IAR responds to inaccurate information

Today’s Indianapolis Star carries a letter to the editor written by IAR’s VP of Government Relations regarding HEA 1339. It corrects the record with respect to an earlier letter published by the Star on March 19^th (view today's letter from IAR online here):

I am writing in response to the March 19 My View by Patrick Woodall of the Washington-based Consumer Federation of America ("Home sellers lose with this new law"). He implies that a bill recently passed by the legislature will prove detrimental to home sellers in Indiana. Woodall's criticisms are not only inaccurate, they are borderline offensive.

House Bill 1339 is an effort to end "hit and run listings." This happens when a firm lists a property for sale, charges an up-front fee and then abandons the project, leaving the consumer with no representation. Consumers often then turn to the agents of potential buyers to help them through the transaction, even though that agent works for the opposing party in the transaction.

State law has for years defined the duties required of real estate agents. A loophole in that law has allowed some firms to avoid virtually all state-imposed standards. HB 1339 merely reinstates a portion of those consumer protections.

HB 1339 does not require specific marketing activities, nor does it eliminate any business model. Many states have enacted similar laws, and the discount brokerages Woodall refers to still operate successfully.

Consumers here will continue to have a broad choice of brokerage models to choose from. But now they will also have the guarantee that they will not be left high and dry in the middle of a transaction. The legislature and governor should be applauded for enacting this consumer-friendly reform.

The Star also published a letter from State Representative Tim Harris (Marion) on the same subject. Rep. Harris, who authored HEA 1339, also responds to the March 19^th piece. His letter clarifies what the legislation does and does not do:

HB 1339 does not do the following:

• Require marketing of the property.

• Address compensation issues in any way.

• Prohibit discount brokerage.

• Prohibit consumers from selling their home as a "for sale by owner", or with the assistance of an attorney.

HB 1339 specifically requires licensees to do only the following:

• Be available to present offers and counter-offers.

• Assist in negotiating and completing forms.

• Be available to respond to questions.

The state has already required more services of licensees than the above, but HB 1339 merely sets out that these services cannot be "contracted away."

Rep. Harris also points out that discount brokers are thriving in states that have passed similar legislation—you can read his full letter here. We hope that this information sets the record straight with respect to HEA 1339.

Daylight Saving Time update

Last session, IAR stood with numerous organizations to support statewide observance of Daylight Saving Time. As we prepare to “spring forward” on April 2^nd, IAR is again teaming with the Indiana Chamber of Commerce, the Indiana Manufacturers Association, and many others to help Hoosiers with the transition.

Lou Zickler, a former IAR president, represented REALTORS® at a press event earlier this week (WISH-TV – Indianapolis covered it here). Inside INdiana Business with Gerry Dick noted IAR’s take on why DST is good for the state:

According to Karl Berron, Vice President of Government Relations for the Indiana Association of Realtors, "There's no excuse for us as Hoosiers not to do everything in our power to remove barriers to new investment."

Read the full Inside INdiana Business article here. Also, the Indiana Chamber has compiled some excellent resources on DST. Check them out here, here, and here.

West Coast TICs investing in Indiana

A very interesting article by Madhusmita Bora in yesterday's Indianapolis Star shines the spotlight on the trend of West Coast investors using "tenant-in-common" interests or TICs to snap up commercial properties in Indiana (click here to read the article):

"It's a very yield-driven market," said Scott Richter of California-based Evergreen Realty Group, a TIC that has holdings in Kansas City, Florida, California and Arizona. "The yields at the coasts are not as good as they are in the Midwest."

That's one of the mantras that brokers at commercial real estate services firm CB Richard Ellis use when pitching Indiana to the TICs.

"The other reason is there's growth here now," said Steve LaMotte, vice president of the multi-housing properties group for CB Richard Ellis. "And their arrival has coincided with our economic recovery."

LaMotte cited statistics to back up his claim: 8,600 jobs created in the last year in the Indianapolis metropolitan statistical area; 7,500 new households were added to the market; and occupancy rates in apartment complexes climbed 1.4 percent.

NAR has some great resources on assisting clients in TIC transactions—check out examples here and also here.

HEA 1017 – Property Appraisal

Authored by Representative Peggy Welch (Bloomington) and sponsored by Senator Vaneta Becker (Evansville), HEA 1017 will improve the accuracy of certain appraisals required under Indiana law.

There are several Indiana statutes that call for judicial appointments of property appraisers. Instances where such appointments are made include certain sales of public land and eminent domain proceedings. However, prior law required only that “disinterested freeholders” perform the appraisals. Taxpayers’ dollars are at stake in these transactions, but appointed “appraisers” needed no experience or qualifications.

HEA 1017 requires that some of the appointees be licensed as a real estate broker or appraiser. It also requires that the licensed individuals reside in Indiana.

This legislation passed both chambers of the General Assembly unanimously and was signed by the Governor on March 20^th. The changes described above will become effective July 1^st, 2006.

Foreclosure picture still grim for Indiana

Headlines earlier this week indicated that Indiana had the highest foreclosure rate in the nation. The Indianapolis Star's article (click here) cites the Mortgage Bankers Association as its source, but the time period covered was the last quarter of 2005.

This Inman newsbrief we just received cites more recent statistics from this February (provided by RealtyTrac), and it places Georgia as the number one state. However, Indiana appears to be not far behind:

Foreclosure rates in Indiana and Colorado were among the nation's five highest for the second month in a row. Indiana reported 5,909 properties entering some stage of foreclosure in February, a 34 percent increase from the previous month and nearly three times the number of new foreclosures reported in February 2005.

Regardless of which state has the highest rate, it is not good news.

Session wrap-ups

Next week we will begin posting summaries of legislation enacted in the just-concluded session. It was a highly productive few weeks that should have very positive impacts on Indiana's real estate industry. We’ll take a closer look at property tax changes, the Major Moves bill, eminent domain, and much more.

For now, check out this nice recap by the Indianapolis Business Journal (click here). The IBJ reached out to IAR for our views on the General Assembly’s work, and the article features several quotes such as:

"For a short session in an election year, I'm not sure how much more you could have hoped for," said Karl Berron, the Indiana Association of Realtors' vice president for government relations.

NW IN REALTORS® rally for Major Moves, dedicated funds

As noted by media outlets around the state (click here for WIBC Newsradio 1070’s report), a deal on the Major Moves proposal seems to have been completed. A final vote in the House and Senate will decide HB 1008’s fate later today.

One of the key changes reportedly involves inclusion of $100 million dedicated for transportation infrastructure in northwest Indiana. REALTORS® in this region rallied for restoration of these funds, and their backing has undoubtedly helped HB 1008 progress to this point.

GNIAR joined regional business leaders yesterday to support Major Moves and funding for northwest Indiana. The Times covered this event (read the full article here) at which the importance of regional development was a key theme:

Nancy Smith, executive vice president of the Greater Northwest Indiana Association of Realtors, said the proposal "will be a much-needed boost to Indiana's economy" and commuter system.

The South Shore is a good line, she said, but "it only benefits a certain part of Northwest Indiana." With more Illinois residents moving into places farther east, such as Valparaiso or Chesterton, a good commuter system is becoming more important to the region, Smith added.

"There's a quality of life you can't get in Chicago," she said.

Change in assessment structure unlikley

We have written much over the past several months about Indiana’s broken property tax assessment structure. We were greatly encouraged when the Governor urged reforming our antiquated system in his State of the State address in January. But even though the House of Representatives approved provisions to remove most township trustees from the assessment process earlier this session, it now appears unlikely that any changes will be enacted into law.

IAR will not relent on this issue, and we are hopeful that next session will provide a better opportunity. The fast pace of this “short” session added to the difficulty involved with making changes opposed by township officials.

With time running out for changes in 2006, we found a great deal of irony in today’s Post-Tribune update on the ongoing saga of Porter County’s property tax shortfall. Jim Stinson’s article entitled “Blame in tax fiasco spreads” provides even more evidence that reforms are desperately needed. You can read the article here today only (The Post-Tribune doesn’t archive), but here is the most relevant portion (with our emphasis added):

VALPARAISO — Porter County’s system of valuating property is riddled with errors and miscommunication, a consultant told Valparaiso city leaders Monday night.

James M. Bennett, a tax consultant hired by Valparaiso City Clerk-Treasurer Sharon Emerson Swihart, made the claim before the Valparaiso City Council.

Bennett was hired after county auditing errors led to the city being forced to return about 8 percent of its general funds for 2006.

Bennett said a series of errors — including the multimillion-dollar overvaluation of a modest Chicago Street home — caused the mistake in Valparaiso’s property tax draw, which officials say is dangerously hovering around 92 percent of what was budgeted and approved.

But Bennett drew the first public line away from Porter County Auditor Sandra Vuko and to other county offices, including those of the Porter County assessor and Porter County treasurer, whom he said pushed for property tax refunds over three years to be paid at once.

Bennett also said township assessors not making their deadlines is causing the auditor to use faulty numbers — although the auditor by law must use numbers he is provided.

And some taxpayers even may be to blame: Bennett said a large number of tax delinquencies caused Valparaiso’s draw to be shorted.

Bennett said the state and county system of assessing citywide valuation is so volatile — he noted changes are made every day by township assessors — that Valparaiso leaders should just assume annual mistakes are made and appeal to the state every year by Dec. 31.

Obviously, there is much more to the problems in Porter County than just the decentralized nature of property tax assessment. But we can’t help point out that this flaw has played a key role in a serious financial crisis for one of Indiana’s largest counties.

Final hours

The legislative session is drawing to a close. The regular session must end at midnight tomorrow, and we expect some solutions on property tax issues and the Major Moves proposal to emerge soon. The Indianapolis Star is reporting that key negotiators on HB 1008 are expressing optimism this morning-- read a short update here.

Health care working group tomorrow (Indy)

The Citizens' Health Care Working Group is holding a forum in Indianapolis tomorrow (March 11^th) at Butler University from 9 am to 1 pm.

The Working Group was created by federal legislation written by Senators Orrin G. Hatch (R-Utah) and Ron Wyden (D-Oregon). The goal is to seek citizen input and answers to these four questions:

• What health care benefits and services should be provided?
• How does the American public want health care delivered?
• How should health care coverage be financed?
• What trade-offs are the American public willing to make in either benefits or financing to ensure access to affordable, high-quality health care coverage and services?

The National Association of REATORS® is a major participant in this effort, and a NAR representative will be in attendance along with area real estate professionals. Click here to register for the meeting, and click here to learn more about the Working Group.

Commercial broker lien bill moves ahead

HB 1136, which would place Indiana among a number of states that already allow liens to be used by commercial brokers, is now on its way to the Governor's desk. The House of Representatives voted last night 88-5 to agree (or "concur") with changes made in the Senate.

Legislation update

Last week was a great week for REALTOR®-backed legislation. Several bills passed the Senate and may soon become law. A conference committee responsible for final negotiations will begin work today on the Major Moves program (HB 1008), but other bills are even closer to being signed the by Governor.

HB 1339 – License Law Enforcement

The real estate licensure bill authored by Representative Tim Harris (Marion) was not amended in the Senate and therefore does not need to be addressed by a conference committee. A 49-0 vote last Thursday sent the bill to Governor Daniels’ desk for his signature. If he signs it into law, Indiana will become one of only a few states to enact laws to prevent “hit and run” listings.

HB 1136 – Commercial Broker Lien Law

Another IAR-supported bill allowing liens to be used by commercial brokers also passed the Senate unanimously. The House of Representatives must vote once more to agree with recent changes, but we are hopeful of a positive result. Concerns raised at the eleventh hour threatened to derail the bill, but Senator David Long (Fort Wayne) showed great leadership and was able to forge a compromise. We owe thanks to him and author (and IAR member) Representative Woody Burton (Greenwood).

Distance learning approved by IN Real Estate Comm.

We just received word from the Indiana Professional Licensing Agency that as of this April 1^st, real estate licensees may use distance learning to obtain continuing education. Each specific course will have to be approved by the Real Estate Commission, however.

Major Moves up for final Senate vote

The bill is being debated right now, and you can watch it live. Click here to launch the video.

Downtown housing in Fort Wayne

Becky Manley of the Journal Gazette wrote yesterday about demand for downtown housing in Fort Wayne. According to her article, local REALTORS® have differing opinions of a recent study on downtown housing. An excerpt is posted below, or you can read the full piece here.

This article grabbed our attention since a bill supported by the City of Fort Wayne (along with the FW Area Association of REALTORS® and others) to make tax increment financing available for housing projects had been moving through the General Assembly this session. Despite passing the Senate unanimously, SB 217 was not heard in the House of Representatives. It is possible that it could be revived later this session, however.

Demographic extremes are creating a market for housing in downtown Fort Wayne, according to a study by a marketing strategy firm.

Those demographic extremes are composed of younger singles and childless couples and, on the other end of the spectrum, empty nesters and retirees. Also, “non-traditional families” are considered to be seeking downtown digs.

“These are people who are seeking a more urban environment,” said Laurie Volk during a Tuesday news conference. Volk is a partner at the New-Jersey based Zimmerman/Volk Associates, the firm that produced the study for the city of Fort Wayne’s Redevelopment Department.

Waiting for Senate action

The Senate is in recess right now for caucus meetings. The Major Moves bill, HB 1008, will be eligible for amendment when business resumes. 37 amendments have been filed, so it could be a long affair.

Two other bills of interest may be acted upon. HB 1136, dealing with liens for commercial brokers, may also be amended today. HB 1339, the real estate license law legislation, could be called for a final up-or-down vote (or third reading).

HB 1010, the main eminent domain bill, passed the Senate with unanimous support yesterday. It is possible that author Rep. Dave Wolkins will approve of the changes made in the Senate and the House will send the bill to the Governor for his signature.