REALTOR® News - August 2006
Northbrook/Glenview School Area Changes
On June 8th, the Northbrook/Glenview School District 30 Board of Education made a change in its elementary school boundaries. Beginning in the 2007-2008 school year, children residing in the area referred to by District 30 as "Area I" will attend Willowbrook School for grades K-5 instead of Wescott School. Students (and their younger siblings) who presently reside in this area and attend Wescott School through the 2006-2007 school year will be "grandfathered" and may continue to attend Wescott School. Students in grades 6-8 will continue to attend Maple School. Area I extends north of Willow Road, south of the Chicago and Northwestern Railroad tracks, east of Willowhill Golf Course, and west of Waukegan Road.
FIRPTA Requirements Bother Some Sellers
The Foreign Investment in Real Property Tax Act (FIRPTA) requires that foreign persons (i.e. nonresident aliens or foreign corporations not recognized as domestic corporations) selling property must withhold 10 percent of the gross sales price and send it to the IRS. In order to determine that a seller is not a foreign person, sellers must submit a "nonforeign affidavit" to that effect. An issue arises when the seller's taxpayer identification number (i.e. Social Security no.), is included on the form, which is in turn handed over to the buyer (for fear of identity theft). Sellers not wanting to submit the SSN may take the following options:
1) Close without the affidavit in the hopes that the seller is not foreign.
2) Instruct escrow to send the funds to the IRS (which requires both parties' signatures), or
3) Provide an affidavit that the property will be owner occupied and that its purchase price is less than $300,000.
Whatever the course of action, it is imperative that agents know and understand the FIRPTA act when buying/selling with nonresidents. To read more, visit the following link: http://realtytimes.com/rtapages/20060721_foreignrequirements.htm
Facts About Unrepresented Sellers
Thirteen percent of home sellers last year worked without representation of a real estate professional. A closer look at these FSBOs, using statistics from NAR's 2005 Profile of Home Buyers and Sellers, indicates that many FSBOs actually were transactions between family members and acquaintances. The number of open-market FSBOs was considerably less than 13 percent. To learn more about this sector of the market, go to http://www.realtor.org/research.nsf/pages/fsbofacts
Guide on Dealing with Meth Labs Updated
Methamphetamine is a derivative of amphetamine which gives the user a euphoric high. Due to increased demand, meth labs have been created in rural and urban areas across the U. S. These labs can be easily created by the purchase of over-the-counter items available at grocery stores. According to the U. S. Office of National Drug Policy, the production of one pound of methamphetamine creates 5 to 7 pounds of toxic waste and releases poisonous gas into the atmosphere. Lab operators tend to dump this toxic waste in household drains or yards. Learn about the warning signs, disclosure laws, and hazardous effects of meth and meth labs in an updated field guide from Information Central. To access, go to http://www.realtor.org/libweb.nsf/pages/fg324
Who is coming to Illinois?
Read NAR's research report on Business Data for Engaging in International Real Estate Transactions in Illinois. Fascinating report with such specific items as: In Illinois, 46,314 newly admitted legal immigrants arrived in 2004. Most came from Mexico (10,412). Other top countries of origin include:
• Poland (5,932)
• India (5,450)
• The Philippines (2,562)
• China (2,216)
• Ukraine (1,201)
REad more: http://www.realtor.org/Research.nsf/files/IntlBusIL.pdf/$FILE/IntlBusIL.pdf
Build a Home in New Orleans
At the NAR Convention in November REALTORS will be building homes for Katrina victims. Want to be a part of this? Register for the Conference http://www.realtor.org/convention.nsf/ and then register for the "Operation Home Delivery http://reg.itsmeetings.com/its/0611narmsy/choices.asp
MLSNI Rules
A listing with residential zoning shall only be placed under one of the residential property types unless the listing is both for sale and rent, in which case the listing may also be entered under the residential rental category.
A listing with both residential and commercial use or zoning must first be placed in the appropriate commercial property type, and then may be placed in the appropriate residential property type.
A vacant residential lot may not be placed in property type 1. "Detached Single Family" (except for lots with specific plans and price for a "to-be-built" structure.) Proposed construction must be disclosed in the Remarks section.
SECTION 1.4: CO-LISTINGS/COURTESY LISTINGS: Properties co-listed with other Subscribers of the Service shall be appropriately identified on the system. Co-listings with Non-Subscribers or licensees affiliated with Non-Subscribers are not allowed in the Service. Courtesy listings are not allowed in the Service.
SECTION 1.9. SPECIAL CONDITIONS APPLICABLE TO LISTINGS: Any contingency or conditions of any term or terms (including a "special agreement" and condition regarding compensation) in a listing shall be specified and noticed to the Subscribers, by showing "V" (variable rate),"M" (bonus) or "Z" (exceptions) in the "Special Compensations Information" line. Exclusive right to sell listings will be specified by an "E" in the "LIST"(listing type) field, and Exclusive agency listings will be marked with an "X".
VARIABLE RATE COMPENSATION – "V"
This is an arrangement in which the seller agrees to pay a specified commission if the property is sold by the Listing Broker without assistance and a different commission if the sale results through the efforts of a Cooperating Broker; or one in which the seller/landlord agrees to pay a specified commission if the property is sold by the Listing Broker either with or without the assistance of a Cooperating Broker and a different commission if the sale results through the efforts of a seller/landlord. This shall be disclosed by the Listing Broker as "V" in the SCI field or any such key, code or symbol as required by the Service. The Listing Broker shall, in response to inquiries from potential Cooperating Brokers, disclose the differential that would result in either a cooperative transaction or, alternatively, in a sale/lease that results through the efforts of the seller/landlord. If the cooperating broker is a buyer/tenant representative, the buyer/tenant representative must disclose such information to their client before the client makes an offer to purchase or lease.
EXCLUSIVE AGENCY - "X"
The Exclusive Agency brokerage agreement authorizes the Listing Broker, as exclusive agent, to offer cooperation and compensation on a blanket unilateral basis, but also reserves to the seller the general right to sell property on an unlimited or restrictive basis. This shall be disclosed by the Listing Broker by "X" in the "LIST"(listing type) field or any such key, code or symbol as required by the Service, before the client makes an offer to purchase or lease.
EXCLUSIVE RIGHT TO SELL, WITH NAMED EXCEPTIONS - "Z"
Named exclusions are those individuals or organizations named as exceptions to an Exclusive Right To Sell brokerage agreement for which the seller and listing broker will pay no commission. This shall be disclosed by the Listing Broker by "Z" in the SCI field or any such key, code or symbol as required by the Service.
Put It In Writing
License law: Sec. 10 27. Disclosure of licensee status. Each licensee shall disclose, in writing, his or her status as a licensee to all parties in a transaction when the licensee is selling, leasing, or purchasing any interest, direct or indirect, in the real estate that is the subject of the transaction.
Sec. 10 30. Advertising.
c) A licensee shall disclose, in writing, to all parties in a transaction his or her status as a licensee and any and all interest the licensee has or may have in the real estate constituting the subject matter thereof, directly or indirectly, according to the following guidelines:
(1) On broker yard signs or in broker advertisements, no disclosure of ownership is necessary. However, the ownership shall be indicated on any property data form and disclosed to persons responding to any advertisement or any sign. The term "broker owned" or "agent owned" is sufficient disclosure.
(2) A sponsored or inoperative licensee selling or leasing property, owned solely by the sponsored or inoperative licensee, without utilizing brokerage services of their sponsoring broker or any other licensee, may advertise "By Owner". For purposes of this Section, property is "solely owned" by a sponsored or inoperative licensee if he or she (i) has a 100% ownership interest alone, (ii) has ownership as a joint tenant or tenant by the entirety, or (iii) holds a 100% beneficial interest in a land trust. Sponsored or inoperative licensees selling or leasing "By Owner" shall comply with the following if advertising by owner:
(A) On "By Owner" yard signs, the sponsored or inoperative licensee shall indicate "broker owned" or "agent owned." "By Owner" advertisements used in any medium of advertising shall include the term "broker owned" or "agent owned."
(B) If a sponsored or inoperative licensee runs advertisements, for the purpose of purchasing or leasing real estate, he or she shall disclose in the advertisements his or her status as a licensee.
(C) A sponsored or inoperative licensee shall not use the sponsoring broker's name or the sponsoring broker's company name in connection with the sale, lease, or advertisement of the property nor utilize the sponsoring broker's or company's name in connection with the sale, lease, or advertising of the property in a manner likely to create confusion among the public as to whether or not the services of a real estate company are being utilized or whether or not a real estate company has an ownership interest in the property.
In the Code of Ethics: Article 4
REALTORS® shall not acquire an interest in or buy or present offers from themselves, any member of their immediate families, their firms or any member thereof, or any entities in which they have any ownership interest, any real property without making their true position known to the owner or the owner’s agent or broker. In selling property they own, or in which they have any interest, REALTORS® shall reveal their ownership or interest in writing to the purchaser or the purchaser’s representative. (Amended 1/00) Standard of Practice 4-1. For the protection of all parties, the disclosures required by Article 4 shall be in writing and provided by REALTORS® prior to the signing of any contract. (Adopted 2/86)
Are You Sure They Have a License?
I receive several phone calls from members alerting me that someone is posing as a real estate agent and later they find out the license was not renewed or they never had a license. Unfortunately, we are not equipped to warn you of each person out there BUT you can easily find out yourself if they have a current license or not.
Here is the page to check an Illinois license: http://www.obrelookupclear.state.il.us/defaultRE.asp?Division=10
And here is the page to check a license for the US: http://www.arello.com/ArelloWeb/ShowPage?command=main
AND here is the page that has both links: http://www.nsbar.org/memberinfo/index.asp
Make this a regular part of your business -- if someone you do not know states they have a license, then check BEFORE you start working with them. Also, if they say they have a license (and they really do) they usually want to make some kind of arrangement about commission. This also should be discussed BEFORE you starting working with them. ALSO, remember, commissions go from sponsoring broker to sponsoring broker so you better make sure it is ok with the sponsoring broker before you cut any deals on commission!
New Procedures for Arbitrations
The Directors have adopted new procedures for Arbitrations. Arbitration hearings are disputes between two or more REALTOR offices all laying claim to the selling portion of the commission. A panel of 3 conduct a hearing with all the parties and then determine who will get the money (the money is NOT split; it is all or nothing). After a hearing the non prevailing party may request a rehearing based on procedural deficiencies.
Due process includes:
- the right to know,?in advance, the offense for which one is being charged
- the opportunity to prepare an adequate defense
- the right to call witnesses
- the right to present evidence
- the right to cross-examine the witnesses called by other parties
- the right to have?legal counsel present
- the right to receive an equitable decision from an impartial peer panel
Arbitrations cannot have an appeal. The decision is final and have no recourse to dispute the decision.
The new policy will have a charge of $500 to file for due process rehearing AND the disputed amount of commission must be given to the North Shore - Barrington Association of REALTORS to place in their escrow account. NSBAR will then distribute the money to the prevailing party.
Return of Earnest Money
Yes, we DO have a form for return of earnest money. It is entitled Notice of inability to satisfy contingency and/or mutual cancellation agreement and can be found on the Contracts page of nsbar.org under Addenda.