february 2010 - wisconsin real estate magazine

MAGAZINE

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APPRAISAL CONFERENCE 2010Mark the date for the WRA Appraisal Conference, March 10-11.

R&G DAYFree to the fi rst 500 registrants, R&G Day is February 24.

February 2010

Your Clients Are TalkingAre You

Listening?>> page 6

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february 2010 | vol. 26, no. 5table of CONTENTS

Your Clients Are Talking: Are You Listening?Although the emphasis in real estate today seems to be on technology, your clients are looking for the basics: integrity, honesty and follow through.

ELD Does Not Bar Claims Against AgentsA recent Court of Appeals decision confirms the Economic Loss Doctrine would not block misrepresentation lawsuits against licensees.

Off to the Races! While it’s too early to make predictions on what voters will do in November, we update you on fund raising developments, the 8th Congressional District, and more.

Wisconsin’s Pending Fiscal PerilSeveral recent reports on Wisconsin’s fiscal future paint a disturbing picture, and we may face budget reform not by design but by default. Here’s what you should know.

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features articles

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10 Best of the Legal Hotline Are you ready to use the new WB-11? Here are

answers to questions about the new forms.

13 Practice of Law Petition Considered – Again Find out what the WRA is doing to protect your

ability to negotiate and draft real estate contracts.

16 Product Showcase Renew your ZipForm subscription and check out the

new Wisconsin Real Estate Law manual.

21 P-R-I-C-E: Tell You What it Means to Me Pricing the property to sell is key. Marcus Wally has

some suggestions in this month’s Sales Tip.

26 New Rezoning Penalty for Farmland REALTORS® should disclose a new conversion fee

– whether or not the buyer plans to rezone.

28 Operation Tax Credit: Campaign Update The Homebuyer Tax Credit Program has found new

life and greater reach. Read all about it.

news.wra.org 1

2 wisconsin real estate magazine | oCTober 2009 news.wra.org

Top News Stories in and Around the Industry

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. Th e Tocqueville Society Award celebrates 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

Th e city of Milwaukee’s housing authority is due to receive $6.7 million in federal Hope VI money to build 100 new housing units. Th e 100 units will be constructed in a 2.5-mile area and will include 29 public housing and aff ordable rental units; nine aff ordable 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 fi rst major housing study in three decades, the Southeastern Wisconsin Regional Planning Commission (SEWRPC) is still struggling to get the eff ort launched. Proponents hope the study will serve as a catalyst for improving aff ordable housing opportunities throughout the city’s suburbs. But commissioners have yet to assemble an advisory committee to oversee the research or set a specifi c timetable for conducting the survey. Phil Evenson, the commission’s executive director, said other issues keep getting in the way. Th e 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.” Th e 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)

Th e 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, “Th e 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. Th e 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. Th is, 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. Th e St. Paul-based Wilder Foundation recently reviewed income data for several Twin Cities counties. Th e 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 fi nancing

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. Th ey also have

launched a new page called “NAR Helps You Navigate

the Current Economy” where you can fi nd 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, “Th ere’s plenty of money for home

loans out there. It is slightly more diffi cult 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 qualifi ed home buyers can get loans

if they have the proper income verifi cation. On the

downside, banks have been less willing to make

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

conventional fi nancing without a down payment has

indeed disappeared. However, 100 percent fi nancing

is still available with Veterans Administration and

Rural Development home loans.

News


Bill MalkasianWRA President

he lead story in this month’s magazine is a recap of the Home Buyer and Seller Focus Group presentation that took place at Management Conference on December 10 in Pewaukee. This is the second time

we’ve done a focus group like this and we’ve gotten great feedback on this program. I recommend that you take some time to read the responses to the questions asked of the group and see if they’re similar to those you hear in your part of the state.

Also, I’d like to thank everyone who attended Winter Convention this year in Wisconsin’s beautiful Northwoods – it was a great success.

February brings two big events for the WRA this year – Designation Week – which will be occurring around the time you receive this issue, and REALTOR® & Government Day, which is happening February 24 in Madison.

So what’s different this year from the Government Day you’ve come to know in the past? 1) It’s free – not your time, of course, but registration; 2) it’s one of the top fi ve biggest events in Madison of any special interest trade group; and 3) we hope to have all three major gubernatorial candidates as part of our program. Two of them are already confi rmed.

My fi nal thought on Government Day: we need 500 people there to let the press, candidates and legislators know what’s really going on in Wisconsin and the issues we are facing in the real estate industry.

Moving from Government Day on to the actual election, you’ll want to read Joe Murray’s article about gubernatorial fund raising as well as what might be the most exciting of the upcoming races – the Fox Valley’s 8th Congressional District race.

The rest of our Public Affairs team writes about a new rezoning penalty in effect for farmland and the pending fi scal peril Wisconsin faces in the future (now do you understand why we have a Government Day?).

Moving beyond our public policy area, the month of March brings the WRA Appraisal Conference, which is always well-attended (wra.org/appraisal). March is also when we offer out-of-state continuing education (wra.org/celasvegas). This year we will be at Tuscany Hotel & Casino in Las Vegas, March 1-3.

I encourage you to take a look at out Web site (wra.org/education) to see the array of classes we offer throughout the state plus the wide range of delivery methods available, particularly for your continuing education. The WRA is truly committed to offering you a wide range of choice to help you complete your continuing education by the end of the calendar year.

Internally, there are a number of things for me to report on: 1) a number of us went to Washington, D.C., on January 25 and 26 and received a policy briefi ng by the NAR legislative team on issues that will impact us in 2011 by Congressional action.

For those of you interested in helping us out in the legislative arena, NAR’s Mid-Year meetings are May 11-15 this year, with our Capitol Hill visit on Wednesday, May 12. You might want to check with your local board offi ce or the WRA for more detailed information if you are interested in attending.

Later this year we plan to do some external outreach work throughout the state as the WRA prepares for the balance of this year and next in program planning.

I’d also like to point out some personnel changes. I’m pleased to announce that, after a series of interviews, Kristi Mikalsen of our Business Services Department has been promoted to replace Kitty Kuhl as WRA Vice President for Business Services. Kitty, who has been with us almost 33 years, offi cially retires September 30, 2010, with Kristi stepping in effective July 1. I’m delighted that Kristi has been selected to take on that position. Congratulations, Kristi! As the months move forward, look for more Business Services staff alignments.

Also, Kevin King, WRA General Counsel, has accepted the position of Executive Vice President of the REALTORS® Association of South Central Wisconsin and will be returning “home” effective February 16.

I’d like to personally thank Kevin for giving us an additional fi ve years of his expertise and help. We know he won’t be leaving us – just moving downstairs for a new opportunity.

We have redesigned the legal team and I am pleased to announce that effective February 16 Cori Lamont, our current attorney/trainer, will take on a new position, Director of Brokerage Regulation & Licensing. Debbi Conrad becomes Senior Attorney and Director of Legal Affairs. Tracy Rucka will become Director of Professional Standards and Practices.

This new legal team confi guration will continue to offer the best legal services and products in the industry.

As you can see we’re off and running with a lot of changes here at the WRA, all of which put us in a strong position as we move forward in 2010.

Until next month,

Bill

2 wisconsin real estate magazine | february 2010 news.wra.org

with BILL MALKASIAN

T

inside the WRA

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WRA Member Benefi ts

John Flor, ABR, CRS, e-PRO, GRI, RRS, [email protected]

John Horning, [email protected]

Robert Keefe, [email protected]

William E. Malkasian, CAE, [email protected]

Editorial Staff:

William E. MalkasianPublisher

Robert UhrinaManaging Editor

Terry O’ConnorPublication Editor

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 201Madison, 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.

facebook: www.wra.org/facebooklinked-in: www.wra.org/linkedinyoutube: www.wra.org/youtube

REAL ESTATEnotes from the wra

Nominating Commitee Seeks Candidates

wisconsin real estate magazine | february 2010 3

Are you interested in serving in a leadership role for your state association? The WRA Nominating Committee is seeking candidates for the positions of 2010-11 WRA Executive Committee Vice President, NAR Director and WRA Board of Director Regional Representative positions. The number of openings for Regional Representative is determined by the membership as of February 28, 2010. The application deadline for these positions is March 15, 2010.

Day 2010REALTOR® & GOVERNMENT

As a member of the Wisconsin REALTORS® Association, you have many member benefi ts available to you. The WRA carefully selects benefi t programs that offer valuable services in health care, dental care, and errors and omissions insurance. Additional benefi ts include a credit card program, retirement fund, phone service plans, a delivery plan for packages and envelopes, and Web site design. A detailed description of the member benefi ts is available online at www.wra.org/WRAmemberbenefi ts.

PRoFIT Retirement Program(Planned Retirement Future Investment Trust) through M&I Institutional Trust Services. (800) 279-1972 ext. 256 for application

Health, Dental & Life Insurance Plansthrough REGIT, Inc. specifi cally designed with REALTORS® in mind.(800) 537-9786

Errors and Omissions Insurancethrough Pearl Insurance and underwritten by XL America, Inc.(800) 289-8170

UPS Discounts & Delivery PlansHassle-free! Once you enroll, your savings are automatic – every time you ship. (800) 325-7000

Long Distance Telephone ServiceNo monthly plan fee, no time-of-day restrictions. Save big money! (800) 254-3202

Real Estate Home PagesCreate, edit and manage your own Web site. Free seven-day trial, (800) 280-6926

Help lobby your legislators at REALTOR® & Government Day on February 24 at the Monona Terrace in Madison. Success hinges on what we advocate together. REALTOR® & Government Day is your opportunity to help shape laws that impact you. Through lobbying efforts at the state Capitol, you’ll meet state lawmakers and have a unique opportunity to advocate for issues that impact your business and the real estate industry in Wisconsin.

Our success as an industry requires activism and hinges on what we advocate together. In 2009, the WRA and its membership demonstrated an impressive show of REALTOR® strength by bringing in more than 300 REALTORS® from all around the state. With your support and advocacy, 2010 will be a day well remembered at the Capitol when key votes are taken.

REGISTRATION IS FREE!! Sign up at www.wra.org/RGDAy

Correction: Last month’s feature article, “The Wisconsin Real Estate Outlook for 2010” used an incorrect term on page 8 in the following sentence: “That’s why we’ve shifted from a subprime crisis to a crisis in prime mortgages that are underwater with unemployed or underemployed mortgagees.” (Should read mortgagors) Wisconsin Real Estate Magazine Managing Editor

Region

OneTwoThreeFourFiveSixSeven

2231011

Preliminary Number of Openings


REALTOR benefi ts®

Check out the National Association of REALTORS® REALTOR® Benefits® Program

ABR®/ABRMSM

American Home Shield Avis Budget eNeighborhoods Entertainment® Book Dell, Inc. DocuSigne-PRO® FedEx Hertz Corporation Hewlett PackardInfoUSAInternetCrusade® Lenovo Liberty Mutual Lowe’s REALTOR.com REALTOR® Core Health InsuranceREALTORS® Federal Credit UnionREALTOR® Team Store™ RELAY® Transaction Management Sentrilock, LLC SRES® Xerox ZipForm®

As of 1/2010. List Subject to change

The REALTOR Benefits® Program is your member benefits program. NAR has partnered with industry leaders to provide you with value-added offers and significant savings on products and services you use on a daily basis.

Did you know that you can earn back more than your national membership dues by simply taking advantage of the REALTOR Benefi ts® Program? Choose from a variety of value-added offers and savings from industry leaders. Plus, every partner provides products and services that you can use every day, in your business or personal life.

Here is just one example of how the REALTOR Benefi ts® Program can save you money TODAY:

• Lowe’s®— provides REALTORS® with a FREE marketing tool to help build even stronger relationships with clients, including:

- A FREE, personalized direct mail coupon for 10 percent off at Lowe’s

- FREE e-newsletters with home improvement content you can send to clients

- FREE subscriptions to Lowe’s publications that you can give to clients

- 5 percent discount on Lowe’s gift cards you can use as closing gifts

See partner listing for details or online at www.LowesRealtorBenefi ts.com.

For More InformationVisit www.REALTOR.org/RealtorBenefi ts regularly to learn about new partnerships and offers. You can also call the REALTOR Benefi ts® Help Line at 1-800-NAR-5233 for updates and assistance.

REALTOR® Newswire is a monthly news service prepared exclusively for the Wisconsin REALTORS® Association by Information, Inc. Reproduction, use, or inclusion of this material in other publications, products, services or Web sites is not allowed without prior written permission from the Wisconsin REALTORS® Association.

RIGHT TOOLS, RIGHT NOWRealtor.org

Th e National Association of REALTORS® has extended the Right Tools, Right Now initiative to 2010. NAR members can continue to take advantage of hundreds of NAR products and resources that can help their business now for FREE or AT-COST. Visit www.realtor.org/righttools for more information.

REALTORS® SUPPORT HAITI EARTHQUAKE RELIEF EFFORTS Realtor.org

In the wake of a devastating earthquake in Haiti on Jan. 12, 2010, NAR quickly mobilized its resources to support the more than three million people aff ected by this tragedy. Th e REALTORS® Relief Foundation of the National Association of Realtors® is contributing $550,000 to provide relief to Haiti earthquake victims, and NAR is calling upon its 1.2 million members to help. REALTORS® can contribute by visiting www.realtor.org/about_nar/haiti_relief

GROUP ESTIMATES WIS. PROPERTY TAXES UP 4.2 PERCENTWQOW TV-18 (WI) (12/24/09)

Th e Wisconsin Taxpayers Alliance estimates that property taxes are set to rise an average of 4.2 percent statewide. According to the research group, school districts are raising their taxes by an average of 6 percent across the state. Technical colleges, meanwhile, are raising them by 3.9 percent and counties by 3.2 percent. Combined, it adds up to 4.2 percent higher taxes for homeowners, who have been receiving their bills in the mail this month. Alliance researchers caution that individual bills may be signifi cantly higher or lower depending on where the taxpayer resides.

STIMULUS FUNDS BRINGS MAJOR EXPANSION TO WEATHERIZATION PROGRAMAshland Daily Press (WI) (12/21/09) Olivo, Rick

For years, Wisconsin has had programs to assist its residents to weatherize their homes. Th at eff ort has taken on new importance under the American Recovery and Reinvestment Act (ARRA), which boosted federal funds available for such programs by more than $5 billion. Opponents charge that the rapid ramp-up of spending on weatherization will leave numerous homeowners vulnerable to shoddy craftsmanship and even outright fraud and theft. In Wisconsin, though, state and local offi cials say that

simply isn’t the case. Dan Schoof, deputy director of the Wisconsin Department of Administration, remarks, “We have spent a lot of time making sure our oversight is robust enough. We’ve also beefed it up with the new money coming in.” Schoof added that despite the fact the program has doubled in size, the infrastructure to keep tabs on the program was already in place. He remarks, “We are not like some other states where there was no program. Th ey are starting from scratch and having a massive amount of money given to them for weatherization. Th ere could be valid concerns about what kind of accountability they have in place.”

LOAN PROGRAM HELPS BUYERS GET INTO FORECLOSED HOMESJanesville Gazette (WI) (01/03/10) Vogel, Stacy

Th e Wisconsin Housing and Economic Development Authority (WHEDA) has had success with the Neighborhood Advantage program, which encourages people to purchase foreclosed homes in fi ve counties statewide. Th e program uses funds from the federal government’s Neighborhood Stabilization Program for loans to buy and repair foreclosed residences. In today’s economy and tight lending environment, it can be diffi cult to obtain conventional fi nancing to buy foreclosed homes, notes Tim Shortreed, a mortgage loan offi cer with Johnson Bank in Janesville. Even those fortunate to get approved for a loan must often come up with extra cash for home repairs. Neighborhood Advantage addresses the overall problem by off ering loans not only for home purchase, but for home repair to low- and moderate-income households. Additionally, the WHEDA program off ers a separate, forgivable loan of up to 25 percent of the purchase price for those who make less than 120 percent of the county median income. Applicants who make less than 50 percent of the county median income are eligible for a loan of 50 percent of the home’s purchase price. Ten percent of the loan is forgiven each year the recipient resides in the home. Th ose who live in the house for at least a decade get the entire loan forgiven. On the downside, the program has a number of requirements. Th e property must go through a couple of inspections, all repair work must be done within 90 days, and the buyer is required to take eight hours of homebuyer classes. Shortreed states,” It’s more work, but frankly in the current environment, everything’s more work. Th e days of walking a consumer through the door and writing an off er quick and making a lot of assumptions are over.”

WISCONSIN ECONOMIC RECOVERY HAS BEGUNOnMilwaukee.com (01/06/10) Jagler, Steve

Analysts report that Wisconsin’s economic recovery

has begun and will continue to gain momentum

throughout the new year. In recent surveys, 86 percent

of BizTimes.com readers say their company will either

add jobs or at least maintain the status quo in 2010. In

addition, 76 percent say they are optimistic about how

their business will do in the year ahead. Th e number of

fi rst-time unemployment claims in the state is on the

decline, as is the number of company job layoff notices

fi led with the Wisconsin Department of Workforce

Development. Th is all bodes well for the state’s

housing stock. On the downside, Wisconsin’s market

for new commercial development is fl at. Additionally,

some of the banks around the state remain on shaky

fi nancial footing. Finally, because employment is a

lagging indicator, researchers say it may take a few

more months before there is a clear and defi nite

reversal out the Great Recession.

HOUSING MARKET HEATING UPnbc15.com (01/12/2010) Pollack, Barclay

In Wisconsin and elsewhere, now may be the ideal

time for sellers to list their homes. Interest rates

remain low, home prices have come down, and there’s

the 8,000 federal tax credit for fi rst-time buyers. Th is

past November, the federal government extended

the $8,000 fi rst-time home buyers tax credit.

Additionally, those who have owned a home for fi ve

of the last eight years consecutively may be eligible

for a tax credit of up to $6,500. Joe Murray with the

Wisconsin REALTORS® Association says these factors

combined have gotten many people who previously

had no interest in buying to start house hunting.

Murray remarks, “If you’re interested in buying a

home, you should probably move sooner rather than

later.” Both the tax credit for fi rst time buyers and the

one for existing homeowners is set to expire at the

end of April. Th e Wisconsin REALTORS® Association

has launched a Web site containing information about

these two tax credits at www.wisconsinhomebuyer.

org.



REALTOR® NEWSWIRE

6 news.wra.org

Your Clients Are TalkingAre You

Listening?By Terry O’Connor

Although much of the emphasis in real estate today seems to be on technology and how it has changed the home buying and selling process, in the final analysis the things that matter most to your clients are the tried-and-true basics: integrity, honesty and follow through.

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When 10 homebuyers and sellers get together to discuss their recent real estate transactions, REALTORS® are all ears. That was the case for those who attended the WRA’s Management Conference in Pewaukee last December. Watching the discussion live from another room, they were able to not only hear what the consumers had to say, but they were able to submit questions to the group.

Sharon Chamberlain of Chamberlain Research facilitated the discussion. The 10 consumers had all recently bought, and some had also sold a home, primarily in the Milwaukee metropolitan area. They discussed everything from finding a REALTOR® to the service level they expected and their likes and dislikes, as well as how the Internet is affecting the process.

The following excerpt gives REALTORS® a unique perspective on the home buying and selling process through the eyes of the consumer, and how the more things change, the more they remain the same.

First Step: Get Online All of the participants agreed that they began their home buying (and/or selling) process online, which comes as no surprise.

SC: You all started your search on the Internet. Tell me some of the things you saw out there that you liked.

They all agreed that they liked to search by school district, number of bedrooms and bathrooms, and price range. When they found properties that met their criteria, they wanted details – and pictures – before they wasted their time visiting a property.

B: If I didn’t see pictures I just skipped that property and went to the next one. Also a good description of the house – every single detail counts.

L: If there was only a picture of the front of the house or of the outside of the house I took that as a huge red flag.

D: Definitely need pictures of the kitchen and bathrooms.

SC: Did you see anything out there you didn’t like or that you thought was inferior to others?

D: On one of the sites you had to click through several times to get to the property, even when you had the MLS number. Just put it on the front page so you only have to click once.

J: Not removing the listing. You look online and decide “these are the 10 houses I want to look at,” and then you call and none of those houses are available, which is really frustrating. I understand why they leave them on the site – to get people to call – but let’s get down to it. Tell me what you’ve got available.

L: It would be nice to have some designation on the Web site that a property has an accepted offer so you know that up front.

Going Online Saves a Lot of TimeEveryone agreed they saved a lot of time by deciding from a property’s

online presence whether or not they were interested in visiting the property.

SC: Did anyone use the Internet for a purpose other than what we’ve talked about?

K: Initially we used Craigslist. That is really the Wild West, but I see a lot more REALTORS® using that forum. On the selling side you can bypass the commissions and some of the costs if you do it yourself. But you’re on your own so it’s a give and take.

Ch: We definitely got some hits on Craigslist when we were trying to sell our condo on our own. It was just another avenue besides word of mouth and other advertising.

D: There really wasn’t anything fresh out there unless it was “For Sale by Owner,” but I put our house on there with our REALTORS® contact information.

SC: What other sites did people use?

L: We liked the Google Maps program, where you could see a 360-degree view and get a better idea of the surroundings and the neighborhood.

J: Because we have kids, we used a site where we could see where sex offenders were living.

K: Trulia has a lot of neighborhood demographics, so we pulled statistics from there to use on our Web site when we were trying to sell the house ourselves.

Did any of you use any kind of social media – Facebook, Twitter, blogs, or anything like that?

N: My wife uses Facebook 24/7. She found our REALTOR® and our mortgage broker through Facebook and her friends.

Are You

“… my real estate agent had promised to send me coupons and I never got them, and even though I was happy with what she did I don’t think I would ever use her again … if you’re going to put incentives out there, follow through … it shows integrity.”


Pricing to SellSC: For those of you that sold a house, how did you go about

determining the price?

Ch: We used comps that we found online when we tried to sell our condo ourselves.

L: We went online to compare what other houses in our area of similar size were selling for in comparison to the assessed prices and then we got our REALTOR®’s opinion.

K: We used the municipality Web site for comparables to come up with a listing price to sell it on our own. Later, when brought a real estate agent in we realized we were still too high for the market at that time.

J: We went to Zillow, which aggregates sales information by neighborhood, and leveraged that against the REALTOR®’s comparables.

SC: Did price ever become a sticky issue?

K: It’s a reality check when you have to accept that the numbers are not what you had hoped for.

L: You have to accept that you might not get what you originally hoped, but trust that your REALTOR® is going to go for the price you agreed on and that you’re not going to have to cut the price a second or third time.

Help for First-Time HomebuyersSC: Of the first-time homebuyers, did the homebuyer tax credit influence your decision to buy?

N: We didn’t even know about the credit. Our REALTOR® told us about it but it didn’t influence our decision.

C: I was going to purchase a home anyway, but it definitely influenced me to buy sooner.

I: I was already looking to buy but it influenced my decision to buy sooner, too.

SC: As first time buyers, what was going through your head? What were the “worry points?”

N: We didn’t know any of the steps to buying a home. Our REALTOR® really helped out by meeting with us a lot, calling every day, asking questions, and walking us through his Web site.

I was worried about buying a “lemon” and that the most money we’ve ever spent would end up being on a piece of junk that would need major repairs.

C: My fear was buying a house that ended up needing work. Maybe the furnace would go out or something right after I moved in. The sellers bought a year home warranty for me which helped ease my mind.

Choosing a REALTOR®

SC: All of you worked with a REALTOR® at some point, right? So how did you pick that person?

B: Since we were moving from overseas, we used the REALTOR® through my husband’s company. She did a lot of the legwork for me because I wasn’t here. It worked really well for us and we were really happy.

C: I was referred to my REALTOR® through my loan officer.

D: A co-worker. She’s a friend, too, and her father is a REALTOR® so I went with him. I probably wouldn’t use him again.

SC: Why wouldn’t you use him again?

I think if you have someone too close it’s hard. Several things went wrong and I wanted to complain about him but I couldn’t because it was her dad.

SC: How did the rest of you choose a REALTOR®?

K: We tried to sell our house ourselves, so when we decided to use a REALTOR® we drove around and looked at the signs in the area to see who had the most listings. Then we researched online to see what their sales records were, and then called a few and talked to them.

N: My wife got the recommendation from friends and co-workers who had all used the same REALTOR®. He and his wife are a team, and they send us free stuff every couple of weeks. Buy one meal; get one free, or a free round of golf or whatever it may be.

He also recommended a home inspector and was with us at the inspection, asking questions and going through everything with us. I don’t have anything to compare to, but my friends have all said they had problems with their REALTORS®. I couldn’t have asked for anything more.

SC: How do you feel about the things that come in the mail, the coupons?

N: They’re nice – they have his picture and company name on them. He keeps in touch, e-mailing my wife asking how things are going, how the first snow was living in our new house, things like that.

Staying in CommunicationSC: How did your real estate agent stay in touch with you?

I: Phone. E-mail takes a lot of time. You might send an e-mail, and they might not check it right away because they’re doing something else.

C: Texting, because I always have my cell phone with me and it’s easier to check and get back to each other sooner – within minutes.

L: I found that both worked. With a young daughter it doesn’t always work well to talk on the phone, so it was convenient to have listings e-mailed to me that I could review on my own time.

“If you say you’re going to do something, do it. It’s a business transaction so respect the person you’re working with. That will get you the return business.”


What Could Your REALTOR® Have Done Differently?SC: What is one suggestion you would have for your REALTOR® to improve their performance during and after the sale? If you could ask them to do one or two things better?

C: One thing that really stands out to me, and it’s a minor thing, but my real estate agent had promised to send me coupons

and I never got them, and even though I was happy with what she did I don’t think I would ever use her again.

I believe in doing what you say you’re going to do, so if you’re going to put incentives out there,

follow through. Even though it’s just a dinner, it shows integrity.

D: I never got a copy of the home inspection report of the property that I was selling. My REALTOR® got a copy, but I never did.

SC: Anything else your REALTOR® could have done?

J: Follow through. It’s not just about when you get the listing and when the sale closes.

Bend over backwards because you’re getting a large chunk of change – earn it, work through, follow up. Do what you say you’re going to do. It’s a business transaction, so respect the person you’re working with. That will get you the return

business.

SC: So I hear honesty is really important; follow through on what you’re going to do. Obviously the

home inspection means a lot and you’d like to see a copy of that.

D: We had a lot of contingencies based on the home inspection of the property we bought, and it would have been nice if our REALTOR® had

pointed out to us what was done and what wasn’t. A number of things were not fixed and after the sale, when we asked our REALTOR® about

it he called the sellers, who said, “No, we didn’t fix those things and we’re not going to.” And he said, “I’ve never had this problem before.

You can sue them.” We bought the house from a lawyer – we’re not going to win.

SC: Anything else your REALTOR® could do for you?

K: Keep up the communication, even after the honeymoon period.

N: Being a first-time homebuyer, I would have liked information about the steps to buying a home and what to expect.

SC: With all the information available out there today, are REALTORS® worth the commission?

N: I’d say yes because I liked having someone who knew what he was doing. If that’s your career you should know what you’re doing – and to me it’s worth the money to have it done right.

D: We’re doing a lot of our own legwork now – searching the

Internet, searching our comparables – and yet the commission rate is still the same and house prices have gone up. REALTORS® are actually earning more money, yet we’re doing more of the legwork.

C: I agree we’re doing a lot more legwork. My REALTOR® told me I could look for myself, and then sent me an e-mail with properties that hadn’t been weeded through first; I thought that was too much legwork for me, for the amount of money she ended up with.

B: Our REALTOR® knew that we had to buy a house because we were moving from overseas and yet I felt she was always on our side, worried about me and my family. We saw 52 houses in just one week because that was the week I had here in the states to look.

K: In the end it’s finding a buyer for a seller. So it’s really the connections and the resources that they have. It’s getting harder to justify the full-service brokerages because the discount brokers are starting to develop some of the same pools of people to work with and they’re starting to take hold.

L: Our REALTOR® coordinated the closings for us when we sold our house and bought a new one. That was a big help that I don’t know if we’d have been able to do ourselves.

SC: What kinds of things could a real estate agent do for you that would make you think, “That was really worthwhile?”

K: You’re saying a full-service agency? Lower the commission.

L: In buying our house she was very helpful and gave us a lot of insight. I think it’s a little harder when you’re selling your house. We sold for significantly less than we paid for it four years ago. Then at the closing there were charges and fees on top of the commission that we didn’t know about. It would have been helpful to know about those beforehand.

The General ConsensusThe general consensus of the group is that they are doing more online research prior to working with a REALTOR® than ever before, due to the availability of information on the Internet – everything from searching for properties, to researching comparable properties when pricing a property to sell, to using a variety of Internet resources to help them pinpoint a neighborhood and home – before they even step out on the street to look at properties. All agreed that the Internet saved them a lot of time.

But beyond that, while consumers are doing more research online, they like having property information available to peruse on their own time. And while REALTORS® are not the sole source of that information anymore, they still play a vital role in the home buying and selling process. The advantages of using a REALTOR® ranged from providing the contacts to find a buyer for a seller, coordinating the closings for sellers who are both buying and selling a home, providing expertise in pricing a property to sell, and being the “expert” in an often overwhelming and confusing process that many consumers are not familiar with.

And in providing those services there are some basic characteristics that consumers value – honesty, integrity, and follow through. Those qualities in a REALTOR® seem to stand the test of time.

Terry O’Connor is Publication Editor for the WRA.


best of the legal hotline with tracy rucka

LEGAL

Earnest Money

The buyer has agreed to pay additional

earnest money within five days of acceptance.

Line 43 of the new 2010 WB-11 Residential

Offer to Purchase refers to U.S. Mail delivery.

If the box at line 43 is marked “N/A,” does this

preclude mailing the additional earnest money

called for at lines 11-12?

No. Line 11 provides that the additional

earnest money may be mailed, commercially

delivered or personally delivered. Therefore,

unless the language is struck at line 11, the

WB-11 allows earnest money to be mailed.

The delivery provisions on lines 34-55 of the

offer are for the delivery of documents and

written notices only.

Water Treatment Systems

Before taking a listing, the listing broker inspected the property and saw there was a reverse osmosis water system. The seller said the system was rented when the listing broker asked about it. The offer was presented and nothing was said about the osmosis system. Is this acceptable?

Brokers must consider rented water treatment systems both at the time of listing and when the offer is presented to the seller. The updated definition of fixtures, found at lines 185-195 of the new WB-11, now includes water treatment systems. It is important when listing the property to ask what systems are rented and make that information available to cooperating brokers. If the rented water system is not excluded at lines 17-18 of the offer, the seller will need to counter the buyer’s offer or be prepared to purchase the system for the buyer. Drinking water systems, house water filters or other systems are now by definition fixtures and must be excluded at lines 17-18 if they are rented.

Pre-Closing Walk-Through

The buyer wants to have his home inspector do another home inspection before the closing. Can the buyer do this per the walk-through provisions?

Regardless of whether the buyer has had

inspections or tests done, the buyer has

the right to view the property again within

three days before closing. There are two

purposes for the walk-through provisions

at lines 204-207 of the new WB-11: (1)

to make sure that the property has been

maintained in the condition it was at the

time of the offer and that any damage that

occurred since then has been repaired, and,

(2) if the seller agreed to cure defects or

otherwise make repairs, to make sure that

such repairs were correctly performed. The

walk-through is not an opportunity for the

buyer to have a home inspector conduct an

additional home inspection.

New Offer / New Forms Mandatory-Use Date: March 1, 2010

The following questions have been recently submitted to the Wisconsin REALTORS® Association in regards to new forms.

WB-11 Residential Offer to Purchase

WB-40 Amendment to Offer to Purchase

WB-41 Notice Relating to Offer to Purchase

WB-42 Amendment to Listing Contract

WB-44 Counter-Offer

WB-46 Multiple Counter-Proposal

WB-47 Amendment to Buyer Agency


LegaL HotLine ... continued on page 12

Occupancy Agreements

The agent was looking at the new offer and

realized the occupancy section has been

removed. Can the buyer still have an early

occupancy?

Yes, the parties may negotiate for pre- or

post-closing occupancy. The broker may

provide terms in the additional provisions

section of the offer or consider using an

addendum such as the Wisconsin REALTORS®

Association Addendum O to the Offer to

Purchase – Occupancy Agreement. The WRA

Addendum O has been recently updated and

includes many optional provisions relating

to occupancy including, but not limited

to, occupancy charges, security deposits,

maintenance, utilities, property taxes and

keys. The 2009 version is available on ZipForm

or for purchase at www.wra.org/forms.

Closing of Buyer’s Property Contingency

The buyers have to sell their current home before they can buy the new property. They have an offer on their home. Should the buyers use the Closing of Buyer’s Property Contingency in the new WB-11?

Although the buyers do have an accepted offer on their property, they cannot purchase the new home until that offer closes. In such a case, because the buyers cannot complete the purchase of a new home until they have sold their current home, including the Closing of Buyer’s Property Contingency in their offer is prudent and practical. If the buyers’ buyer does not close by the date specified at line 308, the buyers will not be obligated to buy the new property.

The re-crafted contingency on lines 307-314 of the WB-11 automatically includes a “bump clause” for the seller. Until the buyers’ property closes, the seller may continue to market the property for sale and accept secondary offers. If the seller accepts another bona fide offer, the seller may notify the buyers of this fact. The buyers must then consider whether they can proceed with the transaction and waive the Closing of Buyer’s Property Contingency or whether they must terminate the offer on the new property.

Loan Commitment – Written Authority to Deliver

The buyers have a loan commitment from the lender and they have signed it. Can the broker now forward this commitment to the seller?

The question here is whether the buyers’

signatures constitute written authorization

to deliver the loan commitment, as required

by lines 240-243 of the new WB-11. Some

lenders require the buyer to sign the

commitment as evidence of the agreement

between the lender and the borrower to

fund the transaction. Such a signature is

not evidence that the buyers have directed

delivery of the commitment to the seller.

The offer now provides that the buyer must

review the commitment and then give written

authorization to deliver. Buyers, lenders

and brokers are cautioned to not deliver a

loan commitment without the buyers’ prior

written delivery authorization. The written

delivery directive must accompany the

offer. The buyer, for instance, may authorize

delivery of the loan commitment by using a

WB-41 Notice Relating to Offer, signing the

loan commitment in a manner that directs

delivery to the seller or attaching a cover

letter.

WB40 Amendment to Offer

The agent has a question on the new Amendment to the

Offer to Purchase. What is expected on Lines 30, 32 and

34, and what was the thought process behind it?

The agent understands “drafted by” as the agent who

drafted the amendment for the buyer or seller. The agent

understands “presented by” as the agent who presented

the amendment to the seller or buyer who would be

accepting the amendment as drafted by the other party.

But “delivered by” is confusing. Delivered to whom?

The other agent? The other party to the transaction?

Back to the party to the transaction that originated the

amendment so that both now have a signed copy?

The form is somewhat unclear as to who the person

delivering the contract is. Any broker delivering the

amendment could complete Line 32. For example,

it may be completed by an agent who drafts the

amendment for the buyer and delivers it to the listing

agent to present to the seller. It could be completed

by a listing agent who drafts an amendment for

the seller and delivers an amendment for the

buyer’s consideration. It may also remain blank in

circumstances where an agent is working with both

buyer and seller.

Tracy Rucka is a Staff Attorney for the WRA.


best of the legal hotline continued from page 11

Home Inspection Contingency

The buyer is thinking about writing an offer. In the Real Estate Condition Report, the seller states that there was a hail storm that caused some damage to the roof. The seller did not, however, repair or replace the damaged shingles after the storm. How can the buyer use the new Inspection Contingency in the WB-11 residential offer in this situation?

The new Inspection Contingency on lines 413-435 of the WB-11 provides for three types of possible inspections: a home inspection, a component inspection and follow-up inspections recommended by authorized home inspection or component inspection reports. The preprinted language in the contingency calls for a home inspection by a Wisconsin-registered home inspector, who is required by law to have a certain level of expertise and to conduct inspections and make reports according to certain rules.

The contingency provision can also be completed to provide for an inspection of a particular component or item by a qualified independent inspector or a qualified third party, for example, an experienced roofer could inspect the roof. Given that the seller has disclosed the damage to the roof, the buyer may want a roof inspection. If the roof inspection discloses damage and defects beyond what is disclosed in the RECR, the buyer may issue a notice of defects. If, however, the nature and extent of the damage disclosed in the inspection report is the same as that disclosed by the seller in the RECR, then the buyer may not issue a notice of defects. As stated on lines 427-428 of the offer, defects do not include conditions of which the buyer had actual knowledge or written knowledge, including the nature and extent of the condition, before signing the offer.

What happens if the fact situation is different? Assume that the RECR was silent regarding any roof damage because the seller did not know of the damage. The buyer included an Inspection Contingency in his offer and the Wisconsin-registered home inspector listed roof damage on his written home inspection report and recommended a roof inspection.

The third type of possible inspection contained in the Inspection Contingency on lines 413-435 of the new WB-11 offer to purchase is a follow-up inspection. The trigger for a follow-up inspection is a written report from an authorized home or component inspection recommending a follow-up inspection. When working with buyers it is important to have inspections conducted soon enough to allow time for any recommended follow-up inspections to be completed before the deadline at line 423. Please also note also that the follow-up inspection provision does not authorize testing. If testing is required, an independent testing contingency must be included in an addendum, additional provisions or an amendment.


LEGAL

BY KEVIN KING

SUPREME COURT CONSIDERS PRACTICE OF LAW PETITION – AGAIN

On March 8, 2010, the Wisconsin Supreme Court will once again conduct a public hearing and conference with respect to a petition by the State Bar of Wisconsin asking the Court to create a new rule defining the practice of law and a new system that will administer and enforce of the new rule. Labeled the “Legal Services Consumer Protection Act,” this matter has been the subject of discussion and/or hearings by the Court since at least 2003. And each time we successfully have opposed the proposal.

Why Should REALTORS® be Concerned With This?

Under the rule proposal presented by the Bar, the practice of law would be defined to include, among other things:

• The selection, drafting, or completion for another entity or person of legal documents or agreements that affect the rights of the other entity or person;

• The negotiation of legal rights and responsibilities on behalf of another entity or person(s);

• Any other activity determined to be the practice of law by the Wisconsin Supreme Court.

Does any of this look familiar? Although these tasks now are performed every day by Wisconsin real estate licensees, under the State Bar proposal an individual would have to be licensed to practice law in Wisconsin and an active member of the State Bar of Wisconsin to perform these activities, unless otherwise excepted or excluded by the proposed rule.

For the past 15+ years, the State Bar asserts it has received numerous complaints describing the alleged unauthorized practice of law (UPL) by a wide range of individuals, including real estate licensees, title companies and others. The State Bar contends that a new mechanism

to monitor and enforce the law against the UPL is needed because district attorneys are not interested in pursuing complaints under Wis. Stats. § 757.30 (which makes UPL a crime) and the statute’s definition of UPL is vague. They apparently do not believe that the various state agencies like the Department of Regulation and Licensing which regulate and discipline persons licensed in different professions adequately address their concerns. But the State Bar has never supported this allegation with concrete evidence of a widespread problem. In fact, the Supreme Court has repeatedly asked the State Bar to submit evidence of the need for a new rule defining the practice of law. And the State Bar has yet to do so.

Almost fifty years ago in State ex rel. Reynolds v. Dinger, 14 Wis. 2d 193, 109 N.W. 2d 685 (1961), the State Bar, acting through the Wisconsin Attorney General, sought to take away the ability of real estate brokers and salespersons to use certain state-approved forms incidental to their practice of real estate brokerage, contending that this activity constituted the practice of law and therefore must be limited to licensed attorneys. The Wisconsin Supreme Court agreed that when a broker or salesperson selects, completes and uses one or more standard approved forms to accomplish the purpose of the client, he or she does practice law. But the Court went on to state that this practice provided a useful benefit to the public and that the Brokers Board (now the DRL Real Estate Board) offered appropriate protection for the public. It cautioned, however, that the Court will act at any time it determines that the interest of the public requires it. With respect to REALTORS®, it never has.

The State Bar’s proposed rule would not expressly protect REALTORS®. Therefore, the WRA has responded to the proposed rule with three key modifications. These changes were prepared at the request of the Court following a

public hearing in December of 2007. Two of our recommendations were approved by the Court in March of 2008 – yet the State Bar opposes our recommendations. Our third offered change has not been approved or disapproved by the Court– and will likely be the subject of additional discussion. All of our changes are necessary to assure that protections provided in Dinger are preserved under the State Bar’s proposed new rule, if adopted by the Court.

The WRA will be actively engaged in the upcoming hearing – once again. An updated statement of our position and recommendations will be filed with the Court prior to the hearing. Your legal counsel – both WRA attorneys and attorneys from Godfrey & Kahn, retained to represent the Association through the WRA Legal Action Program – will be present at the hearing.

Several other groups will also likely be present at the hearing to present their position on the State Bar’s petition. In the past, numerous groups have joined the REALTORS® in successfully opposing the State Bar’s petition. These groups have also asked the Court to deny the petition entirely or at least adopt revisions and exceptions necessary to protect these groups’ members.

There is nothing more fundamental to consumers and your real estate practice than the ability to negotiate and draft real estate contracts to accomplish the intent and purpose of the consumer. There is no legal precedent more clear than the Dinger decision. The WRA is optimistic that the Court still recognizes the significance of protecting this practice and the risk posed by the State Bar’s petition. Still, the WRA will be there to do everything it can to assure that this lawful practice is not compromised.

Kevin King is General Counsel for the WRA.


LEGAL

BY DEBBI CONRAD

ECONOMIC LOSS DOCTRINE DOES NOT BAR MISREPRESENTATION CLAIMS AGAINST

REAL ESTATE AGENTS

Because agents and brokers are not parties to the offer to purchase or other contracts between the parties, it would appear that the Economic Loss Doctrine (ELD) would not block misrepresentation lawsuits against licensees. The Wisconsin Court of Appeals has now confirmed, in Shister v. Bipin, 2009 WI App 163, that the ELD does not bar home purchasers from suing the seller’s real estate broker for misrepresentations committed in a residential real estate transaction.

In Below v. Norton, (2008 WI 77) (www.wisbar.org/res/sup/2008/2005ap002855.htm), the Wisconsin Supreme Court held that the ELD applies to residential real estate transactions, thereby barring a buyer’s common law misrepresentation claims against the seller. (See Pages 1-6 of the August 2008 Legal Update, “2008 Supreme Court Decisions Affecting Real Estate,” at www.wra.org/LU0808 for further discussion of the case and its impact.) The ELD is a judicially created doctrine that encourages the parties to a contract to anticipate all of their potential legal claims relating to the contract and address them in the contract. According to the ELD, there should not be any lawsuits based on misrepresentation, fraud or negligence (referred to as tort claims) with regard to the subject of a contract because the parties should have provided the remedies they need in their contracts. This has been changed, at least for one- to four-family residential real estate transactions, by the recently enacted Wis. Stat. § 985.10. This statute allows homebuyers who are harmed by a seller’s intentional misrepresentation or fraud to once again sue the seller for both compensatory and punitive damages.

In Shister, the buyers received the sellers’ Real Estate Condition Report (RECR) before making

their offer to purchase. The sellers’ RECR stated the sellers had no knowledge of any remodeling done without the required permits and were not aware of any pending property tax reassessment. The sellers knew they should have had a building permit and told the listing broker that they had remodeled their basement without the necessary permits. She had advised them to not disclose this information on the RECR. She told them not to worry because she would take care of it.

The listing broker’s property flyer advertising a finished basement alerted the city assessor that the sellers had remodeled and finished their basement, a fact not reflected in the assessment records or in the assessed value. The assessor contacted the sellers to arrange for a reassessment and the real estate broker met with the assessor in place of the sellers. The property was reassessed between the date of the buyer’s offer and closing.

After closing the buyers learned that the sellers had remodeled the basement without the required city permits and that the home had just been reassessed due to the city’s discovery that the previously unfinished basement was remodeled and finished. The assessed value increased by nearly $60,000, which resulted in a total of $4,408.34 in increased property taxes over a period of three years, and the buyer also had to pay $2,143.20 for retroactive remodeling permits.

The buyer sued the sellers for fraudulent misrepresentation under Wis. Stat. § 100.18, the false advertising statute, and for common law intentional and strict liability misrepresentation. The buyer sued the listing broker for breach of professional duties and intentional and strict liability misrepresentation. The circuit court

dismissed all claims except the false advertising claim against the sellers based on the ELD and allowed only the cost for the retroactive permits.

The buyers appealed and the Wisconsin Court of Appeals held that the Below v. Norton case did not apply to brokers. The ELD “does not address or limit the liability of third party professionals who are involved in the real estate transaction, and whose duties and responsibilities to the plaintiff do not arise out of contract.” The ELD does not apply to claims arising from the provision of services or for professional malpractice. Additionally, there was no contractual relationship between the buyers and the listing broker. The broker’s duties arise from license law, and, the Court observed, “[T]here is no insulation from liability [for an agent] under the law for making untrue factual statements about the condition of a property during the course of a sale.” The broker has an independent duty under Wis. Stat. § 452.133(1), not arising from contract, to provide brokerage services honestly and fairly and with reasonable skill and care, and to disclose material adverse facts to all parties.

• REALTOR® Practice Tips: AS ALWAYS, real estate brokers must fulfill their legal duties to disclose material adverse facts and information suggesting the possibility of material adverse facts, promptly and in writing, to all parties. The ELD provides no excuse for licensees failing to disclose, disclose, disclose! Review the October 2009 Legal Update, “Diligent Disclosure,” at www.wra.org/LU0910 for disclosure duty details.

Debbi Conrad is Director of Legal Affairs for the WRA.


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ZipForm is an electronic forms product available to REALTOR® and Legal Section members as a benefit of membership with the Wisconsin REALTORS® Association. It is available for download free of charge at www.wra.org/zipform. There are two software programs available – an online version (Professional) and a desktop version (Standard). Both are included in your membership.

During registration of the program, the software is stamped with an expiration date of March 1. Within 30 days of the expiration a message will display indicating that the program license is expiring. To renew ZipForm, you must be a member of the WRA and follow a series of steps. The edition of the software determines the renewal steps you will follow:

ZipForm 5 users – To renew your program an upgrade to ZipForm 6 is required.

• IfyouareaZipForm®Online user please select the “Free Upgrade to ZipForm 6” button located in the program.

• IfyouuseZipForm®Desktop, you will upgrade via a button (REALTOR® member or Section Member) on the WRA’s Web site at www.wra.org/zipform

• Onceselected,– REALTOR® members will be directed to a log in page at ZipForm® where you will be prompted to enter your NRDS number and last name. The NRDS number is printed on your NAR REALTOR® Magazine mailing label and on your NAR Membership identification card. A look up option will be provided should you need further assistance in locating this number.

– Section members will be directed to log into the WRA’s Web site and then will be sent to ZipForm for upgrading.

• After logging in, youwill select to upgrade your current ZipForm® account or create a new ZipForm® 6 account. Create a New Account.

• Nextyouwillbeaskedtocreateausernameandpassword.

• You will verify you company information, enter any missing information andproceed to check out.

• When finished, you will receive an e-mail confirmation informing you howto access ZipForm® 6 Professional (formerly ZipFormOnline) and zipForm® 6 Standard (formerly ZipFormDesktop).

ZipForm 6 users – This is a summary of the renewal process for both zipForm® 6 Standard and Professional.

• Whenyouopenorlogintothesoftware,youwillseeamessagethatyouraccountis expired or expiring.

• IfyouclickonRenewNowintheapplication,youwillbeloggedintoyourcustomerdashboard to complete your renewal.

• Inthecustomerdashboard,– REALTOR® members will click the Renew Now button and will be taken to a shopping cart to renew.

– Section members will click the Authenticate Now button, log in to the WRA’s Web site and be returned to the customer dashboard. Clicking on the Renew Now button will take you into the shopping cart to complete your renewal.

>> To learn more about zipForm® 6 please visit http://www.ziplogix.com/products.

The new edition of Wisconsin Real Estate Law (2010) provides a complete updating of the prior 2008 edition based on the many significant changes resulting from approval of the new Residential Offer to Purchase (WB-11) by the Wisconsin Department of Regulation and Licensing. Each chapter of the respected treatise is updated to reflect changes in real estate transactions created by the new form. In addition, the new edition explains important new legislation and court decisions that affect Wisconsin real estate transactions.

Among the more significant changes in the 2010 edition are:

• Disclosure and misrepresentation issues (Chapter 4): false advertising remedies in Wisconsin statutes, effect of the economic loss doctrine

• New offer to purchase provisions (Chapter 7): apportionment of real estate taxes, title restrictions and encumbrances, title evidence, inspections and testing, contingencies, delivery issues, seller’s property condition disclosures

• Closing issues (Chapter 8): Gap coverage, Real Estate Transfer Return, closing proration, new HUD Settlement Statement

• Mortgage lending issues (Chapter 12): Wisconsin and federal legislation on foreclosures and fraudulent lending/borrowing

• Ownership by domestic partners

• Land use controls (Chapter 20): Wisconsin’s “Working Lands Initiative,” Pier Protection Act, Shoreland Development rules (Department of Natural Resources)

• Landlord-Tenant issues (Chapter 21): rental unit energy efficiency requirements, protecting tenants’ rights in foreclosure, tenant terminations based on imminent threats

Order your copy today by visiting www.wra.org/pub285 or calling 608-241-2047. Price is $45 plus shipping and tax.

WISCONSIN

REAL ESTATE LAW

2010 Edition

SCOTT C. MINTER DEBRA PETERSON CONRAD

Formerly by

Walter B. Raushenbush & James B. MacDonald

2010 Wisconsin Real Estate Law Manual Available

Las Vegas CE

M a r c h 1 - 3 , 2 0 1 0

PAYLINE

S O L D !

S O L D !

Las Vegas CELas Vegas CE

M a r c h 1 - 3 , 2 0 1 0M a r c h 1 - 3 , 2 0 1 0Great Food! Great Shows!

Great Continuing Education!

Course 1 – Listing Contracts

Course 2 – Offer to Purchase

Course 3 – New Developments

Course 4 – Buyer Agency Agreements

Elective A – Risk Reduction

Elective C – Condominiums

Out of State CE - Las VegasMarch 1-3, 2010Tuscany All Suites Hotel & Casino | Las Vegas, Nevada

Great Food. Great Shows. Great Education.Fulfi ll your 2009-2010 real estate continuing education requirements in style. Escape the winter weather and join the WRA in sunny Las Vegas, Nevada. Whether you enjoy the spectacular dining or try your luck at the many casinos, this is one educational opportunity you won’t want to miss. Choose from as many as six CE courses or electives and still have plenty of time to catch a show on the strip. You may even be able to write it off as a business expense (check with your tax accountant)!w w w. w r a . o r g / l a s v e g a s


EDUCATION

New Broker TrainingFebruary 17-19, 2010WRA Headquarters - Madison

This course provides guidance for brokers who are opening up their own brokerage office or are becoming a manager for their company. The three-day course covers the fundamentals of being a broker and

the responsibilities that come with that supervisory role. Registration includes the latest version of the Broker Desk Reference – a $75 value. Visit: www.wra.org/newbroker

GREEN Residential ElectiveApril 9, 2010Brookfield

NAR’s GREEN Designation Residential Elective Course gives you the knowledge and awareness of green building principles applied in residences so that you can guide buyer-clients in purchasing and retrofitting green homes as well as help sellers by listing and marketing green properties. For more information, visit: www.wra.org/Green

QuickStartOn DemandThe QuickStart program assists agents in learning the business of real estate. Courses focus on contract issues, agency relationships and negotiating strategies. The program is designed to help agents become confident in their practice as well as focused on their personal business plan. Completion of the QuickStart program (four days) and passing the exams fulfills the requirements for GRI Course 1. Visit: www.wra.org/QuickStartondemand

Short Sales & ForeclosuresApril 23, 2010WRA Headquarters - Madison

Working with buyers and sellers of distressed properties can be frustrating and time consuming, but also rewarding. This CRS elective provides you with practical approaches to the pre-foreclosure and

foreclosure processes that will result in the successful disposition of these properties. Learn the intricacies of the short sale and foreclosure processes. Visit: www.wra.org/CRSinfo

2009-2010 Commercial CEFebruary 3, 10 & 17, 2010: Brookfield(co-sponsored with Commercial Association of REALTORS® - Wisconsin)

March 10, 17 & 23, 2010: Appleton(co-sponsored with REALTORS® Association of Northeast Wisconsin)

Tired of taking continuing education classes that focus on residential issues only? Then the WRA commercial CE courses are exactly what you need. The WRA has created commer-cial-centric courses specifically for those who practice in the commercial real estate world. Commercial brokers and agents: Complete your required 18 hours of continuing education in three days at one of two locations. Visit: wra.org/CommercialCE

GREEN (2-Day) CourseApril 7-8, 2010Brookfield

NAR’s GREEN designation gives you the tools you need to guide clients through buying, selling, or building in the sustainable marketplace. You will learn how to explain to your clients

what makes a home, building or property green; list and market green properties; determine the energy efficiency of a property, and moire. For more information, visit: www.wra.org/Green

ABR CourseMarch 25-26, 2010Wisconsin Dells

The Accredited Buyer Representative (ABR) designation is the benchmark of excellence in buyer representation. The overall goals of the ABR Designation courses are to educate and prepare buyer’s representatives to provide the kind of service and fidelity to buyers that seller have always enjoyed, and to offer methods for building your buyer representation business. Visit: www.wra.org/ABRcourses

Course Schedule Visit wra.org/CourseSchedule for full schedule. Sales & Marketing Management Date Course Location $Early Reg.** $Reg. $ATD

February 17-19, 2010 New Broker Training Madison 315 325 345 March 25-26, 2010 ABR Course Wisconsin Dells 260 270 290 April 7-8, 2010 GREEN (2-day) Brookfi eld 285 295 315 April 9, 2010 1-day GREEN Residential Elective Brookfi eld 130 140 150 April 23, 2010 Short Sales & Foreclosures: Protecting Madison 145 155 175 Your Clients Interests (CRS Core 1-day class ) Fulfi lls core education for NAR new Short Sales and Foreclosure Resource (SFR) certifi cation

Conference and Conventions Date Event Location March 1-3, 2010 Out of State CE (Courses 1-4, Electives A & C) Las Vegas, NV March 10-11, 2010 Appraisal Conference Wisconsin Dells - Ho-Chunk Casino March 10, 2010 2010-2010 7-Hour National USPAP Update (includes USPAP book) or Current Trends – 7 hours March 11, 2010 Appraising the FHA Way – 7 hours or Technology Resources 3.5 hours Appraising in a Down Market – 3.5 hours

Real Estate Continuing Education Date Course Location

February 10, 2010 2009-10 CE 3 &4 (Comm.) 8:30 – 4:30 Brookfi eld 800-279-1972 February 17, 2010 2009-10 Elect. B & E (Comm.) 8:30 – 4:30 Brookfi eld 800-279-1972 February 17, 2010 2009-10 CE 3 & 4 8:30 – 4:30 Beaver Dam 920-885-3312 March 1, 2 & 3, 2010 2009-10 Courses 1,2,3,4 & Electives A & C Las Vegas 800-279-1972 March 3, 2010 2009-10 Electives A & E 8:30 – 4:30 Beaver Dam 920-885-3312 March 10 2010 2009-10 Courses 1 & 2 8:30 – 4:30 Grafton 262-375-4730 March 10, 2010 2009-10 Courses 1 & 2 8:30 – 4:30 Appleton 800-279-1972 $30/m; $35/nm (Commercial) March 11, 2010 2009-10 Courses 3 & 4 8:30 – 4:30 Brookfi eld 800-279-1972 $27/m; $35/nm March 16-17, 2010 2009-10 Courses 1 & 2; 3&4 8:30 – 4:30 Merrill 715-627-4885 March 17 2010 2009-10 Courses 3 & 4 8:30 – 4:30 Grafton 262-375-4730 March 17, 2010 2009-10 Courses 3 & 4 8:30 – 4:30 Appleton 800-279-1972 $30/m; $35/nm (Commercial) March 17, 2010 2009-10 Courses 3 & 4 8:30 – 4:30 Madison 800-279-1972 $27/m; $35/nm March 23, 2010 2009-10 Elective B & E 8:30 – 4:30 Appleton 800-279-1972 $30/m; $35/nm March 23, 2010 2009-10 Courses 1 & 2 8:30 – 4:30 Duluth, MN 218-728-5676 March 24, 2010 2009-10 Courses 3 & 4 8:30 – 4:30 Duluth, MN 218-728-5676 March 25, 2010 2009-10 Elective A & C 8:30 – 4:30 Duluth, MN 218-728-5676 April 8, 2010 2009-10 Courses 3 & 4 8:30 – 4:30 Sturgeon Bay 920-743-9651 April 21, 2010 2009-10 Electives D & E 8:30 – 4:30 Brookfi eld 800-279-1972 $27/m; $35/nm April 22, 2010 2009-10 Elective A & E 8:30 – 4:30 Marinette 715-735-0547

Elective A: Risk Reduction Elective B: 1031 Exchanges and Exchange Opportunities Elective C: Condominiums Elective D: Landlord/Tenant and Property Management Elective E: Financing the Sale

Pre-License Date Course Location $ Early Reg.** $ Regular Reg. * Plus books February 1-4, 2010 Broker Pre-License Course 8:00 - 5:00 Milwuakee 260* 280* April 5-8; 12-15. 2010 Sales Pre-License Course 8:00 - 5:00 Madison 325* 325* April 19-22, 2010 Broker Pre-License Course 8:00 - 5:00 Madison 260* 280* July 19-22;26-29, 2010 Sales Pre-License Course 8:00 - 5:00 Madison 325* 325*

Now available online!

July 19-22;26-29, 2010 Sales Pre-License Course 8:00 - 5:00 Madison 325* 325*Start July 19-22;26-29, 2010 Sales Pre-License Course 8:00 - 5:00 Madison 325* 325*Start July 19-22;26-29, 2010 Sales Pre-License Course 8:00 - 5:00 Madison 325* 325*Start July 19-22;26-29, 2010 Sales Pre-License Course 8:00 - 5:00 Madison 325* 325*Start July 19-22;26-29, 2010 Sales Pre-License Course 8:00 - 5:00 Madison 325* 325* April 19-22, 2010 Broker Pre-License Course 8:00 - 5:00 Madison 260* 280* July 19-22;26-29, 2010 Sales Pre-License Course 8:00 - 5:00 Madison 325* 325*Start July 19-22;26-29, 2010 Sales Pre-License Course 8:00 - 5:00 Madison 325* 325*Start July 19-22;26-29, 2010 Sales Pre-License Course 8:00 - 5:00 Madison 325* 325*Start July 19-22;26-29, 2010 Sales Pre-License Course 8:00 - 5:00 Madison 325* 325*Start July 19-22;26-29, 2010 Sales Pre-License Course 8:00 - 5:00 Madison 325* 325*Quicksales training program

www.wra.org/QuickStartOnDemand

*Plus books** Early registration applies two weeks prior to the start of the course.***Includes Winter Convention Registration.

# Appraiser section members receive a discount.


APPRAISALCONFERENCE

2010

Ho-Chunk Casino, Hotel & Convention CenterMARCH 10-11

Conference Highlights

8:00 - 8:30 | Registration

8:30 - 4:30 | 2010-2011 7-Hour National USPAP Update Course (includes copy of the USPAP book)Instructor: Jim Jacobs

8:30 - 4:30 | Current Trends - 7 HoursInstructor: Joe Traynor

12:00 - 1:00 Lunch (Included in fee)

Day 1March 10, 2010

8:00 - 8:30 | Registration

8:30 - 4:30 | Appraising the FHA Way 7 HoursInstructor: Jim Jacobs

8:30 - 12:00 | Technology Resources 3.5 HoursInstructor: Joe Traynor

12:00 - 1:00 Lunch (Included in fee)

1:00 - 4:30 | Appraising in a Down Market 3.5 HoursInstructor: Joe Traynor

Day 2March 11, 2010

Continuing Education Credit:

Each full day class has been submitted for 7 hours of continuing education credit for Wisconsin Appraiser and Assessor, Michigan Appraiser and Minnesota Appraiser.

Each half day class has been submitted for 3.5 hours of continuing education credit for Wisconsin Appraiser and Assessor, Michigan Appraiser and Minnesota Appraiser.

www.wra.org/APPConference


REALTOR® SALES tip

Ever since our first real estate classes, we have

all been familiar with this slogan: LOCATION,

LOCATION, LOCATION. Today, I describe the three

most important elements to any real estate

transaction this way: PRICE, PRICE, PRICE.

Most of the nation is in a serious buyer’s market,

and home prices are being determined by the

buyers, not the sellers. Keeping in mind that prices

are still settling, it’s more important than ever to

accurately price a new listing to sell and not add to

the inventory of overpriced properties.

Pricing is an art, not a science. Part of it is a gut

feeling, and part of it is assessing supply and

demand. It is no different than at the grocery store:

if the supply of tomatoes is low, prices tend to be

high; if tomatoes are abundant, then bargains can

be found.

Ask yourself: “Where and when was the last sale?”

If it was three months ago and there is very little

inventory on the market, you may be able to push

up the asking price, especially if there is nothing

else available in a desirable neighborhood. I just

sold and closed on a home for full price.

Some sellers refuse to accept that prices have

leveled off; others are confused about the changing

market. Last week I had an opportunity to go the

extra step on a new listing by taking the sellers to

see eight other homes on the market that would be

our competition. My goal was to have them step

into the shoes of the buyers to see just how much

house you can get for the money and to see how

their home compares to the others on the market.

A number of dangers exist when a property is

overpriced from the start. First of all, the house sits

on the market and does not sell. Then it gets

shopworn, and the sellers end up taking a lower

price than they might have if they had priced it

correctly from the beginning.

Here are some things you will want to keep in mind

when helping your clients determine the right price.

Price vs. Value

First, you have to understand the difference

between price and value. Two homes might have

identical prices and similar specifications, but there

are a number of factors – location, upgrades, and

condition, for example – that could make one home

a better value than the other.

The best way to assess your listing’s value

proposition is to be extremely familiar with the

competition. Check broker Web sites, national real

estate Web sites, and print and online

advertisements to gather general information about

competitive listings.

Complement this intelligence with firsthand

knowledge. By visiting properties, you will also be

able to evaluate the homes’ locations within a

particular community. Does the back of a property

face woods or another home? Is the home on a

corner lot or in the middle of the block? Get out

there and preview as many homes as you possibly

can. If you don’t know your inventory, you can’t sell

it!

An Appealing Price Point

Second, you want to find a price point that will

generate interest among multiple buyers. By

attracting more than one interested party, you

create a greater sense of urgency and competition.

One way to create interest is to capitalize on the

fact that buyers often search for properties within a

certain price grouping, such as $480,000 to

$500,000. If a reduction is necessary, the listing

agent could drop the price to the top end of the next

price grouping ($479,000). That exposes the listing

to a new crop of buyers who might otherwise not

have found it. Our MLS systems are all set up

according to price – from lowest to highest – so it

truly is all about PRICE!

Before suggesting a listing price, determine your

sellers’ motivation. Find out if the sellers are serious

or just testing the waters. Do they need to sell fast

because they are relocating or have a signed

contract on another house? Or are they willing to

wait for the highest possible offer to maximize the

equity they receive? In other words: are the sellers

pricing for today’s market or for the year 2012?

Even the most talented salesperson cannot close a

transaction if the buyer or seller lacks motivation.

This conversation gives you an opportunity to

discuss realistic expectations. Be sure to talk about

recent changes in the market, such as rates of

appreciation and average days on the market.

Current interest rates also affect price. If your

sellers have an understanding of current market

conditions, there will be less stress, confusion and

anxiety for everyone.

Reprice early and often

A REALTOR®’s goal is to price each listing correctly

when it first comes on the market. But pricing a

home is not a one-time task, especially in a

changing market. You will need to stay on top of

changes – new listings, recent transactions, overall

inventory shifts, price adjustments and

improvements to previously listed houses – that

could affect the perceived value of your seller’s

home. Review your listings at least every 30 days

– more often if there is a lot of transaction activity.

Your best chance for a full-price offer comes in the

first three weeks. Do not let a listing languish at the

wrong price. If there is no activity on your listing,

consider a price reduction or a series of timed

reductions to generate interest and excitement.

As a top professional, I think of myself as the real

estate doctor – in order to get well clients must

listen to my advice, fill the prescription and take the

medicine. My job is to use my expertise and

professional judgment to analyze market

information and make recommendations to my

clients. That guidance is more valuable in the

current market than it has been for a long time. And

that’s what the doctor ordered!

Marcus A. Wally, MBA is an active Florida REALTOR® in St. Augustine, Florida - “Our Nations Oldest City.” 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. Marcus can be reached at 904-669-1081 or by e-mail at [email protected].

BY MARCUS WALLY

P-R-I-C-E:

Tell You What it Means to Me


BY JOE MURRAY

OFF TO THE RACESpublic AFFAIRS

8th Congressional District – Democratic Congressman Steve Kagen from Appleton was first elected to the Fox Valley’s 8th Congressional District in 2006, replacing Republican Mark Green, who vacated this seat to run for governor. Kagen was re-elected in 2008 with 54 percent of the vote.

Kagen had the good fortune of running for this seat in back-to-back election cycles that strongly favored Democrats. Kagen barely won the first time before winning the second race comfortably. In both elections Kagen faced former Assembly Speaker John Gard.

The 2010 election has generated a large number of Republicans looking for the chance to run against Kagen in November. Six GOP candidates

have jumped into the primary and there may be others looking to get in. The six include businessman Reid Ribble, Door County Commissioner Mark Savard, Brown County Supervisor Andy Williams, physician Marc Trager, former state Representative Terry McCormick and state Representative Roger Roth.

Republicans believe Kagen will have a difficult time getting re-elected given the political trend today that appears to favor the GOP. But more interesting is this: the 8th Congressional District has elected a Democrat only four times in the last 100 years, and none of the four were elected for more than two terms. This historical fact and Kagen’s votes for cap and trade, health care reform and controversial stimulus spending could make this seat very difficult to hold.

With nine months to go before the midterm elections, it’s just too early to make hard and fast predictions on what voters will do in November. The economy, unemployment, taxes, health care and more will all factor into the outcome when voters head to the polls. But it’s not too early to take a snapshot look at political trends as they stand today for clues about what could happen on November 2. Here are a few of the most recent developments.


Gubernatorial Fundraising – One sure way to judge the legitimacy of any top-tier gubernatorial candidate is fundraising capacity. The more money a statewide candidate can raise, the more serious voters (and political insiders, including the media) take them.

The three top-tier candidates running for governor this year include City of Milwaukee Mayor Tom Barrett on the Democratic side, former Republican Congressman Mark Neumann and Republican Milwaukee County Executive Scott Walker.

All three candidates have made it a point to highlight their fundraising success since their announcements. In 2009, Tom Barrett raised $1.5 million, Mark Neumann raised $1 million and Scott Walker raised $1.9 million.

Neumann’s total came from a large personal loan to his campaign and Walker’s fundraising number was generated from 10,000 donors statewide. Barrett hasn’t released the details on where his money comes from.

The 2010 race for governor is expected to break all previous fundraising and spending records.

2010 Landscape – Democrats, who only a year ago were riding high after winning the White House and strengthening their control over the Senate and House of Representatives, are feeling a broad public backlash against their party. Ten percent unemployment, higher taxes and record-setting deficits appear to be turning voters, especially independent voters, against the party in record numbers.

According to Real Clear Politics Poll Averages, the public is in a very sour mood. President Obama’s job approval stands at 50 percent approval, 45 percent disapproval; congressional job approval stands

at 27 percent approval, 66 percent disapproval; and 36 percent of the country believes we are heading in the right direction, while 57 percent feel we are on the wrong track. These numbers are almost as bad today for Democrats as they were for Republicans before they lost power in 2006 and 2008.

Charlie Cook, an independent and highly respected political handicapper out of Washington, D.C., wrote in a recent article titled “Trouble for Democrats,” “This election year is just beginning and much can and will happen over the next ten months. But it would be hard to describe the last year, politically speaking, as anything less than a nightmare for Democrats and a fantasy-filled dream for Republicans.”

In the 2006 and 2008 election cycles, Republicans were demolished at the polls over the war in Iraq, political scandals, earmark spending that resulted in a “bridge to nowhere” and the near collapse of the banking system. Unless something changes soon, Democrats may be heading for a train wreck of their own this November.

RPAC Success – Congratulations to all REALTORS® Political Action Committee Trustees, local association RPAC chairs, government affairs staff and association executives for the successful RPAC fundraising in 2009. The 2009 goal of $350,000 was set in January and, even with a challenging economy and sluggish real estate market, that goal was met and exceeded. The final fundraising total was $356,539.

The importance of RPAC and involvement in political campaigns cannot be overstated. Decisions made in Washington, Madison and at the local level have a direct impact on your ability to earn a living in the real estate industry. The purpose of RPAC is to help elect candidates who will promote and defend issues that impact homeowners, property owners and the livelihood of every Wisconsin REALTORS® Association member. In short, RPAC exists to kill bad laws and pass good ones.

To all of you who contributed, thank you! We hope to have all WRA members involved through RPAC in 2010.

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


public AFFAIRS

Current Fiscal Condition

The first noteworthy analysis is a recent snap-shot of our state’s current fiscal condition. The analysis comes from the respected Wisconsin Taxpayers Alliance (WTA) about an all-but-ignored year- end report by the state comptroller. According to the WTA, the state comptroller must use generally accepted accounting principles (GAAP) when preparing the state’s official financial statements. Which means all the accounting maneuvers, delays in payments, borrowing, use of one-time money, and other tactics used by lawmakers and governors to show a “balanced” budget, must be ignored. What emerged is a $2.71 billion state general fund budget deficit at the end of 2009.

Perhaps even more disturbing is the WTA analysis shows Wisconsin is among the worst states in the nation when it comes to budget

deficits. In reviewing 2007-2008 data, only four states – Wisconsin, California, Illinois and Maine – had GAAP deficits. Wisconsin’s $2.50 billion deficit compared to California’s $4.16 billion deficit, Illinois’ $3.93 billion deficit, and Maine’s $0.24 billion deficit.

But the real magnitude of Wisconsin’s deficit problem is demonstrated when you consider how many more people California and Illinois have compared to Wisconsin. On a per capita basis, we’re by far in the worst shape. California has 36.8 million people and Illinois has 12.9 million people, compared to Wisconsin’s 5.6 million. Thus, on a per capita basis, Wisconsin has the largest GAAP deficit in the nation at $445 per person, followed by Illinois at $305, Maine at $181, and California at $113 per person according to the WTA analysis. That means, on a per capita basis, Wisconsin’s budget deficit is four times larger than the poster child of state budget deficits, California.

Given the current status of our economy, it’s become increasingly important for REALTORS® to pore over as much economic news and data as we can get our hands on, looking for new threats, opportunities and clues for the future. Toward that end, several recent reports and analyses regarding the state’s fiscal future are particularly noteworthy. Together, these reports paint a disturbing picture of Wisconsin’s pending fiscal peril.

WISCONSIN’S PENDING FISCAL PERIL

BY MICHAEL THEO

Budget Reform May Come by Default if Not Design


Future Fiscal Condition

The second noteworthy analysis is a look at Wisconsin’s future fiscal condition. This analysis was produced by the Wisconsin Policy Research Institute (WPRI) and was authored by former state Department of Revenue Secretary Rick Chandler. (Mr. Chandler has been a tax and economic policy consultant to the WRA for the past 7 years.) According to the WPRI, the next state budget (covering 2011-13) will have a $2.2 billion gap between general fund revenues and expenditures. This disturbing projection is based on realistic estimates that revenues and major expenditures (school aids, medical assistance, the UW System and corrections) will grow at about the same rate as they have for the past 10 years or so, and that all other expenditures will remain flat.

According to the WPRI report, the major reason for this future budget gap is that the state will likely not have huge amounts of federal stimulus revenues in the next biennium like it did in the last two biennia. (Wisconsin has received $2.2 billion over a three-year period from the Feds, averaging about $740 million a year.)

The report goes on to review the four main options being discussed to address this problem, which includes hoping for an economic boom; freezing all spending; raising taxes on the rich; and cutting state

agency operating budgets. The report concludes that none of these approaches by themselves would solve the problem because:

• Even if the economy grew by a whopping 5.7 percent per year, the budget gap would still be $1.2 billion (Wisconsin’s most robust level coming out of the last recession).

• Even if we froze spending on all state programs, including the big four programs, the budget gap would still be $778 million.

• Even if we raised taxes on the wealthy like we did this past year, it would only close the gap by $287 million.

• And even if we cut state operations by 5 percent, it would only close the gap by $375 million.

This doesn’t paint a very rosy fiscal picture for Wisconsin or for our new governor who takes office in January 2011. The state would have to experience 5.7 percent growth in revenues AND freeze all state spending for two years in order the balance the budget, both of which are unlikely.

The bottom line is the next state budget will not be business as usual. Wisconsin needs fundamental change in both how we raise money and how we spend it. We may face radical budget reform not by design but by default.

Michael Theo is Vice President of Legal and Public Affairs for the WRA.


public AFFAIRS

NEW REZONING PENALTY GOES INTO EFFECT FOR FARMLANDBY TOM LARSON

On January 1, 2010, a new state law went into effect requiring local zoning authorities to impose a conversion fee on farmland currently located in a farmland preservation zoning district. Despite strong opposition by the Wisconsin REALTORS® Association, which included a Call to Action to WRA members, the fee was adopted in the 2009-2011 state budget as part of a comprehensive package of new regulations (known as the Working Lands Initiative) designed to better protect farmland from development.

Calculating Conversion Fee

A property owner must pay a conversion fee when rezoning land out of a certified farmland preservation district. A “certified farmland preservation district” is defined as land that is currently subject to a farmland preservation agreement, or land that is located in an exclusive agricultural zoning district.

The conversion fee is equal to the greater of:

• three times the assessed value of property, as determined by the Department of Revenue under Wis. Stat. § 73.03 (use value program), or

• an amount specified by the county in its Farmland Preservation Zoning Ordinance.

If a county chooses to impose a higher fee, the county gets to keep the additional revenues generated. Therefore, a county has a financial incentive to impose a higher penalty.

Based upon the state’s average assessed value for farmland in 2009 ($270 per acre), the minimum fee that a property owner must pay when

converting land out of a farmland preservation zoning district will be $810/acre in 2010. If the county chooses to impose a higher fee, the fee will naturally be higher.

Conversion fees are assessed based on the Wisconsin DOR Use Value Guidelines for Agricultural Land Assessment, which can be found at www.revenue.wi.gov/slf/useval/10useval.pdf. To determine the fee for each acre of land being rezoned, multiply the Grade 1 Agricultural Land Assessment value or highest class of tillable land by three. (Note: the conversion fee is assessed based upon the number of acres to be rezoned, not the entire parcel.)

Conversion Fee vs. Use Value Penalty

Although they both apply to farmland, the new farmland conversion fee is different from the use value penalty that has been in effect since 2003. The new farmland conversion fee applies only to property located in a farmland preservation zoning district, and only when the property is rezoned by the property owner. If the property is rezoned by the local unit of government as part of a comprehensive revision to the zoning ordinance, no fee is owed.

The use value penalty is owed any time a property owner changes the use of farmland to a non-agricultural use, which includes having the property lie fallow. The use value penalty is calculated by multiplying the number of acres converted by a percentage difference between the average fair market value of agricultural land in the county (based on the previous year’s sales of land that is larger than 38 acres and intended to be used as agricultural) and the average

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equalized value of agricultural land. Th e DOR calculates these fi gures and provides them to the County Treasurer each year. Th ey are also available at www.revenue.wi.gov/slf/useval/uvindx.html.

Land can be subject to both the new conversion fee and the use value penalty if the land is (1) located in a farmland preservation zoning district, (2) rezoned to a diff erent zoning classifi cation and (3) converted to a non-agricultural use. Farmland converted for development purposes will often fall into this category.

Disclosure of New Conversion Fee

Although the new law does not specifi cally require the new conversion fee to be disclosed to prospective purchasers, a REALTOR® and seller should disclose this information to prospective buyers, even if the buyer is not planning to rezone the property.

For more information on the new conversion fee, visit www.datcp.state.wi.us/workinglands/index.jsp. See also 2009 Legal Update “Wisconsin Farmland Initiatives” at www.wra.ogr/LU0909. To help ensure that buyers are aware of the penalty, the WRA has included information about the conversion penalty in fi ve of its disclosure forms: the Condition Report, the Seller’s Real Esate Condition Report, the Real Estate Condition Report - Farm, the Seller Disclosure Report - Commercial, and the Seller Disclsoure Report - Vacant Land.

Tom Larson is Director of Regulatory and Legislative Aff airs for the WRA.


SPECIAL report

When building any campaign, buzzwords like “social media and public relations” are often thrown around, but may be quickly forgotten. For the Wisconsin Homebuyer Tax Credit Program, those buzzwords are hard at work.

Utilizing a full array of marketing resources, the Wisconsin Homebuyer Tax Credit Program found new life and greater reach in late 2009 and early 2010.

Keeping it centralized

Kennedy Communications and the Wisconsin REALTORS® Association colluded to design and approve a strategy that capitalized on traditional awareness vehicles, and a renewed emphasis on emerging medias. At the end of the day, all roads, links and clicks led to www.WisconsinHomebuyer.org. Since the campaign began, the site has grown in all the right ways, surpassing the campaign goals across the board.

The microsite’s traffic indicates an almost perfect geo-target of Wisconsin, and continues to build search engine visibility on Google, Yahoo and Bing. Moreover, the pay-per-click campaign has seen thousands of impressions and a click-through rate (CTR) roughly six times better than average.

Joe the HomeBlogger: Social Butterfly

One of the very first considerations in the expansion and extension campaign was the social media content. Research actually shows the campaigns that really make an impact are the ones that offer strong and consistent material to the public.

Enter Joe the HomeBlogger.

Joe is a mutation of the Twitter feed @JoetheHomeBuyer, and speaks in a casual, conversational tone. He doles out home buying advice from his own digital home, and offers tax credit insight in a new voice. Moreover, the blog gives our Facebook and Twitter affiliates an added incentive to suggest our material to their network.

Thus far, Joe has racked up 5 posts – one every week. That production will continue until the campaign’s end on March 28th. To read Joe’s musing yourself, go to joethehomeblogger.com.

REALTweetORs

With content firmly in place, the Wisconsin Homebuyer Tax Credit Program revamped its style within popular social media spaces Twitter and Facebook.

With a huge potential exponential Twitter network,

the social strategy behind our microblogging arm is dedicated to education. New information and research is constantly sought out to feed Joe, and ultimately provide REALTORs and their clients with a constant stream of useful information. To date, Joe boasts about 353 followers, with our insights re-tweeted (or copied and passed on by other users) consistently – strengthening the level of awareness.

In terms of Facebook, Wisconsin Homebuyer Tax Credit enjoys a healthy amount of fans (722 at the time of print) thanks partly to the high frequency of posts. Interactivity is at an all-time high as Facebook proves to be a popular destination for those seeking more personal information on the tax credit.

Ready for our close-up

After the WRA and Kennedy Communications kicked the campaign off in earnest, a press release went out to media outlets all over Wisconsin touting the new campaign, and calling out its details. On January 13th, the WRA was asked to participate in a story by NBC15 in Madison about how the housing market is “heating up.”

WRA’s Political Affairs Director, Joe Murray, gave his expert commentary during an in-house interview where Murray highlighted the tax credit as a key force in the market’s improvement. Murray’s insights coupled with an interview with The Holdermans (an area family of four looking for a new home) left a strong impact. The story ran more than two minutes on the 10 p.m. nightly news, as well as several times during the 5-7 a.m. morning show.

Through a publicity formula that takes into account the length of the piece, interview quality and impressions (over 37,000) - the overall investment in the public relations outreach was returned in publicity value 11 times over.

The Whole Landscape

The tax credit campaign continues to find success and new ways to reach the homebuying community. By interacting through multiple venues, the Wisconsin Homebuyer Tax Credit Program is spreading the word, filling the education gap, and hopefully, getting homebuyers active in the market.

Peter Raisch is the Public Relations Director at Kennedy Communications in Madison. KennedyC is an integrated advertising, marketing and interactive agency and has been a media and advertising consultant with the WRA for many years.

THE BUZZWORDS AT WORKSocial media and traditional media converge to build tax credit awareness

BY PETER RAISCH

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CRS-BL-AD_WI-8.325x10.875_093009_Corrected.pdf 1 10/7/2009 2:10:30 PM

Wisconsin Housing and Economic dEvElopmEnt autHority201 West Washington Ave n Madison, WI 53703 800.334.6873 n www.wheda.com

The WHEda Fannie mae advantage gets first-time buyers into a home with as little as $1,000 out-of-pocket, no private mortgage insurance requirement and a low, 30-year fixed interest rate.

In 2010, WHEDA will continue to offer innovative, market-driven loan products, job loss mortgage payment protection and unique down payment options.

For the latest information about the WHEda Fannie mae advantage or to check out our new, higher income and purchase price limits allowing more borrowers to qualify, go to wheda.com.

Follow us on Facebook. Just click on the icon found on our website.

Eligible first-time home buyers can use the federal housing tax credit with this loan. Buyers must enter into a contract by April 30, 2010 and close by June 30, 2010.

february 2010 - wisconsin real estate magazine

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