GREC REnews, 2019 November

GGRREECC RREENNeewwss November 2019
Volume 15 Issue 11

Monthly Newsletter of the Georgia Real
Estate Commission

This Issue

2019 Calendar
Annual Schools Meeting and GREEA Workshop
December 5 & 6, 2019 UGA Continuing Ed Center Atlanta, GA www.greea.org
Link to the Georgia Real Estate License Laws, Rules, and Regulations

Can I Call or Not?

Disciplinary Stats

AMK Section

Focus on Terminology

1

The Appraisers Page

P. 1 P. 1 P. 2 P. 2 P. 3-4

Can I Call or Not?

Anyone with a telephone has likely received phone calls marketing all types of products and services. The use of automated robocalls and telemarketers have become standard advertising tools for many companies. Telephone solicitation by real estate licensees does fall into the category of telemarketing. As such, it is important to follow the following guidelines to ensure compliance with the Telephone Consumer Protection Act (TCPA) and avoid violating these federal guidelines or receiving any consumer complaints.
Check the Registry First. Check the Do-Not-Call Registry before contacting a potential client/customer, unless the consumer has made a customer inquiry.
Every 31 days. Access the National Do-Not-Call Registry and purge numbers from their marketing call lists every 31 days. The company must maintain records to document this process.
Request & Records. Telemarketers are required to document a consumer's request not to receive further calls and must maintain a record of a consumer's request. A do-not-call request must be honored for 5 years from the time the request is made.
Referrals. Telephone solicitations to persons based on referrals are also subject to the do-not-call rules.
Train. All agents and office personnel in the brokerage firm should understand and be trained in the firm DNC policy and procedures.
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Link to Proposed Rule
Changes

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Click here to review a legend of the disciplinary actions the Commission may impose.
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GREC RENews November 2019, Volume 15 Issue 11
Call or Not?...
FSBO. The purpose of the call must be to discuss a potential sale. If a seller is a For Sale by Owner and his/her phone number is listed on the Do-Not-Call Registry an agent can only call the owner if he/she actually has a party interested in the property. Otherwise, it is a violation.
The National Association of RealtorsTM has created an informative video explaining tips for real estate offices to manage and comply with the Telephone Consumer Protection Act Do Not Call requirements, and it can be viewed at the following link. Window to the Law: Comply With The Do Not Call Registry. In addition, the entire FTC document stating describing the requirements can be accessed as a pdf file at the following link: https://transition.fcc.gov/cgb/policy/Telemarketing-Rules.pdf
There is no cost to register residential or cell phone numbers. Go to www.donotcall.gov. The phone numbers already registered on the previously maintained Georgia Do Not Call List were merged into the Federal Do Not Call Registry. (DNC).
bsolutely ust now Section
The Brokerage firm's Office Policies and Procedures should include practical policies to comply with the TSR (Telemarketing Sales Rule) including procedures to avoid calling numbers registered in the Do Not Call National Registry. There is a 31-day requirement to scrub and update call lists.
In addition to compliance with FTC rules, it is a violation of the License Law, Rules, and Regulations to negotiate a sale, exchange, or lease of real estate directly with an owner, a lessor, a purchaser, or a tenant if the licensee knows that such owner or lessor has a written outstanding listing contract in connection with such property granting an exclusive agency or an exclusive right to sell to another broker or that such purchaser or tenant has a written outstanding exclusive brokerage agreement with another broker, unless the outstanding listing or brokerage agreement provides that the licensee holding such agreement will not provide negotiation services to the client; Reference: 43-40-25. Violations by licensees, schools, and instructors; sanctions; unfair trade practices (b) (14).
Focus on Terminology: "Solicitation"
The TCPA defines a telephone solicitation as: "the initiation of a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services, which is transmitted to any person but does not include a call or message to any person with that person's prior express invitation or permission; to any person with whom the caller has an established business relationship; or by a tax-exempt nonprofit organization."
The term telemarketer means the person or entity that initiates a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services, which is transmitted to any person.
Relevant Acronyms: TCPA: Telephone Consumer Protection Act of 1991 FTC: Federal Trade Commission TSR: Telemarketing Sales Registry
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The Appraisers Page

Georgia Real Esta1te Appraisers Board

November 2019

Useful Links:
GREAB Web Site

Appraisal Act

GREAB Disciplinary Sanctions


Calculating Time Adjustments
By: D. Scott Murphy, SRA & E. Grant Murphy
One of the most challenging tasks for an appraiser is to correctly analyze the current market and calculate the rate of depreciation or appreciation. It's a moving target and while hind sight is 20/20 confirming the most recent and pending sales is often a challenge. The method for calculating either depreciation or appreciation is to carefully research comparable sales in the subject market. Only sales and listings which would have been a valid alternative for the subject property can be used. A common error is to calculate market change using all sales and listings in the subject market.
In 2008 the two GSE's (government sponsored entities) Fannie Mae and Freddie Mac released forms 1004MC and 71 respectively (a cosponsored form which is identical). This is the form which appraiser use to report their results.

Market Conditions Addendum to the Appraisal Report The Market Conditions Addendum (Form 1004MC) is designed to enhance
the transparency of the market trends and conditions conclusions made by the appraiser. The Market Conditions Addendum will be required with all one- to four-unit property appraisals performed on or after April 1, 2009. This requirement applies to loans delivered to Fannie Mae, whether the loans are underwritten manually or through Desktop Underwriter. The Market Conditions Addendum is intended to provide the lender/client with a clear and accurate understanding of the market trends and conditions prevalent in the subject neighborhood. The form provides the appraiser with a structured format to report the data and to identify more easily current market trends and conditions. The appraiser's conclusions must be reported in the "Neighborhood" section of the appraisal report. *Source: Fannie Mae

The appraiser must use the exact same search parameters used in looking for the comparable sales and listings used in the appraisal. This often results in a modest dataset. Sometimes there will be zero sales or listings for a given period. The GSE's say that is okay. They do not want the appraiser to change neighborhood boundaries or other significant factors in order to collect more data.

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The Appraisers Page

Georgia Real Estate Appraisers Board

November 2019

Useful Links:
GREAB Web Site

Appraisal Act

GREAB Disciplinary Sanctions


Calculating Time Adjustments
By: D. Scott Murphy, SRA & E. Grant Murphy
Markets are seldom all up or all down. Most markets have general trends, but on any given day, there will be evidence of values increasing, decreasing, and/or remaining stable. In some areas, it may be difficult to find any evidence of a trend or even any change. This is not for the lack of change but for the lack of evidence. It is doubtful that the analysis done in one market is transferable to another market nor is it likely that any analysis has a very long shelf life. * Source Fannie Mae, Freddie Mac and the Appraisal Institute training video
Using just the neighborhood boundaries is not sufficient. Within those neighborhood boundaries are many submarkets. Wouldn't you agree that homes in a given neighborhood in the $100,000-200,000 price range could be appreciating or depreciating at a very different rate than those over $1,000,000. One could be appreciating and the other depreciating. The appraiser must focus on the particular submarket, which the subject is a part of.

The 1004MC form, when completed correctly, should help the appraiser properly analyze the current market. He must consider any current trends. This does not mean he calculates that average appreciation over the course of the past 12 months. He must consider how the market is reacting as of the effective date of the appraisal. The 1004MC should also not be the only source of data used by the appraiser. There are various databases available, which can assist, in his final conclusion. Furthermore, close attention should be given to pending sales, which tend to form leading indicator.
Correct completion of the 1004MC and proper analysis of the market forms the foundation for a reliable appraisal. Incorrect completion of the 1004MC form leads to other errors throughout the report. The next most common error is the incorrect completion of the Neighborhood Section. Many appraisers and other users of the appraisal report, do not realize that the GSE's have "repurposed" the neighborhood section. This was particularly difficult for very experienced appraisers who for decades have completed the neighborhood section by reporting the data for the entire neighborhood. Makes sense, we would define the boundaries of the neighborhood and then we provided the trends of ALL the sales and listings within the subject neighborhood (remember that the subject neighborhood is generally not just the subject subdivision but many subdivisions within the defined boundaries). Now what the GSE's require is that the appraiser populate the fields in the neighborhood section with the data from the 1004MC and other databases used to arrive at his conclusions of the current market conditions. So not to state the obvious but if the appraiser checks the box "increasing" for sales price on the 1004MC form, he must check the box for "increasing" for market values in the neighborhood section. You would be amazed at how many times these boxes do not match.
Then the third part to correct completion of the appraisal with regards to the 1004MC is the "top of page two". This term is familiar to appraisers, it is the first part of the sales comparison approach where the appraiser is asked to report the current number of active listings and their list price range, then the number of sold properties

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The Appraisers Page

Georgia Real Estate Appraisers Board

November 2019

Useful Links: Calculating Time Adjustments

GREAB Web Site

Appraisal Act

GREAB Disciplinary Sanctions


By: D. Scott Murphy, SRA & E. Grant Murphy
in the past twelve months and their respective sales price range. Again, these numbers must match those reported in the 1004MC. There are two significant shortcomings of the 1004MC report. The first is that the results are the median values. I am not a statistician and I am sure there is a very good reason the GSE's chose to use the median numbers but one or two slightly abnormal sales in a given period may significantly alter the result. I think the rational is that median eliminates the highs and lows.
The second shortcoming with the 1004MC report is that all the sales and listings used in this report are unadjusted. Remember we are trying to calculate the market change for the subject property. The data used in the report must be comparable properties. Properties which are as similar to the subject as possible, properties a typical buyer would have considered when considering to buy the subject property. But it does not mean that those

properties will not vary slightly from the subject property. If all sales used were identical to the subject property then any change in sales price would represent a true change in market value. However, let's assume all the homes in our dataset are identical except in the early part of the year two of the sales had inground pools (the subject and the other sales did not have pools). Let's assume those pools had a contributory value of $40,000. Then in the second quarter of the year there were three sales which happened to have an additional car garage and let's assume the contributory value of the additional car garage was $20,000. In the 3rd quarter a number of sales had slightly superior lot sizes assume $10,000. In the final, or current quarter, all the sales were identical to the subject. Remember, my assumption is that all the sales and listing are identical to the subject in terms of size, age, condition, room count, basements, etc. the only slight differences are those outlined above.

First Quarter $750,000

Second Quarter $740,000

Third Quarter

Fourth Quarter

$730,000

$725,000 UNADJUSTED

$710,000

$720,000

$720,000

$725,000 ADJUSTED

The unadjusted value indicate that values have declined from $750,000 to $725,000 over the course of the year. But if you consider the adjusted numbers values have actually increased over the course of the year.

One other very important factor to take into consideration is that appraisers use the local multiple listing service for collection of the data for this analysis. Not all sales and listings are not included in the multiple listing service. Also consider that most new construction is not multiple listed. When valuing a new or newer property alternative databases must be relied upon over the standard MLS system.

The take-away for agents and appraisers is how critical it is to analyze the subject market correctly. With or without

a special form, we must be very careful in collecting the right data and thoroughly analyzing it. You also want to step

back and contemplate if the data actually makes sense. If the trends are contrary to what you expected or are not

consistent, go back and look at the actual sales and listings. If there are some which are skewing the resPuaglets2 and

may not be a true representation of the market they should be given less weight.

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