NAR Report Lynne Dennison (Executive Officer)

Overview of the City

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NAR Report – Lynne Dennison (Executive Officer)

Rebuilding New Orleans

The St. Roch community was home to nearly 12,000 residents before flooding caused by hurricane Katrina. It is this neighbourhood that Rebuilding Together, sponsored by Countrywide has committed to help restore this historic community by repairing homes of low-income, elderly and disabled residents. This area had approximately four to five feet of water and the homes are now slowly being repaired.

Paul and I along with sixteen other volunteers spent Wednesday at the home of Willie and Willie May. Willie is 69 yrs old and has some medical problems, while Willie Mae at 59 is in relatively good health but is currently working two jobs to help them get back on their feet. Their home had already been repaired inside and a new roof had been put on the house, we spent the day scraping and putting two coats of paint on their home to finish the project.

Everyone in New Orleans has been touched by this devastating event. Not everyone had water damage, but there was a lot of looting as residents fled the area. There are still major stores and hotels not open, which are under construction and scheduled to reopen soon. Residents are slowly returning (only 45% so far) some to find, demolition notices on their homes. FEMA trailers can be seen everywhere, in front of homes, filling up parking lots and any open space that is available. The newspaper had pages of listed homes listed that the government has taken over are now selling. The most haunting image for me was the large painted X’s on every home; the top quadrant being the date the house was searched and the bottom quadrant containing the number of bodies that were found in the home.

New Orleans will be years in the remaking, but they are making progress. Everywhere we went residents thanked us for coming, they even had flags flying that said “We’re jazzed you’re here”.

NAR Conference

There are actually two programs at this conference, the REALTORS® Conference/Expo Program and a Governance Program. I attended mostly governance meetings as these pertain more to industry and Board Office issues. The following are the programs I attended.

Friday November 10, 2006

9:00 – 11:00 a.m. Economic Issues & Residential Real Estate Business Trends

Forum

David Lereah NAR’s Chief Economist

Steve Murray – REAL Trends

The Road to Recover – David Lereah

David believes that there are signs of recovery as they are back to sustainable pace of sales. New home sales have bottomed; they were up the last two months. Existing new home inventories are falling and builders are cutting production. Mortgage applications have stabilized and mortgage rates are falling which will attract buyers.

This has been a unique housing cycle caused by speculative investors, exotic mortgages, share of second-home purchases and media scares.

Most of the nation will only feel small corrections; however Arizona, Nevada, South Florida and Las Vegas are expected to have a large correction in prices.

Mortgage Rates are still near 45 year lows. There have been steady job gains, unemployment at or below natural rates, wage growth is picking up, record Dow Jones averages, record household wealth and falling oil prices which will all positively impact the housing market.

Buyers and Sellers however are not seeing eye to eye and has sidelined buyers. A positive message needs to be sent to the public by the media and REALTORS®. Real estate is a wealth builder, is superior to renting, is a great leveraged asset, performs well against stocks/bonds and is less risky than stocks. REALTORS® need to promote this net wealth difference.

2006 is still the 3rd best years for real estate sales, a 9% drop compared to last year is very

small compared to the last 3 recessions.

The long term outlook is still favourable; buyers are missing opportunities if they postpone buying.

The Years Ahead – Steve Murray

There are three major issues for real estate whose impact had not been fully felt thus far but will be:

The Internet

Consumers do not and will not rely on sales professionals solely for their housing information…they will increasingly rely on the web.

Those who can deliver it to consumers via the web and provide rapid response to consumer requirements will win the day.

REALTORS® are losing control. Online valuation tools is just the most recent example.

Consumerism

Consumers are more demanding and have greater expectations for greater value than ever before and have reshaped entire industries in their pursuit of value. (eg:travel industry)

In residential services they have gained more influence over the process of buying, selling and financing their homes. 70% are pre-approved for mortgages before they call a REALTOR®.

While satisfaction with traditional sales professionals & services remains high those who are “highly satisfied” declined by nearly 50% in the past four years.

The factors that matter the most when using a REALTOR® were solely related to “relationship” concerns and nothing to do with the process.

Consumers are looking for trustworthiness, representation and communication.

Over 80% of consumers indicate that they prefer the use of traditional housing services.

What housing professionals and housing consumers consider “full service” is measurably different. The flat fee/discount segment grew quickly from 2002 to 2005 and has retreated in 2006.

The FSBO has benefited from the drop in share in the alternative model segment.

Consumers have segmented their purchase habits for virtually every service and product category, so too are consumers “segmenting” their choices among providers of housing service providers.

The variety of service offerings has only begun to arrive and they expect an infinite variety of new service and fee arrangements to appear in the next few years.

The association and MLS® are vital parts of the housing economy.

Good News – Bad News. Industries who do not change with the times will suffer enormously as have the airline industry, the auto industry, the steel industry and the securities industry. REALTORS® must listen to the consumer first and talk second.

Consumers will purchase more homes in the next 10 years than they did in the last 10 years.

It is expected that real estate professionals will earn more in the next 10 years than they did in the last 10 years.

1:00 – 3:00 p.m. MLS® Association Executive Session

“And the Beat Goes On” – a DOJ Update – Laurie Janik

The two primary issues are:

1. The ability of listing brokers to opt out of allowing competition to display listings on

their virtual office website.

2. Who gets to be a participant in the MLS®?

The FTC (Federal Trade Commission) has now joined in as well. It is very rare for two parts of the government to be pursuing the same industry on the same issues.

The motion to dismiss the case was denied by the courts in September 2006.

The Department of Justice (DOJ) has identified 36 markets where they intend to prove that anticompetitive activities took place. They are currently in the discovery phase and motions for summary judgments will likely be heard next fall.

NAR was proposing some changes that would tighten up the issue, these changes were to be presented Saturday morning at a meeting which I attended – see below.

An MLS® Consortium – A New Approach to an Old Model – Davis Charron

Brokers are our primary customer and as such we must meet their needs.

There is a problem for real estate professionals gaining access to the MLS® data they need with overlapping market areas.

The speaker advocated establishing common data standards and information sharing protocols (RETS) and common databases among confined MLS® trading areas.

Denise Gryder an EO spoke about the services her Board gives to its members.

She visits each brokerage office 2-3 times a year providing training, presentations or just a visit to discuss what the brokerage would like to see from the board.

She visits each new brokerage company when they join to provide training.

The board e-mails a newsletter to each member monthly.

3:30 – 6:00 p.m. Risk Management – User Group Meeting

Financial crimes are one of the fastest growing areas of criminal activity in the US.

One of the fast growing areas is mortgage fraud.

Mortgage frauds can include but are not limited to property flipping, equity skimming, application fraud, credit or income misrepresentation or asset and down payment misrepresentation.

The two different schemes are: “fraud for housing” and “fraud for profit” and real estate professionals need to be able to distinguish between legal and illegal mortgage practices.

Common examples of mortgage fraud are: property flipping, silent second, nominee loans/straw buyers, fictitious/stolen identity, inflated appraisals and equity skimming.

NAR has produced a CD on mortgage fraud which we viewed and a Mortgage Fraud pamphlet which was approved for distribution.

Saturday November 11, 2006

9:00 – 12:00 p.m. Multiple Listing Issues and Policies Forum

This was one of two very interesting sessions I attended and contrary to the report from OREA these policy changes were approved by the committee.

This meeting dealt with the eligibility to be an MLS® listing, and marketing obligations if the seller has reserved the right to sell privately without paying commission, much like the issue that CREA is currently addressing. The terms they use are Exclusive Right to Sell (ERS) listings and Exclusive Agency (EA) listings. ERS listings are what we are familiar with ie: the seller pays the listing brokerage if the property sells during the term of the agreement. An EA listing, which is an acceptable MLS® listing under NAR policy, the seller reserves the right to market the property and does not have to pay commission if he finds his own buyer. The problem lies with the marketing of MLS® listings on 3rd party consumer sites. Some boards did not want to send EA listings to 3rd party sites – only ERS listing. Their position was that the MLS® should not be obliged to put buyers into direct contact with sellers and eliminate the agent. NAR has been working on a policy that would be acceptable to the DOJ and the FTC, but that would not oblige boards to engage in marketing activities that would help sellers sell privately.

The policy that was approved would give boards the right to suppress EA listings from their uploads if two elements are in place: the address is shown (or site technology such as mapping of GPS allows it to be located), and the seller has a sign on the property that encourages buyers to contact them directly. Those listings would not have to be included in the upload. Sellers are free to advertise, but the board does not have to do it for them unless the listing agent is involved in the transaction. If the listing agent’s sign is on the property, commission is payable. If the location of the property can be identified in the advertising, commission is payable.

Laurie Janik, NAR’s lawyers, was very clear in saying that there was some exposure in approving this policy, since neither the DOJ, nor the FTC will ever give ironclad approvals in writing. However, she encouraged the delegates to approve it, and told them she thought the risk was relatively low.

1:00 – 2:30 p.m. Creating a Chain of Ownership: Managing Listing Content

We stumbled on this seminar by chance, as did only about 20 other people, and this seminar was very informative.

A copyright lawyer presented information on what boards should do to ensure that they have all the rights they need to market on 3rd party sites so that no one can claim copyright infringement. Although this was based on US law, apparently copyright law in Canada is not much different. Bill Harrington, CREA’s lawyer, attended this session, and also seemed to believe that we are not necessarily obtaining all the releases/licenses/authorities we might need on our data and images. An example given was that a seller, who worked with you as you wrote your consumer ad copy on the data form, could claim to hold the copyright on that original work. Photos of the home are also subject to copyright law.

Perhaps this issue should be discussed with the Board solicitor as it relates to our By-laws, Rules and Regulations and listing agreements.

4:00 – 6:00 p.m. Presidents George W Bush and President Bill Clinton.

I along with over 5000 people attended the General Session featuring these two past presidents.

They spoke about their contributions to the world after their presidencies, through the Bush-Clinton Katrina Fund to help those in the Gulf Region. To date they have raised more than $125 million to date and has so far announced $40 million in grants to the affected states, $30 million in grants to higher education institutions, and $20 million to help rebuild churches that were devastated by Katrina.

Sunday November 12, 2006

9:00 – 11:00 a.m. - State EO Forum

I attended this session along with most of the EO’s from Ontario. The facilitator and participants came up with 10 different topics which were assigned to different tables. We then sat at three different tables and discussed the different topics. I found that in each case the way their boards operate was so different from us that it was not much benefit to me as an EO from a smaller board in Ontario. However I did meet the EO from the newest Realty Server Board in Bismark North Dakota, she and I had a candid conversation regarding our experiences with our mutual MLS® provider and I look forward to meeting her at the user group seminar that Realty Server is proposing for the spring.

NAR Report – Lyle McNair (President)

The overwhelming impression of the time spent in New Orleans was the gratefulness of the people that the National Association of REALTORS® had chosen to not change the chosen venue for the 2006 annual convention to a different location. The phrase “Thank you for coming to our city.” was heard time and time again. The economic backbone of the city is still far from being mended and the time Isobel and I spent there was an eye-opener to the damage caused by Hurricane Katrina. Parts of the city were severely flooded, parts were damaged by the wind and the ensuing rain, and some had only to deal with minor wind damage, but the overall toll has been devastating. There is a great deal of anger over the actions of government at all levels in the way they have handled this situation. Several people said “We have been treated by our own governments worse than as if we were in a third world country.” It makes one wonder if our community were to be rocked by another “Hurricane Hazel”, would our governments be any better able to cope. What would happen if, in the middle of a torrential downpour and severe winds, the GuelphLake dam were to burst? What about the communities around us?

Isobel and I volunteered to work on the NAR sponsored “Help rebuild New Orleans” projects, and we were assigned to help with the libraries. Fifty (50) of us were transported to the “Algiers Regional Branch” by bus, where Pat O’Brien, one of just 19 people currently employed by the New Orleans Public Library, explained the task in front of him and us. Box lunches and beverages were provided by the NAR sponsors.

The libraries are funded from the municipal tax base and, given the state of the city and the ability of the residents to even pay their taxes, you can imagine the extent of financing the libraries receive. The roof of the Algiers branch was damaged by wind and the subsequent rain infiltration flooded the building. All the books and bookshelves are gone. There is evidence of mould growth in many locations, although the roof has been repaired and the building, now dry, would seem to have no active mould growth. The building, about 8000 sq. ft. on one floor, has been converted into a receiving centre for the books that people are sending to the New Orleans Public Library in their personal attempt to help. The branch is open for a few hours each day, operating out of a 500 sq. ft. trailer. While there, a tractor trailer load of boxed books on pallets arrived; that was the following days’ project.

The books that are being sent to New Orleans are not being used to re-stock the libraries. The activities at the Algiers location consist of sorting through the piles of books to determine which have no value, which have minimal value and can be trucked to other cities to be sold to raise funds, and which have significant value and can be put into book auctions to raise funds. It’s all about raising money to keep the libraries open to the public.