The Section 8 housing voucher program is at the center of recent debates in the California legislature and in the Appellate Division of the Sacramento Superior Court. Section 8 is designed to provide housing Read more...
The Section 8 housing voucher program is at the center of recent debates in the California legislature and in the Appellate Division of the Sacramento Superior Court. Section 8 is designed to provide housing for very low income families, the elderly, and the disabled: the federal government provides the funding and local housing agencies distribute vouchers that essentially guarantee a portion of the rent to a landlord. The Section 8 recipient pays a portion of the rent and the housing agency sends a check for the remainder. Landlords have long chosen whether or not they would participate in Section 8. Federal law does not require landlords to participate, so states typically follow those guidelines. Now, however, arguments are being made that landlords should not be able to reject applications to rent for the reason that their income is from a Section 8 voucher.
The court case of Sacramento Manor v. Morris was of particular importance in this debate. Court proceedings began when Sacramento Manor ended its participation in the program, eventually evicting any remaining Section 8 tenants. The Sacramento Manor cites difficulties receiving payment on time as a significant reason for their intended exit from the program (an issue they blame on government administration of the Section 8 program, not the tenants). A tenant, Dorothy Morris, was sued for eviction and in her appeal claims elderly tenants and Section 8 tenants should be considered protected classes under the Unruh Civil Rights Act.
In February the California Apartment Association (CAA) filed a court brief arguing that participation in the Section 8 Housing voucher program should remain optional for landlords. The CAA claims “a myriad of valid business and policy reasons why owners should not be forced in to the program and why it should remain voluntary as intended under federal law”. In the brief the CAA also argues that the voluntary nature of the program is designed to incentivize people to join the program and that landlords should not be forced into permanent arrangements. Last week the plaintiff chose to drop the Section 8 protected class argument (for which the CAA claims credit), ending the threat to landlords—for now. Without the legal precedent of a court ruling, another person could bring a similar suit to court with a chance of success.
Meanwhile, State Senator Mark Leno (D, Senate District 11) has authored SB 1053, which ,if passed and signed into law, would classify those receiving Section 8 vouchers as a protected class under the Unruh Civil Rights Act, meaning discriminating based on a potential tenant receiving Section 8 vouchers would become illegal.According to Senator Leno, “All tenants should have a fair opportunity to apply for housing, regardless of whether they receive a housing voucher”, receiving support from housing-specific advocacy groups such as Housing California.
This would also mean that the recent developments in the Sacramento Manor v. Morris court case would become irrelevant as the legislature (and subsequently, the governor) settles the issue itself. California’s legislature has a strong Democratic majority and the state also has a blue governor, so it is quite possible that this Democrat-sponsored bill will in fact become law. The bill is currently placed on Appropriations Suspension file, meaning it is waiting to advance to the floor for voting.
Real estate professionals should keep an eye on these proceedings as they could greatly impact the renter’s market in California. There is also the obvious need to understand any and all protected classes in order to avoid discriminatory behavior in your business practices. We will be sure to update our readers as soon as possible when there is a development.
For questions or clarifications, start a discussion in the comments or write to the author at: cody@adhischools.com
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Anyone involved in the real estate industry knows that interest rates are currently near historic lows, which makes sense—the government does not want to slow down spending in a sluggish economy. There Read more...
Anyone involved in the real estate industry knows that interest rates are currently near historic lows, which makes sense—the government does not want to slow down spending in a sluggish economy. There has been speculation for months that the Fed would raise rates (it has to happen eventually) based upon the health of different sectors of the economy. This speculative waiting was put to rest (at least for a moment) on Wednesday (4/27/16) when the Fed announced that it would not be raising its benchmark rate yet. The Fed wants its monetary policy to remain “accommodative, thereby supporting further improvement in labor market conditions”, providing continuing hope for the recovering housing market.
Although the Fed has not changed its rates, Freddie Mac’s Mortgage Rate Survey showed a jump from 3.59% to 3.66% from last week for the average 30-year fixed-rate mortgage. This is a climb from all of April, but no need for alarm. March had higher rates and February spent most of the time right around the 3.66% figure. Last year at this time the average rate on these loans was 3.68%. So disregard any alarmist articles or discussion about the significance of this rate jump.
So what does all of this rate talk mean for the housing market? Well, lower rates tend to free up investment. Some analysts have praised the Fed’s decision, noting that unemployment figures are not yet ideal and the low rate policies have been working. And although mortgage rates have climbed over the last week, they are far from high. We will keep an eye on this situation and report back with any updates, but for now rates do not appear to threaten the housing market.
For questions or clarifications, start a discussion in the comments section or contact the author at: cody@adhischools.com
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If you’re reading this, you’re probably interested in the real estate industry. Maybe you are considering getting your license or you’re a veteran REALTOR® pondering change. No matter the situation, Read more...
If you’re reading this, you’re probably interested in the real estate industry. Maybe you are considering getting your license or you’re a veteran REALTOR® pondering change. No matter the situation, anyone in the industry wants to know what competition and opportunity looks like in their area or an area they’re interested in operating in.
Most REALTORS® probably have a pretty good idea of where other REALTORS® work. Large states with large populations like California, Texas, Florida, and New York obviously have more REALTORS®—common sense. Some states (like Florida, again) also have a reputation for having a lot of REALTORS® compared to the overall population. We decided to look up some figures to see which states had the most REALTORS® per capita.
Check out the Top 10 rankings! States are ranked by the number of people per REALTOR® (so since Florida’s number is 133.74, there is one REALTOR® for every 133.74 people).
Florida— 133.74
Arizona— 161.31
Hawaii— 162.14
Nevada— 191.96
New Jersey— 205.53
Utah— 221.66
Idaho— 226.05
California— 229.44
Connecticut— 232.27
Colorado— 237.84
No surprise with the top 3 states—they were the top 3 in 2012 as well. But there are a few significant changes in rankings. Washington, D.C. was 4th in per capita REALTORS® in 2012, but now sits at 12th. Utah is a newcomer to the top 10, sitting at 6th. Idaho made the biggest jump in rankings within the top 10 since 2012, moving from 10th to 7th as the number of REALTORS® per capita there grew faster than Colorado, California, and Connecticut. And although some states did not make a big rankings jump, 8 of 10 states in the top 10 (all except for New Jersey and Connecticut) now have more REALTORS® per capita than they did in 2012.
Of the “Western” states, only New Mexico and Washington fell outside of the top half and 7 of the Top 10 are Western states: becoming a REALTOR® is clearly a more common career path in this part of the country than others.
These numbers can be viewed in a number of ways. Some states with dense REALTOR® populations may look like a difficult place to make a living as a REALTOR®, but that state may have a very active housing market that is drawing people to the industry. While there is no guarantee of success, California, for example, has a strong housing market with rising prices—a good REALTOR® can capitalize on the situation. Likewise, a state with very few REALTORS® per capita may represent a golden opportunity. Just consider New York: it is the only state that is in the top ten for total REALTORS® while being in the bottom half for density (ranked 34th, while having the 4th highest population in the U.S.). With a huge population and a relatively sparse REALTOR® population, it is easy to see why one would seek financial success and choose to become a REALTOR® in the state.
Any REALTOR® reading this knows that these statistics show how competitive or open a market is, not a guarantee of success or failure. At the end of the day these stats should serve as motivation to perform better, not as a deterrent from entering a great field.
For complete rankings, questions about methodology, etc. contact Cody at cody@adhischools.com
Sources:
https://theamericangenius.com/housing-news/report-density-of-realtors-in-each-u-s-state/
http://www.realtor.org/sites/default/files/reports/2016/membership/03-2016.pdf
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On the surface, solar panels appear to be a great selling feature for a home. The prospect of lower utility costs are appealing to everyone and many buyers love the idea of “going green”. Because solar Read more...
On the surface, solar panels appear to be a great selling feature for a home. The prospect of lower utility costs are appealing to everyone and many buyers love the idea of “going green”. Because solar panels are increasingly common in residential real estate, the professional REALTOR should be properly informed as to the impact these panels can have on a transaction. According to the Solar Energy Industries Association the number of homes and businesses with solar panels has exceeded 748,000 in the United States and growth is expected to continue, so this topic will only become more relevant.
Especially if you are taking real estate classes in Los Angeles you’re going to be dealing with houses with solar panels frequently and it’s important to know a few things once you are licensed.
It's important to note that the installation of solar panels on homes does not automatically equal an increase in value. In some instances solar panels can actually lower property value, even in areas that have high utility costs. The desirability of the panels is often determined by whether the panels are owned or leased. If the homeowner purchased the panels, there is evidence to suggest that the home could gain value (sometimes more than $15,000), because long-term utility bills are predictably lower and solar power is viewed as a property improvement.
However, solar leases are often viewed as less desirable. No-money-down solar lease offers have enticed some homeowners to agree to long term leases—sometimes upwards of 15 years. With the lowered bills and no upfront costs, this seems like a fiscally sound choice—and it very well may be for the original owner.
Yet problems can arise when the homeowner tries to sell their home with the leased panels. Potential buyers find themselves signing up for a solar lease with steep credit qualifications that could act as a deterrent. Although solar companies such as Clean Power Finance claim that 95% of the time the buyer either assumes the lease or the owner pays it off, that still leaves 5% of potential transactions where the looming costs or credit qualification issues break a deal. Many people simply do not want to assume the responsibilities of a deal they did not negotiate and may struggle to qualify for, particularly if they have an agent that views the lease as a poorly negotiated deal.
The result can be that a potential buyer may back out of a contract or demand that the seller pay off the lease before they leave. Homeowners with a time constraint like a job relocation may be forced to pay off a $15,000+ lease so they can close a sale and move on. These problems don’t arise on every property with leased panels, but it can happen to a substantial number of homeowners who initially thought they were improving their property. These owners optimistically invest in their homes, but when they decide to sell they find themselves in a position to lose money on their investment.
This is in no way an attempt to dissuade anyone from buying or leasing solar panels or agreeing to represent a seller in this situation. It is simply something to keep in mind: not every dollar spent is a dollar gained.
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Drones - also known as Unmanned Aircraft Systems (UAS) by the FAA - are being increasingly used for commercial purposes. Real estate professionals often want to use drones to improve their photography Read more...
Drones - also known as Unmanned Aircraft Systems (UAS) by the FAA - are being increasingly used for commercial purposes. Real estate professionals often want to use drones to improve their photography and videography - it’s undeniably sexy. Drones offer amazing visual perspective on property that would basically be impossible any other way.
I know many of our real estate school students see videos on YouTube of listings and wonder how they can get cool aerial shots like this on their listings.
It's important to remember that it is currently not legal to operate a UAS for commercial purposes without a Section 333 Waiver from the FAA. Here is what you need to know about these waivers and the concept of using drones for your business.
A pilot’s license is necessary for a Section 333. A broker can’t just buy a drone and fill out a form to get permission for commercial use.
You are allowed to hire someone with a Section 333 to operate a UAS for commercial purposes for you. If you really want aerial pictures of your listing, but do not want to go through the process of getting your own pilot’s license, just hire someone who already has permission from the FAA.
You can take steps to protect yourself. UAS operators can get insurance for their aircraft to limit liability. If you choose to contract a UAS operator, ask for proof of insurance. The National Association of Realtors also points out that you can also request that the operator “indemnify you against any actions, suits, damages, losses, costs and expenses” from the operation of the UAS. If the operator crashes the drone into someone’s house (or worse, into someone), you don’t want to be liable.
Penalties
Nearly all drones must be registered now, whether they will be used for recreational or commercial purposes. There are already steep fines in place if a drone is not registered.
The repercussions become much more serious when commercial usage is involved. Consider this case, where a company was fined $1,900,000 by the FAA for flying unregistered drones without permission in an allegedly unsafe manner. The implication is that the penalties will vary (unauthorized UAS usage in big cities with crowded air traffic will result in bigger fines than flying in a small suburb) but the FAA is serious about enforcement. Some in the commercial drone industry expect fines to typically fall in the $1,000-$10,000 range, which is significantly less than $1,900,000 but still a lot of money. The FAA website asks citizens to report crashed or suspicious drones to local law enforcement and there is no reason to believe threats of enforcing these laws are empty.
The bottom line for the real estate professional is to hire a company that can legally fly UAS for commercial purposes. If you don’t know what you're doing and fly illegally you could potentially hurt someone or damage property. Even if neither of these occur you could still be in serious trouble with the FAA. It just isn’t worth it.
New rules have been proposed and will likely come into effect soon. Follow the link if you intend on operating a UAS and want to see the potential changes coming.
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For tax, compensation and work hour requirements real estate salespeople have long been classified as independent contractors, not employees. It isn’t hard to see why brokers prefer this - they aren't Read more...
For tax, compensation and work hour requirements real estate salespeople have long been classified as independent contractors, not employees. It isn’t hard to see why brokers prefer this - they aren't required to reimburse for business expenses, provide health care benefits or pay the employer share of payroll taxes. It would cost brokers a great deal of money and completely change the real estate profession if agents weren’t contractors.
In a recent class-action lawsuit Bararsani v. Coldwell Banker (2015), the plaintiffs alleged they were misclassified as contractors when they should have been employees. Part of the rationale was that the broker exerted so much control over their day-to-day activities that they could not be contractors.
The case eventually settled outside of court in January, with the $4.5 million settlement to be split by approximately the 5,600 members of the suit. Before plaintiffs see any money the court awarded $1.5 million to the attorneys.
It’s important to remember that a settlement is not an admission of guilt or wrongdoing. Coldwell Banker maintains that they have done nothing wrong and will continue their business practices as before. This means no new employee classification for agents and no new benefits.
This challenge to current business practices is not just occurring in California. A similar case (Monell v. Boston Pads, LLC) was dismissed in Massachusetts and the real estate agents were confirmed to be contractors.
The Massachusetts Association of Realtors considered the Monell case to be a significant win for the real estate industry because brokers were not forced to change their business practices. Plus now they have a strong court ruling to support them. The Bararsani case is not as definitive a victory for those wishing to keep agents classified as independent contractors as a settlement was reached.
The overall issue of independent contractors vs employees is not going away. Uber Technologies, Inc. has found itself in numerous federal lawsuits over the issue (with an interesting emphasis on employment being determined by amount of control the employer exerts over the subordinate) that could end up impacting the real estate industry indirectly. Uber will eventually go through a jury trial to decide the classification of its drivers and if they are determined to be employees in a federal court, independent contractors all across the nation could find themselves in a stronger position to sue for employee status.
The Bararsani v. Coldwell Banker settlement may not be the last of this issue.
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I got my license in 2002 and have seen many real estate partnerships flourish and work well. I’ve also seen partnerships end in bitterness and hatred due to missed expectations and disappointment. One Read more...
I got my license in 2002 and have seen many real estate partnerships flourish and work well. I’ve also seen partnerships end in bitterness and hatred due to missed expectations and disappointment. One mentor of mine famously said “If partnerships were good God would have had one.”
With that being said, your chances of being successful can (not will) increase if you find the right partner or get on the right team. Everyone has heard the saying “two is better than one” and if you want to succeed, a team can help you in areas that you are naturally weak.
Part of the temptation associated with starting or joining a team is the perception that it is the path of least resistance. For the rookie agent, starting out on a team may mean that they will be fed with leads so they won’t have to prospect as hard. For the “rain-maker” or team owner, the allure is that they can somehow take themselves “out" of the business and everyone else will do the work for them. One person will handle all the CMA’s while another will show property for you while another will act as a transaction coordinator for your files.
I saw a YouTube video recently where a prominent real estate “coach” was speaking to a group of real estate agents about building a business. In the video he talked about having members of your staff all aspects of your business while you can be “in Mexico sipping a margarita on your phone saying keep up the good work team!”
This dangerous “get rich but do nothing” philosophy is a large part of why it has become so en vogue to form teams in the real estate business. It’s tempting to think about because it makes the real estate agent think that they can somehow delegate all of the heavy lifting to someone else and avoid working. This rarely works and is a recipe for disaster.
I would highly recommend that before you start or join a team you have very clear expectations of your role and the roles of other team members. Sometimes things are a lot easier to get into than get out of.
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Good REALTORS® are used to thinking about the Code of Ethics. Beyond the ethical guidance it provides, it is also a professional obligation. But what about the application of the Code of Ethics as it Read more...
Good REALTORS® are used to thinking about the Code of Ethics. Beyond the ethical guidance it provides, it is also a professional obligation. But what about the application of the Code of Ethics as it relates to social media? While the Code is typically very clear, it's application to social media can be ambiguous.
Between “private” accounts, character limits, and inexperience applying the code to online behavior, it is easy to forget the Code of Ethics or overlook some of its provisions. This could result in an ethics hearing or even a lawsuit. Keep the following rules in mind to avoid finding yourself in trouble over an easily preventable situation.
Assume everything you post is public.
It isn’t just the content you publicly post—whether it be to your Facebook wall, as a Tweet, or a comment on someone else’s public post—that you should be concerned about. Even private messages on a social media platform can come back to bite you, particularly if you choose to say something disparaging about another real estate professional or a client. Messages you meant to be private can be saved and shared with anyone. A quick screenshot of an old Facebook message can be a serious problem.
Give credit where credit is due—clearly.
Let’s say your close friend is also a real estate professional. You attend a broker's open and you decide to share it on social media. No biggie - you think it is an amazing opportunity and include the address. Maybe you post a picture of the property. You think nothing of it—you aren’t trying to steal the listing. A week later you receive notice of an ethics complaint, alleging you violated Article 12 of the Code of Conduct. Someone (perhaps your friend’s employer?) objected to you posting about the property without making it absolutely clear that you were not the listing agent and obtaining consent to advertise the property. While you may think you are being unnecessarily attacked for helping your friend, you cannot assume everyone will feel the same way. There are case interpretations of Article 12 at realtor.org covering similar situations. The simplest way to avoid this situation is to not make posts like this. But if you choose to, make it very clear who is listing the property and that you are not associated with the listing.
Don’t complain on social media either.
While it might be possible to find yourself in hot water over social media posts made with good intentions, it is definitely possible to run into trouble over negative or disparaging posts. Consider another hypothetical. You had a listing on a property that expired. The next day, your clients sign with a new agent. You have suspicions the new agent had solicited his or her services to your clients while your agreement was still active, but you have no way to prove it. Your former clients refuse to speak about the subject. Lacking evidence of an ethical violation you choose to not file a complaint . Instead you post a vague message on your personal Facebook page about the frustrations of your job and stolen clients. Maybe a friend or family member comments, asking if this is about the house you had not been able to sell. Perhaps another person comments about one of their experiences with a shady real estate agent. Your former client’s new agent finds out about this post from a friend (a realistic possibility, I’m sure you could think of a handful of potential common connections in a few seconds), obtains a screenshot, and files a complaint with the Professional Standards Committee alleging a violation of Article 15 of the NAR Code of Ethics. The agent claims that you are knowingly and recklessly making unsubstantiated false and misleading statements. The moral of the story: don’t complain about business on social media. Between clients, employers, and rival agents, someone can and will find something to be offended by. A perceived breach in contract or code of ethics could result in the loss of a client or even a job.
Cover your bases with personal accounts.
It is common knowledge that REALTORS® are required by the Code of Ethics to disclose their status as a REALTOR® when carrying out business. But what about on a personal social media account? If you keep your personal and professional accounts separate, you shouldn’t have any problems. But separation is key. If your friend shares a listing for their house that is on the market, “sharing” it further might be kind and helpful. But, as a real estate professional, you would then be required to make it clear that you are a REALTOR®, that you are employed by Employer X, and that this is not your listing. This might seem unnecessary (particularly if you have a relatively small number of friends on social media and aren’t operating a prominent account), but it is a far better option than a formal complaint when someone decides that you misrepresented yourself.
Keep private information private.
It is easy to let information slip in conversation. You tell a friend about a commission or a client that was trying to downsize after losing a job. While this might constitute a violation of the Code of Ethics, you are also unlikely to find yourself on the receiving end of a formal complaint. Talking about these topics on social media—regardless of whether or not you’re doing this in a private message, a public post, or a private group of some sort—is not just a violation: it’s a paper trail. You’re best off not violating the Code of Ethics (it’s in place for a reason). But you’re worst off leaving evidence of violation that you committed without malice or the desire to damage the reputation of another person. Leave private information out of social media.
Be smart—even if you come out of a Code of Ethics hearing unscathed, you will still have wasted your time and possibly damaged your reputation - your most important asset.
The few hypothetical situations in this post are realistic and just scratch the surface of what can be done on social media. Good intentions won’t prevent an ethics hearing. It’s common these days to reach for our phones and rant. Just remember - someone is always listening.
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I received this email from the Bureau of Real Estate and I wanted to share it with all of our stakeholders.
This is to inform you that all individuals who submit an application for a real estate license Read more...
I received this email from the Bureau of Real Estate and I wanted to share it with all of our stakeholders.
This is to inform you that all individuals who submit an application for a real estate license received on or after January 1, 2016 will no longer need to submit proof of legal presence in the United States.
On September 28, 2014, the Governor signed Senate Bill 1159 (Lara, Chapter 752, Statutes of 2014), which adds Section 135.5 to the Business & Professions Code (BPC), changing the legal presence requirements to obtain a real estate license. Current law requires an individual to provide proof of legal presence (proof of U.S. citizenship or legal alien status), in the United States in order to obtain a real estate license. SB 1159, which becomes effective on January 1, 2016, will remove the legal presence requirement from the application process. Applicants will still be required to provide a social security number or an individual taxpayer identification number for licensure. Please make appropriate changes to your materials and inform your students of the changes to the requirements for licensure.
What this will likely lead to is the elimination of the RE 205 form as well as the need to show either US Citizenship or the possession of a Alien Registration Card “Green Card”. We will update our processes as this date comes closer.
This isn’t the forum to discuss the politics of this, but I wanted to let you know of the upcoming change.
Best regards,
Kartik Subramaniam
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Time for a serious discussion for all you new agents out there. Starting a career in real estate is not like starting a business. A career in real estate sales is starting a business.
If this sounds Read more...
Time for a serious discussion for all you new agents out there. Starting a career in real estate is not like starting a business. A career in real estate sales is starting a business.
If this sounds daunting to you, don't worry. Upon close examination, you will see that the revenue that a real estate agent can make relative to the amount of investment necessary is amazing.
For a moment, let's compare real estate sales with other businesses like restaurants, clothing stores or most other businesses that you might think of.
Imagine how hard it is to own and operate a restaurant, for example. You have to purchase supplies, hire staff and deal with dozens of customers on a daily basis. Don't forget rent each and every month. You're also going to need a phone line and probably Internet access. Additionally, you don't get to take time off randomly like you would as a Realtor. You don't get to create your own schedule. You have to be there six to seven days a week from open to close.
Man... THAT'S HARD WORK.
Compare this with real estate sales:
You don't have to carry any inventory. Our inventory is out there ripe for us to sell! We have zero carrying costs and don't have to pay for the inventory (listings) that we have.
You don't have payroll to make until you can afford it. If you owned a restaurant, bar, clothing store, coffee shop or almost any other business, you would have payroll obligations from day one. In real estate sales, you hire an assistant when you can afford to.
You don't pay for an extra phone line or Internet access, your broker pays for this. Don’t kid yourself about how expensive business class telecommunications can be. Many businesses have a phone and Internet bill of several hundred dollars per month or even more!
You only deal with a small number of select clients unlike the volume game played by most other businesses. Think of something as simple as a coffee shop. How many customers does a coffee shop have to deal with each and every day? Potentially dozens or maybe even hundreds. Every single customer has to leave happy. In our real estate business a successful Realtor might only have to deal with 20-30 clients over the course of an entire year. Yes, this means that each deal comes with more pressure, but you don't have the constant pressure you would have in a higher volume business.
There are a ton of people who get into our business that come to the sad realization that buyers and sellers aren't going to beat down the doors of the newly licensed agent. This causes them to second guess the real estate sales business and dismiss it as "too difficult". They then start to blame the market.. "Hey nobody is buying anyway"... "Haven't you read the news lately? The market sucks..."
The truth is that as Realtors, we don't know how good we have it in our business. Even as a new agent, over 50% of the gross revenue generated is ours to keep. Strong, experienced Realtors often get to keep over 80-85% of the gross revenue.
Think of attorneys as a point of comparison. Attorneys typically bill out at $275-$450 per hour. Do you think that and average attorney working at a firm gets to keep that high of a percentage? Even half of it? No way. An associate at a law firm might be making $40-$50 per hour against the $250+ that they are billing.
Yes the market might be down and prices are lower than they were in many parts of the country but real estate sales can be one of the most most rewarding business out there. This is true from an economic perspective as well as the inner feelings of fulfillment that comes from helping clients navigate the complex world of real estate.
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