License Law Changing for Indiana Realtors

Indiana Association of Realtors (IAR) number one legislative priority passed the Senate yesterday with overwhelming support and is now on its way to Governor Mitch Daniels for his signature.  The REALTOR(R) voice was heard loud and clear at the State House this session during a year characterized by most State House insiders as a very tough session in which to get a bill passed.

Our success is a tribute to the credibility and persistence of our members.  Many thanks to IAR President Charlie Shook, your IAR Leadership Team, the License Law Task Force chaired by Mike Lunsford, and the hundreds of REALTORS who contacted their legislators to ask for their support of SB 275.  The contacts made on IAR's Lobby Day and the REALTOR presence at the State House helped push the bill through the final leg of the process.  Our grass roots are surely second to none! 

This week we are devoting the entire edition of Capitol Corner to the License Law bill.  Below, please find a brief summary of the rationale behind these changes, as well as a detailed bill summary to bring you up to date with the changes that are included in the legislation.  Our membership has long clamored for higher professional standards and greater relevance of continuing education.  SB 275 accomplishes both and aligns our licensing structure with the real world, modern practice of real estate.

The Government Affairs Team extends our thanks to all of you for your hard work on this bill and for your dedication to your profession!

SB 275:

MODERNIZES the way real estate professionals are licensed by instituting the first major changes to the licensing process since 1979 

INCREASES PROFESSIONALISM through more targeted education.  With spotlight on the housing crisis, and the business of real estate more complicated than ever before, the real estate industry itself has a drive for increased professionalism among licensees

INDUSTRY DRIVEN legislation that stems from more than two years of work by actual real estate practitioners who serve on the Indiana Real Estate Commission as well as a subset of the Commission called the License Law Task Force

STREAMLINES GOVERNMENT by extending the current two-year renewal period for real estate licenses from two years to three years

RAISES THE BAR for all current real estate salespersons by transitioning them to broker status:  everybody will be a broker.  Mandatory 2-year 24-hour broker transition education course required for all salespersons.  Counts as continuing education during the transition period.

IMPROVES EFFICIENCY  by giving the existing Education Advisory Council, a sub committee of the Indiana Real Estate Commission comprised of practitioners, additional duties to ensure enhanced quality and relevance of continuing education

ENHANCES EDUCATION FOR NEW LICENSEES by eliminating the salesperson license, providing support and education for new brokers and requiring new managing brokers to take a course on managing their real estate business.

What does this mean for existing licensees?

1)  If you are currently a salesperson you will have until July 1, 2014 to complete a 24 hour broker transition course which will count as your CE requirement for those two years from 2012-14.  You will become a broker upon completing of the course.

2)  If you are currently broker nothing changes.  You merely complete your annual CE.

3)  If you are currently a principal broker you are grandfathered and will be called a managing broker after July 1, 2014. 

Bill summary of SB 275:

--bill passed House 95-0 and Senate 45-2

--creates minimum education requirements for licensees:  a high school diploma or GED

--eliminates the license category for salespersons effective July 1, 2014

--24-hour broker transition course transitions all current salesperson to brokers license by July 1, 2014.  Course counts as required CE from 2012-2014 for salespersons.  Broker transition course is tested.

--extends renewal period for all real estate licenses from two year to three years

--requires that for at least two years after being issued a broker’s license, the license must be assigned to a managing broker

--requires 30-hours of post-licensing education within the first two years of practicing for all new brokers who are licensed after July 1, 2014.  The post-licensing education fulfills the CE requirement.

--gives authority to Indiana Real Estate Commission to approve all education

--establishes membership of the Education Advisory Council, a sub-committee of the IREC, and give the council authority to make recommendations concerning requirements for sponsors of course, requirements for instructors, and requirements for curricula

--gives the commission authority to approve pre-licensing online, post-licensing and continuing education

--eliminates term “Principal Broker” and replaces it with “Managing Broker”

--provides that an individual who is a “Principal Broker” on June 30, 2014 becomes a “Managing Broker” on July 1, 2014

--creates minimum requirements for managing brokers effective July 1, 2014; a broker must hold a broker’s license for a minimum of two years and take and pass a 24-hour broker management course approved by commission

--provides that a licensed salesperson with an inactive license must complete the 24-hour broker transition course prior to reactivating their license

--provides that a salesperson with a license in referral status must complete the 24-hour broker transition course prior to performing the functions of a broker beyond making referrals

--provides that a salesperson with a license in referral status automatically becomes a broker after June 30, 2014 but cannot perform the functions of a broker beyond making referrals to licensed brokers until the 24-hour broker transition course is completed

--provides that if a broker’s license is placed in referral status prior to completing the 30-hour post-licensing education requirement the broker must complete the 30-hours prior to being removed from referral status

--for new brokers the required curriculum consists of 90-hours of pre-licensing education to be determined by the commission, with at least three written examinations during the course

--requires schools to submit names and addresses of those who have successfully completed the pre-licensing course to the commission within 30 days of completion

-requires 12 hours per year of continuing education for all licensees

--for managing brokers at least four of the 12 hours of annual CE must be dedicated to the necessary business and management skills and legal knowledge needed to be a managing broker

IAR will be working closely in the months to come with the Professinal Licensing Agency and the Indiana Real Estate Commission to ensure that all licensees are made aware of the new requirements.

"Capitol Corner"

4 Predictions for the 2012 Real Estate Market

With 2012 nearly upon us, many of us will be spending this week reviewing the events of 2011 and setting resolutions, goals or visions for what we'd like to accomplish next year.

It will come as no surprise that the most common New Year's resolutions fall into the categories of getting organized and getting fit -- physically and financially.

Financial fitness includes getting your real estate business in order. But you can't set up your real estate plans for the year in a vacuum. They must be done in context of what's going on in the market. Here are four predictions about what that market context will look like in the coming year:

1. Even more foreclosures

While I'd like to claim crystal-ball credit for this one, it doesn't take heightened powers of prediction to foresee an uptick in the rate of home repossessions in 2012. Last fall's robo-signing debacle and the ongoing legal fallout from it created a massive backlog in the foreclosure pipeline, meaning that banks are taking many months, even years, to actually foreclose on mortgages in default.

Earlier this year, the New York Times reported that the additional hurdles New York state courts are requiring banks to leap in the wake of the robo-signing revelations, like additional settlement meetings with the homeowner to see if a modification can be brokered, have created a backlog of foreclosures that it would take 62 years to clear, at the current rate of foreclosure.

It's pretty clear that in 2012 and beyond, the banks will work through those backlogs. The inevitable result will be an increase in foreclosures.

2. REOs and short sales will become the new normal

If you even know anyone who has house-hunted in the past couple of years, you've likely heard tales of the high-drama high jinks -- super-long escrows, first-time buyers being bested by investors' cash offers, banks resistant to negotiating for repairs -- that take place in the course of a distressed property sale.

In the coming year, distressed home sales will continue to represent an increasing share of homes on the market. So, buyers will shift from considering whether to buy a short sale to understanding that they must be educated and prepared to do a deal with a seller, a bank (to buy an REO) or a hybrid of the two (to buy a short sale) to access the full selection of homes on the market.

This, in turn, will empower buyers to make smart decisions about what to offer and what to expect on any listing they like, as well as to set smart priorities and make realistic comparisons between listings based on their own personal priorities around timing, certainty and seller flexibility.

3.  So-called 'smart cities' will do well 

This year, a number of housing markets saw double- or even triple-dips in home values. In others, pricing stayed relatively flat. However, in areas where technology powers the economy, home values prospered along with the industry. Silicon Valley real estate, for instance, saw fierce competition among buyers as the young employees of companies that went public like used their newly stocked bank accounts to buy their first homes.

I recently talked with Jed Kolko, chief economist for real estate search site Trulia, and his 2012 forecast was that so-called "smart cities" will continue to have hot real estate markets next year. But Kolko defined smart cities much more broadly than the California tech hubs. Other tech centers like Austin, Texas, and the Massachusetts suburbs of Cambridge, Newton and Framingham all made Kolko's list, as did Rochester, N.Y. (a town known for its highly educated, highly skilled work force).

4. Consumers will get ‘hopeless'

I mean hopeless in the best of all possible ways. For years, buyers and sellers have been waiting for that singular event to occur that would cause a quick market recovery. But 2012 will mark the fifth or sixth year of the real estate recession, depending on who you talk to. I predict that those consumers who have not already done so will drop unrealistic hopes for a fast return to the heady real estate fortunes of the subprime era.  Instead, people will make their real estate plans based on:

• today's low home prices, rather than the fantasy of what could happen if the market miraculously came back;
• assumptions of very low, or no, appreciation in home values for years to come; and
• very conservative estimates of their own finances and how they will grow.

As a result, buyers won't break their necks to hurry and buy before prices uptick; rather, they'll save and plan to buy when it makes the most sense for their finances. Homeowners will do the same; they will either refi, remodel and be content where they are for the long haul, or decide their homes no longer fit their lifestyles and their finances, divest of them and move on. But the good news is, people will make these decisions based on what is or is not sustainable for their lives and their finances, and not based on inflated hopes about what the market will or will not do.

 Tara-Nicholle Nelson

Good morning. I’m sure you’re aware that the existing home sales data reported by our national association has been called into question and that the real estate blogosphere is afire. While direct IAR member inquiry on this topic has been minimal, I thought it still important to touch base with everyone. Thankfully, I have good news to share. First, please know the way NAR calculates existing home sales data is statistically sound. It’s just complicated because it’s based on estimates. Estimates cause errors to grow over time, which is why NAR periodically undertakes a re-benchmarking effort. Here’s a video if you want a more in-depth explanation. It’s nearly eight and a half minutes long, so you know how complicated all this is and why traction on the most recent re-benchmarking effort - set to debut with next week’s scheduled release of existing home sales data – has been difficult in the blogosphere and with the media. NAR uses estimates out of necessity. There isn’t the same cooperation across the country like we enjoy here in Indiana. Not even within other states. We are truly unique. That brings me to the good news – none of the above is relevant for REALTORS® in Indiana thanks to your cooperation. Because you’ve allowed your MLS – BLC® as is the case in the central and southwestern parts of the state – to participate in IAR’s data warehouse, we are able to produce the monthly Indiana Real Estate Markets Report, which: is real-time because you allow the warehouse access to your data every night; has real numbers because it’s fueled by the MLSs and BLCs®; is comprehensive because it includes all existing detached single-family home sales; is consistent because we pull data on the same day every month; and is of the highest quality because we scrub the data for duplicate listings and outliers. The Indiana Real Estate Markets Report has been an invaluable aid to IAR’s advocacy efforts and has all but removed reference to NAR when the media tells the Indiana housing story. But, we all know real estate is local. The report has that covered, too. You can get specific county information – one-pagers you can reference, share with your clients, use to make comparisons and correct media reports if need be. So, check it out, use the report and know you have the admiration of state associations across the country, not to mention the gratitude of your own! Happiest of holidays to you and yours, Patricia “Pat” Williams 2011 President Indiana Association of REALTORS® pwilliams@callcarpenter.com

Take Advantage of Expiring Tax Deductions

There are several tax credits and deductions set to expire at the end of the year, and given the federal deficit problem, there's a good chance they won't be extended. If you want to take advantage of them, you need to act before Jan. 1, 2012.

Mortgage insurance premium deduction

If you itemize deductions, you may deduct the premiums you pay for mortgage insurance, just like you do mortgage interest. However, this deduction is phased out if your income exceeds certain levels. To qualify for the full deduction, a couple or a single taxpayer must have an adjusted gross income of $100,000 or less. The deduction is phased out completely if AGI exceeds $109,000.

This deduction, which was first enacted for 2007, is scheduled to expire at the end of 2011. Thus, your payments are deductible only if you pay them during 2011; a payment after 2011 is not deductible.

A deduction of up to $4,000 for qualified education expenses is available for 2011. All or part of the amount you pay can be for classes beginning in 2012. But you must make your payments during 2011, because the deduction expires at the end of the year. This deduction is not available if your modified adjusted gross income is more than $80,000 ($160,000 if filing a joint return). Nor is it available if any of education tax credits are claimed.

Home energy credit

First, any homeowner may qualify for an energy credit of up to $500. You can qualify for the credit if you purchase during 2011 solar panels to generate electricity or for water heating, or install wind energy equipment, a geothermal heat pump, or certain types of fuel cells to generate electricity. The credit is up to 30 percent of the amount you spend, up to the $500 limit. This credit is not available for purchases in 2012.

Sales tax deduction

If you itemize, you can deduct either your state and local taxes or your sales taxes paid during the year. This deduction is a boon for people who live in states with no or low income taxes. However, the deduction for sales and use taxes instead of state income taxes is scheduled to expire at the end of 2011. To maximize this deduction, you should make any large purchases before the end of the year.

Adoption credit

A tax credit for adoption expenses (adoption fees, court costs, attorney fees, travel, etc.) has been available for many years. However, an enhanced adoption credit is available for adoptions finalized before 2012. The credit is up to $13,360 of adoption expenses. For 2011, this is a nonrefundable credit, meaning you qualify for it even if it exceeds the amount of your 2011 tax liability. This means that you could qualify for a tax refund even if you did not have federal income tax withheld.

Stephen Fishman-Inman News

State of the Evansville Market

Local interest rates held steady with the following average rates:

Conventional Mortgages (up to $ 417,000):

Term                                            Rate                 Points                APR

30-Year Fixed                             4.125%             0.625%             4.242%

20-Year Fixed                             3.875%             0.375%             4.007%

15-Year Fixed                             3.375%             0.875%             3.616%

When selling a home it is always a good idea to offer a rate buydown or pay all or part of the buyer's closing costs. Typically a seller can command a better sales price. Talk to your real estate professional about this option.

*******

From January 1, 2012 - October 27, 2011 ERA First Advantage Realty had total sales of $ 241,726,086 in total market penetration (sales) with an average sales price of $ 147,213.26. ERA First Advantage is #1 in the market with FC Tucker at #2 $ 5 million behind. ERA First Advantage and FC Tucker command 54.5% of the total market with the other 67 companies sharing the remaining 45.5%.  There are currently 2,807 active properties and 622 showing "pending" or under contract. The average days on the market to sell is 118 days. The average sales price is $ 127,606. The real estate market in the Evansville Metro area is still very good.

****************

If you are "under water" on your mortgage or find yourself struggling to make your mortgage payments due to loss of job or other extenuating circumstances, call me, I can help you. There are several Federal morgage modification programs available.