FOCUS ECOnOmiC OUtlOOk FOr 2013

magazine

WisconsinReal estateJanuary 2013 Vol. 29 No. 4A PublicAtioN of the WiscoNsiN ReAltoRs® AssociAtioN

"Easify" Your Business! terry Watson explains how.

Case law SummaryWhy recording an interest is critical.

Shoreland ZoningAnother proposed regulation change.

Community rEAltOr®

A quest for cultural immersion.

by S

teph

en M

alpezzi

5 Traducción españolaA new WRA tool for your spanish-speaking customers!

12 Know your limitsAre you competent enough for that transaction?

14 Case law storyAn entertaining read on recording real estate interests.

16 Legal hotlineQuestions and answers on trust accounts and earnest money.

22 new year, new manualAll the changes to the new WRA office Policy Manual.

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Cover StoryWhat will the economy, here and nationally, look like in 2013? Graaskamp center professor stephen Malpezzi shares his economic forecast for the new year, complete with information on Wisconsin and national statistics regarding employment, mortgage rates, incomes and more.

COntEntSJanuary 2012 | Vol. 29, No. 4

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Meet ReAltoR® bob heffernan with MontVal llc in Milwaukee for the second installment of the new Wisconsin Real Estate Magazine column that features Wisconsin ReAltoRs® and community involvement. heffernan’s organization assists burmese refugees with cultural immersion.

Pictured at right is a burmese girl decorating cookies at a christmas party hosted by heffernan’s organization last month. learn more on page 30.

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23 Terry Watson sales tiplearn how and why you should “easify” your business in 2013.

26 shoreland regulationsAn overview of NR 115 and the new modifications by the DNR.

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REALTOR® in the Community

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A market Family Portrait

by Mike Theo

a family portrait serves as a permanent reminder of what the kinfolk looked like at a certain snapshot in time.

Sometimes funny, oftentimes scary, but always edifying in hindsight. The same can be said about market portraits. If we take a snapshot and look at who’s in the real estate marketplace at any given time, we can often learn something useful about ourselves as REALTORS®, our buyers and our sellers.

This is exactly what NAR does every year with its annual survey of members, buyers and sellers. NAR’s recently released snapshot reveals plenty about the 2011 marketplace, and if past is prologue, may tell us about what we just experienced in 2012 and what may lie ahead in 2013.

According to NAR, a typical homebuyer in 2011 averaged 42 years old, down from 45 years old in 2010, and had a median household income of $78,600 ($61,800 for first-time buyers and $93,100 for repeat buyers.) 65 percent were married — the highest share since 2001 — and 16 percent were single females — the lowest share since 2001. (Chalk-up at least part of that last stat to tighter credit standards over the past few years.) 39 percent of buyers were buying for the first time and moving into a house that averaged 1,900 square feet with three bedrooms and two bathrooms.

90 percent of all buyers nationwide and 96 percent of buyers under the age of 44 used the Internet in their home-search process, with 41 percent saying it was their first step. The typical buyer looked at 10 homes over 12 weeks.

Regarding financing, 87 percent of buyers financed their purchases, with 23 percent saying the mortgage application and approval process was somewhat more difficult than expected, and 17 percent saying it was much more difficult than expected.

89 percent of buyers bought their homes from a real estate agent or broker — a number that has risen consistently from 69

percent in 2001. Real estate agents were viewed as a useful source of information by 87 percent of buyers. 40 percent of buyers said they found their agent through a referral from a friend or family member, with 10 percent saying they used the same agent they used before. And nine out of 10 buyers said they would use their agent again or recommend them to others.

So much for buyers — what about sellers? The typical home seller nationally in 2011 lived in their home for nine years, which is longer than the past. In 2007, the average stay was only six years. 88 percent of sellers used a real estate agent. 60 percent of sellers said they lowered the price at least once but typically sold their homes for 95 percent of the listing price. 93 percent of sellers said their homes were listed or advertised on the Internet.

Evidently these numbers made for satisfied sellers. 84 percent of those who used an agent said they would use that agent again or recommend them to others; 66 percent definitely and 18 percent probably.

Only 9 percent of all sellers sold FSBO, with 33 percent of them selling to a buyer they knew prior to the transaction. Why did they sell FSBO? 43 percent said to avoid paying a commission; 25 percent said because they sold to a relative, friend or neighbor; and 15 percent said because the buyer contacted them directly.

The market family portrait wouldn’t be complete without looking at ourselves, right? NAR’s member survey found the typical

REALTOR® in 2011 was in the business 11 years with an average of 10 transactions a year, up from eight transactions the year before, with a sales volume of $1.3 million, which is up from $1.1 million in 2010. The typical REALTOR® had 19 percent of their business from past clients and customers and 20 percent from referrals from past clients and customers.

The median gross income of REALTORS® nationwide in 2011 was $34,900, up from $34,100 in 2010. Those in the business 16 years or more had median gross incomes of $50,200, and contrasted with those in the business less than two years who earned only $8,700. The median gross income of REALTOR® households was $94,100, up slightly from the previous year. The single largest business expense for REALTORS® was vehicle costs.

Eight in 10 REALTORS® are independent contractors in a firm of about 23 agents and brokers. The typical REALTOR® spent six years with their current firm. 72 percent of them receive no benefits through the firm.

60 percent of all REALTORS® are female. Wisconsin’s average age of all REALTORS® is 54 — 55 for males and 53 for females, with 52 percent male and 48 percent females.

And we practice what we preach. 89 percent of REALTORS® nationwide own their primary residence!

Our market family portrait has changed a lot over the past five years and along with it, the expectations of ever-evolving customers and clients. But hasn’t change always defined our markets? In that sense, the more things change, the more they remain the same. So smile big, say “cheese” long and loud, and make the 2013 picture one to remember.

$78,600

Average household income for homebuyers

in 2011.

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Editorial Staff:Publisher: Michael theoeditor: lauren bizorikAdvertising: Robert uhrina

WRA Executive Committee:Renny Diedrich, chairmansteve lane, chairman-electDan Kruse, treasurerPaul schieldt, Vice PresidentPeter sveum, Vice PresidentK.c. Maurer, Vice Presidenterik sjowall, Vice President

Contact Information:4801 forest Run Rd., suite 201Madison, Wi, 53704-7337608-241-2047 • 800-279-1972e-mail: editor@wra.org website: www.wra.org

POSTMASTER: please send address changes to the WiscoNsiN ReAltoRs® AssociAtioN, 4801 forest Run Rd., ste. 201, Madison Wi 53704-7337.

Wisconsin Real Estate Magazine™ is published by the WiscoNsiN ReAltoRs® AssociAtioN. trademark issued pursuant to Wisconsin state statute; federal trademark is pending.

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. 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 WiscoN-siN 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 spe-cifically 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.

Design and production by Joe leschisin, Kella Designwww.kelladesign.com

magazine

WisconsinReal estate

Happy Birthday, Code of Ethics!2013 marks the 100th year that members of the National Association of ReAltoRs® have subscribed to a code of ethics. the original code was written prior to license laws and has been known as the “golden thread” uniting those who are devoted to professionalism in the practice of real estate. learn more about the 100th anniversary in the online version of NAR’s publication, REALTOR® Magazine, at www.realtormag.realtor.org.

CARW Receives Top Commercial Award from NARthe National Association of ReAltoRs® commercial Division honored the commercial Association of ReAltoRs® Wisconsin (cARW) as one of the country’s top commercial boards at the NAR convention in orlando last month.

including cARW, only six NAR-accredited commercial associations received the inaugural Accredited commercial excellence Award from more than 200 associations nationwide. NAR commercial praised cARW’s collaborative efforts and innovations. congrats to cARW!

Consumer-Friendly Explanations of Offer and Listing Now in Spanishthe WRA and the WRA cultural Diversity in housing committee are proud to announce an exciting new tool to enhance the ease and effectiveness of Wisconsin ReAltoRs® working with spanish-speaking consumers!

the Explanation of the State of Wisconsin Residential Offer to Purchase and the Explanation of the State of Wisconsin Residential Listing Contract have been translated into spanish and are now available on the WRA website.

the WRA is able to make these resources available to ReAltoRs® and to the public at no charge due to a NAR Diversity initiative Grant received by the WRA for this project.

the spanish explanations of the residential offer to purchase and listing contract can be accessed on the translation issues Resources page on the WRA website at www.wra.org/translation.

College Scholarships Availablethe selection process is now under way for the 2013 Wisconsin Realtors® foundation ReAltoR® children’s scholarship program. this program awards college scholarships to children of WRA members. the foundation is offering 10 scholarships in the amount of $750 each. the deadline for submitting an application is March 8, 2013.

the application is available online at www.wra.org/childscholarshipAppl or by contacting sandy at sandyb@wra.org.

resources

membership

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exclusive member BenefitsWe wish you success in your career and hope you take advantage of the many benefits we offer.

Office Suppliessave big on office supplies with office supplies 2u, a Wisconsin-based company with a seasoned, experienced staff focused on customer service. os2u’s mission is to be the single-source premier supplier of business products by providing the utmost in quality, commitment and care. for more information, contact bob brooks at 608-441-8900, ext. 26, or by e-mail at bobb@os2u.com. Visit os2u online at www.os2u.com.

Long-Distance Programsave big money on your long-distance rates with AMi communications inc. the plan features low rates with no monthly plan fee, no time-of-day restrictions and no term or volume commitments. AMi also offers a variety of products, including teleconferencing and toll-free service. call 800-254-3202 or visit www.ami.net and mention that you are a WRA member to begin enjoying the high-quality service and savings that AMi provides.

Health, Dental & Life Insurancesave on insurance premiums with ReGit inc. without compromising your coverage. ReGit inc.’s health program provides access to insurance plans that can be customized to meet the needs of the individual. call today for a free, no-obligation quote at 800-537-9786 or visit www.regitinc.com.

Business Furnitureestablished in 1940, emmons business interiors has marketed and distributed quality office furnishings across Wisconsin for decades. through several statewide locations, ebi provides a complete line of quality new and used furniture, as well as refurbished office furniture products. Also available are interior design services, installation, and project management and moving management. let the experienced team at ebi design efficient, productive and ergonomic work environments for your office or home. for more information, contact tod Dean at 800-324-1691 ext. 424, or by e-mail at todd@ebiweb.com. Visit online at www.ebiweb.com.

Website Developmentinterested in creating your own website? WRA members can design and maintain their own websites through Real estate home Pages. software templates and easy-to-use tools for adding images and formatting text provide a professional look, usually only attained by a graphic artist or Web designer. Visit www.realestatehomepages.com or contact Jeff corbo at 800-280-6926 for more information. you’ll be amazed at how easy and inexpensive having a website can be!

Shipping DiscountsWRA members currently enrolled in the uPs savings Program must re-enroll to take advantage of this new exclusive offer. Just take a few minutes to fill out the short application form available at www.savewithups.com/enroll. to enroll, use promo code NcR308. if you have any questions, call uPs at 1-800-325-7000.

if you have questions about one of the WRA Member

benefits, please contact Debbie thacker at dthacker@

wra.org or by calling 1-800-279-1972.

Save on Office Supplies and Furnishings!Have you taken advantage yet of your newest member benefit?

in 2012, the WRA partnered with Office Supplies 2U/Emmons Business Interiors (OS2U/EBI) as an exclusive WRA member benefit. OS2U/EBI is a Wisconsin-based

company providing exceptional service and high-quality office supplies and furnishings for more than 70 years!

As a REALTOR® member, you have the ability to shop more than 32,000 items in the OS2U catalog at discounts of 45% off most items.

As a member, you will receive discounted prices on:• General office supplies• IT supplies and accessories• Remanufactured toner cartridges• Breakroom and janitorial supplies• Health care and first aid supplies• Office furniture and design• And more!

The application and ordering process is quick and easy!Download the application at www.wra.org/OS2U_credit_application

and mail or fax to a customer service representative. Please allow 24 hours for the application process to complete. Once the application has been processed, you can order several ways:• Online: Order online at the OS2U website www.os2u.com• Phone: Call 888-508-6728, or fax your order to 888-296-8220

For furniture and design orders, contact Tod Dean at 800-324-1691 ext. 518 or visit EBI online at www.ebiweb.com.

housing report

wisconsin monthly

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november another strong month for sales

by David Clark

WISCONSIN HOUSING STATISTICS MONTHLY ACTIVITY — NOVEMBER 2012

Statewide NOV-2012 NOV-2011 % Change YTD-2012 YTD-2011 % ChangeNew listings 5,974 6,405 -6.7% 106,098 108,569 -2.3% closed sales 4,938 3,956 24.8% 58,155 48,001 21.2%Median sales Prices $129,900 $133,000 -2.3% $133,900 $133,000 0.7%

Median Price Existing Home Sales Region NOV-2012 NOV-2011 % Change NOV-2012 NOV-2011 % Changesoutheast $140,000 $137,700 1.7% 1,736 1,394 24.5%south central $143,750 $155,000 -7.3% 911 770 18.3%West $128,500 $135,000 -4.8% 514 372 38.2%Northeast $122,000 $118,050 3.3% 899 744 20.8%central $103,430 $107,000 -3.3% 348 232 50.0%North $115,750 $132,000 -12.3% 528 438 20.5%

Wisconsin home sales continued to grow at a robust pace in

November, extending a strong growth trend that started in July 2011. Existing home sales rose 24.8 percent in November, compared to that same month in 2011, according to the most recent monthly report by the WRA. After increasing for eight straight months, median prices dropped in November, slipping 2.3 percent to $129,900 compared to November 2011.

David Clark, Ph.D., is a professor of economics at Marquette University and serves as a consultant to the WRA in the analysis of existing home sales data. For more information, contact Clark at C3 Statistical Solutions, 414-803-6537.

20122011

CLOSED SALES IN NOVEMBER

4,938

3,956

2010 3,350

NOVOCT

CLOSED SALES PAST 3 MONTHS

4,938

5,569

SEPT 5,113

$110,000

$120,000

$130,000

$140,000

$150,000

jAN FEB MAR APR MAY jUN jUL AUG SEP OCT NOV DEC

MEDIAN PRICE 2012 VS. 2011

2012

2011

View Online View all of the housing statistics at

www.wra.org/housingstatistics.

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A Healing Market, Some Risks Remain:

The economic outlook for 2013

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as i WRite the GRAAsKAMP ceNteR’s ANNuAl Note to ouR fRieNDs At the WRA, NeWs JuNKies liKe Myself ARe toGGliNG betWeeN coMPelliNG stoRies of huMAN tRAGeDy, iNcluDiNG the DeceMbeR 14 MAssAcRe At sANDy hooK, AND WhAt At the MoMeNt seeMs A less coMPelliNG-thAN-usuAl stoRy of the ecoNoMy. MARK tWAiN GAVe GooD ADVice WheN he sAiD “WRite WhAt you KNoW”; so i’ll siMPly Note the PAiN We’Re All feeliNG, theN focus oN the ecoNoMy.

oNce We RetuRN ouR AtteNtioN theRe, theRe’s A lot to focus oN!

by Stephen Malpezzi

In last year’s outlook, “Déjà vu All Over Again,” I noted:

“… we’re back to prices at or near fundamentals; employment is growing, albeit slowly; … I see another year of flat-to-modest growth in housing prices, with some downside risk if a big chunk of the “foreclosure glut” hits the market, though this will be less of a problem here than in the ‘sand states.’ If we did see further declines, these would, in the main, be temporary overshooting until we work through the foreclosures and other distressed sales.”

Déjà vu, squared?DV2: that’s about what happened, and

what seems to be happening now — albeit shaded more toward the modest growth side — and we are slowly working off shadow inventory. Ongoing Graaskamp Center research that compares housing prices to fundamentals like rents, incomes, interest rates and supply conditions suggests that Wisconsin and other markets nationwide are back in line with historic norms. While this is no guarantee of stable or rising prices, we can expect to resume normalcy where home prices rise just a touch above the rate of general inflation on average — this is if we can avoid further major hits to the economy.

A summary of the Wisconsin market’s recent performance is available in Mike Theo’s presentation at www.wra.org/HSRNOV2012 along with supporting data and charts at www.wra.org/HousingStatistics. Median sales prices for

existing homes fell from $163,000 in 2007 to an annual low of $132,000 in 2011, and are just a few thousand dollars above that low in 2012. Annual sales are up about 20 percent over their recent low, which helps to clear the “shadow inventory” — a risk that still remains in the housing market.

But I snuck in that pesky caveat about avoiding major hits to the economy. How is Wisconsin’s economy doing, and what are some of the risks?

The figures on the next two pages summarize how we’re doing in terms of income and employment. On these and other indicators, we’re often not far from national norms. Wisconsin’s income and employment numbers both track the national numbers reasonably well, though we’re slightly under recent performance in income (Figure 1), and significantly underperforming in employment growth (Figure 2). The latest quarterly data pinned U.S. per capita personal income at $43,000 and Wisconsin at $40,800. Both are trending up slowly from the recession’s trough and have yet to regain 2007 peaks. U.S. employment currently stands at 133 million, down from a peak of 138 million. Wisconsin

employment is currently a bit over 2.7 million, down from a peak under 2.9 million.

What’s going on?Why recent employment growth is so flat

is a puzzle, and somewhat controversial. Of course all economic data are measured with error, and the errors in state employment data are proportionately larger than the national data. With governments’ reduced data collection budgets, data errors have increased; directorsblog.blogs.census.gov/2012/05/11/a-future-without-key-social-and-economic-statistics-for-the-country provides insight on this unfortunate trend. Another problem is that Bureau of Labor Statistics data collection is based on where workers live, and we may be missing Wisconsinites holding jobs in neighboring states. For example, according to the 2000 census, about 45,000 Wisconsinites worked in Minnesota; about 16,000 Minnesotans contributed their labor to the Wisconsin economy. The numbers for Illinois are similar: 42,000 Wisconsin residents head south for work, passing 15,000 northbound Illinoisians on the way. On Sundays, we may love to tangle with the Bears or the Vikings, but on weekdays, our economic fortunes are deeply intertwined.

The disappointing employment numbers have been much discussed in our state recently, but there is better news on the other metric: Wisconsin’s unemployment rate has been trending down, most recently at 6.9 percent, compared to the U.S. at 7.8 percent. How can the unemployment rate fall while employment is flat? As most

$132,000

Median sales price for homes in 2011 as

compared to $163,000 in 2007.

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readers may know, the unemployment rate doesn’t count people who’ve left the labor force, whether voluntarily or because they’ve given up looking for work. The labor force participation rate has been falling lately, here as in the rest of the nation.

Mortgage rates are currently 3.4 percent, the lowest I can find in history. Low mortgage flows have been the real story in recent years; on balance, broadly, households have been deleveraging in the aftermath of the Great Recession. Anecdotal evidence and a little data suggest that lending is picking up, but so far in the data I track, I’ve found it hard to see. Housing starts are trending back, though still low. Nationally we’re from a low of 500,000 to about 900,000 in housing starts; 1.3 million would put us back to trend. Vacancies for both rental and owner-occupied units are high, but down from peaks and no longer far from long-run averages.

The economy is growing, and the housing market is healing — but not too quickly. One scenario suggests the economy picking up steam as housing recovery takes hold and consumer and business confidence build. But other scenarios suggest that recovery is slow and therefore easily stalled. What are the risks? My short list is not as short as I’d like.

Economic risksSome risks are close to home for the

real estate industry as we continue to work down shadow inventory. Mortgage lending remains tight, especially outside conforming limits. Striking a balance between increased lending without falling back to the excesses of the 2000s will challenge lenders and regulators alike. And, of course, a huge question is how to handle Fannie and Freddie as well as the Federal Housing Administration. That subject deserves a separate article later this year!

At the other extreme, we’re exposed to global risks. The ongoing European crisis, the recession hitting Japan, and the possibility of a China slowdown could reduce the near half-trillion dollars we

export to these areas. Our low mortgage rates, and rates at which we finance our other debt, depend partly on continued demand for U.S. paper by our friends overseas. The risk of a Middle East event that could affect energy supply and pricing also must be considered.

Right now, though, all eyes are on the risks emanating from Washington. Are we facing a fiscal cliff, or a fiscal roller coaster? If nothing is done, shortly after this goes to press, we’ll once again hit the debt ceiling and raise taxes by an estimated $413 billion for the year. As the Bush tax cuts expire, the Alternate Minimum Tax (AMT) rolls back to 2000 thresholds, FICA taxes go back to normal levels, additional health care taxes kick in, dividends return to being taxed as ordinary income, and Section 179 depreciation limits back to 2003 levels ($25K). On the spending side, “sequestration” will require federal spending decreases of $110 billion in 2013. All in, the Congressional Budget Office (CBO) forecasts that if all this came to pass, the 3 percent of Gross Domestic Product (GDP) negative shock could throw us into the next recession. See www.cbo.gov/publication/43694 for more.

The CBO point estimate is a decline of 0.5 percent in 2013 if all the “cliff” events occur. Of course it’s hard to accurately forecast the effects of federal tax and spending policies on GDP; I would argue the odds of leaving all the elements unchanged for the year are very low — would Congress really let the AMT hit 30 million taxpayers with incomes as low as $34,000? My reading is that we’re unlikely to fix everything by the beginning of January, but rather we’ll have several rounds of muddling, argument, negotiation and policy changes in the coming months. Hence my preference for the roller coaster metaphor over the cliff ... pun intended.

Nevertheless, the economy is not yet back on its feet, and no one thinks that these looming tax and spending changes are going to help us in the short run. That’s why many assume that Congress and the Administration would find a way to deal and fix at least some of the major “cliff” issues. The question we face today is: do they remember how to deal?

45,000 Number of Wisconsin residents that work in Minnesota. Only 16,000 Minnesota residents work in

Wisconsin.

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The current budget deficits are at record levels for several reasons, one of which is that the recession and slow recovery have lowered revenues and increased expenditures. Federal government spending, at 25 percent of GDP, is the highest it’s been since the 1950s. Federal revenue, at 16 percent of GDP, is the lowest it’s been since that time. That’s why most economists believe that spending and revenue both need work, whatever the political rhetoric of the moment. See my blog post on the subject at wisconsinviewpoint.blogspot.com/2011_07_01_archive.html.

We hold two contrasting thoughts in our mind simultaneously. At the moment, if nothing is done about the “cliff,” spending will be cut everywhere but in the place where it matters for fiscal health: entitlements, particularly Medicare and Medicaid. Taxes will go up. The deficit

will shrink, but so will the economy.We need to tackle the problem of the

“cliff,” but then wheel about and figure out the longer run problem of how to contain and/or pay for rising health care costs. CBO projections suggest that if nothing is done about the structure of health care, Medicare and Medicaid alone will approach 10 percent of GDP in a few decades. That’s a problem that will be

hard to solve, but easier if we start early.I hope that by the time you read this,

our politicians will have remembered Winston Churchill’s dictum that America can always be counted on to do the right thing — after we’ve tried everything else.

In the end, perhaps the most remarkable characteristic of the U.S. economy is its robustness. The late Kansas City Monarchs star Buck O’Neil once said, “You know that baseball is the greatest game because even the owners haven’t been able to kill it.” That sounds like the U.S. economy, too. With a laundry list of policy and political mistakes, we’ve tried pretty hard to kill the economy over recent years. But we’re still here, and we’re still growing.

Stephen Malpezzi is a Lorin and Marjorie Tiefenthaler Professor at the James A. Graaskamp Center for Real Estate Wisconsin School of Business.

6.9% Unemployment

rate in Wisconsin, compared to 7.8

percent in the U.S.

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“i Think i can, i Think i can” – Yes, But should You? Identifying your limits

by Cori Lamont

The inspirational story of The Little Engine That Could and its mantra “I think I can, I think I can” is about perseverance. However its application to the practice of real estate may not be the appropriate mantra to determine competency. Challenge is part of growth of any business, but when it comes to contract-drafting and the multitude of services real estate professionals provide in a given real estate transaction, “I think I can,” should probably not be the litmus test.

a conversation about competency is similar to the conversation about what is or is not reasonable. Neither are defined in statute, rule or contractually. Sure, the Code of Ethics

and license law provide some guidance on competency, but no clear-cut definition or act consistently delineates what is or is not competent. I liken it to the famous 1964 quote from Supreme Court Justice Potter Stewart in Jacobellis v. Ohio regarding obscenity: “I know it when I see it.”

The REALTOR® Code of Ethics Article 11 addresses the issue of competency:

“The services which REALTORS® provide to their clients and customers shall conform to the standards of practice and competence which are reasonably expected in the specific real estate disciplines in which they engage; specifically, residential real estate brokerage, real property management, commercial and industrial real estate brokerage, land brokerage, real estate appraisal, real estate counseling, real estate syndication, real estate auction, and international real estate. REALTORS® shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service, or unless the facts are fully disclosed to the client. Any persons engaged to provide such assistance shall be so identified to the client and their contribution to the assignment should be set forth. (Amended 1/10)”

Read the following scenario and the question that follows. An agent receives a referral from a friend of a first-time

homebuyer who wants to purchase a home in the Fox Point area, a community north of Milwaukee. Fox Point is not an area that the agent regularly shows or lists homes. Frankly, the agent has never participated in any transaction in the Fox Point area in the 10 years the agent has practiced real estate, but as a favor to the friend, the agent decides to help. The agent and buyer sign a WB-36 Buyer Agency Agreement, and off they go to find

a home in Fox Point. The agent typically practices in Pewaukee, approximately 40 minutes west of Milwaukee; however, the Fox Point area is in the same MLS of which the agent is a member. The agent shows the buyer a number of homes in the MLS in the area, however the buyer found a FSBO property in the Village of Fox Point and decided that it’s his dream home. The agent makes an appointment with the seller, the buyer sees the home, writes an offer, and closes 60 days later. After closing, the buyer decides to build a fence and learns that he needs a permit. When applying for the permit, the Village informs him that the buyer and seller failed to complete the Village’s Certificate of Compliance. For the purposes of this conversation, let’s say that there is a $130 fee for a single-family home for this certificate required by the Village at the point of sale. The Village requires that a building inspector approved by the Village confirm that the home is up to codes relating to building, plumbing and electrical. The buyer calls the agent and asks if the Village can enforce this fee and also asks why the agent did not tell the buyer and seller. The agent tells the buyer to contact an attorney regarding challenging the fee and admits that they had no idea about the point-of-sale requirement because they don’t typically practice in the Fox Point area.

Did the agent practice competently? Survey says … it depends. And yes, “it depends” is a favorite

answer of the legal community, because it does often depend on the circumstances. For example, how did the Village communicate the point-of-sale requirement? If the title company didn’t catch it and the home inspector didn’t mention it, how would the agent or a member of the public know about it?

As a real estate licensee, one of the greatest personal challenges is identifying when you are not competent to participate in a transaction. Listen to yourself; if any part of you is quietly questioning a possible risk to you in this transaction, then begin to look for alternatives.

Consult your broker; your broker as much as anyone wants you to be successful, but recognizing your limitations is part

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of that success. If you want to participate in the process, you need to engage the services of someone who is competent or refer your client to someone who is competent. If you decide you are not competent to provide services, Wis. Admin. Code § REEB 24.03(2)(a) states that you may engage the assistance of someone who is, and the person engaged to provide the assistance shall be identified and their contribution shall be described. Essentially, in the most frank terms, this is you saying, “I recognized my limitations, and this person has held themselves out as a competent individual.”

Your reputation is all you have. If you participate in a transaction in which you are not competent, you not only risk a lawsuit, discipline by the Real Estate Examining Board (REEB), and local board; you also risk a person expressing their dissatisfaction with you to all their friends, family and acquaintances because you were trying to be helpful.

Wis. Admin. Code § REEB 24.03(2)(c) states, “Licensees shall be knowledgeable regarding laws, public policies and current market conditions on real estate matters and assist, guide and advise the buying or selling public based upon these factors.”

It is not clear how the REEB would apply § REEB 24.03(2)(c) to the Fox Point scenario. However, following are questions to ask yourself to guide making your decision as to your own competency.

1. Do you know the market? Do you know the current market conditions and how those

relate to the area’s market value? Are you informed about unique local ordinances, such as point-of-sale requirements? Do you have an understanding of local environmental issues — lead, arsenic or water quality, for example? Do you understand shoreland zoning issues for a waterfront property? Do you know what municipal services are offered, such as garbage removal and recycling as well as whether property owners must buy their own trash cans?

2. Do you know about the type of property? For the last 15 years, if you have focused solely on single-

family residential transactions, should you participate solo

in a vacant land, commercial, condominium or business transaction? While your license allows you to practice anywhere in Wisconsin and in any type of transaction, the competency requirement may prevent you from going it alone.

3. Do you know the appropriate contingencies, documents and addenda to include?

No matter if you practice in the same area and focus on the same type of property in your transactions, every transaction is unique. Many boards, attorneys and companies have specific addenda that address specific market issues.

In addition, if you do not understand the type of property or market nuances, you may be placing your party at risk. For example, if you do not typically practice in a certain area, you may be unaware of a gas leak three months prior that affected 50 homes and will continue to be impacted for several months. Therefore, you would not know what additional contingencies, documents, addenda or disclosures should be included to address the needs of the parties.

4. Do you know how to identify your limitations?

Knowing your limitations will help you provide better service, allowing you to become an expert in your market. And when it’s time to challenge yourself, by acknowledging your limitations you will be able to seek out the appropriate mentor who is competent and who can help assist you in the transaction and teach you the correct ways to execute your role in a transaction.

When you begin to tell yourself, “I think I can, I think I can draft this vacant land offer to purchase” when you have never participated in a vacant land transaction — ask yourself how helpful are you going to be to the consumer. Consider changing the mantra to “I think we can, I think we can” or “I will refer, I will refer.”

Cori Lamont is Director of Regulatory Affairs for the WRA.

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The importance of Recording a Real estate interest The story of two billboards, a bowling alley and a bona fide purchaser

When 3 Rivers Advertising, Inc. (3 Rivers) decided it wanted a billboard on the bowling alley’s property, it entered into a somewhat unusual land-use agreement with the

property owner. The agreement allowed 3 Rivers to install and maintain a billboard that it would rent out to advertisers. In return, 3 Rivers agreed to also erect a second billboard sign on the property promoting the bowling alley. The agreement stated, “This Contract shall be considered as an easement and therefore shall be transferred with and as part of any change of ownership to such property until such time that both parties agree to terminate this contract.”

Both billboards were erected but the agreement was never recorded. The bowling alley burned down.

The sale of the bowling alley propertyIn March 2008, a buyer began negotiations with the listing

agent for the purchase of the bowling alley property. The buyer saw the billboard but did not closely inspect it due to deep snow. Only the back of the billboard was visible from the property, and it contained no markings. The buyer’s offer to purchase provided: “If Property is currently leased and lease(s) extend beyond closing, Seller shall assign Seller’s rights under said lease(s) and transfer all security deposits and prepaid rents thereunder to Buyer at closing. The terms of the (written) lease(s), if any, are to be disclosed and transferred to Buyers (Billboard).” When the owner countered to raise the price, the buyer asked the listing agent about who exactly owned the billboard. In response, the agent handwrote, “Seller represents that Billboard is part of property” on the counter-offer. At that time, the owner had not yet signed the counter-offer. The buyer initialed the handwritten statement and signed the counter-offer. The deal closed on schedule. Nothing in the title work revealed any third-party ownership or interests in the billboard. The buyer never spoke directly to the owner during the transaction; all discussions were with the listing agent.

After closing, the buyer examined the billboard that contained an advertisement for a car dealership and found a tag that read “Affordable Outdoor Advertising” and gave the name and telephone number of Roddy’s Signs, Inc. (Roddy) that was leasing the billboard from 3 Rivers. When the buyer called the car dealership, he learned that its lease payments were paid to Roddy, not to the prior owner of the bowling alley property. The phone number listed on the tag was for an office where the two related billboard companies, 3 Rivers and Roddy, were located. When it learned of the controversy,

the dealership stopped making any lease payments. 3 Rivers sued the buyer, alleging tortious interference with

contract and seeking a declaration that it had an easement interest in the billboard. The buyer denied these claims and counter-claimed, also alleging tortious interference with contract and seeking a declaration that he owned the billboard. The trial court dismissed both claims for tortious interference with contract and the billboard company’s claim for declaration of an easement. The only issues left for trial were who owned the billboard and how the lease payments should be allocated. After the trial, the court held that the buyer was a bona fide purchaser for value without notice because 3 Rivers did not record the easement with the register of deeds or take any other reasonable steps to protect its interest in the billboard. The leasing fees were awarded to the buyer as the owner of the billboard. 3 Rivers appealed to the Wisconsin Court of Appeals.

Under Wisconsin law, the court observed, a purchaser is under an obligation to seek out information regarding potential encumbrances on the real property he or she is seeking to obtain.

Bona fide purchaser analysisWis. Stat. § 706.08(1)(a) protects purchasers of real

estate against adverse claims that are not properly recorded. It provides that “every conveyance that is not recorded as provided by law shall be void as against any subsequent purchaser, in good faith and for a valuable consideration, of the same real estate … whose conveyance is recorded first.” A purchaser in good faith is one who does not have actual or constructive notice of existing rights in the land.

No recordingIt is undisputed that 3 Rivers did not record its land-use

agreement with the county register of deeds and thus did not provide affirmative notice of its easement interest under the recording criterion of Wis. Stat. § 706.08(1)(a).

No affirmative noticeThe buyer argued that:1 The billboard contained no information indicating that

3 Rivers owned it. The billboard’s mere presence on the property, standing alone, was not an “actual, visible, open and notorious” use. Even if the buyer had seen the tag on the billboard sooner, nothing on the tag indicated a claim of ownership, and the 3 Rivers name did not appear anywhere on the billboard. While the billboard itself was obvious, it was not obvious from looking at it as to who owned it.

by Debbi Conrad

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2 The buyer made a “due and diligent inquiry” into who owned the billboard by asking the listing agent who wrote in the offer that the billboard was part of the property, by asking in the offer for documentation of any leases that came with the property, and by having a title company conduct a title search to determine whether the property was subject to any easements, liens or encumbrances.

Under Wis. Stat. § 706.09(2)(a), a buyer has affirmative notice of a claim arising from the use or occupancy of the property by another person regardless of whether such use or occupancy is exclusive. The other person’s use or occupancy provides notice to the buyer only if “due and diligent inquiry of persons using or occupying” the property would, under the circumstances, have revealed the prior outstanding interest. In addition, the use or occupancy by the other person must be “actual, visible, open and notorious.”Affirmative notice from the land

It was undisputed that the billboard was located on the property. 3 Rivers asserted that an advertisement was plainly on the billboard, it was readily apparent that the billboard was being maintained, and the company possessed an annual permit for the billboard. The billboard company argued that the buyer’s inquiry into the ownership of the billboard was insufficient to satisfy the

“due and diligent” requirement of the statute. The buyer could

have asked the car dealership or called the number on the sign

before closing to learn who had interests in the billboard.

And which party had the winning arguments?

The answer was the buyer. The Court of Appeals concluded

that the trial court properly determined that the buyer did not

have sufficient notice of the billboard company’s interests and

thus was a bona fide purchaser of the property, for value and

without notice, including the ownership of the billboard.

Tortious interference with contract claim3 Rivers argued that the trial court should not have dismissed

its claim against the buyer for tortious interference with its

advertising contract with the car dealership. The elements

of a claim for tortious interference with a contract are:

1 the plaintiff had a contract or a prospective contractual

relationship with a third party,

2 the defendant interfered with that relationship,

3 the interference by the defendant was intentional,

4 there was a causal connection between the interference and

damages, and

5 the defendant was not justified or privileged to interfere.

The court’s discussion focused on the fifth element. 3 Rivers

contended that the buyer was not justified or privileged to interfere

with its advertising contract because they had provided affirmative

notice of their ownership of the sign, and because the buyer’s

inquiry was insufficient. The buyer argued that he was a bona fide

purchaser for value and without notice and thus had every right to

contact the car dealer regarding lease payment terms. The court

once again agreed with the buyer.

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

REALTOR® Tips REALTOR® Practice Tip: Don’t make representations about the ownership of billboards or any other property improvement! Refer the inquirer to the owner, the title company or an attorney!

REALTOR® Practice Tip: it is hazardous to not record documentation of an interest in real estate!

3 Rivers Advertising, Inc., v. Augelli (ct. App. 2012, No 2010AP2295), www.wisbar.org/res/capp/2012/2010ap002295.htm

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by Tracy Rucka

Trust accounts and earnest money DisbursementsMany questions are asked about how and when to disburse earnest money. The first section of questions and answers in this article highlight disbursement alternatives while the second section on the next page includes frequently asked questions about opening and closing trust accounts.

Attorney opinion The broker has a short sale listing

with an accepted offer. The seller moved; the broker believes the seller moved across the country. The bank did not approve the short sale, and the closing date passed three months ago. The buyer demands the earnest money. Can the broker just disburse it to the buyer?

No, the listing broker should not

release earnest money without proper

authority. The parties may indicate to

whom the money should be disbursed

in a WB-45 Cancellation Agreement

and Mutual Release (CAMR) or another

written directive. If the parties won’t sign

a CAMR, provide written instructions,

or cannot be located, the broker may

disburse by following the procedures

set forth in the offer to purchase and

Wis. Admin. Code § REEB 18.09(1).

One alternative described in the offer

is to obtain an opinion from an impartial

attorney regarding who should receive the

earnest money. There are two timelines

to keep in mind for this option: first, the

broker cannot disburse until 60 days after

the scheduled closing date; and second, the

broker must give 30 days advance written

notice by certified mail to the parties

before disbursing the funds. If the broker

chooses this disbursement method, the

broker may deduct up to $250 from the

earnest money for the legal fees involved.

Party initiates small claims action

The parties have a dispute about the offer, and the buyer wants the broker to release earnest money, but the seller will not sign a CAMR. Can the buyer pursue small claims for the earnest money?

Yes. A broker may disburse the earnest money as directed by the order of a court hearing the parties’ earnest money dispute. Under the § REEB 18.09(1)(d) disbursement rule, either of the parties may go to court at any time, and the broker is allowed to disburse pursuant to the order of the small claims court whenever so ordered. For the court to have proper jurisdiction to order the broker to disburse, the broker would be made a party to the lawsuit as a defendant.

Broker initiates small claims action

The transaction was scheduled to close in July. Both parties are working with legal counsel, but neither has initiated a small claims action for the earnest money. Can the listing broker go to court to decide how to disburse?

The listing broker may choose to initiate a small claims action, known as an “interpleader action,” to determine who receives the earnest money. An interpleader action is a lawsuit brought by the custodian of money or property when

he or she is not certain who is rightfully entitled to the funds or property. In an earnest money situation, the suit is filed by the broker who is a neutral stakeholder and unable to render the legal judgment regarding who is entitled to the earnest money. The interpleader action names the competing parties, which are usually the seller and the buyer, and forces them to litigate their respective claims. The broker normally participates in the action only to the extent of starting the action and paying the earnest money into the court or as the court directs. The broker should not initiate an interpleader action until 60 days after the scheduled closing date unless specifically ordered by the court to do so at an earlier time. The broker may, however, consult with his or her attorney and prepare the paperwork necessary for an interpleader action before the 60 days has passed. Costs incurred, such as working with legal counsel and filing the action, may be covered by deducting up to $250 of the earnest money per the terms of the offer.

Wait or do nothing?What happens if the broker does not

hire the attorney per the offer and neither party initiates legal action?

The broker is not obligated to resolve the parties’ earnest money dispute and may simply allow the money to remain in the broker’s trust account. The broker is to remain impartial and allow the parties to resolve their differences.

If the parties fail to take action, the

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money will be considered abandoned

after five years per Wis. Stat. Chapter 177.

Per Wis. Stat. § 177.12, any intangible

property held in a fiduciary capacity,

including earnest money or trust fund

deposits, will be considered abandoned

after five years unless the owner takes

certain steps to retrieve the funds. During

the five-year period, the broker will

make reasonable efforts to contact the

parties and document those efforts in the

transaction file for the purposes of the

unclaimed funds rules. After the five years,

the broker will work with the Office of the

State Treasurer to follow the unclaimed

property procedures. The broker may

submit the names of all the buyers and

sellers to the Treasurer for publishing.

Even after the five years, the broker is

not obligated to determine whether the

buyer or seller has the right to the funds.

Third-party payorsThe buyer’s mother is going to pay

the earnest money for the transaction. What happens if the deal fails and the seller makes no claim to the earnest money? Who gets the earnest money — the buyer or the mother who paid it?

The answer depends on whether or not there is an accepted offer. If there was an offer that was not accepted, § REEB 18.09(1)(a) and the offer indicates the funds should be returned to the payor, that is, the person who paid them. In this case, that would be the mother of the buyer. If, on the other hand, there was an accepted offer and the buyer and seller agree to cancel the offer, the disbursement will be directed in the CAMR. Therefore it is possible the broker makes out a check to a person who did not pay the earnest money. This is why cautionary language contained

More Info Online Wisconsin Administrative code chapter Reeb 18 may be viewed at http://docs.legis.wisconsin.gov/code/admin_code/reeb/18.

october 2000 Legal Update, “trust Account basics,” at www.wra.org/legalupdate/oct2000.

The Real Estate Trust Accounts in Wisconsin handbook gives a summary of the trust account rules and how to manage trust accounts to comply with DsPs requirements. Visit www.wra.org/PPub2753.

fall 2011 Broker Supervision Newsletter, “trust Accounts: Are you Prepared for an Audit?” at www.wra.org/bsNfall11.

The broker should not

release earnest money without

proper authority.

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© 2012 PrimeLending, A PlainsCapital Company. Trade/service marks are the property of PlainsCapital

Corporation, PlainsCapital Bank, or their respective affiliates and/or subsidiaries. Some products may

not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved.

PrimeLending, A PlainsCapital Company (NMLS no: 13649) is a wholly-owned subsidiary of a

state-chartered bank and is an exempt lender in WI.

Providing Service To

Metro Milwaukee Area, 262.798.4274

Metro Madison Area, 608.824.8041

Janesville Area, 608.359.9544

Green Bay Area, 920.621.8198

16871 W. Green�eld Ave., New Berlin, WI 53151

1600 Aspen Commons #240, Middleton, WI 53562

Mortgages without obstacles.

in the offer suggests “If someone other than Buyer makes payment of earnest money, consider a special disbursement agreement.”

Trust account FAQsThe broker decided to open her own company. Is

she required to have a trust account? If there is no trust account, where is the earnest money held?

Wis. Admin. Code § REEB 18.033(1) does not require a broker to open a trust account unless the broker receives trust funds. If a broker does not have a trust account, this information will need to be disclosed first to the seller and then to any buyer drafting an offer because all offers will need to be modified. The offer provides that the earnest money will be paid to and held by the listing broker, the buyer’s agent if the property is not listed or the seller’s account if no broker is involved. Therefore, parties must negotiate where to hold earnest money if the listing broker chooses not to have a trust account. There are several options: the title company, the other broker, if any, an attorney, or the seller, to name a few. Offers to purchase will need to be modified to reflect where the money will be held, and earnest money and other checks would need to be made payable accordingly.

How many trust accounts can a broker have?The broker may have as many trust accounts as the

broker deems necessary based on the services the broker provides. For example, the broker may open a trust account for each type of real estate activity that the broker engages in, such as sales and property management. Likewise, if the broker has more than one office location, there could be a trust account for each of the offices.

The broker is planning a trip and wants to know who can sign for the broker on the trust account while he is gone?

Wis. Admin. Code § REEB 18.04 provides that a broker may authorize any person to sign real estate trust account checks provided the person is at least 18 years of age. The Administrative Code does not require the person to hold a real estate license.

How long does the broker have to deposit the earnest money?

Wis. Admin. Code § REEB 18.031 provides that a broker must deposit all real estate trust funds received by the agent or the broker in the real estate trust account within 48 hours of receipt of the funds. The 48 hours are measured from the time that the licensee receives the check — not from the date of the check. If the funds are received on a day prior to a holiday or another day in which banks are closed, the deposit must be made within the next two business days.

Do you have to notify the DSPS of a closed account? If so, how?

Yes, you must notify the Department of Safety and Professional Services of a closed account. Wis. Admin. Code § REEB 18.037 indicates that when closing a real estate trust account, a broker may inform the board by letter. There is no form to notify the DSPS of a closed trust account. The broker can send written notice, including the name of the broker or the business entity, the trust account name, name of the bank and account number, to the Department of Safety and Professional Services, Division of Professional Credential Processing, 1400 E. Washington Ave., P.O. Box 8935, Madison, Wisconsin 53708.

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

CE

Get on the road to earning the prestigious Graduate, REALTOR® Institute designation.

NEW live classroom webcast

www.wra.org/GRI

February 12–13; March 12–13, 2013 Appleton I Eau Claire I Madison I Milwaukee

March 18-19, 2013 I Wisconsin Dells

APPRAISALCONFERENCE

2013

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2013-14 CE Out-of-StateMarch 5-8, 2013 — San juan, Puerto Rico Grab your suitcase and fulfill your 2013-14 ce requirements in style! escape the winter weather and join the WRA in sunny Puerto Rico. Whether you enjoy ocean views, ziplining or rain forest tours, this is one educational opportunity you won’t want to miss. classes are held at the sheraton old san Juan hotel & casino. • course 1 – Wisconsin listings• course 2 – Wisconsin offers• course 3 – Wisconsin New Developments• course 4 – contingencies in Wisconsin Approved offer forms

To register, visit www.wra.org/CEOut-of-State.

Real Estate Sales Pre-licenseFebruary 25-March 1; March 4-6, 2013 WRA Headquarters — Madisonto obtain a real estate license in the state of Wisconsin, you must first complete 72 hours of approved education courses, such as the WRA sales pre-license course. you then must pass a state-administered exam. the WRA will offer an 8-day accelerated 72-hour sales program on february 25-March 1; March 4-6, 2013 in Madison.

For more information, visit www.wra.org/salespl

BPOR Certification April 18, 2013 — Appleton

earn your broker Price opinion Resource (bPoR) certification with the course bPos: the Agent’s Role in the Valuation Process. this course will provide you with the know-how to produce professional and accurate bPos. you’ll learn about the many uses of bPos, how to evaluate and minimize risk in the valuation process, plus much more. the bPo course counts as one RebAc elective to be applied toward the AbR designation.

To learn more and to register, visit www.wra.org/BPOR_overview.

Top-notch classroom educationWhether your goal is to become a real estate sales licensee, enhance your career with a prestigious designation, or renew your license with continuing education, this section offers you the key courses you will need.

GRI Course 2February 12-13; March 12-13, 2013 Madison, Appleton, Eau Claire, Milwaukeethe GRi is the most widely recognized of the national real estate designations. 90 hours of classroom instruction are required in contract law, professional standards, marketing, finance, technology and business ethics.

this designation is earned by completing three four-day courses — GRi course 1, 2 and 3 — and passing the exam for each course. the courses do not need to be taken in order. once you start the GRi designation coursework, you have five years to complete all three courses. GRi course 2 can be fulfilled by passing the GRi course 1 equivalency exam or by completing the Quickstart program.

GRi scholarships are available online at www.wra.org/GRischolarship.

To register, visit www.wra.org/GRI.

2-Day ABR CourseApril 10-11, 2013 — Madison Do you like working directly with buyer clients? if so, this course is for you! you’ll discover how to represent buyer clients with the same level of service that sellers enjoy. you’ll also learn about methods of building your buyer representation business. complete two of the three days required for the AbR designation. submitted for 2013-14 ce credits.

To register, visit www.wra.org/ABR_overview.

Broker Pre-license CourseMarch 18-21; April 15-18, 2013 the 8-day broker Pre-license course covers contracts, approved forms, trust accounts, escrow and closing statements, business management and marketing, finance and office management, personnel, business ethics and much more. completing sales pre-license education and passing the real estate sales exam are prerequisites.

For more information and to register, visit www.wra.org/Broker_Career.

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WrA Course Schedule

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

Conferences and Conventions Date Event/Course Location March 5-8, 2013 out-of-state ce 2013-14 san Juan, Puerto RicoMarch 18-19, 2013 Appraisal conference Wisconsin Dells

Real Estate Continuing EducationDate Course Location Price february 14, 2013 2013-2014 course 1 Madison call 800-279-1972february 14, 2013 2013-2014 course 2 Madison 800-279-1972february 21, 2013 2013-2014 course 3 Madison 800-279-1972february 21, 2013 2013-2014 course 4 Madison 800-279-1972february 21, 2013 2013-2014 course 1 & elec. D brookfield 800-279-1972february 27, 2013 2013-2014 course 1 sheboygan 920-457-7908february 27, 2013 2013-2014 course 3 & 4 brookfield 800-279-1972March 5, 2013 2013-2014 course 1 Puerto Rico 800-279-1972March 6, 2013 2013-2014 course 2 Puerto Rico 800-279-1972March 6, 2013 2013-2014 course 2 brookfield 800-279-1972March 7, 2013 2013-2014 course 3 Puerto Rico 800-279-1972March 7, 2013 2013-2014 electives A & D Manitowoc 920-973-7748March 8, 2013 2013-2014 course 4 Puerto Rico 800-279-1972March 8, 2013 2013-2014 electives b & D Madison 800-279-1972March 14, 2013 2013-2014 electives A & c Madison 800-279-1972March 20, 2013 2013-2014 electives A & c brookfield 800-279-1972May 2, 2013 2013-2014 courses 1 & 2 sturgeon bay 920-743-9651May 8, 2013 2013-2014 course 2 sheboygan 920-457-7908

Appraisal Continuing EducationDate Course Location March 18, 2013 7-hour National usPAP 2012-13 update Appraisal conference i Wisconsin Dells March 18, 2013 Appraising the tough ones Appraisal conference i Wisconsin Dells March 19, 2013 Rules & Regulations: Myths & facts Appraisal conference i Wisconsin Dells March 19, 2013 Performing and Defending the Appraisal Review Appraisal conference i Wisconsin Dells March 19, 2013 loss Prevention Program for Real estate Appraisers Appraisal conference i Wisconsin Dells

Pre-LicenseDate Course Location Member Non-Member ATDfeb. 25-Mar. 1; Mar. 4-6, 2013 sales Pre-license course Madison $325* $335 *Plus books Mar. 18-April 5, 2013 broker Pre-license course Madison $325 / AtD: $345 $345* $365 *Plus books

Designation CoursesDate Course Location february 12-13, 2013 GRi course 2/cRs 201 Appleton/eau claire/Madison/MilwaukeeMarch 12-13, 2013 GRi course 2/cRs 201 Appleton/eau claire/Madison/MilwaukeeApril 10-11, 2013 2-Day AbR course Madison April 18, 2013 bPoR: the Agent’s Role in the Valuation Process Appleton

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Welcome to 2013! It is the start of a brand-new year and the perfect time for revising, updating and

implementing new office procedures. The new Office Policy Manual is now available to help you do just that! Now in its 13th edition, both the business and technology sections of the manual have been completely updated by the WRA legal team. Some new sections added to the manual include:• Conceal & carry policy.• Disposal of consumer information

under the FACT Act.• Anti-money laundering measures.• Broker commission liens.• Managed forest lands.• Sheriff’s sales.• HUD-1 review.• Listing syndication. • Etiquette relating to texting and text

record keeping concerns; references the 2012 addition of texting to the no-call list law.

• A reference to URL shortening in the linking issues discussion.

• Acknowledges a distinction between Wisconsin Administrative Code and changes made to the Code of Ethics Article 12 relating to advertising and disclosing broker’s name when the technology being utilized provides for a limited number of characters.

• Recognizes the numerous social networking platforms utilized in real estate.

• Resource suggestions for software and technologies including cloud backup and password management as well as a significant number of updates to data security and privacy.

• Office Electronic Media Policy Checklist.

Also, many sections in the new manual have been enhanced. They are:• Independent contractor agreements.• Contact information.• Sales and purchases of associate’s

personal real estate.• Delivery of loan commitments.• Accessibility features reports.• Broker agency disclosures.• Property condition reports.• Farmland preservation conversion fees.• Listing short sales.• Working with agents under buyer

agency.• Buying REO properties. • Delivery methods in the offers.• New administrative code citation

format as well as revised rules in Wis. Admin. Code chapter REEB 24.

• Greater detail relating to electronic consent and going paperless with Digital Ink.

• Updated changes to Wisconsin Fair Housing Law, Code of Ethics and updated policy references relating to all

other media, including Facebook and Twitter.

• A more in-depth look at the Gramm-Leach-Bliley Act regarding privacy issues.

The manual is designed to assist brokers drafting or revising a manual for their office. The goal is to identify areas and topics regarding office policies and the type of language that may be used in developing policies. As- bonus, a CD offering an electronic version of the manual is included.

Please note that brokers using this manual are responsible for determining the types of provisions that appropriately reflect their individual office policies.

For more information and to order, visit www.wra.org/PUB239.

RealEstatePromoterIf you do not have listings on

Facebook, RealEstatePromoter is the perfect application for you to get started! RealEstatePromoter provides an interactive and viral tool to list your real estate product roster. A free subscription option is available as well as three fee-based options: Standard, Pro and Enterprise. Free features include:• Basic property search and browsing.• Property video.• No contract — unsubscribe at any time!• Visitor analytics.• And much more!

Facebook charges no commissions on a sale made through the app. The only fee is the monthly subscription. More information is available by contacting info@univalence.com or go to www.facebook.com/realestatepromoter.

Nichole Mickelson is the Business Services Assistant for the WRA.

by Nichole Mickelson

Office Policy manual Designed to assist brokers

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by Terry Watson

The public absolutely detests companies, brands or marketers that make them think and participate in unnecessary

processes. How do you feel about calling your local telephone company? I would rather be pecked to death by chickens than call mine! I know I am going to be transferred five or six times during that phone call. Every person during that call is going to ask me the exact same question, as if I have called a different company on a different day. I have caller ID — why don’t they?

This call will take between thirty minutes to an hour that I have definitely not budgeted for. I almost have to take St. Johns Wart to calm my nerves before I call. The mere thought of calling the phone company raises my blood pressure. Why? … Because they have a Ph.D. in the unnecessary.

Does that box really need to be checked for the sake of checking a box? Immediately, look at every process you require of the public and ask yourself the question “how can I make this easier?” How can I reduce the steps? How can I opt out of the irrelevant?

Now is time to do an Easify® study of your business!

Easify®: To reduce the steps, eliminate the unnecessary, and reduce the time required for a given activity … to drastically reduce decision-making stress and effort. In short, don’t make people think!

The shortest distance between obscene profits and financial embarrassment is rooted in the ratio of thought versus effort. There is one exception, though: if you offer an absolutely must-have, unique service, then all bets are off. If potential customers can go elsewhere and get the same service or product with less toil, they will leave you like you have garlic breath.

Companies that Easify® the process

are not just profitable — they also tend to be profitable even when others are not, regardless of economic fluctuations. Think Apple, Redbox, Zappos, Amazon, Southwest Airlines, Ritz Carlton, Costco, Hammacher Schlemmer, Nordstroms or Whole Foods, to name a few. Why do I buy my books at Amazon? Because it’s easy! Why do I shop at Nordstroms, Hammacher Schlemmer and Costco? … Because returning an item is a non-event and a non-issue. The public craves people who reduce the thought and effort of a decision-making process.

In 2013, is your goal to make your income move vertically? If so, perform an Easify® study on your business and deconstruct every process, Web page, marketing piece and requirement. Again, ask yourself how can you make the process for your customers easier and reduce the steps so people don’t have to think.

To Easify® your business, you must look at your entire business — from your marketing efforts to the way you work with customers throughout a transaction. For example, is your phone number on the right-hand corner of every page on your website, or do you make people look for a contact button and then reward contact information after they go on an Easter egg hunt? Does your Facebook business page have a phone number listed? My research says no. What if I click the “about” button on your Facebook page? Will I find your contact information? My research says probably not. Does your website have a sitemap that displays an index so prospects can find the page they are looking for quickly and effortlessly?

When you meet with a prospect in person, do you immediately give them a list of top mistakes they should avoid as well as frequently asked questions? Or when meeting a prospect, do you let them stumble through the transaction and learn as they go? Are prospects told all potential costs up front so they budget for them, or

do you provide what I would like to call a “pop” disclosure? The companies that have a fanatical following don’t make people think, and at every opportunity, they reduce or eliminate the effort of the transaction.

For example, I used to visit a big box store for building supplies. After a few visits, I noticed a trend. Usually I could not find what I was looking for, and the item was out of stock or the one on the shelf had been pilfered through and was missing components. The salesperson was nonexistent, and if I did find an associate, they often looked annoyed or put upon; they are from another department, completely clueless and had about three people in cue to speak with them. They entertained random questions from other shoppers who approached them, as if I was not speaking with them already. When I get to the register after standing in a long line, I am pitched their credit card or home services or both. If my psyche was not completely already eviscerated ... as I am leaving the store, I must stop by security, which will vet me to determine that I am not a shoplifter, highlight my receipt and allow me to leave the premises.

I would rather have a root canal then go back to this store.

Whole Foods is one of my favorite stores because they remove the thought process. Help is readily available. They don’t number the aisles because an associate will personally walk you to any item you have questions about. Returns, if necessary, are obscenely easy and the employees seem to be very happy to be working there.

Are you giving your customers an Easify® experience? If not, what are you waiting for?

Terry Watson is President of Easify Inc. He travels the world showing people and companies the simple, unconscious things they do that pummel their profits and absolutely annoy the consumer. The good news is that the fix is cheap and it is easy!

2013 Economic Outlook: Easify!Your economic outlook will be in direct proportion to the difficulty level and the effort that is required of the people who do business with you. If you make things unnecessarily hard, the public will go elsewhere. Your goal for the coming year should be to not make people think. Yes, I said, NOT make people think. We want effortless.

SUrVEY rECAP

tECHnOlOGY

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ReaLToR® Technology UsageThe WRA periodically surveys its members to identify key technology trends in order to develop products that can help REALTORS® now and in the future. Last month, over 500 REALTORS® responded to the WRA technology survey. A snapshot of the results are below.

REALTORS®’ smartphones:• 49% use Android• 26% Apple• 8% Blackberry• 4% Windows phone• 13% other

What technologies do REALTORS® use per day?• 98% use a cell phone.• 68% use a desktop, 58% use a

laptop, 30% use a tablet.• 25% use cloud storage. • 19% use a Bluetooth headset.• 16% use a digital camera and less

than 2% use a video camera.

What activities do REALTORS® perform on smartphones?• 52% use mobile applications.• 20% take photos.• 4% shoot videos.

REALTOR® social media usage:• 82% use Facebook, 75% use

LinkedIn.• 35% of REALTORS® site referrals

as a benefit of social media. • 47% of REALTORS® gain better

connections with clients using social media.

WRA website features that REALTORS® want via mobile:1 Legal information2 Housing statistics3 Mortgage calculator4 Tech Hottips5 Industry news

What new technologies should the WRA develop?• “What would be helpful would

be training on how to use the iPad effectively for real estate business. The Apple stores don’t have anything for real estate. So now we have an iPad and wonder what we could be doing for our business.”

• “More classes for using new technology for those of us who have been in the business for a while.”

What’s YourDream Job?

When was the last time your boss asked you that? At

Coldwell Banker it’s always our first question. We believe

our success comes from helping you realize your idea of

success. It’s whatever you decide.

Every Dream Deserves a ChanceDreamBlueBlog.com • ColdwellBankerOnline.com

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by Tom Larson

DNR Proposes New Changes to State shoReLanD zoning RegULaTions … againThe Wisconsin Department of Natural Resources (DNR) is proposing new changes to the state’s shoreland zoning regulations (NR 115), which were revised in 2009, and will go into effect on January 1, 2014 unless the effective date is extended. The proposed changes are in response to a number of concerns raised by legislators, county zoning administrators and property owners who believe that several of the new (2009) changes will be too onerous for property owners and harmful to economic development efforts.

BackgroundSince 1966, Wisconsin has imposed

minimum shoreland zoning standards that require counties to regulate the use of property near lakes, rivers, streams and other navigable waterways. These regulations apply to all land within 1,000 feet of a lake, pond or flowage, and land within 300 feet of a stream or river. Because the state standards are only minimum standards, counties are generally permitted to create standards that are more restrictive.

In 2009, the DNR revised NR 115 due to increased development pressure along waterways and numerous complaints about the prior regulations. However after having more time to analyze the impacts on existing property owners and future development, many county zoning administrators believe that

several of the new regulations are overly restrictive and will create hardships for new development and for property owners wishing to expand their existing homes.

Proposed changesIn response, the DNR introduced

modifications to NR 115, including changes related to impervious surfaces, nonconforming structures and the trimming of vegetation. Specifically, these changes include the following:

1. Higher impervious surface standard for already highly developed areas

The current regulations limit the amount of impervious surfaces, such as concrete, blacktop or footprint of structure for new construction

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and expansions of existing homes and buildings within 300 feet of the water to no more than 15 percent of the lot area. The impervious surface standard is increased to 30 percent if the property owner agrees to perform mitigation measures established by the county.

For more urban areas with higher densities and smaller lots, these impervious surface standards would place significant restrictions on the size of the home that can be built on the lot and, in some cases, could make the lots unbuildable. For example, in a sample study performed on several lakes in Waukesha County, over half of the existing homes exceeded the 30 percent impervious surface standard and thus would not have been allowed to be built in the same manner if the impervious surface limits were in place when the homes were constructed.

Under the proposed changes, the impervious surface standards would be increased in areas with highly developed shorelines. These include areas that are located within an urbanized area or an

urbanized cluster, according to the 2010 U.S. Census, or areas with a commercial, industrial or business zoning classification. In these areas, the impervious surface standards for residential development would be increased to 30 percent without mitigation and up to 40 percent if mitigation was performed. For commercial and industrial development, the impervious surface standard would be increased to 40 percent without mitigation and up to 60 percent with mitigation.

Keep in mind that these impervious surface standards would only apply to new construction. Existing homes and buildings would be able to maintain current percentages of impervious surfaces.

2. Applying impervious surface regulations to only riparian lots and non-riparian lots located entirely within 300 feet of the ordinary high water mark (OHWM)

In addition to increasing the impervious surface standards in highly developed areas, the proposed changes would limit the application of the impervious surface standard to only:• Riparian lots adjacent to a navigable

waterway; and• Non-riparian lots located entirely within

300 feet of the OHWM.If any portion of the lot is more than 300

feet away from the OHWM, the impervious surface standards would not apply to the lot.

3. Exempting lots that do not drain directly into the lake or river

The proposed changes also include a new definition of “impervious surface.” Under this definition, any surfaces that do not drain directly into a lake or river are not considered “impervious.” In other words, if a surface drains into an off-site stormwater pond, constructed wetlands or other engineered system, or into an internally drained area, the surface will not be considered “impervious” for purposes of calculating the impervious surface limits.

4. Greater flexibility for expanding nonconforming structures

The proposed changes also allow for greater flexibility with respect to expansions of nonconforming structures within the 75-foot setback. Under current law, homes and buildings located between 35 feet and 75 feet may expand vertically, but are not allowed to expand laterally or toward the landward side of the property, unless the entire expansion occurs behind the 75-food setback. Under the proposal, these homes and buildings would be allowed to expand within the setback up to 100 square feet along the sides of the structure, or 200 square feet of rearward expansion.

5. No permit for removal of invasive, damaged or diseased vegetation

Finally, the proposed changes clarify that a permit is not necessary for the removal of invasive, damaged or diseased vegetation within 35 feet of the water. Under current law, some confusion exists as to whether property owners are required to get a permit before cutting or removing such vegetation.

Next steps in the rulemaking process

Before going into effect, the proposed rule changes must satisfy a series of procedural requirements, including public hearings, approvals by the governor and the Natural Resources Board, as well as pass review by the legislature. At any point in the process, the proposed changes could be modified. While it is somewhat unclear how long this process will last, the DNR is hoping to complete the rulemaking process by early 2014.

If you have questions about the proposed changes to the shoreland zoning regulations, please contact Tom Larson (tlarson@wra.org) at 608-240-8254.

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

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by Joe Murray

Why is the WRa involved in Politics?

needless to say, all the extracurricular election activity didn’t sit well with the general public or some WRA members. The political atmosphere was very bitter, and certain members asked why the WRA was and has to be involved in politics at all. Why not get out of the

business of politics and supporting or opposing candidates, and simply focus on the issues that concern real estate and REALTORS®?

The simple answer is this: you can’t separate public policy from politics. The people who run for office and win will decide the outcome on the issues of the day. If the WRA leadership decided to “get out of politics” as some suggest, it would be left to others who do stay involved to influence the outcome of those elections. Without a voice in the election process, REALTORS® would have a diminished role in the policymaking process. And issues that have a direct impact on homeowners and real estate professionals would be decided by others who may not have our interests at heart. Let’s look at a few examples of not only why the WRA is involved in politics, but how WRA involvement benefits you.

Attorneys required at closings: Think about how your job would be different if attorneys were required at every closing, like they are in Illinois and Georgia. In other states, real estate licensees are not allowed to complete offers to purchase and other state-approved forms because state bar associations in those states actively lobbied their legislatures or successfully argued to their courts that only attorneys be allowed to complete forms related to real estate transactions.

Prohibit REALTOR® opinions of value: In 2010, some appraisers and the city of Milwaukee attempted to pass legislation designed to prevent real estate licensees from giving broker price opinions (BPOs) or other opinions of value unless they had an appraisers license. Fortunately, the WRA, with help from individual REALTORS® across the state,

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The political turmoil that consumed Wisconsin over the last two years was historic. 13 state Senators were forced into recall elections along with Lt. Gov. Rebecca Kleefisch and Gov. Scott Walker. All this took place before we ever started the “normal” election cycle for the fall 2012 elections.

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defeated this legislation and preserved the ability of consumers to choose to hire an appraiser or real estate licensee to provide them with an opinion on the value of their property.

Joint and several liability: In the 2009 Wisconsin state budget, former governor Jim Doyle included a provision that would have involved REALTORS® in never-ending lawsuits. The proposal would have forced a defendant, who was as little as 1 percent at fault in a lawsuit, to pay up to 100 percent of the damages if

the other defendants were unable to pay. The WRA and allied business organizations successfully defeated this proposal.

Real estate transfer tax: In 2007, the WRA defeated a state budget proposal to double the real estate transfer tax that would cost your sellers hundreds of dollars on the sale of their home. This legislation was defeated by determined REALTORS® and homeowners across Wisconsin who opposed this tax increase.

Sex offender registry: Since June 1, 2001, real estate licensees have been able to avoid liability when asked by potential buyers and tenants about sex offenders by referring such questions to the Wisconsin Department of Corrections. Given the scope of the potential liability for improper disclosure, the disclosure language in forms protects REALTORS®, owners and property managers from liability for failure to disclose. This was a significant victory for REALTORS® and homeowners.

Home inspector regulations: Prior to the 1998 law, the industry had few regulations, inadequate standards of practice or ethics, and very little accountability to the consumer. The lack of adequate regulations for the home inspector industry was a problem for sellers and brokers.

Mortgage interest deduction (MID): Many homeowners deduct their mortgage interest when assessing their tax bill,

a substantial benefit that has helped bolster the income of millions of families and the nation’s housing market. As President Obama and Congress attempt to reach a deal to reduce the budget deficit, the MID is a serious part of the negotiations. NAR and the WRA will work hard to defend and protect the MID because it’s vital to the stability of the American housing market and the economy.

Fraudulent misrepresentation: In 1998, the WRA

drafted and passed legislation to respond to a court case that held REALTORS® could be liable for fraudulent misrepresentations made by a third party in a transaction. Without this important legislation, REALTORS® would have been exposed to lawsuits for defects or other material facts concealed by sellers that only sellers could have known.

What would a world look like if we just stayed out of politics altogether? Higher transfer fees? Attorneys at every closing? A prohibition on broker opinions of value? An unregulated home inspection industry? And many, many problems that have never materialized because you get involved in the political process.

Our success is made possible because RPAC and Direct Giver help to support candidates for public office who support REALTOR® and homeowner issues. Every two years, voters decide who will represent them in Congress, the state Legislature and local governments across Wisconsin, and REALTORS® have played a crucial role in helping elect pro-business and pro-real estate candidates.

As ugly as campaigns have been, we cannot separate public policymaking from politics.

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

The people who run for office and win will decide the outcome on the issues of the day. If the WRA leadership decided to “get out of politics” as some suggest, it would be left to others who do stay involved to influence the outcome of those elections.

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in tHE COmmUnitY

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enhancing Lives after escaping Violence

heffernan created a cultural immersion program more than a year ago to help Asian refugees to live a normal life.

Heffernan’s group, the Burmese Immersion Project, is known as BIP Paw, with “Paw” meaning “beautiful flower” in the Karen language. BIP Paw is operated solely by volunteers who serve as cultural mentors and academic tutors to the community of Burmese refugees residing in and around Milwaukee. Approximately 90 percent of the Burmese refugees do not meet State of Wisconsin proficiency standards for 10th grade students, in spite of having the highest attendance rate of any group in Milwaukee Public Schools (MPS). Primarily serving the South Side of Milwaukee, BIP Paw provides twice-a-week tutoring sessions held at a local church as well as tutoring sessions at home for stay-at-home moms with infants and toddlers who are unable to get to an English As A Second Language (ESL) program.

By profession, Heffernan is a landlord and provides affordable housing to low-income families. He began BIP Paw with his Burmese tenants over a year ago and has since expanded the organization to offering tutoring services to other refugees in the Milwaukee area. Students benefiting from BIP Paw come from several ethnic backgrounds, such as Karen, Karenni, Burmese and Malay, and speak a variety of different languages, such as Burmese, Malay, Thai and more. Heffernan and his volunteers help refugees of all ages,

from toddlers to adults. Most adult learners work full time and/or take ESL courses. School-age refugees are enrolled in MPS.

“Bob deserves recognition because this community service goes beyond the Code of Ethics and embraces the aspirations of a professional organization aware of its unique leadership role in the community,” said Scott Bush, VP of Operations with the Greater Milwaukee Association of REALTORS®, of Bob’s commitment to BIP Paw and his students.

In addition to tutoring and ESL, BIP Paw also provides cultural mentoring, such as field trips to Independence Day firework shows, pumpkin-carving events and more. Last month, more than 50 Burmese refugees attended a Christmas event with cookie decorating and a visit from Santa. Several BIP Paw volunteers act as cultural mentors for families to help with whatever may be needed — from visiting the DMV to obtain a driver’s license or communicating with the children’s teacher at school. Right now, BIP Paw is collaborating with other community groups to develop a plan to eradicate the community-wide bedbug problem that many refugees currently face.

Would you like to learn more about tutoring and volunteering? Visit www.bippaw.wordpress.com to learn more about the organization and about volunteer opportunities or contact Bob Heffernan at BobJohnPM@wi.rr.com.

“If you can read with a child, we have a place for you,” reads the BIP Paw website. That child is a refugee who fled or whose family fled from Southeast Asia to the United States to seek refuge from rebel violence and civil conflict in an area that lacks basic human rights. And Milwaukee-area REALTOR® Robert Heffernan is ready to help.

Are you a REALTOR® in the Community?

if you would like to be featured in the ReAltoR® in the community column, or nominate a fellow ReAltoR®, visit www.wra.org/ritc for the submission form as well as a disclaimer form with full rules and details. We look forward to your submission! until then, get out, volunteer, and have fun!

WHAT MAKES A CENTURY 21® AGENT? GUTSPAH. IT’S LIKE CHUTZPAH. BUT WITH EVEN MORE GUTS, MOXIE AND METTLE. LIKE THE KIND OF METTLE THAT’S STRONGER THAN STEEL. WITH NERVES TO MATCH. THAT’S GUTSPAH. AND GUTSPAH DELIVERS EVERY TIME. CENTURY 21 AGENTS.SMARTER. BOLDER. FASTER.SM

C 2 1 . C O M

©2012 Century 21 Real Estate LLC. All rights reserved. CENTURY 21® is a registered trademark owned by Century 21 Real Estate LLC. An equal opportunity company. Equal housing opportunity. Each office is independently owned and operated.

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