BY LEN ELDER, JD, DREI

Somewhere along the way, a great idea got lost. In an effort to create minimum standards of professionalism, most states require a certain number of hours in order to maintain a real estate license. Given the complexities and the speed of change in the real estate industry today, hardly anyone can maintain the position that the mandatory levels are sufficient to achieve success and excellence. Few fail to realize this, and we are often caught just trying to complete enough hours to renew, falsely believing that’s all the education we really need. Education is the cornerstone of our industry and the foundation for reaching our goals. There is no such thing as too much education today.

I was teaching a class in Phoenix, Arizona when a student proclaimed that they were completing their 100th hour of class so far in a single year. A few people started to snicker, and when I asked what was so funny, they casually replied that they had taken between 200 and 250 hours so far for the year. The number of renewal hours required by the Arizona Department of Real Estate is 24 in a two-year period.

Although I have practiced as a trial lawyer and am a Distinguished Real Estate Instructor (DREI), I then asked a question to which I did not know the answer. I asked the student, “Doesn’t your broker want you out selling real estate?” Unbeknownst to me, the agent’s broker was in class. The broker responded, “Len, you don’t understand. We never lose a listing appointment. We have a 100% capture rate.” I found that to be a miraculous claim, and when I asked for further elaboration, the broker replied, “It’s simple. We ask our agents to make a list of all the educational classes they have attended. We start the listing presentation by reviewing them with the client. We tell the client that we have spent a significant amount of time in class prior to meeting them so that we could be one of the most educated, prepared and skilled agents they ever met. Then we tell the client it doesn’t matter if they hire us, just don’t hire someone with less education.”

Still pressing, I asked the broker, “Wouldn’t you make more money if your agents were out selling more and in the classroom less?” The broker replied, “I guess you didn’t hear me. We never lose a listing presentation. More importantly, most brokers spend all of their time answering basic questions that the agents would know if they went to high-quality classes regularly.”

Sometimes as the teacher, you get more educated in class than the students do. Being a teacher requires tough discussions that often challenge the status quo. Still pressing I turned back to the agent, “Alright, I get the broker’s point, but wouldn’t you rather be out selling?” Now came the hard part, as the agent said, “Perhaps you didn’t hear us. We never lose a listing presentation.” Then the agent added a kicker, just for fun, “Plus my broker pays us to be here.”

I have been an advocate of educational excellence for most of my life, but I couldn’t believe what I was hearing. The agent and the broker explained how the fee splits in the company were structured around how many educational hours the agent had acquired. For example, up to 50 hours is a 50/50 fee split. At 100 hours the fee split became 60/40. An agent could get to a 90/10 fee split at the 250-hour mark.

I should have known better by this point, but I asked the broker how they could afford that. Do you know what he said? He replied, “Perhaps you didn’t hear me, we never lose a listing, and I don’t have to spend time teaching my agents or consulting with them on basic issues.” I later found out that the description these agents give for the mandatory requirements is, “That’s just the minimum hours set by government agency for minimal competency in our industry.” Harsh as that might sound, I think it is accurate.

We should all realize that the value of courses and education is not simply to get a certificate so that we can renew our licenses. We should seek out the education, not for the certificate, but because we care to learn. We should care to learn because in that educational process, we are driven to higher levels of service and client satisfaction, which helps us fulfill our roles as real estate professionals and achieve the professional and personal goals we have set for ourselves.

I dream of a day when we go to class not because we are forced to, but because we want to become better at what we do. I am inspired when brokers and agents like the ones I had in class recognize the importance of such a commitment. I salute them. I salute everyone who contributes to, furthers and tries to elevate education in our profession. Perhaps one day with enough of us sharing the message, education will become about much more than just a certificate.

A note from AAR: Have you visited RETeach.us yet? Read real estate class and instructor reviews before you spend your valuable time and money. How does it work? After you attend a real estate class, visit RETeach.us and share your take on the content and instructor with other agents. Before you select your next class, check the RETeach.us instructor and class reviews to see what others have to say. Together, AAR and its members can raise the bar for real estate education in Arizona.

Leonard C. Elder, JD, DREI is the CEO and owner of Course Creators, LLC, a national training and education company based in Tucson, Arizona. Len can be contacted at Len@CourseCreators.Com or by calling 520-808-0241.

Image courtesy of Flickr user joebeone

Despite the improving market, short sales are likely to be with us for awhile. Here’s what Mike Orr had to say about short sales in the Phoenix metro area in his March 2012 report for the Center for Real Estate Theory and Practice at ASU:

“Most lenders have recently encouraged homeowners facing financial hardship to use short sales as a  preferred alternative to foreclosure. Consequently we have seen single family short sales volumes grow  by 18% over the last year. Short sales and pre-foreclosures represent about 19% of single family home sales, up from 15% in March 2011.”

Have you taken advantage of the short sale resources available to you through AAR? Here are a few highlights:

Legal Hotline Q&As on Short Sales
When Arizona brokers have questions, they call the AAR Legal Hotline. Each month, AAR publishes the best questions and counsel’s answers in our monthly magazine. These Q&As are broken out by category on our website–and short sales is a popular topic.

Short Sale Forms
In addition to the Short Sale Seller Advisory, AAR offers three forms specific to short sales: the Short Sale Addendum to the Listing Contract, the Short Sale Addendum to the Residential Resale Real Estate Purchase Contract and the Agreement Notice Pursuant to the Short Sale Addendum (new in February 2012).

FAQ on Short Sales & Commissions
AAR General Counsel Michelle Lind addresses common questions she receives about commission issues.

Arizona Real Estate Book
The second edition of AAR General Counsel Michelle Lind’s book, Arizona Real Estate: A Professional’s Guide to Law & Practice, has a new section on short sales. You can download an e-book version to your phone, tablet or e-reader for just $9.99. (A hard copy is $21.99 plus shipping.)

View all short sale-related posts on this blog.

Additional resources are available on AAROnline.com.

AAR 2012 President-Elect Sue Flucke, featured in the video above, is a member of the Property Management Forms Workgroup under the Risk Management Committee.  The workgroup, chaired by Lisa Suarez, is developing six new property management forms. Pending approval by the Risk Management and Executive Committees, these forms will be available in August:

• Notice of Intention to Terminate Lease Agreement Due to Non-Payment of Rent (5-Day)
• Notice to Terminate Lease Agreement Due to Material Noncompliance Affecting Health & Safety (5-Day)
• Notice to Terminate Lease Agreement Due to Material Noncompliance (10-Day)
• Notice to Immediately Terminate Lease Agreement Due to Material & Irreparable Noncompliance
• Application for Occupancy
• Move-In/Move-Out Condition Checklist

Property Management Bootcamp

Friday, June 22 | 8:30am – 4:30pm
Chandler Real Estate Training Center | 4050 S. Arizona Avenue | Chandler

Sue Flucke will be one of several property management experts teaching during the Property Management Bootcamp in Chandler in June. Whether you are an active property manager or have found yourself becoming an “accidental property manager,” we encourage you to attend this event. The course covers:

• Financial accountability - keeping accurate accounts and providing itemized records for landlords and tenants
• Managing service orders – tracking services for completion and assigning invoices to the correct properties
• Landlord/Tenant Act – knowing it inside and out, understanding the rights of both landlords and tenants
• E&O insurance – understanding coverage at the brokerage level for property management services
• and much more!

$79 (includes lunch)
3-contract law/3-disclosure
Register Online | Class Flyer

AAR eSign Is Live!

AAR’s new digital signature member benefit is ready for you!  AAR eSign (powered by GoPaperless) is a powerful, easy-to-use system.  Best of all, it comes to you as part of your AAR membership.  Get sign-up and training information.

MongoFax Changes Fax Number

MongoFax is moving its service from a toll-free fax number to a (415) area code.  Although you’ll now pay a few pennies per fax to dial MongoFax, the fax-to-email conversion is still free.  MongoFax informed us this change was needed so that they could reduce costs and still provide a very useful service.  Get the new cover page here.

Creative Commons photo courtesy of Flickr user Ryan Harvey

BY JACQUE WEEMS, e-PRO®

RealtyTrac statistics indicate that, on average, a foreclosure sells for approximately 26% below fair market value. On average, a short sell sells for approximately 15-20% below fair market value.  Once the major portion of both categories are absorbed by able buyers, then and only then will we see prices really begin to go up. By writing this article, my goal is to help more REALTORS® feel confident opening up the discussion of short selling with sellers who have listed their homes too high because of their mortgage debt and to guide them properly before it is too late and foreclosure takes place.

It is common for a homeowner to consider the possibility of short selling their home 18-24 months before they actually do so. This is a difficult time of sleepless nights and strained nerves coming to terms with the decision that they cannot or should not continue to make their mortgage payments.  They look to a real estate professional for guidance, comfort and help to market and sell their home while navigating through the murky waters of negotiating with their lender or lender(s).  It is a great feeling to know you have directed a distressed homeowner properly so they make informed decisions based on accurate information.  We hear of many cases of “unconscious incompetence” in this arena, so I am hoping to share some suggestions to help agents help their sellers.  Hopefully, this will assist us in avoiding the circumstance in which  former homeowners learn, years after short selling their home, that they could have benefited from additional information for the best possible outcome.

If you are ever a defendant in a lawsuit, the court will focus on what was your motivation to conclude a sale and how that played into your guidance of the client, now plaintiff.  There are situations in which it is in the best interest of the homeowner to accept a bankruptcy, deed-in-lieu or even foreclosure instead of a short sale.  When we are proactive and insist that our sellers receive all the information available from legal, credit and tax professionals, we can move forward in a short sale with our sellers as a team, trusting and non-wavering because the seller, and you as their agent, have the underpinnings for a solid direction to a common goal.

Cost for professional services is absolutely a factor when a homeowner is already under duress and isn’t able to make his/her mortgage payment, but help them to weigh the potential benefits to the costs of approximately $500 in consultation fees.  If, for instance, the homeowner doesn’t understand the exact verbiage necessary to release them, now and forever more, on the difference between what is owed and the sale proceeds, they could find themselves in collections three to five years down the road.  This is when their selective memory roles the tape of you, their agent, recommending they sign the settlement agreement to close the sale. What if they walk into a law firm next year and decide their unsecured debt warrants a bankruptcy now that they have lost their job? By short-selling their biggest asset, their home, they no longer qualify for bankruptcy.  This is something a financial advisor could have told them before they sold their home, which, by the way, they could still be living in if they had filed bankruptcy.

The choices, scenarios, possibilities and financial nuances for any property owner are too vast for real estate agents to accept the risk of the world of short sales on their shoulders.  I love short sales and see them as a vehicle to financial relief for many.  If more homeowners who are months behind in their mortgage payments would get going, consult with the pros and get their homes sold, it would help the market recover more quickly.   That being said, I don’t believe that we, as agents, should carry all the risk of unclear protection and put our sellers’ future economic life at risk. I recommend agents passionately push the property owner toward the enlightenment that legal , tax and credit professionals can provide before listing a property as a short sale.

Jacque Weems is partner to Jolynn Greenfield in “Team With Greenfield and Weems,” which is a  residential division focusing on luxury homes and luxury building sites in Sedona and the Verde Valley. Jacque leads fellow REALTORS® by instructing contract writing and law classes and educating fellow REALTORS® about cutting-edge technology for use in real estate marketing and sales. Jacque served on the Sedona/Verde Valley Association of REALTORS® for nine years and was its president during 2008. She is a graduate of the Arizona Association of REALTORS® Leadership Training Academy and has served the Arizona Association of REALTORS® as an ombudsman.  Having served two consecutive years as a member of the Site Council for Big Park School, she has a passion for parents’ pursuit for their children’s best possible education.  Jacque lives in the Verde Valley with her husband where she enjoys hiking, biking, her white German Shepard, Neeva, and preparing gourmet meals for friends and family.

Here are details on an upcoming webinar from the Treasury Department:

Short Sale Workshop/Webinar 
This webinar is designed specifically for the real estate professional to discuss short sales, the Making Home Affordable (MHA) Program and available resources.

May 9, 2012
9:30AM – 11:30AM CST 
Presenter: Chris Dove, U.S. Department of the Treasury

Click HERE to register. Space is limited.
Conference Call Numbers: Provided upon registration.

Please be prepared to provide your name, phone number, email address and company name. If you have any questions prior to the call, please send an e-mail to MHA_Training@fanniemae.com.

Come prepared with your questions. There will be a question and answer session following the training. Questions not answered during the call can be directed to the MHA Training Team at MHA_Training@fanniemae.com.

Program guidance is available on HMPadmin.com.

And here are a few more Making Home Affordable resources:

Updated Request for Mortgage Assistance (RMA) Form
The RMA Form has been updated in light of the recent extension and expansion of MHA programs. The updated version is not required until June 1, 2012, but homeowners may begin to use the form today. View the updated RMA Form to familiarize yourself with the new format and information homeowners must provide when applying for foreclosure-prevention options under MHA. The Spanish version will be available soon.

Real Help. Real Answers. Right Now.
MHA’s public service advertising campaign has helped the program reach struggling homeowners across the nation, and more than a million have now received help through MHA programs. But our work is not done. With the extension of the program through 2013 and the expansion in program eligibility, there’s time to help more homeowners achieve sustainable mortgage relief. Watch this short video to learn more about our outreach efforts and visit our PSA Toolkit for ways you can help spread the word to homeowners in your community.

While I was in Washington, DC in April, the Federal Housing Finance Agency (FHFA) directed Fannie Mae and Freddie Mac to develop enhanced and coordinated strategies to facilitate short sales, deeds-in-lieu and deeds-for-lease in order to help more homeowners avoid foreclosure. On Thursday, April 26, Fannie Mae introduced its policies to expedite this process.

Creative Commons photo courtesy of Flickr user futureatlas.com

Per FNMA’s announcement, servicers must follow the policies for all conventional mortgage loans held in Fannie Mae’s portfolio, those securitized into Fannie Mae MBS pools, and those originally sold as a part of an MBS pool. These policies require Fannie Mae to establish maximum required response times for short sale offers submitted, require servicers to provide borrowers with status updates during this evaluation process, and allow servicers to respond to short sale offers without the requirement to evaluate a HAMP modification.

In March, Fannie also announced that in an effort to maintain a streamlined and efficient process, servicers must receive a complete “Borrower Response Package” to evaluate the borrower for foreclosure prevention alternatives. Fannie warns that the servicer should not request other documentation from the borrower, except in specific limited situations. This package consists of:

• A completed Uniform Borrower Assistance Form (Form 710),
• Income documentation as outlined in Form 710 based on income type,
• Hardship documentation as outlined in Form 710 based on hardship type, and
• A Short Form Request for Individual Tax Return Transcript (IRS Form 4506T-EZ) or a Request for Transcript of Tax Return (IRS Form 4506-T) signed by the borrower.

Additionally, Fannie Mae reminded servicers that federal income tax returns must not be requested from the borrower unless the borrower is self-employed or the borrower has rental income, as outlined in Form 710.

Fannie now states that when a servicer receives a “Borrower Response Package,” it must adhere to the following response timelines:

• If the servicer is unable to fully evaluate the borrower for a Fannie Mae HAFA short sale within 30 calendar days of receipt of a complete Borrower Response Package, the servicer must notify the borrower that the request is under review.
• Each week, the servicer must provide the borrower a status update indicating the reason(s) why the Evaluation Notice is pending. Status updates may verbal or in writing and must be documented.
• The servicer must send the Evaluation Notice no later than 60 days after receipt of the complete Borrower Response Package.
• If a revised offer is received in response to a counteroffer, the servicer must provide a response within 10 business days.
• If the offer does not meet or exceed the Minimum Acceptable Net Proceeds (MANP), the servicer must provide a counteroffer with the denial. The MANP must not be disclosed to interested parties to the transaction.
• The servicer must request a response to the counteroffer within five business days.
• If the revised offer does not meet the MANP but merits further consideration, the servicer must submit a request to Fannie Mae for review and decision within 10 business days after receipt.

But what happens if the servicer does not comply? Fannie Mae may pursue any of its available remedies, which include repurchase, “make whole,” or indemnification. You can read more about the specifics to these changes HERE. To see exactly what is required in the Borrower Response Package CLICK HERE.

This post was reprinted with permission from Amy Swaney’s blog.

Fannie Mae is offering a webinar THIS MONDAY, April 23 designed specifically for the real estate professional to discuss short sales, the Making Home Affordable (MHA) Program and available resources.

Here are the details direct from the Treasury Department:

Short Sale Workshop/Webinar
Monday, April 23, 2012 | 9:00AM – 11:30AM CST

In this information-packed session, we’ll explore just about everything you need to know about executing short sales in today’s marketplace. Hear directly from servicers about the most effective ways to get your short sale offer approved, navigate the process more smoothly, get help with difficult cases, and close the deal faster. Also hear from Treasury about Making Home Affordable’s HAFA program. Don’t miss this opportunity to get all of your questions answered. (This session is not open to homeowners.)

Come prepared with your questions. There will be a question and answer session following the training. Questions not answered during the call can be directed to the MHA Training Team at MHA_Training@fanniemae.com.

Presenter: Carol Lambert, U.S. Department of the Treasury

Click HERE to register.  Space is limited, please register today!

Yesterday, in a five-page bulletin, the GSEs issued new guidelines for Fannie Mae- and Freddie Mac-backed loans. As of June 15, 2012, agents working with distressed homeowners should expect to receive a decision on the short sale offer within 30-60 days. Service providers must comply with the new time frames as described in the bulletin.

For more information about the initiation of the time frames, read the DSNews article “Fannie and Freddie Set Timeline Requirements for Short Sales.”

View other short-sale related posts from this blog.

AAR Talks with Evan Fuchs & Paula Monthofer about How to Avoid Risks While Getting Social

Paula Monthofer, ABR, GRI
Real Estate Instructor & Agent with Realty Executives, Flagstaff

Evan Fuchs, ABR, CRS, GRI, e-PRO®
Real Estate Instructor & Designated Broker at Bullhead Laughlin Realty, Bullhead City

Do you think about Fair Housing and the Code of Ethics when you interact online? Questionable behavior is popping up on Facebook and other social sites—from linking to a map with inappropriate labels handwritten over areas of town to retweeting an off-color joke to disparaging another agent. AAR spoke with REALTORS® and real estate instructors Paula Monthofer, ABR, GRI, an agent with Realty Executives in Flagstaff, and Evan Fuchs, ABR, CRS, GRI, e-PRO®, the designated broker at Bullhead Laughlin Realty in Bullhead City, to find out what’s going on—and what you can do to protect yourself from an ethics complaint or a hefty Fair Housing fine.

REALTORS® get an awful lot of education on Fair Housing. Yet problems persist. Why do you think we are seeing these types of violations on social media sites?

Evan Fuchs (EF): While they’re engaged in social media, people may get a little bit too comfortable with the social side and maybe forget that they are still a REALTOR®. They might also lose sight of the fact that this is on their permanent record. It’s out there forever. It’s great to engage and be casual and have those relationships, but you have to be professional at the same time.

Paula Monthofer (PM): Agents just get too comfortable. Plus, there is a false sense of anonymity online. They feel freer than they really should.

Is social media advertising? What if an agent uses Facebook to connect with friends, not clients?

PM: I think that’s a really easily crossed, thin line. It doesn’t matter if it’s in a chat box, a comment on someone else’s post or a status update that mentions you were doing an open house. If you’re talking about yourself being a REALTOR®, you need to include your brokerage name on your profile and you need to pay attention to Fair Housing law when you’re online.

EF: I’m one person. I can’t separate myself. Imagine that someone is searching for you on Google. One result that comes up is a personal page that has nothing to do with real estate. The second is your LinkedIn profile. It’s not hard to connect those dots: “This person talking about hot rods is an agent with Such-and-Such Realty.”

PM: You can’t take your REALTOR® hat off. The Code of Ethics, Fair Housing—everything still applies.

How do you respond to agents who say it is the obligation of a REALTOR® to let people know the truth about an area? Or who say they should be able to choose who they do and do not want to work with?

EF: As a designated broker, I rely on the law when I have this conversation. I tell my agents that it’s not really a matter of opinion. There are federal laws that carry stiff penalties. This is not a decision that I get to make, and you don’t either.

PM: The bottom line is that we simply cannot discriminate in our services. Everybody’s money is green. Otherwise, you leave yourself open to a claim.

Talk to us about the change to the Code of Ethics that affects social media.

PM: The Code of Ethics Standard of Practice 15-3 (see box below) states that you are responsible for other people’s comments on your Facebook profile or page, website, blog or other platform over which you have a measure of control. So you do have to monitor these profiles and review comments from your friends. Even if the real estate professional’s name isn’t used, if it’s easy to figure out who the other person is, that’s a violation.

What are some danger areas that even well-intentioned agents might stumble into?

EF: Often it is content that the REALTORS® are not producing themselves, but they comment on the off-color joke, “like” it or retweet it. I’m seeing more issues with retransmission than production.

Also, if you administer a Facebook group or community page, you need to be concerned with this stuff. If people engage in comments that are Fair Housing violations, take it off the page immediately and talk to them. You should also address these topics in a “Group Guidelines” document. That way if you have people who cross the line, you can refer them to the guidelines.

What should brokers be aware of when it comes to their agents interacting online?

EF: The first step is making brokers aware of the issues. If you’re a broker who isn’t into social media, you need to know that some of your agents are and the consumers certainly are.

PM: I am concerned for brokers when it comes to social media, to be honest. They definitely need to have a social media policy in place. I would require agents to take classes on avoiding risk in these areas. And I think they should be monitoring as much as possible.

EF: A broker needs to have a monitoring component, for sure, but you can’t watch every move agents make—in the same way that I can’t be present for every deal my agents negotiate. As a broker, you establish clear policies, make education a part of your culture and trust that those values are instilled in your agents.

Any closing thoughts?

EF: Assume that everything you post is permanent—even if you quickly delete it. When you step in it, if people saw it, they can take a screenshot and go shoot it out there.

PM: You can delete something from your Twitter profile page, for example, but it can’t be deleted from the stream. It’s a good reason to never engage in any of these activities while upset or inebriated.

Reprinted from the April issue of Arizona REALTOR® Magazine