Tempest in a Teapot...How Stormy Market Conditions Are Creating Positive Change!

By
Real Estate Broker/Owner with Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate

Summer weather roared in with blazing high temperatures and strong storms here in Grand Rapids, Michigan!  It's been a little while since I've been able to look out my window at a clear blue sky and gently swaying trees.  In some ways the recent rush of climatic activity is a metaphor for the real estate situation here in West Michigan.

tempest in a teapot2008 has been a year in which we have seen some stormy conditions.  The year commenced with the down draft in the mortgage sector due to the sub-prime lending crisis.  In fact, until just recently, most of West Michigan was considered a declining market which meant that New Home Buyers were being asked to bring additional money to the closing table to close loans.  Money which many of them were hard pressed to find. Zero down programs evaporated into the cosmic ethers.

Yet, not all the news was bad.  In the midst of this tempest, affordability levels increased as the prices of homes plummeted sharply creating all sorts of opportunities for buyers and investors to pick up properties at rock bottom prices.  Home owners learned hard lessons about the laws of supply and demand Because bank owned properties now constituted almost 1 out of every 3 sales, marketing times increased to almost a year and homes that were not priced correctly were all but ignored.

In an environment in which so many winds of change are raging, it's often difficult to decipher exactly what is going on.  Recently, Jennifer Granholm the Governor of Michigan signed some important legislation into LAW!  It's the Agency Responsibility Act (ARA)  I think that this legislation is one of the best things to emerge out of the storm which has engulfed our industry.

The Governor's signature on the acts is the culmination of the Michigan Association of Realtors hard fought efforts to clarify for consumers the real estate services that were being provided by various agencies.  This movement was brought about by the amazing discovery that the ONLY duties imposed by statue or rule of law when representing seller or buyers or real estate property were:

The duty of agents to present offers to sellers within a reasonable period of time

The duty of listing brokers to review and sign the closing statements.

ASTOUNDINGLY, THAT WAS IT!

While most Realtors® were offering substantially MORE than this, the public had limited understanding of the potential vast difference of service levels between brokers because all brokers were using the "Exclusive Right to Sell Contract." (Buyers usually are serviced under a Buyer Agency Agreement)

As a result of this legislation, brokers who do NOT provide the required MINIMUM service levels will now have to use a LIMITED SERVICE AGREEMENT form which clearly defines exactly what they are doing or NOT doing.  The ARA also amends the law to make it a VIOLATION of the Occupational Code if a Realtor FAILS to provide all Statutory Services unless they are expressly waived by a client in a limited services agreement.

The is a huge advancement forward for the rights of consumers to ensure they understand exactly WHAT they are getting when they sign up with a real estate broker.  I think it will help to dispel some of the misunderstanding and confusion which has marred the positive perception of the real estate industry. 

Sometimes, it takes a storm to bring out the best in nature.  Today, my lawn is a gorgeous green and the flowers are blooming.  It may have been a little rough getting here, but the results I'm witnessing make it worth it.  The Act becomes effective as law on July 1, 2008. My hope is that the turmoil in our industry will continue to yield changes which serve the good of our profession and the clients we have the privilege of assisting.

Copyright 2008  Audu Real Estate  All Rights Reserved

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Location:
Michigan
Groups:
Realtors®
Michigan Realtors
Michigan Real Estate
Greater GRAND RAPIDS, MI Real Estate
Kent County MI Real Estate
Tags:
agency responsibility act
ara
michigan
audu real estate
home owners
home buying home selling
home buyers

Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the car to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Show All Comments
Rainmaker
95,994
Yvette Smith
LONG & FOSTER - Williamsburg, VA
Realtor In Williamsburg VA, Homes for Sale

Hi Lola,

I just love that teapot!!  Well, the weather is hot, hot, hot!!!  I'm hoping the market will heat up as well.  Thank you for sharing!

Jun 10, 2008 04:29 PM #2
Ambassador
507,082
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Lola - That's the one thing about storms ... the eventual calm.  Folks that are surviving and thriving now will reap substantial rewards when it is said and done, in my opinion at least.  This will also benefit consumers, as the cleansing will more than likely leave a field of more dedicated & competent Real Estate Professionals who are experts in their chosen craft.

Jun 10, 2008 06:24 PM #3
Rainmaker
592,543
Lisa Hill
Florida Property Experts - Daytona Beach, FL
Daytona Beach Real Estate

It's amazing that in a profession that's been around as long as ours, people still don't know how much work we have to do... or how many times we save them from theselves!

And it's getting hot, really FAST here too!

Jun 10, 2008 10:03 PM #4
Ambassador
1,831,367
Jeff Dowler CRS
Solutions Real Estate - Carlsbad, CA
Carlsbad CA Homes for Sale (760) 840-1360

That's pretty impressive legislation, Lola. I suspect we will see much more reform in our industry in other places as well. Hping the weather, adn teh market, improves for you now.

Jeff

Jun 10, 2008 10:03 PM #5
Rainmaker
573,927
Terry & Bonnie Westbrook
Westbrook Realty Broker-Owner - Grand Rapids, MI
Westbrook Realty - Grand Rapids Forest Hills MI Re

Regardless of the minimum level we have to do by law at least now agents will have to tell the seller what they will or will not be doing for the fee they charge.

Jun 10, 2008 11:23 PM #6
Ambassador
2,367,539
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Very interesting.  The disclosure and limited service agreement sound very much like that recently implemented in Virginia. 

Of course, like all disclosure, it's only as effective as the agents using it, or not. 

Jun 11, 2008 05:59 AM #7
Ambassador
895,507
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Realtor - Ann Arbor Real Estate

Lola, I think it is interesting, I read it last week. I am curious to follow to see how many LS firms use this with their buyers.

Jun 11, 2008 07:38 AM #8
Rainmaker
1,483,150
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Authentic Feng Shui Expert

Lola, I'm glad that legislation passed, it will benefit realtors and buyers alike.

Jun 11, 2008 09:41 AM #9
Rainer
286,997
Diane Aurit
LKN Realty, LLC - Mooresville, NC
Lake Norman Real Estate

Lola, that really is surprising about your agency laws.  Your new legislation is long overdue but is great for the consumer and Realtors

Jun 11, 2008 09:50 AM #10
Rainmaker
374,933
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!

George, Thanks for the comment.  It has been an interesting period and there are still issues that the market is working through.  However, we have seen an increase in listing and selling acitivity and this is a good thing!

Jun 11, 2008 12:45 PM #11
Rainmaker
374,933
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!

Yvette, the east coast has been having quite a heat wave according to news report.  Are you seeing more activity in your market yet?

Jun 11, 2008 12:46 PM #12
Rainmaker
374,933
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!

Jason, I think you're right.  I continue to be surprised by the things that I find out that agents are NOT doing...like creating a CMA PRIOR to listing a property.  It's too bad that we have to define the basics of representation, but I think it's long overdue and necessary.

Jun 11, 2008 12:48 PM #13
Rainmaker
374,933
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!

Lisa, great to hear that market activity seems to be increasing in your area.  Doing a real estate transaction takes a lot of work...or a better way to put it is this, processing a real estate transaction PROPERLY takes a lot of work.

Jun 11, 2008 12:50 PM #14
Rainmaker
374,933
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!

Jeff Dowler, we've been quite busy and are very grateful.  Complaining about being busy is no longer allowed. :)  I think that this legislation will improve our industry standards and is therefore a good thing.

Jun 11, 2008 12:52 PM #15
Rainmaker
374,933
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!

Terry...True!  Consumers have been wondering what the differences between our service levels are...now they will at least have a basis for judging and comparing.

Jun 11, 2008 12:54 PM #16
Rainmaker
374,933
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!

Lenn...What is great about this disclosure is that failing to use it will be a violation of the Occupational Code & therefore a violation of the law.  Our Board will be issuing new forms to agents to ensure compliance.

Jun 11, 2008 12:56 PM #17
Rainmaker
374,933
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!

Missy, my understanding is that this will affect both service contracts...listing and buyer agency.  For agents who continue to take buyers out without agreements in place, this will be a real problem.

Jun 11, 2008 12:57 PM #18
Rainmaker
374,933
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!

Carol, I think it is a benefit too.  Whenever, we create opportunities for better communication and clarity regarding our services, it's a good thing.

Jun 11, 2008 12:58 PM #19
Rainmaker
374,933
Lola Audu
Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate - Grand Rapids, MI
Audu Real Estate~Grand Rapids, MI ~Welcome Home!

Hi Diane, It is surprising, but those were the only 2 duties imposed on agency representation prior to this legislation being passed.  Of course most real estate agents did more, but the issue was they didn't have to in order to comply with the law.  Do you have more clearly defined agency requirements in your state?

Jun 11, 2008 01:00 PM #20
Rainer
35,317
Dan Woodworth
The Connection - Garden City, ID
Encouraging Communicator

Hi Lola,

Thank You for your informative post!  Standards for competency create fairness for the profession of real estate and for the buyer.

Jun 11, 2008 07:38 PM #21
Show All Comments
Rainmaker
374,933

Lola Audu

Audu Real Estate~Grand Rapids, MI ~Welcome Home!
Can I assist you with a real estate concern right now?
*
*
*
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the leaf to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Additional Information