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REALTOR® ASSOCIATION EXECUTIVE
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Executive Briefing, News and Events, Winter 2006
AEs Take Lead in Boosting Education Requirements
Although Realtor® associations aren’t charged with setting or enforcing state education requirements for real estate licensees, as of late they’ve been the driving force behind legislation that seeks more rigorous training for salespeople and brokers.
The movement comes after several years of new licensees pouring into the real estate business. Also, as real estate transactions have become more complex, practitioners have had to wade through an ever-growing number of documents, legal risks, and community-housing regulations, says Craig Cheatham, CEO of the Association of Real Estate License Law Officials, or ARELLO.
As a result, associations are fielding more complaints from both consumers and members who lament a lack of professionalism in the industry. Many AEs say better education is the answer, and they’re doing something about it.
“You have industry veterans working side-by-side with new folks who don’t have the experience or education to make up for the lack of experience,” Cheatham says. “We’re seeing a big push from the industry for more professionalism, and the regulatory community is most definitely in favor.”
Since real estate commissions and other regulatory bodies are normally prohibited from engaging in traditional lobbying activities, Realtor® associations must take charge to get real estate education bills passed, Cheatham says. Here’s a look at how some associations have taken action:
*The North Carolina Association of Realtors® launched aggressive lobbying efforts—including one-on-one meetings with nearly all of the state’s 170 legislators—which resulted in the September passage of a law that requires all new practitioners to hold a broker’s license.
Most of the law’s provisions stem from ideas offered by an NCAR advisory committee that sought to answer members’ concerns “over the lack of professionalism and consumer protection in the state,” says Rick Zechini, NCAR’s director of regulatory affairs.
Under the law, scheduled to go into effect in April, those seeking a license must complete all broker courses and pass the broker test before they can sell real estate. They’re then classified as “provisional brokers” and are supervised until they complete an additional 90 hours of coursework. Not until then do they earn the broker title.
*The Alaska Association of Realtors®, meanwhile, has worked hard to gain the state legislature’s approval of a bill that requires salespeople and brokers to complete 20 hours of additional real estate education within one year of getting their license. The law, a top legislative priority for AAR last year, took effect in January. “We basically wrote the bill, lobbied, and got it passed,” says Sandy Eherenman, AAR association executive.
When presenting their case to legislators, association leaders emphasized how low the education requirement is to sell real estate in Alaska—just 20 hours of class time and a test. “Unless you’re working for a big franchise, you’re not going to get the post-licensing education you need,” Eherenman explains.
*The California Association of Realtors®, which has seen membership soar in the past few years to 180,000, is seeking to improve members’ risk management skills by requiring real estate professionals to take a three-hour course on the topic before their license can be renewed.
It also requires licensees to keep current with the increasingly complex demands of documentation, newly required disclosures, and the newest options to shield themselves from avoidable liability.
Recommendations from CAR’s errors and omissions task force resulted in the legislation, which was signed by the governor in September. The rule applies to all licensees, regardless of how long they’ve been in the business.
*The Colorado Association of Realtors® has fought hard to keep the state’s required continuing education hours from being drastically cut. A state bill introduced in 2005 by Rep. Jim Sullivan (R-Larkspur) sought to eliminate the rule requiring that, among other things, brokers complete 15 hours of elective courses every three years.
Supporters of the bill questioned the need for so many courses and said real estate practitioners would save a total of nearly $2 million a year on course fees if electives were cut. But the association made a successful argument against the measure, convincing legislators that a reduction in classroom instruction would hurt consumers at a time when real estate transactions are becoming more complex, says Betsy Ricketts, CAR government affairs director.
The bill was ultimately rejected, but the fight may not be over; Rep. Sullivan says he plans to introduce a similar bill in 2006.
Another Legal Victory for MLSs
In December, a Kentucky federal court rejected an antitrust challenge to the requirement that real estate professionals be members of a local Realtor® association to participate in the multiple listing service. The decision follows a nearly identical ruling by a Wisconsin federal judge in August 2005.
In the most recent case, Florence, Ky.–based Buyer’s Corner Realty Inc. and the company’s principal broker sued the Northern Kentucky Association of Realtors® and its subsidiary, the Northern Kentucky Multiple Listing Service. The brokerage claimed that the membership requirement constituted an unlawful tying arrangement and a group boycott that violates the federal Sherman Antitrust Act.
In his ruling in favor of the association and its MLS, Judge William O. Bertelsman of the U.S. District Court for the Eastern District of Kentucky found that the plaintiffs failed to prove that they suffered antitrust injury or that the membership rule has any anticompetitive effects in the market for association services. The complete ruling is available on REALTOR.org.
Q&A Kitty Kuhl on Changing Education
Kitty Kuhl, CAE, has been shaping Realtor® education in Wisconsin for nearly three decades. She joined the state association as an education director in 1978 and quickly worked her way up to her current position—vice president of business services, overseeing education, sponsorship, products, and services.
During her tenure, Kuhl has made a point of staying current with trends in education while generating nondues revenue for the association. In 2005, for example, her department generated more than $3 million in sales, enough to cover all the department’s costs and give $1.4 million back to the association. “This department is really run as its own business,” she says.
Here, Kuhl talks about how associations’ education programs are changing in light of the Internet, consolidation among real estate brokerages, and the surge of new members.
What’s the biggest challenge for education directors today? Education directors are facing increased competition because members have so many choices. Other local boards, state associations, title companies, and private schools offer classes, too. With all these choices, the member loyalty that used to stay with associations has moved to whichever provider can offer the most convenient and affordable classes.
How has the Internet altered the education landscape? It used to be simple—we’d set up a live course, and everyone would come. Today is different. We offer live, video, DVD, and self-study classes, and, in Wisconsin, we’ll soon be moving to Webcasting. Live classes are getting, and will continue to get, smaller.
As designation classes are more available online, it’ll become difficult for associations to continue offering live classes because they’re so much more expensive to deliver. Associations will need to be successful at delivering programs through the Internet or they’ll risk having their members seek out other education providers—even associations in other cities or states—that have easy-to-use online programs. With the Internet, there are no local or state boundaries.
Are real estate brokerages becoming bigger players in the education field? Large companies have always provided good education to their associates. The thing that’s changing is that the large companies are becoming even larger, and their programs and staffing are starting to resemble our own. Brokerages want their brand to be incorporated into the education. For associations to do well in a market where there’s a large brokerage, they must find a way to deliver programs through the brokerage and with the company’s brand included in the product.
How can associations with limited resources offer high-quality education to their members? Both large and small associations need to think about partnering with other boards, brokerages, the state association, or an outside provider to deliver programs to members. By partnering, you eliminate duplication of classes, reduce expenses, and still have the ability to brand your own program.
One thing we’ve done in Wisconsin to ensure funding for new programs is to charge ourselves a 3 percent sales tax on all of our classes and products. The money goes into a fund devoted to developing new programs. Each year we have $70,000 to $90,000 to create new products, complete survey work, or update existing products. The money doesn’t fold into the general fund at the end of the year; it stays in research and development for the next year. It’s one of the best things we’ve done to create quality programs.
How has the surge of new members affected the education programs of state and local associations? The last two years have been golden. The new wave of licensees has made us all look really, really good. Pre-license classes have been off the charts, and with so many new members, designation classes also are doing very well. All the product sales associated with these classes have been well above budgeted amounts. In Wisconsin, even our form sales continue to grow—despite the fact that our members have access to ZipForm through their dues.
However, I don’t think we’ll see those same numbers in the years ahead; 2006 will be a good year for education programs, but my guess is that it will be only about 80 percent to 85 percent as good as it was in 2004 and 2005.
Members to Be Fined for Inaccurate MLS Data
Starting this spring, members of the Columbus Board of Realtors® (Ohio) who enter inaccurate or misleading information into the multiple listing service will be fined $50 to $500 per instance.
In January, the association began issuing warnings to members who violated any of the two dozen MLS rules, which range from incorrectly entering a condominium as a single-family home to not reporting a closing within 72 hours. On April 1, the warnings will end and fines begin.
“The level of frustration resulting from reported rule violations by members seems to have reached a new high,” the board says on its Web site. The fines seek to protect the integrity of the database and to discourage overly aggressive marketing practices—such as posting housing units on the MLS before construction begins. Such tactics can skew local housing data.
Michael Gautier, MLS director for the Columbus board, says the association did a lot of research before deciding to implement penalties. “We never wanted to be in the position of fining our members,” he said, “but it’s a necessary evil.”
He says other Realtor® associations throughout the country, including several in Ohio, already fine their members for violating property listing protocol and have found the strategy to be a successful deterrent.
Any revenue from the fines will be used to offset MLS costs, but Gautier says it’s a stream of revenue the board would prefer not to have. “It is our hope that the 90-day warning period will discourage any potential violations,” he says.
Blog Keeps Members, Legislators Informed
It started as a short-term experiment but has proved to be too valuable a communications tool to do without.
A real estate blog launched as a test in late August by the Indiana Association of Realtors® is keeping members updated with “real-time” legislative information, says policy director Brian Tapor.
“We’ve been really pleased with the feedback we’ve received so far,” says Tapor, who acts as the blog’s writer and editor. “Members like the commentary.”
In addition to reaching out to members, “we want legislators and other elected officials to look at the blog and listen to what we’re saying,” he says.
Among recent topics covered: property tax relief, economic development, affordable housing, and mold. Tapor spends about 30 minutes per day attending to the blog—posting commentary, linking to informative real estate articles, and updating legislative news.
IAR has done little to promote the blog to members or elected officials, but that will change over the next year, Tapor says. Even without publicity, the blog’s commentary made its way into one state legislative newsletter, proving that it’s serving its purpose to “amplify” the Realtor® voice in Indiana, he says.
Vision Award Renamed for Much-Admired AE
The Arizona Association of Realtors®’ annual installation banquet in November was filled with happy surprises for longtime CEO Ty Strout, cae, rce. First, he received one of the association’s highest honors, the Vision Award, which recognizes a Realtor® who exemplifies the AAR vision.
But following the award ceremony, he was hit with an even bigger surprise when 2005 association President Tim Hatlestad called for a motion to rename the award after Strout. The motion gained unanimous approval, and the award was immediately renamed “The Tyler Strout Vision Award.”
“Since 1987, the Arizona Association of Realtors® has benefited immeasurably from the vision of Ty Strout and his efforts to fulfill the ideals of the AAR vision statement,” Hatlestad says.
It’s Official: 2006 Expo in Crescent City
NAR leaders voted to stick with New Orleans as the site of the 2006 Realtors® Conference & Expo—an event that’s expected to bring the hurricane-hit city as much as $34 million in revenue.
“We can set no better example for the nation than by keeping our promise to New Orleans and its people to hold our 2006 annual meeting there,” says NAR President Thomas M. Stevens.
Stevens met with local New Orleans authorities to review the damage following Hurricane Katrina and to assess the city’s ability to meet NAR’s convention needs. “We’ve done our research, and we’re convinced New Orleans will be a safe and healthful venue,” he says.
Some 26,477 Realtors®, exhibitors, and guests attended NAR’s 2005 annual meeting and expo held in San Francisco last October.
The 2006 conference is scheduled for Nov. 8-13. NAR will mount a national education campaign to encourage Realtors® and exhibitors to attend.
NAR Files Motion to Dismiss Antitrust Lawsuit
NAR has asked a federal district court to dismiss the antitrust complaint by the Department of Justice against NAR related to NAR’s policy governing the display of MLS data on the Internet.
In its motion, NAR says the government sued over provisions in the Virtual Office Web site (VOW) policy, which has since been rescinded, and that the new Internet Listing Display (ILD) policy that replaced it is clearly pro-competitive.
NAR says that “opt out” provisions in the ILD policy do nothing more than permit individual entities to make independent decisions on whether to authorize the display of their listings on competitors’ Web sites. Read more on this at REALTOR.org/ILD.
Mediators on Hand to Resolve Association Disputes
When a name change or jurisdictional dispute arises between local or state associations, the matter is often resolved at an NAR hearing—held either at the annual Realtors® Conference in fall or the Midyear Legislative Meetings in spring.
However, under a new rule approved by NAR’s board of directors in November, associations can save time, money, and stress by using a trained mediator to help resolve the dispute before it reaches a hearing.
When an association’s application for a name change or new jurisdiction is contested, NAR will cover all costs of sending a mediator to the association. A cadre of mediators from the NAR’s Membership Policy & Board Jurisdiction Committee will be available on an ongoing basis to mediate such disputes at the request of the disputing associations.
Bringing Cheer to Recovering Soldiers
Seven NAR staffers from the Washington, D.C., office brought holiday spirit to recovering soldiers at
the nearby Walter Reed Army Medical Center on Nov. 30. The NAR group decorated a tree and provided a festive dinner, while the U.S. Customs Canine Training Center brought puppies to play with the troops. NAR co-sponsored the event with Rolling Thunder Inc. and other groups.
Local Education for Earth-Friendly Members
The Asheville Board of Realtors®, based in the mountains of Western North Carolina, has launched a local certification program for members who want to become more knowledgeable about the environmental issues that come into play when buying or selling a home.
The program covers such topics as indoor air quality, radon, and lead-based paint. The board worked closely with North Carolina State University, the Clean Air Community Trust, and several other environmental organizations to develop the coursework requirements.
Residents and real estate practitioners in the Asheville area are especially concerned about being green, says David West, ABR’s chief executive. The town is surrounded by forests, rivers, and wildlife. “It’s an area that draws folks in because of the environment,” West says. “We feel there’s a demand for this type of knowledge.”
Members can earn their Environmental Consultant Certification—or ECO, short for “environmental consultant”—after completing 36 hours of training, including a four-hour continuing education course, a two-day seminar, and 16 hours of electives.
Elective credit is earned by taking approved classes from such groups as the Green Building Council or by demonstrating real-life experience with environmental issues—by driving a hybrid vehicle or selling Energy Star–rated homes, for example.
As of mid-January, about 50 Realtors® were in the final phase of the certification and accumulating elective credits, and four had earned the certification.
The ECO certification is not affiliated with or endorsed by NAR.
Merger to Form California’s Largest MLS
Six Northern California multiple listing services—which together have more than 46,000 subscribers in 11 counties—have agreed to merge, creating the largest MLS in the state and one of the largest in the country.
The groups reached an agreement in early January to consolidate their listings and abide by a single set of rules. The standardized rules are scheduled to go into effect by March 1, and the online database will be available by the third quarter of this year, says Gregg Larson, consultant and spokesman for the merging MLSs.
“The larger brokers have been asking for it for 10 years now,” says Larson, who’s also CEO of Clareity Consulting in Fountain Hills, Ariz. “Big brokers in the Bay area currently have to access six, seven, or even eight different MLSs, and mid-sized companies often belong to three or four.”
The move also will give listings broader exposure and allow buyer representatives to search a wider geographic area for homes, he says.
The combined MLS would include REInfolink, Contra Costa MLS, Bay East MLS, East Bay Regional Data, Central Valley MLS, and the San Francisco Association of Realtors® MLS.
The organization, named the Northern California Real Estate Exchange, or NCREX, will be owned by local and regional Realtor® associations and governed by a board of 15 brokers from various-sized companies.
A 12-person task force chose the term “real estate exchange” because the term “MLS” is “somewhat outmoded and means different things to different people,” Larson says. “Plus, it also has historical baggage attached to it.”
Find Education Funding with Benefits Partner
A new Realtor Benefitssm Program partner provides tools and services to find educational funding and manage college loan debt. Collegiate Funding Services LLC is an education finance company dedicated to providing students and their families with the practical advice and loans to help pay for higher education. Special programs and discounts are available to all NAR members, Realtor® association staff, and immediate family members. To learn more, visit www.nar.ed-loans.com.
Need to Find a Speaker on Global Real Estate?
A new online tool at REALTOR.org provides an easy way for state and local associations to find qualified speakers with a specialty in international real estate.
The database—launched in January by NAR’s International Division—allows you to search for speakers by name, topic, or geographical location and includes contact information so that you can get in touch with the speaker directly.
The tool also provides links to more than a dozen PowerPoint presentations on the global real estate market covering such topics as international second-home markets, transnational referrals, and an overview of global events that affect local real estate conditions.
For more information, visit REALTOR.org/cipshome.nsf/pages/speakers.
AE Professional Development: Successful Students
The following students successfully completed Realtor® Association Management Self-Study courses between Sept. 20 and Dec. 15, 2005. Students are eligible to receive points toward their Realtor® association Certified Executive (rce) designation.
Sarah Bockway, Huntington Board, W. Va.
Adrienne Nichols, Pennsylvania Assoc.
Advanced Administrative Concepts Self-Study Course
Professional Standards Module
Jacquie Ketchersid, Greater Las Vegas Assoc.
Michael Page, Ann Arbor Board, Mich.
Marylin Psaros, Prescott Area Assoc., Ariz.
Advanced Realtor® Association Management Self-Study Course
Tonya Deskins, Washington Assoc.
Terry Murphy, West Contra Costa Assoc., Calif.
Toni Parker, Bullhead City Mohave Valley Assoc., Ariz.
Mike Ruzicka, Greater Milwaukee Assoc.
NAR Public Policy Victories Looking Back and Setting New Goals
The Capitol Hill location of NAR’s building in Washington, D.C., appears to have paid off in 2005 with significant legislative and regulatory victories. Lobbying efforts were bolstered by strong grassroots involvement; contributions to the Realtors® Political Action Committee
approached a record-setting $6 million, with every state and territory exceeding its fund-raising goal before the 2005 Realtors® Conference. But 2006 comes with new goals—and NAR is setting its sights high. Here’s a rundown of the top public policy wins of 2005 and the pressing issues for the year ahead. For a more extensive list of legislative and regulatory goals, log on to REALTOR.org/federalissues.
2005 Wins
Favorable do-not-fax rules.
For more than a year, Congress and regulators fired back and forth trying to decide on the scope of the Do-Not-Fax rules. NAR sought to protect members from unfair and costly changes to their marketing practices. The law is now explicit: Realtors® without written agreements will not incur fines if they send faxes to clients with whom they’ve had longstanding “established business relationships.”
Disaster assistance for small businesses. After Hurricane Katrina, NAR pressed hard on the Small Business Administration so that real estate licensees could, for the first time, apply for loans from the SBA’s Economic Injury Disaster Loan Program. Before the storm, only businesses with employees had been eligible for the program.
Significant voice in RESPA reform. To make sure that reforms to the Real Estate Settlement Procedures Act don’t have an onerous impact on the real estate industry, Realtors® participated in each of the Washington, D.C., and regional RESPA roundtables held by the U.S. Department of Housing and Urban Development. No other stakeholder organization had such extensive representation. The work will continue in 2006.
Bankruptcy protections for property owners. Legislation enacted in 2005 made it more difficult for individuals to file for bankruptcy. While the legislation was aimed mainly at consumers, it contained useful safeguards for property owners. NAR-supported provisions provide new protections for shopping center owners who have bankrupt tenants; close a loophole that allowed rental tenants to abuse bankruptcy rules to avoid eviction; and require homeowner and condo association fees to be repaid.
Relief for disaster victims. NAR recommended several measures to provide much-needed relief to hurricane victims. Among the major accomplishments, an NAR-backed law was passed that says any payments received from the National Flood Insurance Program will not be treated as taxable income. This provision is not limited to hurricane relief. Separately, Congress adopted NAR’s recommendations to ensure that homeowners in the disaster areas wouldn’t owe tax on any debts—including mortgages—that lenders forgave following the destruction of property. In 2006, NAR will support legislative efforts to make natural disaster insurance available.
2006 Goals
Enact Small-Business Heath Plan legislation. The House of Representatives has, for more than 10 years, passed legislation that would allow associations like NAR to make health insurance available to members through Small Business Health Plans. But the Senate has routinely ignored that legislation. Now, for the first time, Senate leaders are working with each other and with insurance providers and small business organizations to craft an SBHP initiative.
Keep banks out of real estate. In 2005, Congress again barred the U.S. Treasury Department and Federal Reserve from implementing proposed rules that would permit national banks to enter the real estate business. That prohibition remains in effect until Sept. 30, 2006. NAR is urging Congress to enact the Community Choice in Real Estate Act—which would permanently bar national banks from engaging in real estate—and will communicate the extremely competitive nature of the real estate industry. At the same time, NAR is objecting to recent “back-door” rulings by the Office of the Comptroller of the Currency that allow banks
into real estate development.
Protect mortgage interest deductions. NAR’s nimble response to the adverse recommendations of President Bush’s Advisory Panel on Tax Reform drew national press coverage that underscored the importance of the mortgage interest deduction. NAR is urging Congress to protect and preserve the deduction and other homeownership/investment tax benefits from any efforts to reform the tax system.
Improve housing affordability. NAR is working closely with Congress and government agencies to increase the availability and affordability of housing. Among the top goals for 2006: boost conforming loan limits in high-cost areas to allow more individuals to purchase homes with affordable mortgages, and urge Congress to enact legislation that provides tax credits to developers and investors who increase the supply of affordable housing. Meanwhile, NAR’s Housing Opportunity Program will launch new initiatives to solve workforce housing problems.
Affirm housing missions of Fannie, Freddie. Congress generated many ideas, both good and bad, to reform Fannie Mae and Freddie Mac following its review of their financial statement errors and misdeeds. NAR succeeded in corralling those ideas to achieve two important goals: instituting a stronger regulator for financial activities and affirming Fannie’s and Freddie’s essential housing missions. In 2006, NAR will continue to monitor reform efforts and protect the companies’ role in making housing affordable for families.
Increase Your Odds for Success in Reno
Whether you’re a long-time executive of a big association or a new leader of a small one, you’ll be able to tap into courses custom-designed for you at this year’s Association Executives Institute in Reno, Nev.
The Institute, to be held March 31–April 4, is themed “Find Your Winning Combination.” Attendees can choose from a lineup of more than 35 educational sessions that fall into one of four categories: Association Aces, for the veteran executive; Jack of All Trades, for executives who’ve been in the business less than 10 years; Industry Wildcard, with an emphasis on management issues and real estate trends; and Leadership, which examines the qualities needed to be a confident, effective leader.
More big-name speakers will be featured during this year’s event than in years past, says Dave Phillips, rce, cae, chair of the 2006 AEI Advisory Board and CEO of the Charlottesville Area Association of Realtors® in Virginia. Among them is Ross Shafer, a stand-up comedian, author, and former host of several TV shows, who’ll take the stage at the opening session. In addition, NAR executives—including EVP and CEO Dale Stinton—will provide updates on the association’s activities.
For more on the 2006 Association Executives Institute, visit REALTOR.org/ae.
Send us an e-mail
Share your news with other AEs who read this magazine. We want to know how your association is overcoming challenges, responding to market changes, and providing innovative services. When you have big news or great photographs to share, please send an e-mail to RAENews@realtors.org.
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