complete 12 hours of Illinois continuing education prior to April 30, 2012.

BPOs: The Agent’s Role in the Valuation ProcessApril 20, 2012WRA Headquarters - Madison

Whether you are experienced at preparing broker price opinions (BPOs) or are new to the business, this new NAR certification course will provide you with the knowledge and skills for evaluating properties, applying alternative valuation techniques, and efficiently generating accurate and professional reports. This one-day course is required to earn the certification. With this course, you will be able to:

• Prepare accurate and professional BPOs.

• Evaluate market valuation tools for the most productive preparation of BPOs.

• Identify and weigh all significant factors influencing the creation of a useful valuation.

In addition to the core course, a free one-hour webinar is required, which must be taken after completing the one-day core course.

CRS Elective: Silver Bullet SolutionsMay 3, 2012RANW | Appleton, WI

Want to help clients make more informed and effective decisions? With Silver Bullet Solutions, you’ll learn how to be prepared with solutions to agent dilemmas in both buyer and seller situations. First developed for NAR’s convention, this course provides great tools and knowledge for REALTORS® at any level of their career. Instructor: Mike Selvaggio.

Co-sponsored with Wisconsin CRS Chapter.


Course Schedule

Visit www.wra.org/CourseSchedule for full schedule.

Sales & Marketing Management date course location thru 3/7 after 3/7 a.t.d.

March 21-22, 2012 2-Day ABR Course Madison $250** $260** $280** April 20, 2012 1-Day BPO (Broker Price Opinion) $110** $120** $140** May 3, 2012 Silver Bullet Solutions Appleton $110** $120** $140**

conference and conventions date event/course location

March 13-14, 2012 Appraisal Conference Kalahari® Resort, Wisconsin Dells

Real Estate Continuing Education Date course location Price

March 8, 2012 2011-12 Courses 3 & 4 Mosinee (800) 279-1972 $27/m; $35 nm March 9, 2012 2011-12 Electives A & B Mosinee (800) 279-1972 $27/m; $35 nm March 10, 2012 2011-12 Courses 1 & 2 (DVD) Manitowoc (920) 553-6227 March 15, 2012 2011-12 Electives A & B Madison (800) 279-1972 $27/m; $35 nm March 15, 2012 2011-12 Courses 1 & 2 Appleton (920) 739-9108 March 15, 2012 2011-12 Courses 3 & 4 (DVD) Kenosha (262) 942-0592 March 19, 2012 2011-12 Course 1 (DVD) Manitowoc (920) 553-6227 March 20, 2012 2011-12 Courses 1 & 2 Appleton (920) 739-9108 March 20-21, 2012 2011-12 Courses 1 & 2; 3 & 4 Antigo (715) 627-4885 March 22, 2012 2011-12 Courses 3 & 4 La Crosse (608) 785-7744 March 22, 2012 2011-12 Courses 3 & 4 Appleton (920) 739-9108 March 23, 2012 2011-12 Electives A & D-DVD Kenosha (262) 942-0592 March 26, 2012 2011-12 Course 2-DVD Manitowoc (920) 553-6227 March 27, 2012 2011-12 Courses 3 & 4 Appleton (920) 739-9108 March 29, 2012 2011-12 Courses Electives A & D Appleton (920) 739-9108 April 3, 2012 2011-12 Courses Electives A & D Appleton (920) 739-9108 April 3, 2012 2011-12 Course 1-DVD Racine (262) 637-4426 April 4, 2012 2011-12 Courses 1 & 2 (Commercial) Appleton (800) 279-1972 $27/m; $40 nm April 5, 2012 2011-12 Electives A & B La Crosse (608) 785-7744 April 11, 2012 2011-12 Courses 1 & 2 Duluth, MN (218) 728-5676 April 11, 2012 2011-12 Courses 3 & 4 (Commercial) Appleton (800) 279-1972 $27/m; $40 nm April 18, 2012 2011-12 Electives A & C Marinette (715) 735-0547 April 18, 2012 2011-12 Courses 3 & 4 Duluth, MN (218) 728-5676 April 25, 2012 2011-12 Electives B & C Duluth, MN (218) 728-5676 April 25, 2012 2011-12 Elective A & D (Commercial) Appleton (800) 279-1972 $27/m; $40 nm

Appraisal Continuing Education Date course location

March 13-14, 2012 Appraisal Conference Kalahari® Resort, Wisconsin Dells

Pre-License date course location member price non-member price March 5-8; 12-15, 2012 Sales Pre-license Madison $325* $325* April 5-8; 12-15, 2012 Broker Pre-license Madison $260* $280* * Plus booksAvailable online!

StartQuicksales training program

www.wra.org/QuickStartOnDemand

*Plus books** early registration applies two weeks prior to the start of the course.***Wisconsin CRS Members receive a $20 discount# Appraiser section members receive a discount

The 2009-2010 real estate continuing education is still available through On Demand, DVD and Self-Study Booklets:Course 1 – Listing ContractsCourse 2 – Offer to PurchaseCourse 3 – New DevelopmentsCourse 4 – Buyer Agency AgreementsElective A – Risk ReductionElective B – 1031 Exchanges and Exchange OpportunitiesElective C – CondominiumsElective D – Landlord/Tenant and Property ManagementElective E – FinancingElective F – Broker Supervision

2011-12 Electives: Elective A – Short Sales & Foreclosures Elective B – Environmental Matters Elective C – Other Approved Forms Elective D – Financing


Four ways to complete your mandatory continuing education

Wisconsinrealestatelicenseesmustcomplete18hoursofCEtorenewtheirrealestatelicensesbyDecember14,2012.Tocompletethehours,licenseescompletesixthree-hourcoursesandsuccessfullypassthecorrespondingexams.Thesixcoursesconsistoffourmandatorycoursesandtwoelectivecourses.Visitwww.wra.org/CEcourseforacompletelistofcourseoptions.

Mandatory Courses(Alllicenseesmusttakecourses1-4)

Course1-ListingContractsCourse2-OffertoPurchaseCourse3-NewDevelopmentsCourse4-BusinessEthics(fulfills NAR’s QET requirement)

Elective Topics (Licenseesmusttaketwoofthefollowing)

ElectiveA-ShortSales&ForeclosuresElectiveB-EnvironmentalMattersElectiveC-OtherApprovedFormsElectiveD-Financing

LIVETheWisconsinREALTORS®AssociationisthetopproviderofrealestateeducationinWisconsin.Completeyour2011-2012continuingeducation(CE)requirementsbyattendingoneofourlivecourses.TheWRAhostsCEinallcornersofthestate,andcoursedatesandlocationsvary.Foracompletelistofcourseoptions,visitwww.wra.org/CEcourse.

THREE DISTANCE LEARNING OPTIONSIfalivecoursedoesnotfityourschedule,completeyourCEthroughtheWRA’sContinuingEducationDistanceLearningprogram.Coursesareavailableinthreeformats:OnDemand,DVDandSelf-studybooklets.

On Demand

ThisisCEonyourschedule!DistanceLearningOnDemandgivesyoutheautonomytotakecoursesonyourscheduleandatyourownpace–wheneverandwherever–fromyourowncomputer.UsingaWebbrowser,watchcoursesfromthecomfortofyourownhome,officeorwhereverthereisabroadbandconnection.Bestofall,youhavenoneedtotravelorexperiencesalesdowntimetomeetyourCErequirements.$27/members | $35/non-members

Self-study Booklet

Thesecomprehensive,preparatoryguidesallowyoutocompleteyourCEcurriculumatyourownpace.Youcanthentakethecorrespondingexamonlinewhenyouareready.Courses1,2,3and4,andElectivesA,B,CandD,areavailableinthishandyformat.Theself-studybookletsareeasytouseandcoverthematerialrequiredtopasstheexam. $27/members | $35/non-members

DVD

CompleteyourCErequirementsinthecomfortofyourhomewiththeWRA’sDVDdistancelearningoption.ThisprograminvolveswatchingaDVDandtakingthecorrespondingexamonline.All2011-2012CEcoursesareavailablethroughthisprogram.Simplywatchavideo,takeanonlineexam,scoreandprintyourcertificate. $27/members | $35/non-members

www.wra.org/CEcourse

Save Even More with Four-Pack and Six-Pack Discounts (Residential On Demand Only)Saveupto22%onCEcostsbypurchasingOnDemandeducationasasix-packorfour-packdiscount.

Six-Pack Discount

Thesix-packoptionallowsyoutotakethefourmandatoryclassesandtwoelectivecoursesofyourchoice.Purchasethecoursesandelectivesforonly$126/membersand$180/non-members.

Four-Pack Discount

Chooseanycombinationofthemandatoryandelectivecoursesforonly$92/membersand$128/non-members.PricingappliestoresidentialCEOnDemandonly.Packagepricingisnotavailableinotherresidentialformatsorcommercialcourses.

education


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Financing Products from the WRAResources for Education and ReferenceByniCholEmiCkElson

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Essentials of Real Estate Finance (PUB145)TheeleventheditionofEssentialsofRealEstateFinanceexaminesthehardandfastrulesoftherealestateindustryinaclearandconcisemannerwithmanyexamplesandillustrations,makingeventhemostsophisticatedfinanceconceptseasytounderstandandabsorb.Thebookisarrangedintwomaincomponents:theprinciplesoffinanceandpracticesandapplications.

Eachchapterbeginswithalistofkeyterms,containschartsandillustrationstohelpreadersvisualizekeyconceptsalongtheway,andconcludeswithaseriesofreviewquestions.Youwillfindanin-depthandeasy-to-understandexplanationoftherealestatefinanceindustrywiththeEssentialsofRealEstateFinance.Tolearnmoreandtoorder,visitwww.wra.org/PUB145.

Mastering Real Estate Math (PUB205)Asarealestateprofessional,youneedtoknowhowtocomputetaxes,expenses,income,andthemanyotherfiguresthatarecomponentsofmostrealestatetransactions.MasteringRealEstateMathofferscomprehensivecoverageofthesefundamentals,frommortgagemathtoappraisalandleasecalculations.Thisseventheditioncontainsnewfeatures,includingchaptersonsurfaceandspace,partsandpiecesofthetotal,andtheeconomicsofrealestate.Tolearnmoreandtoorder,visitwww.wra.org/PUB205.

Savvy Home Buying Tactics (PUB2755)SavvyHomeBuyingTacticsscrutinizesoldbeliefsregardingmortgagesandprocessesregardingprepayments,refinancingandsupplementingretirementwithdebtbyprovidingtacticaladviceforsettingagameplantomakeyourbestfinancialdecisions.Thisbookdetailsresourcefulwaysofgettingthroughthepurchaseofahomeandacquiring

theverybestpricebyunderstandingthepsychologyofthesalethroughtheseller’seyes.Additionally,SavvyHomeBuyingTacticsincludesasequentialprocessforastress-freeclosing,includingmortgagefinancing,fromhowthemathreallyworkstotheoptionsavailabletoexploringrefinancingisalsocovered.WithSavvyHomeBuyingTactics,youcaneffectivelyassistprospectivebuyerswiththeirnewhomepurchase.Tolearnmoreandtoorder,visitwww.wra.org/pub2755.

Predatory Lending (BRLEND)Gotheextramileforyourclientsbyofferingthemfreeinformationonpredatorylending.Availabletoprintforfreefromourwebsite,thePredatoryLendingbrochureofferstipsfordetectingpredatorylendersandavoidinganyinvolvementwiththem.ForPredatoryLendingandotherbrochures,visitwww.wra.org/dcb.

Nichole Mickelson is the Business Services Assistant for the WRA and oversees numerous WRA products.


techhottipsTechnology Tips & Tools for the Real Estate Professional

View more posts at www.techhottips.com

The List Journey: I love making lists, but I know others like them even a lot more than I do, and these people make lists with detail for everything. A to-do list sits beside me almost every day, and I’ve taken the steps with technology on my list-making journey from the steno pad, through the day timers and palm pilots, computer programs, and currently with my Android phone and new iPad.

The App Hunt: Synchronizing my list across all of my devices was a must when I was on a hunt for a good “To Do” app. I wanted to be able to see my current tasks, whether I was sitting at my PC or out and about on my smartphone or tablet.

I looked at a few that you may want to check out, including Things, SpringPad and Evernote. I ended up using Toodledo.

What Works for Me: I’ve been using Toodledo for about a week now, and I love it. I have been able to stay on top of my tasks no matter where I am. I have folders to stay organized, and with a quick glance, I can see when a deadline is approaching. Of course, checking off the items on my to-do list is the most rewarding.

Try these today and stay organized!

give yoUrselF tHe JUiceSharing news and links online is a great practice – and you can open the world of information to others. But what about helping yourself at the same time?

The number one place for posting is your website or blog

In coaching, I teach the idea that everything you do online should be directed back to your website and/or your blog. This direction back to your site establishes your online presence and can provide optimal search engine optimization results so you can be found in searches. If your website is organized with home searches and real estate, you will also be showing visitors your storefront every time that they drop by your site.

When you post an update on your Facebook business page, the quick snippet messages about what you are doing are great messages. When you want to write, though, about the current market, share a photo, or give tips for home buying and selling, why not help yourself and write about it on your website or blog first? After writing about this on your own site, make sure that your second stop is then back to Facebook and/or Twitter, and introduce your post with the link back to your website and/or blog.

Watch the growth

Now that you have people visiting your storefront real estate site to read your posts, make sure and monitor your analytics to see which types of posts are sparking the most interest with longer visits and more clicks on your site – so you can give users more of what they want.

Making social media work for you is key; directing people back to you is a must.

Tech Hottips writers are Amy Chorew, a nationally acclaimed real estate technology trainer and Kim Wood, a Philadelphia-area REALTOR® involved in both real estate and technology coaching.

For tHe list lovers oUt tHere

not ready to send tHat e-mail?Composing an e-mail for later delivery is handy and can save you time by combining tasks. Many e-mail service providers

allow you to do this within the system, however one of the most popular ones, Gmail, doesn’t have this built in their system. Boomerang is a free extension you can add to your Gmail account. Boomerang also has a paid version available.

Boomerang is easy to install and just adds a button with a drop down menu next to the “send” button when composing an e-mail. You can select various preset times for sending the e-mail, and you also can customize with the actual date and time you would like to send the e-mail.

There are several instances in which you may want to choose to schedule an e-mail for later delivery:

• Compose an e-mail during those crazy late-night or early-bird hours but set it up to send during business hours.

• Commit to follow up with a client in “a week” or “on Monday” and immediately compose an e-mail with it set to deliver as promised.

• Send yourself an e-mail as a reminder for important deadlines.

• As soon as you receive notification of a showing appointment on one of your listings, set up an e-mail to the showing agent requesting feedback to be sent after their showing.

• Use your custom e-mail address associated with your Facebook business page and set a few status updates to be sent as reminders for upcoming open houses.

So no matter what e-mail provider you use, think about scheduling e-mails later and how doing so might be able to save you time and stay organized.


BymarCuswally

realtor® sales tip

Each day, our customers ask for referrals of home inspectors and mortgage professionals. And each time we share

a reference, we are connecting our business practices and ethics with the referral we are giving. But remember to give a referral substantial thought before referring anyone to anyone!

Recommendations are the most successful advertising medium for any business person, and for us in real estate, we know the value of a qualified referral versus a cold lead. Customers referred to us are somewhat “presold” on our abilities and our experience. This is the ultimate reward! Working with a customer or client already aware of our character, knowledge and success gives us a terrific advantage to help create a successful transaction. I like to say that referrals are the lifeblood of real estate.

Testimonial vs. Recommendation

With a testimonial, you’re giving your opinion about a product or a service. A great testimonial conveys that the product or service works and that you were delighted with the results.

When you provide a recommendation however, you’re sharing your opinion about a living, breathing human being. A great recommendation can convey that the person you’re writing about is smart, witty, charming, ambitious, tenacious, diligent and an all-around fantastic human being. The referral is worth its weight in gold!

Referrals are the most powerful form of marketing you can use and also the least expensive. And for all business, watching the bottom line is how we stay in business. Working your business by referrals means allocating marketing money in a new direction: if your business is based on referrals, your bottom line can be higher due to the reduction in cold call marketing!

Criteria for Referrals

When making referrals of home inspectors and mortgage professionals, an important component

is to set criteria. For example, I commit to always sharing three business cards of licensed professionals with whom I have a solid working relationship. Why three? It’s in the customer’s best interest to receive more than one recommendation. And for liability purposes, I never want anyone to believe that there could be a conflict of interest, so I offer three cards for each profession to stay neutral. Customers really appreciate this practice as it demonstrates that I am unbiased. I instruct them to call each vendor, request a quote and see who they like. At times, the decision is as easy as asking, “Did the vendor even call back?”

A safeguard tip is to never allow the customer to push the decision-making responsibility to you. They must make the choice of who to hire. Once the customer decided on their preferred vendor, I am more than happy to call and make the arrangements, but they must choose who to hire for the particular job. I do not waiver from this policy. I do the same thing for all vendors on my preferred list.

Team Effort

Each of us must create a preferred list of proven professionals to refer. And the magic here is to make sure we ask these vendors to do the same for us. Too often, vendors ask for us to send them business. But what about us? I never miss the chance to remind my “team” to send me a referral. It’s amazing what happens once you get them thinking along these lines. Just recently, I received a referral from a local mortgage professional, and I already had the family under contract. Initially, the mortgage firm owner was shocked when I first made the point; they never had a REALTOR® ask them for referrals ... it was always the other way around. Now, I made them think about me and my business – and I’m on the radar whenever they prequalify a buyer! Your job is to ask, “Do you have a REALTOR® you’re currently working with? If the answer is ‘no,’ refer me!”

A referral program should take the following into consideration:

• Make it worth your customer’s time.

• Be creative, generous and reliable.

• Make sure what you offer has value to your

customers.

For peace of mind, I only refer to folks who I know

have no trouble saying “no!” I want each vendor

to know my character and the way I conduct my

business, and if they are not aligned in my thinking,

we won’t work together. We’re back to selectivity!

My mortgage professionals are not afraid to tell the

potential buyer that they cannot qualify upfront. If

the buyer cannot qualify at this time, let’s credit-

counsel them and set them up on a program to

guide them so that in the future, they will be in a

position to buy.

The inspectors I work with have the latest and

greatest equipment. Being in Florida in a coastal

town, my inspectors have those very expensive

inferred cameras that can detect moisture in the

walls and behind the sheetrock. This particular

piece of equipment can cost the inspector $18,000

to $20,000! But having the tools to do the job is a

major choice factor for me. Being licensed, bonded

and insured is another. Having experience and a

superior knowledge base is the ultimate reason of

recommending any home inspector.

Always keep in mind that all referrals are a direct

reflection of the person making the referral, and

we always want to hear these words: “Thank you for

referring me to ____. I was pleased, and they did an

excellent job. I would use them again.”

Now that’s a powerful statement and one that

makes me know I have the proper referral partners.

Marcus A. Wally, MBA, is an active Florida REALTOR®

in St. Augustine, Florida. Marcus is the founder and

broker of New World Realty, which also manages

coaching and facilitation of education classes

around the world. Marcus earned his MBA from the

University of North Florida in Jacksonville. He can be

reached at (904) 669-1081 or by e-mail at marcus@

newworldrealty.com.

Inspections and Money: Two critical Elements!


legislative



Walker Recall Under WayByjoEmurray

On January 17, recall organizers filed more than one million signatures to force a recall election of Republican Gov. Scott Walker and 845,000 signatures to recall Lt. Gov. Rebecca

Kleefisch. The Government Accountability Board (GAB) must certify that organizers turned in enough valid signatures to force the election, and that will take at least two months. Once the signatures are certified, the election date will be set.

Campaign Notes

Most election experts and campaign regulators with the GAB believe the actual election date will ultimately land somewhere between late May and July. The two-month signature certification process will likely be followed by numerous lawsuits that would complicate the process and push the date back as well. In addition, there will be a primary election on the Democratic side for governor and lieutenant governor. Because the process is as complicated as it is unique, here are six points to keep in mind as the recall proceeds.

1. The recall election of Scott Walker is “ground zero” for public employee unions and Democrats in Wisconsin. One year after dropping the collective bargaining “bomb” on 175,000 public employees, anti-Walker recall organizers and their allies will go all-out to defeat the governor and four more Republican state senators who voted for the changes to collective bargaining. Recalling Walker is their number one priority.

2. The first two stages of this war played out in 2011 and broke all the previous election spending records. The state Supreme Court race between JoAnn Kloppenburg and David Prosser cost approximately $5.7 million in total spending and the nine state Senate recall elections in 2011 an astonishing $44 million. The Walker recall election including candidates, political committees and interest groups will likely break all the old records. Some project total spending to exceed $50 million.

3. Gov. Walker and Lt. Gov. Kleefisch can raise unlimited amounts of legal money from individuals and political action committees until the recall signatures are certified. The unlimited fundraising started in mid-November last year and it’s likely to continue into this month. Walker and Kleefisch raised a stunning combined $12.3 million from January 2011 through January 2012. The Walker campaign raised and spent a total of $11.3 million in the entire 2010 race for governor. After the signatures are certified and the election dates are set, the unlimited campaign fundraising stops and “normal” gubernatorial fundraising limits apply. Campaign finance professionals predict the Walker campaign could easily raise and spend more than $20 million before it’s over. While Walker’s Democratic challengers are just

starting their fundraising, the national attention and importance of this race will almost certainly see similar record breaking amounts of money raised for their effort as well.

4. In a January poll conducted by Marquette Law School, Gov. Walker held leads of 6 to 10 percentage points over four potential Democratic opponents in hypothetical matchups for the likely recall election. The independent survey, conducted by Professor Charles Franklin, director of the Marquette Law School Poll, found Walker defeating former Dane County Executive Kathleen Falk, 49 percent to 42 percent; Walker over Milwaukee Mayor Tom Barrett, 50 percent to 44 percent; Walker beating former Congressman David Obey, 49 percent to 42 percent; and Walker over State Senator Tim Cullen (D-Janesville), 50 percent to 40 percent. Since the poll was conducted in mid-January, former Dane County Executive Kathleen Falk and state Senator Kathleen Vinehout (D-Alma) have formally entered the race, and state Senator Tim Cullen has dropped out. In addition, longtime Wisconsin Secretary of State Doug La Follette says he plans to run for governor, joining the Democratic field vying to run against Gov. Walker.

5. Gubernatorial recalls are rare, with only two governors having ever been successfully recalled. California Governor Grey Davis was ousted by Arnold Schwarzenegger in 2003, and North Dakota Governor Lynn Frazier was defeated by Ragnvold Nestos in 1921. According to the National Conference of State Legislatures, there are 18 states that include recall provisions in their state constitutions. With fewer than half the states allowing for recall, it’s not surprising to see such limited use of recall at the gubernatorial level. It may also be true that removing an incumbent governor for something less than official misconduct in office is very difficult. However, given the intensity of the current political debate in Wisconsin and the number of recall petition signatures, this recall will likely be an extremely close race one way or another.

6. The ongoing John Doe investigation into former aides to Scott Walker when he was Milwaukee County Executive remains a wild card in the recall election. Several aides and associates have been charged with offenses as a result of the probe. Walker has stated he was unaware of the illegal activity; Democrats hope this isn’t true.

There may be other candidates jumping into the race on the Democratic side very soon. As the recall election continues into spring and summer, we will update you on developments as they occur. Watch for updates in future issues of Wisconsin Real Estate Magazine.

Joe Murray is Director of Political and Governmental Affairs for the WRA.

legislation Introduced to Place limits on development Moratoria

The Wisconsin legislature is currently considering legislation (AB 562/SB 504) that would create a regulatory framework

for development moratoria. Specifically, the bill establishes who can enact a moratorium, why a moratorium can be enacted, when a moratorium must expire, and how a moratorium can be enacted.

Background

Generally, a development moratorium is a total or partial ban on various land use activities. In most cases, a development moratorium will temporarily freeze current land uses by prohibiting the issuance of zoning changes, subdivision plats or other approvals necessary for economic development. A development moratorium is essentially a “closed for business” sign telling property owners that the community will not even consider proposals for that particular type of economic development during the duration of the moratorium.

Because moratoria impose bans on all or specific types of development, they virtually always have the effect of downzoning and decreasing the value of a property. The extent of value decrease depends on the type and duration of the moratorium. Moreover, by stopping a particular type of development activity for a period of time, a moratorium has a direct impact on job creation, as well as state and local revenues generated by the new development.

Currently, Wisconsin law does not establish a regulatory framework for enacting development moratoria. Accordingly, the law is not clear as to (a) who can enact moratoria, (b) the purpose for which a moratorium can be enacted, (c) the duration of a moratorium, and (d) the process that must be followed when enacting a moratorium. As a result, property owners and the economic development community often suffer negative consequences resulting from development moratoria that are unreasonable in nature and/or duration.

The Bill

Similar to Wisconsin’s Impact Fee Law, AB 562/SB 504 establishes a regulatory framework for development moratoria so that municipalities, property owners and the economic development

community will know the rules going forward. Specifically, the bill contains the following provisions:

Purpose: Under the bill, a municipality may enact a moratorium for one of the following purposes:

1. Creating a comprehensive plan.

2. Adopting a significant amendment to a comprehensive plan.

3. A significant public health-related reason, as substantiated by a licensed health professional.

4. A significant safety-related purpose, as substantiated by a licensed engineer.

5. A shortage of overburdening of public facilities.

The reasons for enacting moratoria are limited to the ones stated above to ensure that such reasons are legitimate.

Duration: Under the bill, a moratorium is allowed to remain in effect for up to 12 months, with an option to extend the moratorium for an additional 6 months if the community adopts a resolution.

Process: To ensure that the public and affected property owners are properly notified of the proposed moratorium, a municipality must adhere to the following process when enacting a moratorium:

1. Send out public notice (class 1 notice) informing the public of the proposed moratorium and its contents, as well as the time, date and location for the upcoming public hearing.

2. Hold a public hearing at least “X” days before the governing body votes on the proposed moratorium.

3. The governing body must adopt the moratorium by ordinance.

The WRA supports AB 562/SB 504 and will be working to pass it into law during the remaining weeks of the legislative session. If you have any questions or comments, please contact Tom Larson at [email protected] or at (608) 241-2047.

Tom Larson is Vice President of Legal and Public Affairs for the WRA.

Bytomlarson

28 www.wra.org/wrem

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C 2 1 . C o M

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buyer education is required. To learn more, go to www.wheda.com/Realtors.

800.334.6873 � www.wheda.com

WISCONSIN HOUSING AND ECONOMIC DEVELOPMENT AUTHORITY

Documents

March 2012 - Wisconsin Real Estate Magazine