Feb. 13th Legislative Update

Legislative Update Topics:

Legislative agenda items, Manufactured Homes Title Issues Bill and Housing Day at the Capitol, February 23rd!

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VIEW HERE

FEATURING –

Paul EgerVice President, Governmental Affairs

Join Us for Housing Day at the Capitol, February 23rd!

Over 550 Registrants!

This is a day you won’t want to miss!

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Full Details & Registration at www.housingdaymn.org

The Minnesota REALTORS® is the largest professional trade association in the state with more than 17,000 members who are active in all aspects of the real estate industry. 

2017 January GRI Graduates!

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Congratulations to Deanna Tollin, Charles Hatcher, Melissa Genereux, Mary McCormick, Connie Glass and Kimberly Culbert-Blaeser for completing the Graduate REALTOR® Institute (GRI) designation this January 2017!

Deanna Tollin

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Charles Hatcher

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Melissa Genereux

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Mary McCormick

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Connie Glass

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Kimberly Culbert-Blaeser

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Minnesota is the #4 State by percentage of REALTORS® who have earned their GRI Designation!

UPCOMING GRI DESIGNATION CLASSES*

St. Paul Area Association of REALTORS®, 325 East Roslawn Avenue, St. Paul:

February 13th | 9AM-Noon | Counseling Sellers with John Anderson

  • Learn how to identify your sellers’ specific wants and needs as well as competently counsel your seller clients about marketing their property, objective pricing, and current market conditions.

Minneapolis Association of REALTORS®, 5750 Lincoln Drive, Edina

February 21st | 1PM-4PM | Feels Like the First Time Every Time (Buyer Counseling) with John Anderson

  • Learn the services buyers want • Buyer decision making • Mortgage prequalification • Showing homes • discussing valuation • Offers • fair housing considerations • homebuying process through closing

February 24th | 9AM-Noon | Professional Standards and Best Practices with Deb Greene

  • An in-depth look at legal and ethical principles, rules, and duties in communication.
  • Customs, etiquette and professionalism with clients and peers
  • Manage expectations and negotiations
  • Preserve the transaction, even in the face of difficult behaviors and personalities.

*All classes approved by the Minnesota Commissioner of Commerce for 3 hours of real estate continuing education each unless otherwise shown.

REGISTER HERE

The Minnesota REALTORS® is the largest professional trade association in the state with more than 17,000 members who are active in all aspects of the real estate industry.

2016 November GRI Graduates!

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Congratulations to Jennifer Ritzman, Joel Johnson, Christine Madison and Matthew J. Kennedy for completing the Graduate REALTOR® Institute (GRI) designation this November 2016!

 Jennifer Ritzman

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Joel Johnson

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Christine Madison

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Minnesota is the #4 state by percentage of REALTORS® who have earned their GRI Designation!

Don’t be left out! Be the next GRI Designee

Minneapolis Association classroom, 5750 Lincoln Drive, Edina:

December 5th | 9AM-Noon | Counseling Sellers with John Anderson

  • Learn how to identify your sellers’ specific wants and needs as well as competently counsel your seller clients about marketing their property, objective pricing, and current market conditions. In addition, the instructor will cover licensees’ responsibilities to sellers from initial interview through closing. Federal and state fair housing laws and MN agency and disclosure law will also be discussed.

December 5th | 1PM-4PM | The Role of Diversity Marketing in Your Real Estate Practice with Julia Isreal

  • Recognize opportunities in marketing to diverse populations and provide helpful resources to effectively represent sellers and buyers from different ethnic and cultural backgrounds.

December 14th | 1PM-4PM | Proper Pricing and Secrets of the CMA with Zoe Liston

  • This course covers various aspects of researching, developing and presenting a Comparative Market Analysis when working with sellers. Topics will include information on what real estate value is and isn’t, tips on handling sellers’ common pricing misconceptions as well as how agents can educate sellers on the benefits of properly pricing a property to meet the sellers’ goals. The instructor will present elements of a thorough CMA, how market dynamics affect pricing, and the relation of pricing to timing.

St. Paul Association classroom, 325 East Roselawn Avenue, St. Paul:

 December 7th | 9AM-Noon | Professional Standards and Best Practices with Deb Greene

  • This course will provide an in-depth look at legal and ethical principles, rules, and duties in communication. The instructor will cover customs and etiquette in responsible business communication, professional communication with clients in managing expectations and negotiating, and the importance of perserving the transaction, even in the face of difficult behaviors and personalities. Models of communication will be included.

December 7th | 1PM-4PM | Risk Management with Susan Dioury

  • Get answers to frequently asked questions in the risk management area including insights into best practices for both issues that frequently arise in your practice and those that are unique, including compensation, disclosure, agency, and contractual issues.

REALTOR Association of Southern MN, 2115 Rolling Green Lane, North Mankato:

 December 7th | 1Pm-4PM | Code of Ethics: Case Studies II with Jonathan Kopecky

  • Explore common scenarios faced by real estate professionals and their legal and ethical duties when these situations arise.

*All classes approved by the Minnesota Commissioner of Commerce for 3 hours of real estate continuing education each unless otherwise shown.

REGISTER HERE

The Minnesota REALTORS® is the largest professional trade association in the state with more than 17,000 members who are active in all aspects of the real estate industry.

 

Prices Up; Bubble Possible?

While the market is showing signs of slowing, things are different today than during the last downturn.

By Scott Wright, manager of business analytics

Home prices have had an epic run since 2012, up a staggering 36.1 percent through June 2016, according to the S&P/Case-Shiller U.S. National Home Price Index. This run has been so impressive that home prices are now only within about 1 percent of their 2006 apex, nearly erasing that brutal six-year run that had such devastating effects on the real estate industry and the economy as a whole.

Sellers, investors and real estate sales professionals have all enjoyed this run, but how long will it continue to endure? Is this another bubble that will be subject to a powerful reckoning? Nobody knows what the future will hold, but there are some signs that demand attention.

The Banking Sector – One thing that should ease your mind is the state of the banking sector today compared t 10 years ago. More subprime loans (nearly $2 trillion) were originated from 2004 to 2006 than in the previous 10 years combined. Such appallingly low lending standards allowed people, who couldn’t afford them, to secure loans. When home prices declined and adjustable-rate mortgages reset at higher rates, defaults were widespread. A tidal wave of defaults naturally crushed the securities that were backed by these mortgages, which ultimately wreaked havoc on the global economy.

Things Have Radically Improved – Fast forward a decade and, as you know, things have radically improved. The Great Recession has come and gone; investors have regained confidence, and after taking its lumps, the banking industry has instilled smarter lending practices while the investment community has been more cautious in creating instruments that leverage these loans. There is much debate as to the bubble status of the current housing market boom, there is; however, no denying that risk is much lower as it relates to the mortgage market.

Watch the Stock Market – While historically there hasn’t been a super-tight positive correlation between the stock markets and home prices, a more recent trend does indeed warrant some attention. Have a look at this chart that shows the Dow Jones Industrial Average overlain by the S&P/Case-Shiller U.S. National Home Price Index from 2003 to June of this year.

The housing bubble and bull stock market that developed in the early 2000s fed off one another. Everyone felt rich as their primary physical asset and stock portfolios skyrocketed. From its late 2002 low to the 2007 high, the Dow soared a whopping 94 percent over which time home prices increased by nearly 50 percent.

By 2007, home prices and the stock markets were in tailspins that dizzied investors. The Dow went into major correction mode, getting cut in half as home prices continued their precipitous decline. This rough patch coincided with the Great Recession and created gnashing of teeth across all markets.

The Dow finally bottomed in early 2009, giving way to a much-needed recovery. This recovery unfolded at a time when the United States and global economics were still on edge, hence home prices continuing to trend downward as many still didn’t quite trust the turnaround. Stock market investors were the first to trust it as they witnessed a dearth of capital hitting the economy via the Federal Reserve’s aggressive Quantitative Easing (QE) campaigns. QE along with the Fed’s unprecedented Zero Interest Rate Policy (ZIRP) provided a backstop for investors, so, with money falling from the sky, there was no way the economy couldn’t improve, and the stock markets responded.

The gun-shy real estate markets finally responded to the Fed backstop, and beginning in 2012, home prices started to soar. Now, in the summer of 2016, there’s been no letup. Tight inventories, low interest rates and the perception of a strong economy have created the perfect storm for home prices.

It is the perception of a strong economy that is worrisome. Interestingly, greater than two-thirds of U.S. GDP is driven by consumer spending. And, the primary reason consumers are spending is the wealth effect that’s been created by the ongoing stock market bubble. Yep, these record high stock markets are now creeping into bubble territory measured by valuations. The Dow’s unprecedented run with nary a material correction to blink at for years on end has consumers feeling rich.

This is a dangerous position that could end badly, but the Fed is trying everything in its power to prevent a recession from happening. As if their open manipulation of rates isn’t enough, there are now rumblings of NIRP, a negative interest rate policy.

The Fed’s reckless meddling in the economy will eventually backfire. There’s only so much funny money you can pump into the system and only so much that interest rate finagling will accomplish. The Fed backstop will eventually come crashing down, and the stock markets will have their day or reckoning. Investors who have been convinced that the stock markets are as safe as a money market fund will see their dreams dashed in quick fashion.

The bottom line is that a major stock market correction is long overdue. And, possibly, once the stock markets crumble, home prices will turn downward. Recession or not, in declining stock markets people naturally feel less rich, and they won’t spend as much on homes. And if a recession does not hit, which is also likely since it’s been over seven years since the last one, it will put even more downward pressure on home prices. We’re not doomsayers, but we do believe in market/business cycles. For those of us in the real estate industry, perhaps it would behoove us to pay attention to what’s going on in the stock markets.

This article originally appeared in the October 2016 issue of the REAL Trends Newsletter is reprinted with permission of REAL Trends, Inc. Copyright 2016.

The Minnesota REALTORS® is the largest professional trade association in the state with more than 17,000 members who are active in all aspects of the real estate industry.

2016 September GRI Graduates!

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Congratulation to Leland Roggenkamp, Troy Lake, Joe Maselter, Wendy Kaarto, Kari Barker and Sarah Diebel for completing the Graduate REALTOR® Institute Designation (GRI)!

 Leland Roggenkamp

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Troy Lake

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Joe Maselter

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Wendy Kaarto

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Kari Barker

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Sarah Diebel

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Minnesota is the #4 state by percentage of REALTORS® who have earned their GRI Designation!

 Don’t be Left Out! BE THE NEXT GRI DESIGNEE

SCHEDULE OF GRI DESIGNATION CLASSES*

Duluth Area Association of REALTORS® – October 6th, 2016

  • 2016-17 Required Module, Residential Contracts (3.75 hours of CE Pending)
  • Code of Ethics Case Studies II (3 hours of CE Approved)

Information & Registration HERE

Minneapolis Association classroom, 5750 Lincoln Drive, Edina:

  • November 7th, 1-4pm, Resolving Transaction Disputes, Jonathan Kopecky
  • November 18th, 9-noon, Risk Management, Susan Dioury and Anne Kealing
  • December 5th, 9-noon, Counseling Sellers: Fundamentals of Sellers and Listings,  John Anderson
  • December 5th, 1-4pm, The Role of Diversity Marketing in Your Real Estate Practice, Julia Israel

St. Paul Association classroom, 325 Roselawn Avenue, St. Paul:

  • October 24th, 9-noon, Resolving Transaction Disputes, Jonathan Kopecky
  • November 21st, 9-noon, Negotiating with Confidence and Power, Deb Greene
  • December 7th, 9-noon, Professional Standards & Best Practices, Deb Greene
  • December 7th, 1-4pm, Risk Management, Susan Dioury

*All classes approved by the Commissioner of Commerce for 3 hours of real estate continuing education each unless otherwise shown.

More classes being added. Check our website HERE

REGISTER HERE

Get more information on the GRI Designation HERE

The Minnesota REALTORS® is the largest professional trade association in the state with more than 17,000 members who are active in all aspects of the real estate industry.

GRI Classes Available in Minneapolis

Don’t Be Left Out!

Earn CE and a National Designation

Minnesota is the 4th state in the U.S. by percentage of REALTORS® who have earned their GRI Designation!

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*All courses approved by the Minnesota Commissioner of Commerce for 3.0 hours of real estate continuing education unless otherwise shown.

More classes being added.

REGISTER HERE

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The Minnesota REALTORS® is the largest professional trade association in the state with more than 17,000 members who are active in all aspects of the real estate industry.

FACTORS TO CONSIDER IF YOU’RE EXPLORING A JOINT VENTURE

Is a joint venture a viable alternative to a marketing service agreement?

By Sue Johnson, strategic alliance consultant

The Consumer Financial Protection Bureau’s (CFPB) aggressive enforcement against Marketing Service Agreements (MSAs), coupled with its 2015 Bulletin warning providers to “proceed with caution” in this area, has led many companies to explore a joint venture as an alternative to an MSA.

The CFPB has not outlawed MSAs per se, and the Supreme Court may decide this year whether or not the agency has overstepped its bounds in its strict interpretation of how RESPA’s referral fee prohibition applies to this type of agreement.

But given the uncertainty of today’s MSA regulatory environment, should you actively explore a joint venture? The answer is, “Maybe.” Here are some factors you should consider as you begin your assessment.

Will you be able to capitalize adequately the joint venture?

To create a RESPA-compliant joint venture, you’ll need to capitalize the entity. No specific amount is required, but many RESPA attorneys recommend an investment covering start-up costs and six months of expenses. Be aware that RESPA regulators expect your investment not to be tied in any way to expected referrals. If the returns are disproportional to the amount invested, you open yourself up to an investigation.

Will your volume of business support a joint venture?

You obviously will need a certain volume of business to make the capital investment and operational costs worthwhile. A pro forma income statement done in conjunction with your prospective partner will enable you to assess how many transactions the new entity will need to close to cover your costs and to achieve your profit goals.

Do you have a viable joint venture partner?

Your partner will be critical to the venture’s long term success. You could start by assessing the suitability of companies that already do business with your sales force and customers. One possible partner is a company with an established track record of creating and managing RESPA-compliant joint ventures.

Are you and your partner ready to make a long-term commitment?

Beware of potential partners that approach you with proposals involving quick profits. A successful and compliant joint venture involves a long-term commitment by the senior management of all owners. If one is a real estate brokerage company, it takes time and excellent service to win the business of its real estate sales force.

Are you ready to comply with RESPA’s ABA standards?

First, you should comply with the three statutory conditions of RESPA’s affiliated business arrangement (ABA) safe harbor:

  1. Provide an ABA Disclosure in writing at or before the time of the referral.
  2. Do not require the consumer to use the affiliated service.
  3. Do not receive any “thing of value” from the venture other than a return on ownership interest or franchise interest.

You also should not consider a joint venture unless you and your partner are ready to comply with the RESPA Sham Joint Venture Guidelines that RESPA regulators use to determine whether a joint venture is “bona fide” or a “sham” designed to  circumvent RESPA’s referral fee prohibition. They include:

  1. Adequate and proportional capitalization: As discussed above, the joint venture should be adequately capitalized, with any returns being proportional to the capital investment.
  2. Employees: It should perform its essential services with its own employees, not employees loaned by either owner. Many RESPA attorneys advise hiring at least one full-time dedicated employee.
  3. Separate management: Its operations should be run by its own management, not the management of wither owner.
  4. Separate office space: Its office(s) should be separated from those of wither partner, and it should pay market value for the space.
  5. Performance of “core” services: It should perform the essential functions for which it receives a fee. If it contracts out services, it should pay for the fair market value of those services.
  6. Outside business: The entity should actively compete for outside business, and not send business exclusively to an owner or its affiliates. Many states require that a certain percentage of revenues be obtained from unaffiliated sources.

Do you need to meet all of these guidelines? Not necessarily. Some, such as capitalization, employees, and the performance of core services, are considered more important than others. But you should be prepared to meet as many as possible to prevent the RESPA police from knocking on your door.

A successful joint venture can bring you long-term financial benefits and enable you to build value for your customers. But it also requires a substantial financial and management commitment, as well as compliance with a separate set of regulatory standards. If you decide to explore this option, make sure you do so with the advice of an attorney with an established RESPA practice.^

This article originally appeared in the September 2016 issue of the REAL Trends Newsletter is reprinted with permission of REAL Trends, Inc. Copyright 2016.

The Minnesota REALTORS® is the largest professional trade association in the state with more than 17,000 members who are active in all aspects of the real estate industry.