Arizona Association of REALTORS® is the largest trade association in the Grand Canyon State, representing more than 40,000 realtors subscribing to the strict Code of Ethics outlined by the National Association of REALTORS®.
RAPAC is a member-sponsored effort, organized to financially support candidates running for local, state and federal office whose positions on real estate regulation and a free-market business environment most closely represent the initiatives of the Arizona REALTORS®.
RAPAC channels resources into races that will have the most impact on the real estate industry. It is a voluntary, non-profit political action committee and operates independently of any political party. That’s enough of technical jargon. Here’s what RAPAC means to REALTORS® on the street and why they invest.
“Think of the RAPAC as an insurance policy for your business. The BIG difference with this policy is that it proactively works to prevent something bad from happening in the first place. You get an immediate return on your investment now, not at some time in the future. RAPAC helps preserve property owner rights, promotes home ownership, and protects my income from over-reaching governmental actions.” – Bryan Anderson, ABR, CRS, GRI, White Mountain Association of REALTORS® past president
“As a homeowner, I want every protection available for property rights — not just for me, but for future homeowners too! As a REALTOR®, I have the opportunity to help keep my business interests viable, and that of other REALTORS® who don’t yet understand the power of RAPAC. That’s why I’ve been a Major Investor since 2011.” – Clark Jones, ABR, CRB, CRS, GRI, SRS, Central Arizona Board of REALTORS® past president
“I invest in RAPAC because I owe it to my clients and our industry to protect property rights and advocate for REALTORS®. If I don’t invest who else will? I want us to have a seat at the table.” – Tiffany Jones, ABR, GRI, SRES, Arizona East Valley Women’s Council of REALTORS® 2018 president
“Investing in RAPAC gives our local, state and national associations the ability to help protect our industry and the people we serve. I invest because I believe in our profession, preserving the American Dream of homeownership, and protecting the rights of property owners!” – Pam Ruggeroli, ABR, CRS, GRI, Tucson Association of REALTORS® 2017 president
“I don’t have the time to run to the Capitol and try to get an appointment to speak with legislators. I invest because I have seen what my investment has done to help get bills passed — or changed if they are going to hurt private property owners and damage our industry. Investing is an inexpensive way to keep 48,000-plus REALTORS® working.” – Paula Serven, GRI, Arizona REALTORS® 2016 president
Let’s make today the day you join fellow REALTORS® in protecting our industry. Invest today!
By Jan Steward, Arizona REALTORS® Risk Management Manager
Every April, our nation celebrates Fair Housing Month. This year, we are celebrating the entire year because 2018 marks the 50th anniversary of the passage of the Fair Housing Act (Title VIII of the Civil Rights Act of 1968).
The Fair Housing Act prohibits discrimination in the sale, rental and financing of dwellings based on race, color, religion, sex, disability, familial status and national origin.
In 2014, the National Association of REALTORS® (NAR) amended the federally-mandated protected classes in Article 10 of the Code of Ethics to also include “sexual orientation or gender identity.”
REALTORS® shall not deny equal professional services to any person for reasons of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity.
REALTORS® shall not be parties to any plan or agreement to discriminate against a person or persons on the basis of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. (Amended 1/14)
As members of the national association, REALTORS® agree to a Fair Housing Declaration and to inform clients about their rights and responsibilities. NAR also encourages its members to work with state, local municipalities and county organizations to promote Fair Housing.
On February 1, 2018, Inman News reported that “Influential members of the U.S. Congress have taken a keen interest in real estate competition, especially in regard to listing data.” (Subscribe to read more.)
In a letter to the Assistant Attorney General of the Antitrust Division, Tom Marino and David Cicilline (respectively, chairman and ranking member of the Congressional Subcommittee on Regulatory Reform) requested “an up-to-date report on competition in the brokerage industry (given the Nov. 2018 expiration of) a 2008 consent decree to address conduct aimed at restricting the availability of listings data.”1
In response to an upcoming Department of Justice and Federal Trade Commission antitrust “workshop” on real estate competition (Inman story here), the National Association of REALTORS® (NAR) responded:
The National Association of REALTORS® is aware of plans for a workshop to be co-hosted by the Federal Trade Commission and the U.S. Department of Justice on the topic of competition in the real estate industry. NAR has contacted both agencies and looks forward to the opportunity to demonstrate the reality that the real estate market is vibrant, healthy, and vigorously competitive. REALTORS® serve the best interest of consumers and provide them with more real estate information today than has ever been available.
Arizona REALTORS® is committed to providing its members with everything you need to succeed.
We’ve listened closely to your feedback and have some exciting news: the Arizona REALTORS® Single Sign-On (SSO) dashboard launches this month!
This dashboard will be the new center of your work day, bringing you a more convenient way to access all of your applications. Don’t worry, you’ll still log-in to the same MLS, we’re just upgrading how you can get there!
The new dashboard will simplify your workflow:
Access all your applications from ONE location!
The new dashboard will offer all of your Arizona REALTORS® membership benefits AND third-party applications for easy access. You’ll be surprised at everything that is just one click away.
YOU ONLY NEED ONE PASSWORD to log-in to everything!
Remembering multiple usernames and passwords can be a hassle. The new dashboard is SSO enabled, which means you only need to remember ONE PASSWORD to log-in to multiple applications.
Wire Fraud Advisory
The Wire Fraud Advisory is a new form which advises clients about the threat of criminals targeting social media and email in an attempt to steal sensitive information. This new Advisory also warns clients about wire transfer fraud, whereby hackers instruct money to be electronically wired to fraudulent accounts. This form is not copyrighted by Arizona REALTORS® and may be branded and/or revised by your Broker.
Because your Broker may have already customized this form, please check with your Broker prior to using the Wire Fraud Advisory located in zipForm®.
Additional Clause Addendum
The FHA/VA Amendatory Clause essentially provides that the purchaser will not lose their earnest money deposit, if a property does not appraise for the purchase price. Because of this, the section titled Non-Refundable Earnest Money now includes the verbiage “unless prohibited by federal law” at the end of line 30.
Residential Lease Owner’s Property Disclosure Statement
The Arizona law pursuant to which the government maintained a list of properties previously utilized as a clandestine drug laboratory was repealed. Due to the repeal of this law, lines 112-114 addressing where to find such a list was removed from the form.
An option to purchase is often part of a lease contract. But beware: if an option lacks key terms, the courts in Arizona will likely not enforce it. At least that was the key takeaway in a recent Arizona Court of Appeals decision, which held that specific performance of an option was unavailable where that option’s express terms were vague and incomplete.
In Offerman v. Granada LLC, the parties—landlord and tenant of a residential property—had entered into a lease with the following option for the tenant to purchase:
At the completion of the 24 month lease, the Tenant has the option to purchase [the] property … for a sales price to be determined at that time by an independent appraiser acceptable to both Tenant and Landlord. (Terms and Conditions to be stipulated by both parties at such time).
If the Tenant chooses to exercise his right to purchase this property at the end of the 2 year lease agreement, he shall be credited $200.00 of each $1900.00 of monthly rent paid towards purchase.
The acceptable condition of the property when Tenant takes occupancy will be considered the condition Tenant agrees to accept at time of closing. All inspections and contingencies to be performed and satisfied prior to initial move-in. Property to be sold AS–IS.
As the end of the lease term neared, Tenant informed Landlord he intended to exercise the option, and when the Landlord failed to respond to Tenant’s request to appoint an independent appraiser, Tenant hired his own, who appraised the property at $240,000.
Tenant shared this appraisal with Landlord, who then sent Tenant a draft purchase contract with a proposed $350,000 sale price. Tenant rejected this proposal. Tenant subsequently sued Landlord for specific performance of the option at the appraised value of $240,000, and the trial court ultimately ordered specific performance of the option at that value.
The trial court also named a title agency to hold escrow, determined the date for close of escrow, divided the transaction fees between the parties, and ordered Landlord to arrange for a property inspection. Notably, none of these terms were agreed to, or even mentioned by, the parties in their contract—they were all determined by the court.
The Court of Appeals reversed, holding that while an option contract does not require “completeness in every detail,” this option was so lacking that it could not be enforced. The parties did not agree to—or establish a means to determine—many key terms of a real estate transaction, such as how to select an appraiser if the parties could not agree, the timing of payment or closing, terms of payment, condition of title, method of conveyance, and whether escrow would be handled by a title agency.
Instead, the parties had simply agreed to defer negotiating these terms until the end of the lease term. As such, the parties had made merely an “agreement to make an agreement” rather than an option with clear terms on which a court can order specific performance.
Because “it is not within the superior court’s authority to flesh out an option agreement that lacks certainty,” the appellate court held specific performance of the option could not be ordered. The court left open whether the Tenant could seek other remedies (such as money damages) against the Landlord.
This case is a reminder that options in real estate-related contracts must be detailed and include key terms in order to be enforced by the courts. Simply referring to an “option” in a contract, but leaving key terms for future negotiation, is insufficient to create an enforceable option.
There is a broad body of knowledge that governs our actions as REALTORS®:
Article 26 of the Arizona Constitution authorizes real estate brokers and salespersons to engage in the limited practice of law by drafting the purchase contract and other documents incident to the transfer of real property
Arizona REALTORS® State Association Guidelines
National Association of REALTORS® Code of Ethics
MLS Rules & Regs
Arizona State Law
Arizona Dept. of Real Estate Rules
Agency Law & our Fiduciary Duty to Clients
Our Designated Broker’s Policies & Procedures
Whether acting as the listing agent, buyer’s agent or both, you should be concerned with:
Article 26. As Arizona REALTORS® Michelle Lind recently noted in Real Estate Agent magazine, “With power comes responsibility. The court of appeals stated:”
Having achieved…the right to prepare any and all instruments incident to the sale of real property, including promissory notes, real estate brokers and salesmen also bear the responsibility and duty of explaining to the persons involved the implications of these documents. Failure to do so may constitute real estate malpractice.1
Agency. In addition, a broker or salesperson acting as an agent, has a fiduciary duty to protect and promote the client’s interests
Professional. Doing our very best for our clients, as well as being honest with our customers
Integrity. Making the necessary disclosures for clients, as well as for ourselves
Collaborative. Working smoothly, competently and cooperatively (as long as in our client’s best interests) with the co-broker
Commission. Ensuring that the commission being offered fits our broker’s (and our own) business model, or ensuring it is being cared for by the buyer.
Next: What REALTORS® Need to Know About Offers
1Morley v. J. Pagel Realty & Insurance, 27 Ariz. App. 62, 550 P.2d 1104 (1976).
The Arizona REALTORS® Business Services Support department hears from members all the time, “I have a tough time remembering all of my passwords!” We get it, and now we’re going to do something about it.
In February 2018, your state association will offer Single Sign-On (SSO) as part of your member benefits. Once implemented, Arizona REALTORS® SSO will give you a customized landing page. From there, you simply click a button to get into zipForm®, AAR eSign, RPR, your MLS, AARonline.com — all without having to login to these accounts, because SSO does it for you! All you need to remember is one password – not five or more.
You’ll also have quick-access buttons to many commonly used Arizona REALTORS® links — such as Tech Helpline, Business Services Support, Buyer Advisory, AZGRI.com, Arizona REALTORS® Blog and many more.
Watch for more information coming soon in the Arizona REALTOR® VOICE weekly e-newsletter. Click here and login to make sure you haven’t accidentally opted-out of our emails.
A delegation from the SouthEast Valley Regional Association of REALTORS® (SEVRAR) will be attending educational presentations with immigration attorneys, accountants and the Panamanian Association of Real Estate Brokers and Developers (ACOBIR) in Panama from February 18-22, 2018.
All Arizona REALTORS® are welcome to join SEVRAR’s Trade Mission to Panama. More details here.
Attendees will glean an in-depth understanding of various real estate opportunities in Costa Del Este, Ocean Reef, Santa Maria and numerous beachfront developments. Guided tours of the new locks of the Panama Canal and the ACOBIR Presidential Installation Gala are also on the itinerary.
The primary objective is to attract and encourage foreign investments in Arizona, and create strategic opportunities with local and foreign companies, organizations and government agencies as a gateway between our two countries.
SEVRAR also hopes to host future trade missions to educate and diversify REALTORS® on international real estate practices and opportunities. The future of real estate investments is very diverse in this global market and we are keeping up with the future.
At the 54th Annual Economic Forecast Luncheon last fall, ASU Economist Lee McPheters forecast that there will be 120,000 new people will be moving to Arizona from domestic and international locations in 2018.
SEVRAR’s Global Business & Alliances Council will be ready to serve this diverse influx of new residents.
Now that we are off to a fresh New Year, it makes sense to note where the market currently stands.
Undoubtedly our serial readers are already well aware that the $500K and under range has been in a “sellers” market for all of 2017. What most may not know is that inventory usually sees a buildup in the fall as demand tapers off.
Fall 2017 saw a very minimal increase in inventory. The under $200K single-family supply was so paltry it seemed to be headed for extinction. Entering 2018, Active Listings are down 12 percent from this time last year. There appears to be no relief on the horizon.
It is easy to get complacent about the low inventory and assume that this is somehow the ‘new normal’. The long-term decline in Active Listings just keeps going and we have now reached the point where days of inventory is the lowest we have seen for Week 50 since 2004…To try to get a handle on what life is like in the regular market, let us focus on homes priced at under $500,000 in Greater Phoenix. The inventory for this segment is 52 days. If we use $250,000 as the price limit we have just under 40 days of inventory. These are not normal readings and we start to wonder how low can these numbers go.
This means buyers are going to have an even tougher time buying than last year in any price range other than luxury. For most sellers, they should enjoy competition from buyers and stronger pricing.
Demand has remained relatively stable and unremarkable, especially compared to its counterpart supply. Demand was on a weakening trend in the 3rd Quarter, but that seemed to shift upwards mid-November and certainly provided a busier than normal December. An interesting side note is that buyers are now primarily in-state buyers (i.e. local house changers).
The Cromford Report notes:
Migration into Arizona is weaker than it was during the 2000-2007 era. In 2004, we saw 30,564 purchases by out-of-state buyers. 2017 year-to-date is 16,443…The total sales count is lower and the percentage of sales going to out-of-state buyers has dropped from 20% to 16%…The flip side of this is that in-state demand has increased from 80% to 84%. Areas that appeal most to in-state buyers have seen stronger appreciation.
Supply and demand ultimately dictate appreciation. It should come as no surprise that appreciation was greatest in the lower price ranges due to low supply.
Turning back to The Cromford Report, we can see exactly how true this is:
After peaking on July 28 at 8.6%, the appreciation rate for all areas and types went into a declining trend until November 9 when it bottomed out at 3.6%. It then changed course and over the last 5 weeks has risen sharply to reach between 7% and 7.5%…Such a rapid change in direction is quite unusual.
The overall appreciation rate based on annual sale price per square foot in Greater Phoenix is 6.2%. However, Supply and Demand are not the same by price range. The greatest appreciation rates are under $200K due to a lack of new construction that would typically balance out the supply shortage.
Sales under $200K are 33% of all sales this year, so their rate has a large effect on the overall average. New multi-family and single-family homes are being added to the $200K-$500K price range to accommodate increased demand, but it’s still not quite enough.
The market is balanced between $500K-$1M, while supply is still higher than demand over $1M despite a 10% rise in 4th quarter contracts. As a result, appreciation rates are as follows by price range:
• Under $200K: 7.7%
• $200K-$500K: 3.5%
• $500K-$1M: 1.7%
• Over $1M: 0.1%
We rarely talk about real estate agents, although they certainly can impact the marketplace in subtle ways. It may be of interest that there was a 6.6% increase in the number of real estate agents since last year as rookies continue to enter the field.
While agents certainly don’t set the marketplace (supply and demand does) they certainly can influence the buying and selling experience. Agent skill impacts the counsel clients receive on market behavior or not; negotiate the highest market value or not. They should be the client’s biggest advocate and legally in fact have a fiduciary relationship to the client.
As institutional investment companies are swarming the Valley (Offer Pad, Open Door, etc.), sellers can learn the hard way the impact that a missing real estate advocate has in terms of reduced proceeds.
Particularly disturbing is the institutional buyers’ offers of “no commission sale” while charging fees of more than 9 percent – far beyond what might be charged as a commission. Add-in the typically lower than market value and imaginary “repair costs”, and sellers are paying dearly for that lack of representation.
Lower than true market value sales can impact appraisals and subsequent neighboring sales – a sobering thought for all of us vested in defending neighborhood values.
As 2018 continues to progress, we will endeavor to keep you apprised of the emerging trends.