Many have stated “my fingerprints do not change, so why do I need a new fingerprint clearance card?

Here is why:

The requirement for a fingerprint clearance card began sometime in the early 1990s. At that time, a license applicant had to go to a facility to have their fingerprints placed on a cardboard card. The applicant would then include that in the application to ADRE to obtain their license. Assuming all the other requirements for a license were fulfilled, ADRE would approve the application for a real estate license. That applicant, now a licensee, would be on the street dealing with clients.

About monthly, ADRE would receive several hundred applications, thus, that amount of fingerprint cards. At some point, ADRE would bundle the few hundred cards and send them to DPS (Department of Public Safety). Once DPS does their research, they would report the results to ADRE. Of that bundle of 400 applicants, DPS might report that 8 people had a felony, maybe in Arizona, or possibly out of state, at one point in the past.

ADRE would then decide if they should ignore the felony or take action against that licensee that has been active for several months. Almost every month, ADRE would either revoke a license that was issued months ago or take any form of sanctions against that licensee.

In the early 2000’s, ADRE realized that every month, they approved licenses for people that had a significant felony in their background.

ADRE took the position that the process needed to be changed; that the applicant should get approval of their fingerprint search BEFORE applying for a real estate license. Within a few years, the process did change.

In state statute, and in the rules for DPS, they clearly state that fingerprint approvals were good for 6 years. As a result, once an applicant receives approval from DPS, and thus, obtains their real estate license, ADRE could have required a new clearance card once the licensee attempted to renew their license.

Yet, until now, ADRE did not require a new clearance card. It was either a conscious decision or an oversight, through the various Commissioners that preceded the current Commissioners, Susan Nicolson.

This is what occurred recently. Within a short period of time, ADRE received notification from DPS that many licensees had recent felony convictions yet were able to renew their license. Several included assault, pedophilia and other felonies where someone was hurt. While rule and statute require a licensee to “self-report” any felony conviction or plea-bargain, it became clear that these licensees failed to do that.

So yes, while your fingerprints typically do not change, your background could change. It was then that Commissioner Nicolson realized that the fingerprint clearance cards expired after 6 years. As a result, and well within her regulatory ability, she is now enforcing a statute/rule that has been in place for decades.

ADRE is now requiring a new fingerprint clearance card for any licensee, at renewal, to repeat the process, get new fingerprints taken, submit that to DPS and wait for DPS to provide the approval. If your license expires within 2026, and your original clearance was obtained more than 6 years ago, ADRE will renew your license without the current fingerprint approval yet will provide the licensee with a period of time (grace period) to obtain a new fingerprint clearance card. The time allowed is on a case-by-case basis, but typically within 90 days.

Once we are in 2027, you will be required to have an active and valid fingerprint card to renew your license. If, at that time, you have not provided a valid card number, your license will not be renewed.

If you are not sure if your fingerprint clearance is valid, simply log in to your licensee profile at ADRE. On the opening page, it will tell you if ADRE has a valid clearance on file. If not, it will state that.

If your license expires sometime in 2026, regardless of when your license expires, do not wait until the last minute. The process from start to finish could last 30-45 days. Many companies are starting to offer events where licensees could obtain their fingerprint card to submit to DPS.

Check with your local association to determine if they are offering the fingerprint service to their members, the frequency and how you may make an appointment. Due to the timing for each agent, most associations will not allow walk-ins.

There are many differences between associations and companies that provide fingerprint services. Be sure you are aware of your obligations from start to finish. The process and the fees could be very different.

DPS will charge $67 to process the application, and you might be required to pay an additional fee to a person or entity for the service to take your fingerprints and submit the application.

ADRE should have every tool available to deny or revoke a license for a licensee who has committed a serious crime.

The backstory: For most licensees, the Commissioner’s Rules (Standards) have been static for our entire career in Arizona real estate. For many reasons, the very last revision to the former Commissioner’ Rules were effective July of 2005. That’s more than 20 years since any rule was added, revised, or deleted.

To create a change to the rules that are found in the Arizona Administrative Code, it typically starts with the Real Estate Commissioner. Historically, that person came to realize that a rules and/or statute needed to added, revised or deleted. As the world changes, technology improves, society norms shift and the real estate market fluctuates, often the current rules become obsolete, or need revision because of some change.

The Commissioner’s Rules were (are) found in the Arizona Administrative Code, (A.A.C) Every regulatory agency in Arizona finds their operational rules in the A.A.C. The rules for Real Estate are found in Title 4, Chapter 28, under Professions. Thus, the full location would be, for example, R4-28-101-1350.

While rules and statutes are changed by a different process, this writing will deal with the rules only.

Soon after the 2008 Election, President Obama asked the Arizona Governor Janet Napolitano to become the Secretary of Homeland Security. In 2009, when the Governor left, based on the state succession rules, Jan Brewer became governor. She was the Secretary of State prior to her succession.

As a result of a severe statewide budget shortfall, in the summer of 2009 Governor Brewer imposed a Rules Moratorium, which prevented any regulatory agency from requesting a rules change. That was a strategic financial move that saved the state more than $9,000,000 per year, from 2009 through 2018. (Per the Arizona Secretary of State Office)

When Doug Ducey won the election in 2014, he soon indicated that the Rules Moratorium might be limited “on a case-by-case basis”.

In the summer of 2016, I was asked by Real Estate Commissioner Judy Lowe to serve on a task force to determine what rules might need to be revised. That group had its progress halted by Commissioner Lowe, due to advance word from the governor that any submission would need to be concerned an “emergency revision request”

Since none of what we were reviewing was considered an emergency, our group stopped working. As a result, the rules continued to be static.

In 2019, Governor Ducey wrote an executive order stating further relaxation of the rules moratorium. Commissioner Lowe was involved in other rules matters and budgetary issues, thus did not review the rules that could have been revised.

When Katie Hobbs became governor in January 2023, she quickly announced that the rules moratorium would be lifted. The following month, Governor Hobbs appointed Susan Nicolson as Commissioner.

In late 2023, Commissioner Nicolson started the initiative to revise major parts of the Arizona Administrative Code, specifically Chapter 28, Real Estate.

Among numerous changes, the title of the Continuing Education credit Commissioner’s Rules (or Commissioner’s Standards) was revised to

Requirements for Licensees

So yes, while the title of the category changed (along with numerous other parts of the Rules) the obligation remains the same. We are obligated to adhere to the Requirements for Licensees just as we were obligated to the Commissioner’s Rules

A common scenario:

A buyer identifies 6 houses they would consider buying to fix and flip and plans to close on some of them.

That investor buyer wants to make as much profit as possible in the shortest period of time.

The typical process we go through with most buyers is as follows:

1. Identify the property and make an offer to the seller.
2. The seller agrees, and escrow is opened.
3. As part of the contract between your buyer and the seller, the seller provides the SPDS within the prescribed period of days.
4. During the inspection period, your buyer might inspect the property—either by themselves, with a friend/colleague who has expertise in residential building, or with a licensed inspector.
5. Between the SPDS and the inspection, your buyer decides to move forward and buy the property. They are satisfied with both, close the escrow, and start the process of remodeling the property to sell to a buyer. To do that, they remove counters and countertops, appliances, all the flooring, fixtures, and other parts of the property.
6. It is during that time that previous and possibly current issues are identified, such as termite tubes, mold, water intrusion, dry rot, roof problems, infestations of rats and other critters, and so on.
7. When getting ready to list the property, the seller refuses to provide a SPDS, claiming, "I know nothing about the property…"
   • You agree, list and sell the property, and cross out the SPDS on the offer.

Multiple choice: Who knows more about that property?

1. The previous seller
2. This seller (your client)
3. You
4. You, now the listing agent, and the seller

Both of you read the previous owner's SPDS, reviewed the inspection your investor buyer obtained, and through the remodel process, both of you witnessed the items in #6 above. Since the investor promised the listings to you, that client asked you for guidance on styles, colors, etc. Thus, you were at the property during the process, seeing the bones of the property that the previous seller, who lived there 12 years, never saw.

Do you know what the slab in your house looks like when the current flooring is removed? Can you see behind or underneath your kitchen cabinets? Can you determine if there is any water intrusion under the pan of your shower?

No, typically a current owner does not know about hidden problems unless those problems evidence themselves. But once that house is brought down to the bones, that is when the problems show. Thus, it is up to those people who see that to disclose what they find.

Refusing to complete the SPDS and provide it to the buyer is a failure to disclose material facts, hidden defects, and a gross misrepresentation of the condition of the property, especially when your listing claims "Totally remodeled and repaired property…" or words to that effect.

We are obligated to disclose all material and/or latent defects under:

• R4-28-1101.B (Requirements for Licensees, formerly Commissioner's Rules)
• Arizona Statute §32-2153.A.2, as well as
• The Realtor Code of Ethics, Article 2

We are often faced with a seller who wants you to keep these issues secret. As the keeper of this information, we hold a higher obligation to disclose the potential of a material fact, a latent defect, or any information that a party might use to change the terms or cancel a deal. If you agree to non-disclosure with the seller while you have considerable knowledge of material facts or latent defects, that will possibly put you and your broker in front of a judge and jury.

*Learn about the SPDS and other disclosure obligations in Desert Sage Seminars Disclosure license renewal classes.

What is a “Green” Home?

Most of the public has heard of “green homes” but what does that mean?  Besides painting a home green, how do you go about making a home green?   Hint – it’s easier than you think!

A word about “green.”   The word is over-used in the construction industry and is generally frowned upon by those in the industry.  But knowing that word would bring instant understanding, I used it.   It’s better to say you want to “improve” a home’s performance or use the term “high performing home” after you improve it. 

High performing homes have features that can be added to an existing home or included when the home is built.  These features make the home more energy efficient, save water, have improve indoor air quality, include renewable resources, may have non-toxic materials, and may produce energy to offset part or all of an electric bill. 

Existing housing stock today includes the most unique types of construction in history.  In Arizona, homes are built from 1848 to brand new. Construction types that you’ll see in the MLS are adobe, rammed earth, straw bale, steel frame, and the most common construction type is wood frame.  But there are a variety of other homes that are site built, modular, and some are built from shipping containers just to name different building types.

The first step to improving your home is knowing what you own.   A knowledgeable energy auditor can explain the key differences in your home, the features, and will perform testing to understand your home’s unique footprint.  You can find an energy auditor on your electric company website.  In Maricopa County, parts of Pinal and Yavapai County, electricity is provided by Arizona Public Service (APS) or Salt River Project (SRP); the electric company in Tucson is Tucson Electric Power (TEP.)  Contractors are typically vetted so that they follow the same standard testing procedures and don’t harm the public or provide misleading information.  For information, visit this site https://www.energy.gov/energysaver/professional-home-energy-assessments.

You’ve probably heard of an “energy audit” but contractors may refer to this process as a “home performance assessment.”   A contractor will seal off your ductwork and perform a “duct blaster test,” a “blower door test,” and use an infrared camera to review construction areas and insulation to see how leaky your home is and ways to improve it.  The duct blaster test, as an example, is meant to know if your ducts are leaking into your attic or crawl space.  It’s very common to find leaks.

After having an energy audit performed on my home, I learned the ducts were leaking 24%.  That means that 24% of the air I was paying for to cool or heat was leaking from the ducts into my attic.  This is a waste of money and energy.  But not to fear, this is easily rectified by a contractor.  They can either seal the ducts manually with an aerosolized resin in your attic, or if your ducts are encapsulated because you have a flat roof, they will use a machine and “Aeroseal” your ducts.  The latter can also be performed on flex or rigid ducts if you have an attic but know that it’s more expensive to use Aeroseal.    I had my ducts sealed by Aeroseal which at that time cost $1000 for a 1500 square foot home with hard rigid ducts.  

It’s important to understand the cost and return on investment of any improvement.  Starting with the lowest cost items will ensure the best return on investment.  Your energy auditor can help with that as they have software to share testing results, and which items provide the best dollar value and return on investment.

Thanks to products, 3rd party testing, and building certifications, a homeowner can improve their indoor air quality, save water and lower electric bills to whatever level they choose.   Understanding how a home works and ways to improve it gives you the satisfaction that you can control your electric bill through your habits.  Know when to use major appliances by understanding on and off-peak power usage by contacting APS OR SRP.

Here is why:

The requirement for a fingerprint clearance card began in the early 1990s. At that time, license applicants went to a facility to have their fingerprints placed on a cardboard card, which they included in their application to ADRE. Assuming all other requirements were fulfilled, ADRE would approve the application. That applicant, now a licensee, would be on the street dealing with clients.

Monthly, ADRE would receive several hundred applications and fingerprint cards. ADRE would bundle the cards and send them to DPS (Department of Public Safety). Once DPS completed their research, they would report the results to ADRE. Of a bundle of 400 applicants, DPS might report that 8 people had a felony—in Arizona, out of state, or at some point in the past.

ADRE would then decide whether to ignore the felony or take action against that licensee who had been active for several months. Almost every month, ADRE would either revoke a license that was issued months earlier or impose sanctions against that licensee.

By the early 2000s, ADRE realized that every month they were approving licenses for people with significant felonies in their background.

ADRE took the position that the process needed to change: applicants should get approval of their fingerprint search BEFORE applying for a real estate license. Within a few years, the process did change.

State statute and DPS rules clearly state that fingerprint approvals are good for 6 years. As a result, once an applicant receives approval from DPS and obtains their real estate license, ADRE could require a new clearance card when the licensee renews.

Yet, until now, ADRE did not require a new clearance card. It was either a conscious decision or an oversight by the various Commissioners who preceded current Commissioner Susan Nicolson.

In 2025, ADRE received notification from DPS that some licensees had recent felony convictions yet were able to renew their license. Several included assault, child endangerment, and other felonies where someone was hurt. While rule and statute require licensees to "self-report" any felony conviction or plea bargain, it became clear that these licensees failed to do so.

While your fingerprints typically do not change, your background could change. Commissioner Nicolson realized that fingerprint clearance cards expire after 6 years. As a result, and well within her regulatory authority, she is now enforcing a statute/rule that has been in place for decades.

Beginning January 2027, ADRE will require a new fingerprint clearance card for any licensee at renewal. Licensees must repeat the process: get new fingerprints taken, submit them to DPS, and wait for DPS approval. If your license expires in the coming months and your original clearance was obtained more than 6 years ago, ADRE will renew your license for now.

If you are unsure whether your fingerprint clearance is valid, simply log in to your licensee profile at ADRE. The opening page will indicate whether ADRE has a valid clearance on file.

We recommend not waiting too long, as thousands of agents will need to complete this process. Many companies are starting to offer events where licensees can obtain their fingerprint card to submit to DPS.

DPS charges $67 to process the application, and you will need to find an entity to take your fingerprints and submit the application.

ADRE should have every tool available to deny or revoke a license for a licensee who has committed a serious crime.

When was the last time you talked to or communicated with a criminal person or enterprise?

You might answer “never” or “maybe I did, but was not aware”

That said, within every 24-hour period, most Americans are contacted by a criminal.

Huh?

Did you get a call, with no one on the other end. Or was there a delay, then a beep, and lots of talking in the background? And someone (not your best friend) asks for you and mispronounces your name(s).

That’s a criminal.

Did you get an email stating that your documents are ready and need your signature? An offer on your listing? Probably not, those are “phishing” emails, waiting for you to click on a link.

That’s a criminal.

Did you get an email from your bank telling you that you need to update your profile on their site? Of course, you bank with them, so why not click on the link?

That’s a criminal.

That email from IRS or Social Security wanting updated income information. You just submitted your tax return, or are receiving social security benefits, so you feel they are asking for additional information

That’s a criminal

I will address each issue above.

The phone call. If you have some form of SPAM filter on your phone, then you might see the notice when the phone rings “Possible SPAM”. Reject the call, it will go to voicemail. If your phone service allows you to stop calls going to your voicemail, set that up. If your voicemail answers, the criminal’s computer determines that it is a live phone number. If you answer it, same thing.

Once the call is done, and after few calls, go to your phones settings and review recent calls. Any that says SPAM or numbers you do not recognize (with no corresponding voicemail from a client) your SPAM filter should allow you to block that number. Sadly, criminals use computers to send calls from a different number each time. It is a game of whack-a-mole.

We might wish to answer the call and waste that person’s time, yet there is more than a 70% chance that you are talking to bot, or AI. You cannot offend them or anger them. It is getting more difficult these days to determine who or what you are talking to.

Are you on the Do Not Call/Text list? While it will not stop anyone from calling you (unless you block their number) it will tell legitimate businesses not to call you. Sadly, that is hit and miss, but clearly, since most legitimate businesses want to do the right thing, most of the unrecognizable calls and texts are probably from a criminal or criminal enterprise.

An individual criminal might “spoof” someone else’s phone number, thus hiding their real phone number, yet making it look like a local call in your area. What damage could that person do when they call you. Convince you to meet them at a house they saw and wanted to see it, for $1,945,000. What could possibly go wrong?

They could act as your credit card company, HOA Manager, car dealership, all claiming you have an overdue amount and will have services cut be days end if you don’t pay. Of course, they can take the payment over the phone, or have you send it via Zelle, or Apple Pay or any other means of payment.

Text messages from random companies, buyers wanting your home, offers of referrals, car detailing, free roof evaluation and so on. Yes, some of them are legitimate companies that buy lists from companies that collect your information. It is difficult to sort through the criminals and the legitimate business.

Criminal enterprises, possibly world-wide, use robo-dialers to call numbers around the world, and once someone answers, based on the language most possible in that area, they use the same tactic. That’s the one when you answer, there is a 2-3 second delay, for the call to be routed to a call center person, or bot or AI, then the beep when the call is connected.

Most phone services offer some form of call filter, and it is best to select one, (not the free one), and pay for it. Most are only a few dollars a month, yet well worth it.

Here is the link to the U.S. Federal Communications Commission site where you can sign up your phone numbers on the Do Not Call list and check if a number is on the list.

https://consumer.ftc.gov/national-do-not-call-registry-faqs

The Documents Are Ready email. Criminals know that real estate agents are always looking out for an offer on their listing, and that is why they target us. At any given time, real estate or not, out of 100 random people, at least 30 of them are working on paperwork with some entity, or joining a group, or new at a doctor’s office, all where we might anticipate the need to sign documents. Most medical portals will send you an email that documents are ready in your portal.

DO NOT click the link in the email. Open your browser and go directly to that medical portal and log in. Criminals know that as Americans age, a huge part of the population, we are accessing medical portals.

The email from your financial institution. Most national financial institutions (your bank) will NEVER email you asking you to click a link to update your information. They will wait for you to log in to their site, and then have a pop-up, drop down or a blinking light on the message icon to ask you to update, or verify or whatever.

And if you get an email from your financial institution with a new program, offer to upgrade services, or a new benefit, they typically will provide a link to check it out. If you see such an email, look at the “FROM” email address. If it looks fishy, do not click on anything.

For example, I received an email from Bank of America (or so it said it was from them) that just looked a little odd. It was for an offer for a 0% interest balance transfer, with “click here” to get started.

The email was from suzyjb7-x@walkersite.eu

Would Bank of America send me an offer email from that email address? NEVER!

An email from IRS or Social Security. I can say with 99.999999999% certainty, that IRS or Social Security will NEVER send you an unsolicited email about anything. They will both use snail-mail to ask you something or tell you something.

We find ourselves playing a never-ending game of avoiding these criminals, but it takes vigilance and determination, that the vast number of Americans are not willing to do.

Or do not believe it is a problem. They do so at their risk yet could often put their clients at risk.

A nice house in a metropolitan area was $80,000, and a more modern larger house was $110,000.

Gasoline costs $1.19/gallon. Minimum wage was $3.15/hour. A gallon of milk costs $1.30/gallon

Home mortgage interest rates were around 13.75%

The average family income was $21,200.

In today’s market, we hear agents stating that their buyers are waiting for interest rates to drop. On social media, as well as news broadcasts, there is whining and complaining about how high the interest rates are, which is why the real estate market has slowed.

Yes, the market, right now (early October) is slower than 3 months ago. 3 months ago, average temperature was 103 degrees, the kids were on summer break and buyers were looking for property.

Now, again, early October, it is still hot, in the 90s, kids are now back in school, and a good portion of the real estate salespersons are back to work, after going to upstate AZ, San Diego, northern Michigan or Canada. Summer is always slower in Arizona.

Interest rates this morning were 6.46% for a 30-year fixed rate, and 5.87 % for a 15-year fixed rate. That means that rates have hardly fluctuated in the prior 6 months. 

In the 1950’s during a housing boom after WWII, the average interest rate was 5.1%.  A new house costs $6,000. Ask your parents or grandparents what their house cost and what interest rate they paid in the 1940s and 1950s.

The questions up top, what year? That was 1980.

Unlike gas, milk, wages and other common goods, which have steadily escalated in cost, home mortgage interest rates have stayed relatively stable. Yes, the late 1970s and early 1980s were an exception. But on a 50-year chart, 1970 to 2020, the average home mortgage interest rate was 7.33%.

Interest rates today are below the 50-year average. So why are buyers sitting on the fence? 

Follow this example. We have a $750,000 sale, with a $600,000 loan.

At today’s rate, 6.46%, the annual payment is $52,044

If the rate drops 1 point, to 5.46%, the annual payment is $44,424

The difference between waiting for the rate to drop 1 point is $7,620 per year. Yes, the buyer saves that amount in the year.

BUT let’s consider the house which they wished to purchase for $750,000. How much should the value change in one year? While it is impossible to predict, in the short term of 1 year, that houses might increase 4.22 percent in value (national 30-year average value increase), or $31,658

Again, no one has the crystal ball. Year to year, home prices in the Phoenix Metro area are down 1.5%, from July 1, 2024, to June 30, 2025 (Tucson was up 2.1% for the same date range, and Flagstaff was up 2.6% from August 1, 2024, to July 30, 2025) Of course, a lot depends on who is providing the statistics and how they are calculated.

If we look at year to year, in 2019-2020, the numbers are vastly different, with gains much different, (Phoenix was up 30.1%, Tucson was up 9.2% and Flagstaff was up 10.3%)

By waiting the one year, while the buyer would save $7,620 with a lower payment, the cost of house increased almost $32,000 if it is still on the market.

Bottom line, by waiting for the rates to drop, the value of homes will typically increase. So, while your buyer wants to see the rate drop by 1 point, they will probably pay more for the house they want to buy when they decide to buy it. They will end up paying more while waiting.

Yet sadly, they also abandon animals, including dogs and cats and sometimes pigs and monkeys. Clearly those present an immediate problem, since they must be dealt with quickly. Once the landlord provides notice to the tenant, the tenant has one day to return and retrieve the animals. If they fail to do that, the landlord may/must bring those animals to a shelter.

In many cases, the landlord has limited contact information for the tenant. Whatever the contact information, whether it being an email, phone call, text message or even a letter mailed, often the tenant does not provide an updated address. Thus, the landlord may send the notice to the last known address for the tenant which is often the property itself. If the tenant submitted a change of address at the Post Office, that letter could take two weeks to be forwarded and to reach the tenant. That said, if the landlord is unable to reach the tenant direct, they may proceed to remove the critters.

What if an animal is aggressive? Dogs that are skittish or snarl at people. What if the cats are elusive, run away and hide. After the tenant has failed to return to reclaim the animals (after the landlord sends notice), the landlord should call Animal Control and allow them to corral the animals and take them to a shelter.

In many situations, the tenant leaves other types of critters behind. Exotic animals such as snakes, large spiders, large birds and fish that all require a certain type of handling. In many cases, those critters could be dangerous if not handled properly.

Again, under the 1-day notice, if the tenant does not retrieve these critters, the landlord may determine their viability, and turn them over to Animal Control. In most cases, Animal Control will take any exotic animals and handle them based on the state or county rules.

The same holds for the non-exotic, non-dangerous animals, such as hamsters, goldfish, small birds, ferrets and any little critter. Rather than making a tough decision, Animal Control would often take them.

Over and above the typical refuse and worthless personal property tenants tend to leave behind, the critters create a different process. The care and feeding of these animals should not be up to the landlord or their manager. While we are unable to determine or require what Animal Control does with any critter, it is best to get them out of the property as soon as possible. Preparing a property for the next tenant or sale should be done without any critters of any form in the property.

Leaving anything behind, including the animals, debris or worthless items might cost the landlord fees or charges to handle, transport or even feed the animals. Those are costs the landlord would include in any accounting of how much money they may retain of the tenants’ deposits, or money the tenant may owe after that accounting. Once the landlord has determined all the costs of the tenants’ breach of lease, the landlord has 14 days to send the tenant an accounting of funds returned or owed. If, after the landlord retains their security deposit, the tenant still owes money to the landlord, the landlord may work out any agreement for the tenant to pay that amount. Or, last resort, sue the tenant in small claims court and hope for a judgement against the tenant.

In all cases, any questions after you enter a property to list, speak with your broker.

Since the dawn of the national organization in 1909 and the MLS programs across the country, all the services for access to the MLS flowed from the national, state and local associations of Realtors.

Thus, Realtor members really had no choice. If their broker was a Realtor member, every licensee under that broker was required to join the Realtor organization.

Now, in mid-2025, agents have a choice. In the fall of 2024, Phoenix Realtors developed Non-Member MLS Access, (originally titled MLS Choice) which offers the members a choice of how they want the services delivered to them.  Since the introduction of Non-Member MLS Access, many brokerages in Arizona have made the switch or included that program. For most brokerages to truly offer the choice, they must form a sister or subsidiary company, with a different designated broker, for their agents. That provides the licensees in their company with a choice; stay with the side that offers Realtor membership or move to the other side whereby they become a Non-Member MLS Access agent, losing their Realtor designation.

Non-Member MLS Access offers reduced billing, (only paying Phoenix dues), and not to the state or national organization. Non-Member MLS Access offers the same MLS access, and other services through the local association.

And, Non-Member MLS Access now provides 9 new Contract forms, as compared to the 70+ forms offered by the Arizona Association of Realtors. While the forms contain the clauses needed in a real estate purchase contract, they do look and flow very differently. That alone has created some objections and anger in the industry. It creates challenges when a Non-Member MLS Access member submits an offer to a Realtor member, on a form that the Realtor member has not seen or has seen yet refuses to acknowledge.

This is our new world of real estate. As such, Non-Member MLS Access agents must realize that the Realtor members will naturally be reluctant to present that offer to their seller, simply because they do not know or understand that form. That said, the Non-Member MLS Access also must be prepared to receive a counteroffer on the Realtor form.

At the same time, the Realtor members must understand that regardless of their discomfort or being uneasy about a form that they have not seen, they are nonetheless obligated to present that offer to their client.

Recently, it became known that some brokerages and specifically, the designated brokers, have instructed their Realtor members to NOT present any offer to their sellers on a Non-Member MLS Access form.

Sadly, those brokers and agents are willing to violate Commissioner’s Rule R4-28-802.B, which requires licensees to “present all offers” to their client as well as the Realtor Code of Ethics, Article 1, Standard of Practice 1-6. Any Non-Member MLS Access agent that is told that their offer will not be presented should first talk to their own broker and then the broker of the listing agent.

Realtor members have voiced opposition to dealing with other groups’ forms. Those Realtor members need to be aware that many areas around the country have multiple state organizations, each having their own set of forms. Michigan has 36 state-level associations, and 8 of them have forms different from the other organizations. Thus, Realtors within one state organization might need to learn forms from numerous other organizations.

In late January 2025, ADRE Commissioner Nicolson posted a message on their social media page, (and on the AZRE.gov website), reminding agents and brokers that ALL offers must be presented to the client.

Realtor members…remember your obligation is to present ALL offers to your client, even on a different form, on a napkin or even verbally. Then the listing agent should allow the seller to decide how to respond.

All members should be familiar with the forms that are on the street being used by co-broke agents. On either side, your client will be best served when you are assisting them in navigating any form presented to you.

To that end, in the spring of 2024, Governor Hobbs directed the ADRE to create classes to cover 3 specific issues prevalent in Arizona. Those are deed fraud, fire issues and water situations. All three courses are now required to renew your license, and can be taken as 3 One Hour courses, or 1 Three Hour course, all for General credit. The result is that now all licensees have 7 required categories for 21 hours, and one Elective in any category.

So, first question. What is Deed Fraud?

These are cases where criminals pose as the rightful owner of a property and then attempt to sell the property and gain the proceeds. They are often successful once they gain specific information about the owner, through hacking services on the owner’s email accounts on their devices. Citizens are victims of hacking every day, and real estate agents are the easy targets for the criminals. Once the criminals get access to your devices through hacking, they will see every email, every text (smartphone) stored passwords, downloaded documents (such as a rental application or client information application). Thus, the criminals have access to any and every detail that is contained within those files.

That process alone can be very damaging to the agent as well as their clients. Once the criminals are successful in accessing websites, accounts, and information on the parties, they will go to the next step; attempt to sell the property that is often identified in email communications found on a hacked device.

The owner is often totally unaware that fraud has occurred for months or even years. Imagine waking up one morning and learn that you no longer own your house. Or vacant land. Or commercial investment property.

Every county recorder in Arizona has a prevention program. EX: for Maricopa County, here is the link to post your addresses and names that would be found on recorded documents in the county files.

https://recorder.maricopa.gov/MaricopaTitleAlert/Default

By registering, any time anything is done regarding that deed, or that name, the county will alert the deeded owner that action is being taken against their property. If the owner takes proper, quick action before title is transferred, the criminal act could be stopped. However, once title transfers, there is very little that can be done, other than making a claim on the title insurance in place on the property. We should never rely on a claim on title insurance as it is a long, ugly and possibly expensive process.

Lastly, the American Land Title Association has produced a useful tool to explain deed fraud, how it occurs and the actions to take to prevent it.

Here is the link to that tool, which I gathered from The Arizona Realtors website.

https://www.aaronline.com/wp-content/uploads/2023/06/06/ALTA-Seller-Impersonation-Handout.pdf

While no action is 100% effective to stop this criminal activity, any steps you can take, and share with your clients will go a long way to prevent this occurring. Diligence and vigilance are the key, and by simply registering your names and addresses, that goes a long way. While it will not stop the attempt to defraud you, it will provide notice that something wrong is going on.

We all went through a significant upheaval in our business as the new rules from NAR went into effect in August of this year. While we had months to prepare and learn, when the day arrived, it seemed as if the wheels came off the bus. Many claimed that it was nonsense, some felt it was an overreaction, while others seemed to acknowledge the obligations and work through it.

Now, about 90 days later, are we done? Have we seen the total impact of what has changed? Sadly, we are not done and have not yet seen the full impact, yet.

On August 17, 2024, we stopped offering compensation from the listing agent to the buyer’s agent in the MLS, as a “unilateral offer of compensation”  That was one change that resulted from a settlement between NAR along with several major brokerages, with the Justice Department and several judges on anti-trust suits, claiming that NAR and the companies conspired to fix prices for real estate services. Rather than fight the charges in a long-drawn-out court battle, NAR offered a settlement, without admitting guilt, while offering practices changes including the offer of compensation. Another part of that change was the requirement of all Realtors to establish a written representation agreement with every client.

What is next? First, a quick observation. AAR has revised and/or developed several forms to assist us in requesting and obtaining compensation from the listing agent, the seller or the buyer. From only one, two of them, or all 3.

Schools and instructors started presenting classes and teaching how to use the 4 key forms; the Commission Agreement Between Brokers (CABB), Seller Compensation Addendum (SCA) the revised Exclusive Buyer Broker Agreement (BBEEA) and the Buyer Broker Agreement to Show Property. (BBSP). Within a few weeks of classes being taught, the Designated Brokers began forming their own policies of how and when to use the forms, which often was different from what the students learned in class, and what the other brokers decided to do.

As a result, rather quickly, the brokers have seemed to retreat to neutral corners and have come out swinging. Meaning, they are asking their agents to unlearn what was provided in many classes and do it their way.

Any broker is entitled to create policies and rules as they see fit, for the operation of their brokerage.

That said, we have heard about some tussles between agents, when one agent, under their broker’s rules, uses a form or forms in such a way that the other agent has different instructions from their broker. In most cases the differences were resolved with simple communication. Yes, communication. Let’s go back to talking to each other.

That said, we will still see more challenges as many more agents start getting involved, who might have been on the sidelines for the past few months.

Another upcoming change will be the structure and operation of the local, state and national associations. There is a great deal of pressure on all fronts for transparency, as many groups are questioning the long-standing tradition of obtaining MLS access through an association, how the broker interacts with the associations, and how the licensees obtain all their services.

NAR is under significant pressure after some internal upheaval, and critical news about excessive payments by NAR executives for lavish parties, transportation, meals, gifts, travel and more. As leadership tries to address the concerns, the rumblings on the ground are getting louder and louder.

When the annual dues bills come out in December, the NAR economist estimated a loss of about 8% of membership. With 1.6 million Realtors, that would equate to about 128,000 Realtors not renewing their membership. Some outsiders with good internal knowledge place that estimate closer to 12%.

With the loss of revenue of maybe 160,000 members not renewing, along with the pressure of other members for an explanation of the lavish expenses, we might see some major upheaval in the national association. Combine that with the pressure from the local and state associations creating their own MLS, contract forms and class of members, thus leaving NAR, we can anticipate some significant changes which will result in choices many licensees will face in the upcoming year.

In summary, we are not there yet.

Be patient yet be willing to listen to them. A good agent is one that can listen more than they talk, and find what the reason is for their fence-sitting, and what needs to happen for them to jump in. If you have been there for them, and are there now, when they jump off the fence, they will be ready to work with you.

Arizona implements a one-party consent law, which prohibits one party from listening in to another party without that party’s knowledge or consent. As a result, it would be considered a Class 6 felony to violate this law.

The Arizona Statutes covering this are A.R.S. § 13-3005, -3012(9).

What does this mean for you? 20+ years ago, most homes were not “smart”, meaning they had no wi-fi connected devices that watched, listened, or recorded motion, activity, or speech. But now, you probably will not find a listing that does not have some sort of “monitoring” device.

Thus, a seller that has any such devices should, at the very least, disclose in some fashion that these devices are on the property and might record anyone visiting the home. Listing agents should consider the disclosure in the MLS private remarks that home contains self-actuated listening devices. The most common are: (I only list names for the purposes of identifying items).

• Ring Doorbell Video Cameras
• Motion sensor devices (indoor or outdoor that sense and record activity)
• Security cams (indoor and out) that record video and sometimes audio
• Nanny cams and other indoor devices that monitor activity
• Alexa, Echo, Dot and other devices that provide music, timers, answers, etc., yet often can be programmed to listen and record.

In addition, a seller might have a flyer or page at the front lobby of the house that the home has listening devices. That could be a stack of handouts on a table, or a stand-up placard with some print or images that stand out and catch someone’s attention.

For the buyer’s agent, knowing this fact or not, should caution their buyer’s not to say anything outside or inside the home that they would prefer the seller not to hear. Some agents have reported some racist comments about the seller, or insults like “what blind idiot decorated this house” or comments about the condition that could insult the seller, or even some comments like “we love this house so much, we would pay well over list price”.

All of these types of comments could and do get recorded. Thus, the buyer’s agent should counsel the buyer, on their way to any listing, not to make any unsolicited comments. Even if the buyer’s agent asks “…so what do you think of this one?”, the answer could be insulting or damaging. A response such as “we can consider this one” is fine, but if the buyer says “nope, could not live in this S**T hole…” could be very insulting.

As a result, both agents have an obligation of disclosure, good counseling and protecting their client.

In a nutshell, our industry operated with impunity or so we thought. For many reasons, over the past 5 decades, we have operated showing the buyers and sellers that we were price-fixing, based on what we said out loud, in our advertising and what we ignored from other agents. The result, even though we can pound the table and say no, we were showing that we were price-fixing. If you disagree, look at a random 100 MLS listings, and focus on the co-broke. Without saying it out loud or here in writing, you will find at least 80 -90% of them offering the same compensation.

Who made the decision to create that same compensation? Or did it naturally reach and settle at that amount over the decades.

There is no one person or entity that created the problem. We know the problem, so must work to remedy it soon. The new rules from NAR as part of the settlement agreement with the courts lays out the changing rules, as discussed here.

The concept of every REALTOR paying or looking for a specific amount of money will all change. Yes, the seller may still pay some compensation to the buyer’s agent, but it will not be a direct offer in the MLS; it will be a response to buyer’s agent request for compensation. That request should be based on two factors:

1. How much the buyer offers their agent on the Buyer-Broker form, or other forms where the buyer agrees to pay some or all of the agent’s compensation. The buyer agent must decide, apart from any previous rate of compensation, what they would expect as a total compensation from one or both parties.
    
2. Any wording in the listing to buyer broker’s, such as the “seller will consider a request from the buyer agent…”, without stating a specific dollar amount or percentage. Listing agents will be required to talk to their sellers as to the language and the amount they might offer upon a request.

If a listing agent gets push-back from the seller, then the agent should alert the seller that without any compensation to buyer agent, the listing might have limited showings.

Aside from other changes, one change in practices will create challenges for many agents.

First, the REALTOR Code of Ethics has always required of us that we determine and establish our compensation before commencing any effort to accept the offer of cooperation. Once a listing agent offered us the co-broke compensation, we make that determination right away, as the offer of compensation from the listing agent was a unilateral offer, which required no response or acknowledgement.

Next, we must recognize that the offer of compensation in the MLS will go away, thus there will be no establishment of compensation through the offer of cooperation. Meaning, unless a buyer’s agent has established their FULL compensation from the buyer via the Buyer-Broker Agreement, they are prohibited from showing a listing unless they have established that from all sources.

Example, the agent would like $18,000 compensation from a specific sale (dollar amounts used rather than a specific commission rate). They negotiated a buyer broker agreement with their buyer, for $12,000. As such, when the agent identifies a property that they would show their buyer, the agent must stop right there, and reach out to the listing agent, in any fashion, to determine if the seller will offer any compensation. There will be new AAR forms to make that request.

Here are the “what-ifs”:

1. The listing agent says yes, the seller will offer $4000. If the buyer is fully prepared to pay the $12000, that would mean $16,000 to the agent. They wanted $18,000. This will be business decision to either negotiate more with the listing agent and the seller for more than the $4,000. It would be difficult at that point to ask the buyer for more, since your contract with them says $12,000.
    
2. The listing agent says yes, and the seller will offer $10,000. The buyer agent has a decision. Accept the $10,000 from the seller, and reduce what the buyer owes them, to reach the $18,000 total. DO NOT ACCEPT BOTH IN FULL THAT WOULD EXCEED THE $18,000. Since the agent has a fiduciary obligation to their buyer, they should make the effort to obtain as much as possible from the seller.
    
3. The listing agent says no and refuses to negotiate. That would mean either accept the full compensation of $12,000 from the buyer, and show the property, or negotiate with the buyer. However, if the buyer agreed to pay you $12,000, that is a contractual agreement, so it would be hard to revise that contract.  In this case, you could and even should tell the listing agent that they will not show the house since the seller is not offering any compensation. That is a slippery slope, since you do not want to “threaten” the seller. Allow your broker to help you here.

Once this all plays out, and both agents feel more comfortable in negotiating with their client, there will be a reckoning as to the level of compensation. Yes, this could cause a lower level of compensation to both agents, that we will all need to work through.

Remember; if you show a listing to your buyer, before establishing any compensation from the seller, you have essentially waived any compensation from the seller or listing agent, meaning your only compensation will be what the buyer broker states. If you failed to obtain a buyer broker agreement, or any agreement from the buyer to compensate you, you will work for free!

The harsh reality is this; agents will need to work harder and be more diligent when negotiating with the clients, all the while probably seeing a reduced amount of income in most transactions.

It sort of feels that way today with AC refrigerants in new units, in older units, and what is coming.

Any refrigerant is part of the broader category of fluorocarbons. While all refrigerants have the same result, the chemical composition changes from product to product. R-22, Freon, which, since the 1950s was the standard bearer for decades, in AC units, in your car AC system, your refrigerator and numerous other consumer products. After the 1987 Montreal Protocol, it was determined that the chlorine component of R-22 was damaging the ozone layer of the planet.

In January 2010, The US Government banned the production and import of R-22, with a 2-decade phase out of the usage and distribution of the product.

R-22 Freon is still available, but the cost has skyrocketed, from $15-24 per pound, to $150- $200 per pound. The typical home AC system requires about 8 – 10 pounds of refrigerant. The newer refrigerant to replace Freon was R-410a, also known as Puron. It has been around since the early 1990s, but became the product of choice once Freon started being phased out in the 2010’s. Most AC units built in the early to mid-2010’s contained Puron.

That was short-lived, since in December 2022, the EPA announced a planned phase-out of R-410a Puron, commencing in 2025. The replacements already being marketed are R-32, Forane or R-454b, marketed as Puron Advance, Opteon XL and Solstice 454b.

Lastly another possible replacement, R-466a, is available for usage in certain units. A qualified AC technician will determine the units’ age, what refrigerant is in use now, was the unit retrofitted to accommodate a certain refrigerant and so on. It is entirely possible that if your seller has a newer unit, that uses R-410a, it might require any of the 3 alternatives, based on several factors.

Why do we care? Is your seller obligated to disclose the material facts about their current AC system?

Should your buyer be certain of the age and refrigerant used currently?

Yes and Yes. If we look at lines 105-111 of the current Residential SPDS (February 2023 version), the seller should disclose the age of the unit, the type of refrigerant, and any awareness of service issues and maintenance.

If your seller is not sure which refrigerant is in the unit, they have options on how to determine that information, ranging from reviewing repair invoices from an AC contractor, calling the AC contractor, finding the unit serial number, and searching that on-line. That may be found on a metal plate or sticker attachment on the outside unit that has the model number and serial number. Search that, and it will result in the manufacturers identity of the unit, age, refrigerant and other factors.

While we are not experts and not obligated to determine the refrigerant and any inherent issues, we should always recommend the buyer have the system(s) inspected as part of their due diligence.

Do you still want to walk past the barkers and not buy the scorecard?

In our ever-changing market, with far more changes to come, buyers and sellers are looking for other ways to handle their real estate needs. More so than in recent decades, we must be in a position to convince a potential client that we are the professional that stands out above the other agents. Clients are looking for intelligent agents that provide a lot more than a nice photo and a listing in the MLS. If they seek an agent, they want someone with experience, a good track record, and an agent that shows their commitment to the industry and their career.

Here are some issues that clients will look at to determine if they feel comfortable working with you.

Your phone number. Using a phone number with an out of state area code. How committed are you to Arizona real estate when your phone is registered elsewhere? Clients that want serious agents will often pass you if you do not show you are a professional. Since so many people move here, and then obtain a real estate license, many keep the original phone number, “just in case…” Meaning, if Arizona and/or real estate does not work out, maybe they will go back. Does that say “professional?”

And as many of us become defensive when answering the phone, with more and more criminals trying their best to get something from us over the phone, out of state area codes are one of the first things people ignore or block those calls.

Free email accounts? Your email address can say a lot about you. First, is it a free domain such as Gmail, Hotmail, and others like it, might show the client that you do not take your career seriously if you would not spend a few dollars every year in a professional domain. Some agents choose to use the free email account that their brokerage provides and this email looks far more professional than a free web-based domain. There is nothing wrong with the free services mentioned above. Are they less secure than your own domain, or your brokerage domain? No. Any email account is subject to hacking, regardless of the service.

Invest in your career and obtain an email domain that better reflects professionalism, rather than a domain that is web-based and free. Most email hosting companies will provide an email domain for low fees. For example, I have jon@jonkichen.com which looks and feels professional, and it costs less than $100 per year. It is simple to set up and maintain, and it shows your clients that you are a professional willing to invest in their business. For the cost of one coffee-shop cup a month, you could have a professional domain.

If you want or expect people to call you, ANSWER the phone!

If not, then activate and personalize your voicemail. One that says, “Please leave your message for 801-439 xxxx) shows that you did not even care to set up a simple message. And nothing is more frustrating when the caller takes the time to call, and listen to your message, only to hear that the mailbox is full and cannot accept more messages. Do you think that person (potential client) will call you back?

Your car… your license plate. Maybe the tags from your previous state costs $40 a year yet would cost $420 a year here. But what does that say to clients when you drive up, or ask them to get into your car, when they see an out of state license plate?

And if you want the buyers to get into your car, look at it. Clean? Inside and out?

Stuff on the seats and floor? Debris, food stuff, baby seats, etc.

As most agents use the same vehicle to drive buyers around and do the weekend outings with the family, the vehicle should be as clean and clutter free as possible when buyers might be sitting in your car.

And how does it smell inside? There are some vehicle air freshers that can be hidden and have a good effect on the interior smell, yet be careful with overloading the odor, as many people are sensitive to perfumes and manufactured odors from air fresheners. If you are a smoker, and you try to hide the odor with heavy air-fresheners, that can be overpowering to many people.

If you are going to be in the real estate business here in Arizona, it is best to show you are a professional and you are invested in your business. Yes, you might save money by keeping your out-of-state phone number, your fee email account and your license plates, but what does that say about you?

 While many parts of our daily role working with buyers, sellers, landlords and tenants will stay in place, one major area (and the core basis of many of the suits) will see a 180-degree shift. This primarily deals with how the listing broker and the buyer agent are compensated in a transaction.

The suits had one common thread: price-fixing. While the prosecuting attorneys had no proof of collusion or joint efforts to affix prices between companies, brokers, agents and even Associations of Realtors, including local, state and national, they did make a convincing arguments that the parties were fixing prices based on the messages delivered in marketing and promotion.

Case in point. May an individual broker decide that his agents will charge X%, nothing more, nothing less? Yes, since that is a brokerage operational rule. But the cases pointed to a brokerage with 800 agents, all independent contractors, and thus, what right does the broker have in determining what the IC’s charge? It does raise an interesting question.

As the plaintiff’s attorneys did, if you randomly ask 100 people on the street, “how much do real estate agents get paid”, most will have an answer, based on a number of factors. Mostly, based on what we tell sellers and sometimes buyers the basis for what we charge. Many sellers claimed, when interviewed, that the agent justified what they were charging based on “that’s what everyone else charges…” That alone spells price fixing.

But here is the common situation that gets us all in trouble. An agent is doing several types of marketing to gain listings and uses the tag line “we charge less”.

Then they expand on that concepts, and claim “we charge less than any other broker out there…” You have seen and heard the ads.

First, how does a competing broker know what I charge? They assume, but do not know. But their statements perpetuate the concept of fixing prices.

As Realtors, we see it one way, but the average rank-and-file consumer who is receptive to marketing ads to sell their house would reach the conclusion that “everyone else charges one rate, yet this one broker charges less”. If all the other brokers charge the same, then clearly, in the mind and eyes of the judges and jury, that is price fixing.

So, what is the 180-degree shift? We have already seen the changes in the month since my recent blog. Many Associations of Realtors and ARMLS type entities around the country have changed their guidelines to get away from a minimum or reasonable offers of co-broke compensation, and now allow a broker to offer $0 to the co-broke agent. And many agents have stated, just in the previous few weeks, that all of a sudden, a lot of listings now offer $0 compensation.

The push is to eliminate any offer of co-broke compensation. It is already here. Thus, if you have the buyer, and my listing shows $0 compensation, how and from whom are you paid?

This will push us, kicking and screaming, into using the Buyer Broker form, negotiating with your buyer to pay you (just like when you negotiate your listing compensation with the seller).

This requires many agents in AZ to embrace the use of a form that they have resisted using for decades, for whatever there reason was.

Think about this; most buyers have no concept of how much you will be paid, and who is paying it. We have always negotiated with sellers for our listing compensation, but we almost never have negotiated compensation with a buyer.

On this website calander, you will now find classes on the Buyer/Broker Agreement. Most are done by this author, yet we have a few instructors teaching the same classes around the valley and state.

If you are one of the agents who have rejected the buyer broker form, now is the time to learn it, embrace it and begin using it. Done properly with the conviction of your worth, you should be able to sell it. Sure, some buyers will balk and bolt, yet that is win for you. Let them go waste another broker’s time.

As more of us start using the form, there will be far less chance for a buyer to say “no other agent has asked me to sign it…”.

This is a slow yet sudden movement that will change the way we do business. NAR just imposed a $45 assessment fee on their dues, to start building a war chest to pay any settlements, which are all under appeal. But NAR and probably no brokerage has $1.6 Billion in their checking account to pay a judgement or settlement. We are all in this together.

Stay tuned...

The two settled suits which involved a few larger and national brokerages, that also included NAR, making the claim that the defendants conspired to keep their fees higher and limited choices for the clients.

First, Anywhere Real Estate, formerly known as Realogy Holdings Corp., settled for $83.5 million in a case filed by plaintiffs regarding real estate commissions along with the allegation of price fixing. That suit also included NAR, yet NAR did not settle their side of the suit, as Anywhere did.

Soon thereafter, REMAX (as one of the defendants) settled and agreed to pay $55 million to resolve all claims against the company and offered several business practice concessions as part of the settlement. One of the concessions was to stop requiring that licensees and brokers obtain membership in NAR. That alone will have far-reaching implications.

In the case that went to trial, The National Association of REALTORS® and two co-defendants were found liable Tuesday November 7, 2023, in which the plaintiffs challenged MLS rules and the real estate compensation model. The eight-person jury also found liable, HomeServices of America and Keller Williams Realty, which were named in the lawsuit. The jury award of $1.7 BILLION is under appeal by the defendants.

And, once these flood gates opened, others are now playing follow the leader. A suit against NAR in South Carolina is arguing that the defendants artificially inflated home prices while not being transparent on who pays the commission.

OK, on the street today, what does this mean? Clearly, many of these verdicts will be appealed, which will drag on for years. But the common thread is the commission structure between the listing agent offering compensation to a buyer’s agent, and how the buyer agent explains to the buyer (if at all) how that structure works.

The Arizona Realtors Buyer Broker Exclusive Employment Agreement is largely ignored in Arizona, as brokers and agents are concerned that most buyers would not sign it, thus costing them business. Another concern of brokers is that their agents are not trained on how to “sell” the Buyer Broker agreement to buyers.

That being said, we could rapidly see the offer of co-broke compensation disappear. Some listing agents are already offering $25 or less. The initial reaction might be that the listing agent is doing a dis-service to the seller, as many agents will sadly ignore that listing (at their peril) even though it might be the best property for their buyer. So, the commission gets in the way of the buyer getting the best property at the best price.

If, however, the buyer signed a Buyer Broker Agreement with their agent, the buyer would be obligated to pay that agent a commission based on the commission noted in the Agreement. In many parts of the country buyers understand the concept, realizing they might be able to get a property at a lower price, due to the fact the seller now only has to pay the listing agent, with no co-broke. That saves the seller money, which could be built into the pricing of the property.

The time has come for Arizona brokers and agents to embrace the Buyer Broker Agreement, as the ability to get paid might hang in the balance. And realize that the Buyer/Broker Agreement is just like a listing agreement, the ER, Exclusive Right to Sell. Both are bi-lateral employment contracts, and they function the same way. Sadly, while every broker requires an Exclusive Listing agreement in order to work with a seller, they have rejected and often fear the Exclusive Buyer Agreement, for many reasons.

We have begun to offer classes on the Buyer Broker Agreement, since in the near future, that might be the only way a buyer’s agent gets paid.

Last point, stay tuned and pay attention. Listen to your broker. Access the local, state, and national Realtor websites. Follow the real estate news services, such as Inman News and others. Be prepared. While we might have significant lead time before anything becomes either mandatory or a standard of care, there is no value in waiting to the last minute. Learn the Buyer/Broker Agreement.

Yet that is causing a new trend that hurts a listing agent, and often the seller.

Case in point. A listing agent has a listing for $765,000. That listing started 7 weeks ago and has 4+ months to run.

While listed, the seller, again, just curious, goes online to any of the websites that provide pricing, and they see that their house might be worth a few dollars more than the current listing shows. After a minute or two, the seller remembers the conversation with the listing agent, who clearly told the seller that pricing should be flexible and should be adjusted when the market dictates that.

Then, within a few days, the seller receives a communication from an agent regarding their property. Turns out, when the seller priced their home on the website, that was turned into a lead that the website sells to agents. So far, there is nothing wrong here.

However, before that agent reached out to the seller, did they follow the REALTORs Code of Ethics, Article 16, Standard of Practice 16-9? That SOP says the following:

REALTORS®, prior to entering into a representation agreement, have an affirmative obligation to make reasonable efforts to determine whether the prospect is subject to a current, valid exclusive agreement to provide the same type of real estate service. (Amended 1/04)

Thus, if that agent contacts the seller based on the referral from the website, they are still obligated to 16-9, and failing that, they would be in violation.

Then, it goes further. That agent sweet-talks the seller and convinces the seller to cancel their listing and list with them. The listing agent receives a communication from the seller that they are cancelling the listing, which usually totally surprises the listing agent.

What’s next? Some FAQ’s

The seller may not unilaterally cancel a listing agreement. The listing agreement is an employment agreement, which binds both parties, the seller, and the broker. Thus, any cancelation of that agreement must be bilaterally agreed between the parties, meaning the broker could demand compensation in exchange for cancelling the listing. That of course depends on if the listing agent wrote any language into the listing agreement allowing a one-party cancellation, meaning the seller may cancel at any time, or with X days’ notice.

This is a business decision, and sadly, many brokers and the agents do not want to fight with the seller and burn a bridge. That agent deserves to get paid, yet that too, is a business decision.

The new listing agent would clearly be in violation of SOP 16-9, unless the agent visited the property and talked to the seller only after the seller specifically reached out and asked the agent to come over and talk to them. In this case, the seller innocently input their address for pricing on a 3rd party website and did not specifically ask that specific agent and/or brokerage to contact them.

With the broker’s approval, the current listing agent could file an ethics claim against the new agent, for failing to honor the current listing on the property.

The Code of Ethics also tells us not to solicit another broker’s listing, found in Article 16, SOP 16-4, which states:

REALTORS® shall not solicit a listing which is currently listed exclusively with another broker. However, if the listing broker, when asked by the REALTOR®, refuses to disclose the expiration date and nature of such listing, i.e., an exclusive right to sell, an exclusive agency, open listing, or other form of contractual agreement between the listing broker and the client, the REALTOR® may contact the owner to secure such information and may discuss the terms upon which the REALTOR® might take a future listing or, alternatively, may take a listing to become effective upon expiration of any existing exclusive listing.

One way to avoid going to war is the current broker reach out to the new wannabe broker, and have that agent back off, tell the seller that they are better off staying with their current agent, and wait for the listing expire. If the broker digs in their heels and does not agree, then the current agent and broker should file the ethics complaint on both SOP 16-4 and 16-9.

Last thought. Business is tough enough. Let’s all work and play by the same rules and treat each other with respect. And remember, ignorance of the rules and codes is not a good defense.

The original show ran just one season from 1962 to 1963, depicting life in 2062. While a lot of what was “suggested” about our future, such as flying cars, robot maids, video calls, smartwatches, food printing and space tourism, many parts were labeled as farcical and whimsical. But are they?

In one episode, George lamented that the robot maid Rosey, an old out-of-date model was upset that she was unable to “think for herself” (also a bit of social commentary of the 1960’s). As George attempted to assist her to do so, he commented (a pop-up balloon over his head) “soon, with new technology Rosie will be able to think for herself…” Yes, he was correct.

Other shows and movies made various predictions, evidenced by flip phones and IPad-like tablets shown in “2001 A Space Odyssey” (1968) as well as in the TV show, “Star Trek” (1966-1969).

One common theme running through all sorts of future predictions is our human interaction with computers. And how computers can complement our lives while frustrating us. But for the longest time, computers were only able to do tasks that were programmed by humans.

Today, we see an explosion of a new technology; AI (Artificial Intelligence) which globally first evidenced itself in a chess match during the 1950’s and 1960’s. AI went through various challenges, mostly computing power sufficient to allow a computer to think on its own.

As we entered the 1980’s, AI grew in prominence, as the fear of the unknown rose. Hollywood was quick to embrace the fear of what AI could become, to take control of our lives.

In 1983, the movie “Wargames” was released, which among other technology issues, was a demonstration of AI capacity, when the WOPR computer started thinking for itself to determine which nuclear war to commence. More movies followed, including the “Terminator” series showing how Skynet began to think for itself to destroy the human race, and the 2001 film “A.I Artificial Intelligence” which again was a futuristic portrayal of the dangers of AI.

AI is here and has numerous applications in our industry. Yet with any new technology there are some long-standing facts:

1. Realtors and licensees will be slow to embrace the technology, mostly out of fear and/or misunderstanding.
    
2. We are being bombarded with articles, blogs, video presentations, live demonstrations, and the actual end-product of AI, in our listings, marketing, contract writing, disclosure language, client communication and more.
    
3. The delicate balance of diving in knowing nothing and muddling through, versus learn and learn before putting a toe in the water. Sometimes, it is just best to dive in and swim.

NAR and AAR have been presenting various articles, webinars, and blogs about AI, as I am doing here. In my 43 years in the industry, I have seen numerous technologies developed making our processes easier. Some have been a shooting star only to flame out, while some staked a foothold in our lives and business practices, such as hand-held tablets (1989) and smartphones (1994). Both of those technological advances brought programs and apps, that are now woven into the fabric of our everyday lives and business practices, many already incorporating AI.

AI will not flame out. It is and will remain an integral part of our lives, personally, socially, politically, medically and in business.

For example, ChatGPT is one AI function that can be incorporated into your personal or business life right now. Need good remarks in your listening? ChatGPT can write that. Need good language for a specific disclosure? AI can do that for you.

It is here, it is not a fad, not a shooting star ready to flame-out. As scary as Hollywood portrays it, and TV shows and media predict it, AI has weaved its way into our lives, mostly for good, yet sadly, for some bad. We need to be able to see the difference.

NAR has a plethora of articles as it impacts our business, specifically this one which is a primer, entry level 101 guideline…

https://www.nar.realtor/magazine/real-estate-news/technology/start-experimenting-with-ai-now

While it is not critical to gain expert status now, it makes sense to begin somewhere. As the above article reflects, be sure to learn the do’s and don’ts up front.

As a school administrator and instructor, I will begin to use AI to refine some of my class outlines, language, and marketing of our real estate school.

            “Worst market I have seen in my 23 years”

            “Feels like we are heading for a crash”

            “While it is a tougher market, there is plenty of business to be had”

            “The market has forced me to change my approach, and that has helped”

And a few comments like the above.

So, where are we? Failing? Steady? Or improving?

Remember the saying “one person’s garbage is the next person’s gold”!

All external metrics should point to a better market. But the market is resisting improvement and is settling for a steady market that has signs that are difficult to interpret.

It is mostly a matter of perspective and willingness to embrace and/or make changes.

What worked a few years ago might not work now. Tools that are rapidly changing can have either a wildly positive impact on your business or be a disrupter and keep your attention on the downside.

This author has been in real estate for 43 years, since early 1981. In the early 1980’s, interest rates hovered around 13%-15% for a 30-year mortgage. One would have expected the market to crash as a result, yet it did not. Yes, it retracted for a period, around 4-5 years, until rates fell below 10%.

But we sold a lot of homes during that time, just by recognizing what impact that had, and adjusting our marketing, our interactions with clients, and our promotion of the market. While many agents failed and found other employment, those that stuck around, made some changes, and changed their attitude a bit, had many sales and made good money.

Some of the tools we have now used for 10-15 years might be the albatross around our necks. Technology, advertising, and interactions with different cultures and people are very different today compared to what it looked like even 7 or 8 years ago.

Every market creates challenges. Surviving and thriving in a changing market is not as hard as it seems.

In the early 1980’s, as stated earlier, interests rates were in the mid-teens, but we overcame that challenge.

In the late 1980’s, the market shifted when the S&Ls (Savings & Loans) crashed and fell like dominoes. We all had to deal with the RTC (Resolution Trust Corporation) that gathered all the real estate assets that the failed banks loaned on and had us list and sell them. True, many were commercial properties, but there were plenty of residential properties, as well.

Late 1980’s- early 1990’s, two more fair housing requirements were added, we changed our MLS and lockbox system, we had a new purchase contract, and we started to feel the impact of a lawsuit in Minnesota that had national impact, which changed how we disclose and deliver agency.

A few short years later, the need to disclose material matters resulted in the AAR SPDS and a sprouting industry; inspectors. That added a few extra steps to our process of listing and selling, so we had to adjust for that.

Soon after 9/11, the market retracted significantly, as all acting partners in the industry felt uncertain of the safety of our country and the resulting wars that commenced. Everyone took a step or two back, until the feeling of uncertainty faded.

But, a few years later, in 2008, in what seemed to be a matter of days, the stock market crashed, financial institutions that owned billions in mortgage-backed securities failed, plunging the world economy on the brink of collapse. Home values plummeted, 401k’s evaporated, and the housing crisis created challenges never seen before. And we survived.

As a result, the country fell into a recession, bordering on a 1929-type depression. We overcame that, dealing with defaults, short sales and rampant bankruptcies.

Industry-wide changes notwithstanding, external forces dictate our markets. Jobs reports, inflation, CPI changes, recessions, Fed rate changes, policy changes based on politics all have positive or negative impacts on our markets.

Most recently, March of 2020, when we all realized that a world-wide pandemic was upon us, every industry in the country (and world) suffered, with fellow citizens dying at the rate of tens of thousands a day, businesses closed, and again, we were in a recession.

Summary: The real estate market has always been on a roller coaster, up and down based on a myriad of challenges. Most of those forces we did not create, cause, or change. Change is part of the cycle. Spend enough time in the industry and you will experience this.

Yes, there are external forces, such as interest rates in the 7’s, debt ceiling uncertainty, election season approaching (or is it here already?), a Dow Industrial Average that is clearly on a roller coaster and waiting with bated breath for any Fed announcement.

HOWEVER, during all this and in any cycle, people need housing. That could be a rental, but even a rental today could turn into a sale next year. Shelter is a basic, essential human need, on the Maslow’s Hierarchy of Needs. As the human race increases in population, there will always be an increasing pool of clients in need of living space. And living spaces are rapidly changing, as we experience an affordable housing crisis.

Identify what worked a few years ago but seems not to be working now. Assess what you need to do to gather more clients, maybe going back to basics, or embracing a new technology that will improve your prospecting.

Bury your head and resist change, and you most assuredly will struggle.

Open your eyes and embrace change, and your business will soar.

In a simple answer, MAYBE…

First, let’s look at how and why AAR generates a new form, or revises a current form. In many cases, a new or revised form is proposed by a Realtor member somewhere in the state. That request/proposal goes to the AAR Risk Management Committee (RMC), that reviews the request based on need, applicability, and function.

Meaning, will the new form fix a problem or address a new issue? If the form request will deal with a very small segment of the Realtor membership, then the odds are it will not be created. The goal of the Risk Management Committee is to reduce the risk for the bulk of the industry in Arizona.

If the RMC agrees that the proposal is valid and would benefit the membership as a whole, RMC will typically create a task force to consider the request and create the language for such a form. Once that task force has completed the work, it is sent back to RMC for approval. If RMC approves the new form or the changes to an existing form, the process begins for final approval and distribution through Transaction Desk.

During the process of approval, AAR sends most new or revised forms out the “Review Loop”. This is a group of Realtor members that have volunteered to review new and revised forms and provide input back to AAR. Currently AAR has about 4000 members in the loop, and typically AAR receives good input from the loop members. Every comment in the loop will be reviewed by RMC to propose changes to what appears in a draft. This allows the Realtor community state-wide to have input on state-wide forms.

The author of this blog has served on Risk Management for almost 3, 4-year terms. And the author has chaired or participated in form request or review task forces, including The HOA Addendum, Wire Fraud Advisory, Residential Purchase Contract, Fair Housing Advisory and Solar Addendum (Chair).

Sometimes, AAR reaches out to the membership asking if a brokerage or a region has already created a form, that while being local and not state-wide, can be a good guidance for a task force to create a new form. In other words, why re-invent the wheel?

To the question of this blog... NO, in most cases you are not required to use AAR forms. AAR provides them to the membership and the brokers so that the members  do not need to re-invent the wheel.

Yet, consider this, your broker has every right to obligate you to use most or all the AAR forms. Why? First, while the broker knows and understands the language of the AAR forms, they might not be familiar with language on a replacement form, or language drafted by one of the agents.

And your broker probably has E&O Insurance (Errors & Omissions) and most companies that offer that coverage REQUIRE for a transaction to be insured, that the transaction must include any industry-wide forms, and not forms provided by another broker, or language inserted that would have been covered on an AAR form.

Bottom line: your broker dictates what forms to use, what language to include and what you should be doing when you are working a deal. So, if not sure, check your brokerage Policy & Procedure manual

Lastly, AAR releases new forms on a set schedule, unless the new or changed form is extremely timely dealing with a rule or statute change, or a change that has significant impact. AAR releases new forms on or about February 1, July 1, and November 1 every year.

Sadly, REALTORS across the US have taken liberties to promote racism and hatred, on their personal social media and on other media tools, even at live events.

In 2019, Newsday A Long Island NY newspaper published the results of a 3-year, exhaustive, hidden camera expose of Realtors on Long Island showing the bold and repugnant discrimination.

As a result, the State of New York developed a Fair Housing Advisory that is REQUIRED on every real estate interaction with a potential new client. The Governor’s office, with the NY legislature, has created very strict penalties of any agent that does not utilize the form with their clients.

Then, in 2020, the NAR Professional Standards Committee developed a new Standard of Practice in Article 10 of the REALTOR Code of Ethics, SOP 10-5, which clearly says that a REALTOR shall not use hate speech, intimidating speech, slurs and epithets when referring to a protected class under the Federal Fair Housing Laws and the REALTOR Code of Ethics.

But the discrimination has continued across the country. As a result, in some cases, many state governments have created similar forms, while in other states, the state association of REALTORS created the form.

The AAR Risk Management Committee (this author serves on the committee) decided to create a statewide advisory. A workgroup was formed, and we reviewed forms from other states and associations, along with the guidance from HUD. The result was this Advisory, which we feel should significantly reduce discrimination in real estate. Why?

Why and how would it reduce discrimination? If every licensee in the state was obligated to have a frank conversation with every prospect about their rights in real estate, what would be considered discrimination, and where they may file a complaint if they feel they were a victim of discrimination. It should make licensees more mindful of their obligations, and possibly stop them from discriminating.

Here are a few Q&A’s

Where do I obtain the form? It is on Transaction Desk, (or if outside of Phoenix, most likely in your on-line forms programs. Also, AAR has it on their website for all members

Is usage of the form required by AAR or the state? As of this moment, no, it is not. However, many brokers state-wide have indicated that they will require it from each of their licensees, and this author and AAR applaud any broker that takes that position.

To whom should the form be presented? Any person(s) who are potential clients, such as buyers, sellers, landlords and tenants. Any property manager should present the form to their owners.

Our position as REALTORS and licensees should be to provide the best opportunity for everyone to begin and complete a transaction without ever feeling that they were a victim of discrimination. And to inform them that if they were a victim, they have recourse and resources as to how and where they could file a complaint.

Second, when the US adopted the “Montreal Protocol” American manufacturers began switching their manufacturing from R-22 units to R410-a, also known by the brand name Puron.

Here we are 11 years later, and there are tens of millions of properties that use a refrigerant of some sort. 

Why does this matter? 5 years ago, a pound of R-22 cost about $14. If your system lost all its refrigerant, and you needed 10 pounds, the cost was $140. Manageable.

Today, delivered and installed by a qualified AC tech, a pound of R-22 is close to $180 retail. That same unit needing 10 pounds, that could cost the seller (or the buyer who now owns) $1800. Big difference. 

As an agent, it is NOT your obligation to determine the age or refrigerant usage of your seller’s system. It is their obligation. But the older the system, there might be more disclosure obligations. Will every property inspector identify the age and the refrigerant of a system? No. Some will, but mostly that is up to the seller.

Let’s assume that your seller had a new system installed in the spring of 2017. Is that R-22, or R-410a?  Odds are it is the newer refrigerant. But not guaranteed.

Simply put, listing agents, it's a great idea to have a conversation with the seller about the system so that both you and the seller would make the proper disclosures.

Run this through your broker if you are not sure.

To answer that question, the answer is No, there is no specific order. Some of that could be addressed with the seller, asking the seller how she would like the offers presented, such as lowest to highest net, or vice versa, closing time sooner versus later, order in which received, and numerous other factors. It is best the listing agent provide the options to the seller and let the seller decide.

Another choice is the method of presentation; put all 5 on the table in front of them (assuming you got into your car and met with the seller in person) or once an order is selected, present one at a time. That should be the seller’s choice. Always be mindful of the seller’s reaction; read their body language. Some offers might really intrigue them, while, for whatever reason, some others totally bore and/or insult them. Be sure to be sensitive to their reaction; both verbal and non-verbal.

 Lastly, now the seller has reviewed all 5. What are their options?

1. Accept one and reject the other 4
2. Accept one and sit on the other 4
3. Accept one, and offer back-up to one of the others
4. Counter 1, and sit on 4
5. Counter 3, reject one and sit on the other one (you must use the multiple counter form when countering more than 1)
6. Counter all 5 of them (you must use the multiple counter form when countering more than 1)
7. Sit on all 5 waiting for a few more to be presented.

Needless to say, there are dozens of combinations including those above, meaning the seller has a great deal of flexibility. While in many cases, we are obligated to play by the rules, in most cases, sellers have no rules. One misconception is that the seller if obligated to sign the rejection part of the contract and return that to the buyer if they are in fact rejecting the offer. That is simply not true. As the listing agent, you should encourage and/or gently insist that they do that, yet they have no obligation to do so.

Give them the choice and proceed, with one caveat; Do not keep the buyer agents in the dark…Tell them exactly what is happening. This is professional courtesy. Remember, that buyer’s agent has a pesky buyer calling them 10 times a day, and all the agent is trying to do, is help you uphold your obligation to the seller, and put money in everyone’s pocket.

But another part/tool of our business is often unnoticed yet could create as much havoc. Our technology. Our devices on which we conduct our business, communicate with clients, title company, lender, inspectors, prospects, other agents, etc. We often use old, out-of-date devices that are also not maintained properly.

Did your computer ever freeze on you? Go to the blank blue screen-of-death? Often, we tolerate technology issues as normal, yet do not desire to get to the root cause and fix whatever is causing the problem.

If the check-engine light on your car activates, do you ignore it, or at some point, check it out?

Why am I making mention of this? Well, first, productivity. I am not suggesting that you change your devices every year or so, but I am suggesting that you pay attention and maintain them, I don’t have the time or room here to go through everything now in a blog. But, computers, phones, printers, scanners and all your devices need some TLC, often. With the proper care and attention paid, they could last longer. But ignored, they can make your life miserable.

That said, you should ALWAYS do the following:

1. Keep your devices’ operating systems updated. Usually, they are pushed to you from the manufacturer or internet company, so be sure to accept and schedule their download and installation.
    
2. Keep virus programs up to date. No need for expensive, invasive programs.For example, if you have a Windows device, Windows Defender does a good job. And a good malware program.
    
3. Routinely clear your browsing history, at least weekly or more often. Failure to do so could slow down and clog your systems and could leave lethal links and malware in your device.

These are just for starters. If you own a car for 5 years, how often do you change the oil, check the brakes, rotate the tires, lube the joints, check tire pressure and do routine normal maintenance? Let’s hope you do, and not think about it while doing 70 MPH on the freeway. Routine care and maintenance will help the car last years. Do the same for all your devices.

As devices and their operating systems age, they become more susceptible to breakdown and more available for hackers to break into and steal information.

We will also explore the rules that govern Arizona real estate licensees regarding property management, as it is one of the more common complaints to ADRE. Arizona Residential Landlord & Tenant Act, the statutes that deal with property management, trust account rules and the eviction process.

All seemed all well and fine, until it started becoming apparent that the seller was looking at the letters from a different perspective.

First, real estate transactions often include some intense negotiations, including the guessing game of one party trying to determine what the other party is thinking. In this case, a seller must wonder how much the buyer really wants the property, and how much are they willing to pay and give up asking for something. That guessing game is the leverage many clients recognize.

 However, with these letters, it became apparent to the seller that the buyer would often pay top dollar and give up concessions and more, since the letter said that the kids already picked out their bedrooms. Why should a seller drop their price or offer more concessions, when the buyer has pretty much indicated that they will buy this house at almost any reasonable price and terms. Thus, the concept of negotiation is off the table.

 The second, and even more disturbing fact is when the seller uses the information provided to discriminate against a buyer. Case in point, a family in Virginia provided the letter and photos of the family. Those photos revealed the parents of different colors, mixed-race kids, and some other adopted kids of a different ethnicity. The seller rejected their offer, clearly on racial grounds. The buyer’s agent picked up on this, and the buyers filed a fair housing complaint against the seller and the listing agent.

 And, as a good measure, they filed complaints against their agent, who convinced them to write and provide the letter.

As a result, NAR has taken the position that these “love letters” are a bad idea, and strongly recommend not doing them, for any transaction. Here is a link to one of many articles on NAR regarding these letters:

https://www.nar.realtor/fair-housing-corner/love-letters-or-liability-letters

Result, no need to give up negotiation ability, nor give a seller a clear path to discrimination. While that discrimination could occur without the letter, it is advisable not to add fuel to the fire, ending in disappointment for the buyer and possible liability for you, your broker and the company.

Question: May the buyer now list the property for rent, and even show it during the escrow period?

Yes.

Let's assume that the property is vacant. Must they wait until they close on it and have title, or can they list it now and show it?

Certainly, unless the contract they wrote with the seller forbids that activity the buyer has the right to market the property. It would be better to obtain the sellers permission, especially if the buyer wants access to show the property, but again, that is not absolutely required. Any such investor buyer would be considered an owner-in-acquisition. 

A buyer in escrow, anticipating a successful close, has an equitable interest in the property. While they do not have title to the property, an equitable interest provides them with certain rights, which includes the right to list it for sale or lease.

That being said, if that investor, rather then rent the property, is more inclined to fix it and flip it, the same rules exist. Just be mindful of the current seller having a form contract with the buyer for, let’s say, $624,000. That buyer wants to fix it, flip and sell it for, let’s say $810,000. The current seller might see that and wonder why they could not sell it for that amount and might be inclined to attempt to cancel the current escrow. While they do not have a lot of options to cancel a contract, they could dig in their heels and not provide the buyer with any repairs, concessions or any benefit, in the hopes the buyer would cancel. This author recommends not listing it for sale until the escrow closes, for that very reason.

Any such listing, and certainly any contract they execute with a buyer or tenant must contain a disclosure that the seller is acquiring title but does not yet have title, and a contract for sale or lease should be contingent on the seller or landlord obtaining title. There should be no prepossession, a tenancy could not begin until the client owns the property, and while a buyer might be allowed to do inspections and a walkthrough, they would not be allowed to begin any work or move anything into the property. If a lease that the investor executes requires the landlord to redecorate, repair, paint or clean, that should not commence until after they own the property.

Be sure to discuss any potential transaction such as this with your broker.

Within the entirety of the agreement, the buyer has about 11 obligations, while the seller has 17. Each obligation carries with it a timeline in which the party must comply.

Does every buyer know what they must do and by when?

Does every seller know that they must do and by when?

The answer to both is a resounding NO!

Most clients have little to no knowledge or understanding of those timelines or the issue itself, simply due to the fact that they have never seen that document prior to entering this contract. Thus, who must they lean on to keep them on track?

YOU!

Every client is different. A cash buyer has fewer obligations and some different ones compared to a buyer obtaining a loan. Same is true for the seller.

The role of every agent is first to know the party’s obligations. Not word for word, but at least a knowledge of the obligation, the timing of that obligation and where to find it on the contract.

Every agent must be able to build a timeline and keep the client informed. And the agent must determine the timing of advance notice of an upcoming obligation, meaning, how long the client has before the obligation is due. Each one is different.

Again, know the contract and supporting addenda. No need to know word for word, but at least the concept and where it is located. If your client runs past an obligation, which impacts their ability to perform, they will look to you as to why that occurred. That will be a tough conversation to have with your client.

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Real estate agents are a slice of society as a whole. As members of this society, we have the same concerns and possibilities as any other sales person, any other business field and any other member of society. Bookstores have complete sections on self-help, motivation, sales tools, marketing and business promotion. We have all watched the sales gurus tell us how to make it rich quick and we have all heard the seminars of the best ways to increase our business. So what?

I have witnessed good real estate agents find themselves in a malaise; a slump. Every professional goes through that. If you have a 3 out of 10 closing ratio, you might consider another field. If a football quarterback completed 3 out of 10 passes in college, they would be working in the corporate world after college. But if a baseball player got a hit 3 out of 10 times, they would be batting .300 and teams would be clamoring for them. It is all perspective.

I have also witnessed real estate agents go to sales seminars, motivational rallies and the like, get all fired up, claim they are going to turn things around and use what they learned, and they fail to do it. Why? Because they don't think out of the box!

It is simple. I could write a book on sales techniques, but it would be a short book. One page or maybe only half of a page.

Here it is for free. Do you want to have more business in 2013 than you will have in 2012? Call 20 new, different or referral rich people 3 days a week.

That's it. Call them, talk to them, ask how they are doing, how's the family, what about the weather and in turn, tell them why you are calling. Be honest. You are asking for business or referrals. Don't hang up until you tell them why you called.

It is that simple. If you called 20 cold calls today, 20 warm calls tomorrow (follow up from days, weeks, and months ago from someone who asked for that) and 20 calls to referral rich contacts the third day, you would talk to 60 people a week. Simple math; call and talk to 60 people a week, and you will obtain 3-5 good actionable leads. Work those leads the other 4 remaining days of the week. Next week, start all over again.

4 good leads a week are 16 good leads a month. Can you close 4 of them, 5 of them, 6 of them? All of them? Close even 4 of them, and that is 48 closings for the year. Have you ever sold 48 properties a year?

Think outside the box. Ignore all the hype and marketing and sales techniques. Call 20 people a day 3 days a week every week of the working year, and you will vastly increase your business.

Taking a new listing is one of the exciting parts of a real estate career. It is potentially the beginning of a relationship that if cultivated properly could result in subsequent sales and referrals for years to come. Sadly, not every listing provides those benefits. Some are problems from the start and are flat-out un-saleable. The sooner you realize the trouble signs and take action, the better you will be

What is your time worth? Have you ever sat down and determined what your hourly income is? This can be an eye-opening experience, because once you know what you are paid each hour, you will be less inclined to allow someone to waste your time. Once you know that, you will work to lessen or completely  avoid those situations that take up your time and do not provide revenue.

The current market of lender-owned and short sale properties, coupled with many sellers in bankruptcy often creates a situation where the property is un-saleable. Here are the more common reasons why and the reasons why you should think of cancelling the listing and moving on…

1. Uncooperative or uncommunicative seller. In short sales, the sellers are often frustrated and worried, and will be less willing to cooperate. In either case, such as making certain disclosures or not paying some of the buyer's costs might render the property un-saleable. If the seller has dropped out of sight, does not return any calls, e-mails, faxes or any other means of communication, you might need to walk away.
2. Seller turns down reasonable offers. You know what's reasonable. No matter what the list price is, if your seller refuses to accept a reasonable offer, or at least provide a reasonable counter-offer, that might be time to cancel the listing. Give this stronger consideration after the seller does this more than once.
3. Sellers are divorcing, fighting or not agreeing with each other. Certainly sales can occur with a divorce situation, or sellers who are arguing with each other. But, at some point, when the situation becomes untenable, when you are constantly being put in the middle of their fight, you need to think about your options. When one divorcing party clearly defies a court order and does not cooperate, or one sibling has made it clear that they will not agree to sell mom and dad's place, it might be time to throw in the towel.
4. Sellers refuse to be reasonable on pricing or making repairs. Pricing today could be a moving target. If the seller does not agree to price adjustments to reflect the current market, and activity is slow or non-existent, then you might be wasting your time. If the seller refuses, either now before a contract, or in response to a contract, to make even the slightest repair, then it might be quitting time.

We never like to lose a listing. It often feels like failure. But in many cases it is not your failure. It is the seller. If they put you in the boxing ring blindfolded with your hands tied behind your back, how do they expect you to win the fight? Without their cooperation, participation and assistance, you might be wasting your time.

So, measure each listing with the above factors, and if the decision is to cancel the agreement, first confer with your broker to determine how you accomplish that.

If you determine that you are worth hundreds of dollars per hour, this will be an easy decision for you. If you determine that you are worth $8 an hour, you will seek to find buyers and sellers who will be ready to act, thus raising your hourly pay.

The investor buyer has an accepted contract on a property, and plans on listing it either for sale or for lease. Let's assume that the property is vacant. Must they wait until they close on it and have title, or can they list it now?

Certainly, unless the contract they wrote with the seller forbids that activity the buyer has the right to market the property. Yes, it would be better to obtain the sellers permission, especially if the buyer wants access to show the property, but again, that is not absolutely required.

A buyer in escrow, anticipating a successful close, has an equitable interest in the property. While they do not have title to the property, an equitable interest provides them with certain rights, which includes the right to list it for sale or lease.

Any such listing, and certainly any contract they execute with a buyer or tenant must contain a disclosure that the seller is acquiring title but does not yet have title, and a contract for sale or lease should be contingent on the seller or landlord obtaining title. There should be no prepossession, a tenancy could not begin until the client owns the property, and while a buyer might be allowed to do inspections and a walkthrough, they would not be allowed to begin any work or move anything into the property. If a lease requires the landlord to redecorate, repair, paint or clean, that should not commence until after they own the property.

Be sure to discuss any potential transaction such as this with your broker.

That is a common statement real estate agents make when they are asking their broker for help with a landlord or tenant. While they are involved with the day to day issues of a tenant and landlord, they insist they are not managing the property.

So, what's the problem? The Arizona Revised Statutes identify the activities of a property manager and go on the say that if a licensee is a property manager (by definition) they must execute a Property Management agreement between themselves and the landlord. This is where real estate agents get themselves into trouble.

It is important to understand the activities that constitute property management, and once you recognize them, act accordingly. And, always be certain that your broker allows property management before executing an agreement with a landlord.

Since the question often arises from the agent that listed the property for lease and was successful in getting it rented, we will use that scenario. From the moment you list the property for lease, up until the tenant moves in, all of your activities are considered part of your listing obligations. No problem there. But, once that tenant moves in, and keys and money are exchanged, your obligations as the listing agent end. If you are not managing the property, you should not have any interaction with that tenant and that landlord about that property until that lease is ending. Talking to the tenant about repairs, calling the landlord in Ohio and telling them the tenant needs pest control and any activity like that IS property management and doing that without a valid PM agreement is a violation of state statute.

If your broker allows you to manage properties, great. You may do so under a valid property management agreement yet keep in mind, if you are handling rent monies, that money must be deposited to your broker's trust account or delivered direct to the landlord. You may not deposit those funds to any account other than the trust account or the landlord's account, and you personally may not be in receipt of those funds in any way.

With the sheer number of rentals increasing as a result of our recent market, more and more agents are handling leases. It is critical for any licensee to understand what activities constitute property management, what their obligations are and what they need to do to protect the landlord, tenant and themselves. If you are not sure, you must talk to your broker.

Arizona's Anti-Deficiency Statutes to Remain Unchanged

As a result of legislation that was signed by Governor Jan Brewer last week, the Arizona Anti-Deficiency statutes will remain unchanged.

Earlier this summer, the Governor signed SB1271, which effectively changed the rules on how and when lenders could pursue a borrower after a default of a mortgage loan. The statutes have been in place in Arizona for decades, and they protect a residential homeowner from being sued by a lender after a default, such as a foreclosure. With those statutes in place, after a lender foreclosed against a homeowner, in most cases, they were unable to pursue the homeowner for the deficiency. SB 1271 would have changed that, and many of the provisions of the bill were ambiguous as to the definition of a resident or occupant. This ambiguity could have thrown thousands of homeowners into a situation whereby they could have faced additional costs after a foreclosure.  Thus, The Arizona Association of Realtors along with many other consumer groups lobbied the Governor and the Arizona Legislature to draft legislation to repeal 1271 before it went into effect on September 30,2009.

The Arizona Legislature and the Governor did just that. During a special legislative session this summer, HB 2008 was drafted and approved and Governor Brewer signed the bill last week. HB 2008 repeals SB 1271 and its change to the anti-deficiency statutes; thus, the statutes remain as they were.

Are you confused by the HVCC (Home Valuation Code of Conduct)? Don't feel bad, most people are. This new rule went into affect May 1, 2009 and has done nothing but create havoc for all concerned in a typical real estate transaction.

The original intent of the rule was to create a separation between a lender and the appraiser, so that the lender would not exert undue influence on the appraiser to appraise the property for more than it was worth. Sounds good on paper, but on the street it creates confusion and tension between lenders, buyers and their agents. NAR has lobbied Congress to impose a moratorium on the rules, so that everyone could obtain a better understanding. As of this date, the rules are still in place.

Without going into the complicated and gory details, there is one misconception that impacts agents. Many believe, since they have been told this, that they cannot talk to or interact with the appraiser, give them comparables or assist them in any way. That is flat-out; not true… The HVCC does limit the lenders ability to talk to the appraiser, but does not limit the agent's ability to do so. Thus, we may still meet the appraiser at the property, provide them comparables or other data and assist in the process. We may provide updates comparables after an appraisals is done, just as we always have. If you attempt to do just that, and the appraiser tries to stop you, remind them that the HVCC rules allow for this.

Our National Association has an excellent flow chart dealing with the HVCC and can be found at http://www.realtor.org/wps/wcm/connect/f57e63804e57784890e4b3d4f1772a7a/HVCC+Flyer+6.16.09.pdf?MOD=AJPERES&CACHEID=f57e63804e57784890e4b3d4f1772a7a

As a listing agent, getting listings on short sales can be challenging. With so many variables and every lender acting differently, it can be daunting to stay on top of all the issues. While there are so many steps to insure that a short sale transaction moves smoothly, I could never cover them all here. Yet, one issue looms large and if not done properly, could cause you considerable grief and aggravation possibly resulting in a failed transaction.

The issue is obtaining the HUD-1 that the lender will require when considering a short sale transaction. Most often, the process starts with you going to a title company and asking for a short sale HUD-1. With that request, most title companies will simply ask you and/or the seller about the current liens. Since the seller owns the home, they should be the one to answer those questions. So, let's assume the seller tells the title company that they have one lien; that being the lender who is considering the short sale.

Thus, the title company prepares the short sale HUD-1, most often without doing a title search, and shows the liens that the seller tells them about. That's the problem. By not doing a title search, and by not grilling the seller with questions which might uncover additional liens, the HUD-1 is prepared with incomplete information which is a recipe for doom. 

If done that way, the lender approves the short sale and everything moves forward. The buyer deposits their money, pays for an inspection, appraisal, and loan application and incurs various other costs, while assuming they are buying the house. Low and behold, much later in the process, the 2^nd lien pops up, typically a Home Equity Line of Credit (HELOC) or some other lien, which the seller either forgot about or did not realize was part of the transaction. Closing is delayed as the 2^nd lien holder is contacted and typically offered pennies on the dollar. Many of them say no, and the deal fails.

Is there a lesson to be learned? Yes. When ordering that HUD-1, either insist that the title search is done in conjunction with the preparation, or very soon thereafter, so that if another lien shows up, everyone will know about it long before the 1^st lender approves the short sale and the buyer spends any money. If the title company refuses to accommodate that request, find another title company, as some do this as a matter of course, but many do not.