Issuu

A NEW BUDGET AND SOME NEW LAWS

AGING SOLARâ€” SHOULD I BE CONCERNED?

HOUSING MARKET HEADS INTO A BALANCED SPRING

HOW BUYERS AND SELLERS FIND THE AGENTS THEY USE

on page 10

on page 22

on page 30

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on page 38

THE MODERN GREEN HOME Some ideas for transforming an older tract house into a modern green home.

on pages 26-35

WHEN FARMING GOES TOO FAR Many homeowners have reacted with frustration and resentment at being contacted by multiple real estate agents when their property listings either expire or cancel from the MLS. Such contacts have had a very negative impact and, under CRMLS Rule 12.11, are illegal. on pages 36

CONTENTS p. 26

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President’s Message 08 Green!

Matt Clements explores the meaning of green and encourages members to have fun, do the right thing, and win the day!

State Update 10 A New Budget and Some New Laws Jared Martin describes “cleanup” legislation that conformed Real Estate Law to existing practice and became effective January 1.

22 The Orange County Housing

The Modern Green Home Installing high-performance windows, insulating the attic, adding solar panels on the roof, upgrading the air conditioning system, controlling the interior temperature with a smart home thermostat, and composting kitchen and yard waste are ways to go green—or greener.

Update

After a cool finish to 2018, Steven Thomas predicts that the Spring Market will be balanced and considerably warmer.

36 CRMLS Update: When Farming

Cover Story

Goes Too Far

26 The Modern Green Home

lesya Drozdova describes the steps one family took to convert a O 1977 tract house into a modern green home.

30 Aging Solar—Should I Be Concerned?

Gene Beck points out that electrical rates are increasing faster than solar panels are degrading.

32 Shift Your View of Shipping-Containers

Sabrina Blair says that shipping containers can be modified either to expand living space or to become granny flats.

33 Surprising Benefits of Shipping Container Homes Marissa Hughes adds that surplus shipping containers are affordable, eco-friendly, durable, and portable.

Edward Zorn points out that contacting homeowners whose property listings have either expired or canceled from the Multiple Listing Service is a violation of CRMLS Rule 12.11.

38 R ealty Reality: NAR 2018 Homebuyer Survey

Bob Hunt says this survey reveals how buyers and sellers find the agents they ultimately choose and use.

40 G uest Column: Dave’s Top 10

To help you address client questions, Real Estate Economist David Girling analyzes ten economic and other factors that may affect real estate.

34 Gadgetry: MySmartBlinds

Albert Ornelas writes about solar-powered blinds that are easy to install and can be controlled with a smart phone.

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CONTENTS

ORANGE COUNTY

® REALTOR MAGAZINE

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25552 La Paz Road Laguna Hills, CA 92653

10540 Talbert Avenue, Ste. 225 West Fountain Valley, CA 92708

949.586.6800

714.375.9313

www.ocar.org 2019 OFFICERS Matt Clements President Danielle Corliss President-Elect Lisa Schulz Treasurer Tammy Newland-Shishido Immediate Past President Dave Stefanides Chief Executive Officer

2019 BOARD OF DIRECTORS Jost Atwood Joyce Endo Dorinda Francois Michele Harrington Bob Hartman Tim Hayden Julie Hile Spencer Hoo Jeffrey Jackson Debra Krumboltz

p. 34

Departments 12

Names in the News

Education Central: Upcoming Classes by Track

Become a Director

Mentions

Affiliates in Action: New REALTOR® Orientations

Liz Lewis Gary Ludwig Charleen Nagata-Newhouse Randy Rector Lacy Robertson Adam Rodell Aaron Rosen Scott White Bob Wolff Eric Wu

MAGAZINE STAFF Sabrina Blair

Breanna Reed

Director of Communications sabrina@ocar.org

Accounting Assistant breanna@ocar.org

Sherri Butterfield

Albert Ornelas

Communications Specialist sherri@ocar.org

Multimedia Specialist albert@ocar.org

Online Magazine

Love the Orange County REALTOR®? Did you know that you can read it online, anytime? Read past issues at www.ocar.org/magazine.

Mission Statement

The mission of the Orange County REALTORS® is to promote the REALTOR® Code of Ethics; to provide education, services, and resources to our members; and to advocate the protection of real property rights.

Notice to All Members

p. 22

On the Cover The photo on the cover depicts a modern green home. The symbols around the home highlight some of the special features that make it more comfortable, more energy efficient, and more eco-friendly than its non-green counterparts.

instagram.com/theocrealtors snapchat.com/add/ocrealtors

It is the long-established policy of this Association, the California Association of REALTORS®, and the National Association of REALTORS® to adhere to both the letter and spirit of the federal and state antitrust laws. For their own protection, members should be aware of the antitrust laws as they affect their specific business activities. Any illegal activity under the state and federal antitrust laws is not in compliance with Association policy, nor is it in the interests of the Association or its members. Participation in Association activities must occur only in harmony with these very important laws. Federal law prohibits discrimination based on race, color, sex, religion, or national origin in connection with the sale or rental of residential real estate, in advertising the sale or rental of housing, in the financing of housing, and the provision of real estate brokerage services. The Orange County REALTOR® editor reserves the right to review and edit all submissions. Orange County REALTORS® makes no warranties and assumes no responsibility for the accuracy of the information contained herein. The opinions expressed in articles are not necessarily the opinions of the Orange County REALTORS®. Orange County REALTORS® does not necessarily endorse the companies, products, or services advertised in this magazine unless specifically stated. The Orange County REALTOR® (USPS 025-445, ISSN 1945-2179) Volume 11, Issue 2, is published by the Orange County REALTORS®, 25552 La Paz Road, Laguna Hills, CA 92653. Periodicals postage paid at Laguna Beach, CA, and additional mailing offices. POSTMASTER: Send address changes to Orange County REALTORS®, 25552 La Paz Road, Laguna Hills, CA 92653-5127. Annual membership dues include $3.13 for a one-year (6 issues) subscription to the Orange County REALTOR® magazine. The Orange County REALTOR® magazine cannot be responsible for unsolicited materials. Publisher: Orange County REALTORS® Printer: The Monaco Group

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PRESIDENT’S MESSAGE

GREEN! Green is more than a color. It’s a fresh beginning, an opportunity, a sign of abundance to come.

By Matt Clements 2019 PRESIDENT, ORANGE COUNTY REALTORS®

Have fun. Do the right thing. Win the day!

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OC REALTOR®

Photo: www.istockphoto.com/SH22

hen I think of green, I think of my son’s favorite color and of fresh-cut grass on a baseball field. I think of clean, of fresh, of abundance. I think of opportunity. Here we are in the Spring of 2019, the season of green, which is the theme for this issue of OC REALTOR ®. My son Noah loves garbage trucks. Green ones. Big ones. They are so cool to a two-year-old. I am fascinated by the creativity and imagination of a larger-thanlife object and by the association of the color green with that image. Real estate Opening Day started with a solid base hit up the middle, and the market appears to be greening once again. We’re already rounding first base, and Spring is going to be one of the best sales seasons in the history of real estate—hotter than we’ve experienced for January. Give yourself a high five! If you’re a goal writer—and I encourage all members to write down their goals—by now, you should have written your business and personal goals for the year in less than one page. If you have not done so, answer these questions: What are your income goals? What are your total sales volume goals? Travel goals? Family goals? Health goals? Spiritual goals? Relationship goals? What, exactly, is your why? Lean in. Dig deep. Be brave. Understand what drives you and focus on it. Harness that drive all year long. We have an incredible season ahead, and the line-up card is looking really solid. Explore this Green issue. Find new ways to become greater. Take a class or two. Check out our new coach, David Halpern. Join the Young Professionals Network (YPN) and meet newer agents in the business. Go to the Annual Membership Meeting in March, see the Housing Forecast, and learn why 2019 is going to be a strong year. As President, I encourage all members to become familiar with the new green laws that pertain to redevelopment, pay attention to tax season and how the recent tax reform may affect your clients, and understand why Spring is harvest season in Orange County.

THE STATE UPDATE

New Budget and Some New Laws “Cleanup” legislation passed last year to conform Real Estate Law to existing practice went into effect on January 1.

ast year was a busy one for the California Association of REALTORS® (C.A.R.) as we worked to defeat Proposition 10 to protect the Costa Hawkins Rental Housing Act and, at the same time, embarked on a historic effort to pass Proposition 5, C.A.R.’s own Property Tax Fairness Initiative. No doubt, 2019 will be another busy year as we work with a new governor and a new legislature to achieve our housing policy goals.

By Jared Martin C.A.R. PRESIDENT

Governor Gavin Newsom’s Budget

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No doubt, 2019 will be another busy year as we work with a new governor and a new legislature to achieve our housing policy goals.

Photos: www.istockphoto.com/ Worawee Meepian

n January, Governor Gavin Newsom revealed his proposed budget. In total, the budget includes $7.7 billion across multiple departments and programs to address housing and homelessness throughout the state. While the governor’s budget makes it clear that housing is at the forefront of his legislative agenda, it was not clear how many new units his proposal would generate. During his campaign, Governor Newsom had proposed building 3.5 million new units over the next seven years. In the budget, the governor has proposed linking transportation funding to housing production goals, which is similar to legislation C.A.R. tried to enact last year. Of particular note, the governor also proposed granting one-time General Fund dollars of up to $750 million to the Department of Housing and Community Development to help jumpstart housing production. These funds will be used to provide technical assistance to cities seeking to meet their housing production goals across all income levels. An additional $500 million to $750 million will be made available as a reward to those jurisdictions that reach the state’s specified production milestones. The governor’s proposed budget will be before the legislature for the next few months with a final budget being approved before the new fiscal year.

Photos: www.istockphoto.com/ FrozenShutter

New Laws That May Affect REALTORS®

new year always brings new laws that may affect REALTORS®. In 2018, C.A.R. sponsored a package of “cleanup” legislation that was signed into law by Governor Jerry Brown last fall. This legislation accomplishes a number of things, including conforming the Real Estate Law to existing practice, eliminating antiquated or confusing laws, and introducing plain language where appropriate. All of the changes in the cleanup legislation went into effect on January 1, 2019. The most significant changes are summarized below.

n Agency Disclosure and Confirmation of Agency Forms. Intended to make these forms

is formally recognized as legal delivery. Likewise, the law clarifies that, when the TDS is delivered electronically, the buyer has a right to cancel a purchase agreement within five days after delivery of a completed TDS. Most significant for REALTORS®, the law is now explicit that the TDS is not complete until the listing agent’s visual inspection disclosure has been completed and provided to the buyer.

understandable to the consumer and easier to use for agents, various changes have been made to the Agency Disclosure and the Agency Confirmation forms. Throughout, plain English is now used instead of more antiquated industry jargon. (For instance, “Buyer’s Agent” is now used instead of “Selling Agent.”) The “third” agency form has now been nD elivery of Copy of Listing. Until last year, the eliminated, which means that the buyer’s agent is law required a copy of a signed listing agreement no longer required to provide an agency form to to be delivered to a seller “at the time the signature the seller (unless representing both sides as a dual was obtained.” Strict compliance was often a agent). Finally, the Agency Confirmation has been practical impossibility. Now the listing need be expanded to require the names and license numbers provided to the seller only “as soon as practicable” of both the brokers and agents on each side of the after the agreement is signed. Furthermore, a copy transaction. of the listing may be delivered electronically, when the parties have agreed to conduct the transaction n Transfer Disclosure Statement: Electronic by electronic means. Delivery and Cancellation Rights. Electronic delivery is often the norm nowadays, but the law, written in the 1980s, envisioned only personal delivery or delivery by mail. Now, electronic delivery of the Transfer Disclosure Statement (TDS), as well as the Natural Hazard Disclosure (NHD) Statement,

More information about each of these updates, as well as all of the other changes made by the cleanup law, can be found in the Legal Q&A titled “2019 Real Estate Cleanup Law Changes.”

This column is based on and has been excerpted from the Monthly Message by C.A.R. President Jared Martin that was distributed via email on January 18, 2019. It is being reprinted here with permission.

OC REALTOR®

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NAMES IN THE NEWS

Photos by Marion Butterfield

Todd Spitzer Takes the Oath of Office as Orange County District Attorney

n the evening of Monday, January 7, in Chapman Auditorium inside Memorial Hall at Chapman University, before a standing-room-only crowd, former Orange County Supervisor Todd Spitzer took the oath of office as Orange County District Attorney. Todd placed his left hand on a Bible that was being held by both his daughter Lauren and his wife Jamie, raised his right hand, and repeated the words of the oath that were spoken by former Associate Justice of the California Supreme Court John A. Arguelles. During his inaugural address, Spitzer recalled some of the milestones along the path that had led him to what he later termed “the job I’ve always wanted.” He had earned a bachelor’s degree from UCLA, a master’s degree in public policy from UC Berkeley, and a juris doctor from UC Hasting School of Law. He had been a high school teacher and a reserve police officer. He had been elected to the state Assembly. He had

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served as an assistant district attorney and had been recognized for his outstanding performance in that position. He had chaired the ground-breaking campaign for Proposition 9, Marsy’s Law, the nation’s most comprehensive Victim’s Bill of Rights. He had jointauthored Megan’s Law on the Internet, the landmark legislation requiring the release of public information related to sex offenders. He had served on the Orange County Board of Supervisors. And he had campaigned successfully for the office of Orange County district attorney To the audience District Attorney Spitzer declared, “The DA’s office will now have a new symbol. It will be the symbol of Justice. Justice is blindfolded to remind us that we must do justice in the most honest and ethical way. We must find joy in the work that we do. We must care deeply. We must make a difference.”

NAMES IN THE NEWS

Moulton Niguel Water District Receives State’s Highest Environmental Honor The State of California recognized Moulton Niguel Water District with its Governor’s Environment and Economic Leadership Award (GEELA). The Geela is the state’s highest honor recognizing organizations that have demonstrated exceptional leadership and made notable, voluntary contributions in conserving California’s precious resources, protecting and enhancing our environment, building public-private partnerships, and strengthening the state’s economy. Moulton Niguel Water Moulton Niguel was District General Manager one of only ten agencies Joone Lopez recognized this year. The water district has helped develop innovative strategies to improve statewide sustainable water management. Its work in developing data-driven solutions and water education programs has saved millions of dollars for its customers. Continued on Page 14

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NAMES IN THE NEWS

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Tuesday, March 12. Among the seven persons who have filed as candidates for the seat are Attorney and Business Owner Kim-Thy “Katie” Hoang Bayliss, Larry Bales, Small Business Owner Katherine Daigle, Anaheim Council Member Kristine “Kris” Murray, Businesswoman Deborah Pauly, former Congresswoman Loretta Sanchez, and Irvine Mayor Don Wagner. The Third District stretches from Yorba Linda and parts of Anaheim into Orange, Villa Park, Irvine, Tustin, and the Cleveland National Forest.

Rich Steinhoff Reappointed to MV Investment Advisory Commission The Mission Viejo City Council unanimously approved the reappointment of Richard Steinhoff to that city’s Investment Advisory Commission for two years. Formed as an oversight body in the wake of the Orange County bankruptcy that was declared on December 6, 1994, this commission is charged with overseeing the city’s investment programs and recommending investment policies. Rich, who was originally appointed to the commission by Mission Viejo City Council Member Wendy Bucknum, chaired the commission in 2018. He is the author of Turning Myths into Money: An Insider’s Guide to Winning the Real Estate Game, which was published in 2011 and reviewed on pages 32–33 in the February 2012 issue of OC REALTOR ®.

OC Supervisors Choose Bartlett and Steel

Members of the Orange County Board of Supervisors have chosen Lisa Bartlett to serve as chair and Michelle Steel to serve as vice chair of that board. Bartlett represents the Fifth District while Steel represents the Second District. Supervisor Bartlett, who holds a bachelor’s degree in finance and a master’s degree in business administration, began her involvement in local government in 2006, when she was elected to the Dana Point City Council. She served that city as mayor pro tem in 2007–08 and as mayor in both 2009 and 2014. She was elected to the Board of Supervisors in November 2014 and took office in December of that same year. During 2018, Andrew Do, Fourth District, was chair, and Shawn Nelson, First District, was vice chair.

Who Will Represent the Third District?

The November election of Third District Supervisor Todd Spitzer to the position of Orange County District Attorney created a vacancy on the fivemember Orange County Board of Supervisors. The Supervisors have authorized a special election to fill the vacancy, and that election will be held on

Melissa Fox Announces Run for State Assembly Seat

Irvine Council Member Melissa Fox, a Democrat, has announced her candidacy to represent California Assembly District 68. This district, which lies entirely within Orange County and encompasses part or all of the cities of Anaheim, Irvine, Lake Forest, Orange, Tustin, North Tustin, and Villa Park, is currently represented by Steven Choi, a Republican and former mayor of Irvine. Fox is the founder and senior attorney at the Fox Law Firm, a civil law firm specializing in business law and public affairs, and is chair of the Irvine Community Land Trust for Affordable Housing. In her bid to unseat Choi, Fox has received the endorsement of California State Treasurer Fiona Ma.

Mike Posey Chairs OC Parks Commission

Congratulations to Huntington Beach City Council Member Mike Posey, who was recently chosen by his fellow commissioners to chair the Orange County Parks Commission. The Parks Commission consists of seven members and is responsible for recommending to the Orange County Board of Supervisors plans and policies for the acquisition, development, maintenance, and operation of the county’s harbors, beaches, and regional parks. Also serving on this commission are David Hanson, John Koos, Warren Kusumoto, Justin McCusker, Joe Muller, and Amy West. Posey, a former mayor of Huntington Beach, was appointed to the commission by Supervisor Michelle Steel.

Al Murray Becomes Executive Director of Tustin Chamber

Congratulations to Al Murray, a former member of the Tustin City Council and three-time mayor of that city, who has been chosen as the new executive director of the Tustin Chamber of Commerce. Murray’s long history of local leadership and community involvement includes having represented Tustin on the Orange County Transportation Authority Board, the Orange County Fire Authority Board, and the Association of California Cities– Orange County. While serving as a lieutenant with the Irvine Police Department, Murray was recipient of that department’s highest honor, the medal of valor. Continued on Page 16

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NAMES IN THE NEWS

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Sixteen Who Made the Orange County Register’s List of the 100 Most Influential People in Orange County Each year, the Orange County Register names one hundred people who have made a difference in Orange County throughout the year. The Register says, “Some entertained, some educated. All, in some way, inspired.” While some are well known and others are relatively unknown, all of them were influential in 2018. Don Barnes, the Orange County undersheriff with twenty-nine years of experience in law enforcement, was elected in November to replace retiring Sheriff Sandra Hutchens. Barnes, who wants to be judged for what happens under his watch, plans to concentrate on social issues and is looking to be more inclusive. He adds, “I’m in the business of putting ourselves out of business.”

Pat Bates, a Republican who won reelection to represent the 36th Senate District (which encompasses parts of San Diego and Orange Counties), was lauded for pushing to reform the practices that have made Southern California the “Rehab Riviera.” Bates has announced plans to run for secretary of state.

David O. Carter, a battle-tested Marine and U.S. District Court judge, visited the homeless encampment along the Santa Ana River Trail and forced Orange County to do something meaningful and humane about its growing homeless population, something that, according to the judge, may be creating a model of cooperation for the nation to follow.

recorder before being elected to the Assembly. Quirk-Silva is a former mayor of Fullerton and was listed among the Most Influential last year for prodding California officials to rethink how they regulate addiction treatment facilities.

Tyler Diep, a Republican who was elected to the Westminster City Council in 2008, bucked the “blue wave” to beat Democrat Josh Lowenthal and win the 72nd Assembly District seat. According to the Orange County Register, Diep has said that one of his top priorities is “to put the community’s polarization in the past.”

Troy Edgar, the mayor of Los Alamitos, was the driving force behind that city’s ordinance to opt out of Senate Bill 54, which limits cooperation of local and state agencies with several immigration offices. Edgar, who visited the White House three times, started a GoFundMe account for the city’s legal bills in the lawsuit the ACLU subsequently brought against it.

Doug Chaffee, former mayor of Fullerton, became the first Democrat in twelve years to sit on the Orange County Board of Supervisors when he defeated Tim Shaw in a bid to represent the Fourth District during the 2018 election.

Emile Haddad, Five Point’s CEO, oversaw the opening of a significant part of the Great Park Sports Park and donated the land that will become the location for the City of Hope’s Orange County cancer center. Haddad made the Most Influential list last year for having overseen his firm’s initial public offering, as well as the land swap for the veterans cemetery and the opening of the Great Park soccer stadium and amphitheater.

Tom Daly and Sharon Quirk-Silva, who represent the 60th Assembly District and the 65th Assembly District, respectively, co-authored Assembly Bill 448 and won bipartisan support to establish the Orange County Housing Finance Trust, putting Orange County in a better position to compete for millions in state and federal tax dollars to house homeless and low-income people. Daly is a former mayor of Anaheim and served as Orange County clerk-

Democrats Katie Porter and Harley Rouda successfully rode Orange County’s “blue wave” to defeat twoterm Republican Representative Mimi Walters and thirty-year Republican Representative Dana Rohrabacher and become the new representatives for Congressional Districts 45 and 48, respectively. Porter said, “This campaign was about standing up to special interests.” Rouda declared that his victory was one in which

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conventional values won out against polarizing politics.

Carl St. Clair, the director of Orange County’s Pacific Symphony, not only took the orchestra to New York City for a debut in Carnegie Hall but also launched an unprecedented tour of China. The 2018–19 season marks St. Clair’s twenty-ninth year leading the orchestra, which just turned forty. Fran Sdao, a mild-mannered former PTA mom from Mission Viejo, served as chairwoman of the Orange County Democratic Party and led the charge for an unexpected sweep of Orange County’s traditionally Republican congressional seats that made national headlines.

Todd Spitzer, who formerly represented the Third District on the Orange County Board of Supervisors, unseated Tony Rackauckas to become Orange County District Attorney. Spitzer declared, “This is the job I have always wanted.” He adds, “I do not believe that the measure of success in DA’s office is the conviction level. Our job is to do justice.” Long an advocate for crime victims’ rights, Spitzer sees himself as a champion for public safety.

Mike and Nicole Suydam, were described in the Orange County Register as a “power couple who help the powerless.” Mike, who owns a public relations firm, and Nicole, who is CEO of Goodwill of Orange County, provide help and resources for those in need. Mike says that their focus is less on being influential and more on being impactful. He adds, “We want to make a difference for our kids and for the community.” Nicole was listed among the Most Influential last year, when she was CEO of the Second Harvest Food Bank, for having overseen the launch of two new food pantries that expanded Second Harvest Food Bank’s efforts to address hunger in poor neighborhoods. Continued on Page 18

NAMES IN THE NEWS

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New Laws Impacting Everyday Life in the OC On February 4, Lacy Robertson (on the left) chair of the Local Government Relations Committee – South, welcomed Risk Manager Tiffany Wood for a presentation titled “New Laws Impacting Everyday

Life in the OC.” Wood quoted Benjamin Franklin as having said, “In this world, nothing can be said to be certain except death and taxes” and then added “and new laws in California.” This year, explained Wood, California has 1,016 new laws! Among the new laws Wood described were AB 1884 (Single-use Plastic Straws), which prohibits dine-in restaurants from giving out single-use plastic straws unless customers request them; AB 946 (Sidewalk Vendors), which prohibits cities from banning mobile sidewalk vendors but allows them to regulate these vendors for health and safety and to prohibit stationary sidewalk vendors in residential neighborhoods; AB 626 (Home Food Businesses), which allows local governments to choose to allow this type of commerce provided individual gross annual sales are no more than $50,000; and SB 1228 (Patient Brokering), which was authored by Senators Ricardo Lara and Pat Bates in response to the opioid epidemic and prohibits the practice of recruiting patients from other parts of the country and selling them to California treatment programs.

OCTax Presents a Discussion of the 2019 Financial State of the County

n February 13, the Orange County Taxpayers Association (OCTax) held its Annual Members Meeting and Lunch, which featured a panel discussion of the 2019 Financial State of the County with an in-depth look at the District Attorney’s office. Asking the questions and moderating the panel was OCTax President and CEO Carolyn Cavecche. Carolyn said that the two men on the panel—Orange County AuditorController Eric Woolery and Orange County District Attorney Todd Spitzer—were people whose careers she had watched over the years and whom she had admired for their devotion to public service. 18

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Also attending the OCTax Annual Members Meeting and Lunch were (from left to right) Travis Baron, Bill Platos, and Rick Cosenza.

Holding up a copy of the Citizens’ Report that the Auditor-Controller’s office prepares each year, Eric said, “A budget is a spending plan,” and explained that “property tax is the bread and butter of the county budget and of the city budgets.” He added that the top taxpayers in the county are the Irvine Company, Disney, and Edison. When Carolyn said, “The issue for cities has been putting money away for unfunded pension liability,” Eric responded, “The county has put about $400 million into the liability that was always there but never on the books.” He added, “Overall, the county is doing better with its

Eric Woolery presented Todd Spitzer with the coveted Taxpayer Watchdog of the Year award. Joining them for the presentation is OCTax President and CEO Carolyn Cavecche.

unfunded pension liability.” When Carolyn asked Todd about his new job as District Attorney, he replied, “My job is to review almost everything that happens in the court. It’s the most awesome, interesting job, one I always knew I wanted.” He added, “The gravity of this job and the responsibility I now have are a welcome weight on my shoulders.” In response to Carolyn’s questions about changes he wants to make, Todd responded, “I do not believe that the measure of success for the DA’s office is convictions. My job is not to get where I want to go but to take responsibility for the whole organization.” Continued on Page 20

Photos by Marion Butterfield

Attending the OCTax Annual Members Meeting and Lunch on February 13 were (from left to right) Rita Tayenaka, Katie Martin, and Candice Burroughs.

NAMES IN THE NEWS

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Independent Broker Alliance Hosts a Special Tax Forum

On February 20, the Independent Broker Alliance hosted a special tax forum featuring guest speaker Larry Oxenham. Author of several books on protecting assets, Oxenham focused his remarks on saving tax dollars, avoiding probate, and eliminating all estate taxes. Pictured at the forum are (from left to right) Craig Borner, Danielle Corliss, Craig Gilbert, Gerald Koller, Sherrie LeVan, Larry Oxenham, Tim Hayden, and Lori Namazi.

Irvine Among Top Ten Safest Cities in the World According to a recent statistical analysis by CEOWORLD magazine, Irvine is among the top ten safest cities in the world. This news follows a report released in September 2018 by the FBI ranking Irvine as the safest city of its size in the nation since 2005. According to the report, Irvine has the lowest rate of violent crime per capita of any city in the nation with a population of 250,000 or more. “This accomplishment is in large part the result of a visionary Irvine Master Plan set forth more than half a century ago, excellent city management, a world-class police department, and engaged residents and business leaders who take pride in their community,” says Greater Irvine Chamber President and CEO Bryan Starr.

This Names in the News column is intended to be primarily a place where Orange County REALTORS® and Affiliate members can share both personal and professional news—about births (of children or grandchildren), graduations, weddings, anniversaries, accomplishments, awards, and other milestones—with one another. If you have news to share, email it to OC REALTOR ® Writer and Editor Sherri Butterfield at Sherri@ocar.org.

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After a cool finish to 2018, the Spring Market will be quite a bit warmer but not as hot as it has been in the past seven years.

t is a chilly morning in Southern California. You climb into your car for the daily commute to the office and blast the heater, but it blows cold air because the engine is not yet hot. Your fingers are numb, and you cannot wait for the temperature to start to rise. After a couple of minutes, the blowing air begins to warm. That is precisely how the housing market starts every year. Housing’s engine is cold on the first of January and takes a few weeks to heat up. This year was no exception. The market had heated up by the time they flipped a coin at the fifty-yard line to begin Super Bowl LIII. Southern California may not experience a polar vortex during the winter, but winter does exist. In fact, Southern California has four unique seasons, exactly like the rest of the country. The weather is not always 80 degrees and sunshine. Similarly, housing is not always hot. During the last four months of 2018, a definite cold snap struck the housing market. Sales were down 17 percent year over year; and, in December, pending sales were down 21 percent. In 2019, the housing market started off a lot colder than everyone had been accustomed to. It was the coldest start since 2011 with an Expected Market Time of 152 days, buyer’s market territory (see Figure 1). Early in the New Year, the market began to thaw as more and more 22

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buyers entered the fray. This warming trend occurs every year. By the end of January, a couple of days before Super Bowl Sunday, the active inventory had climbed by 10 percent while demand (prior 30 days of pending sales) jumped by 40 percent. As a result, the Expected Market Time dropped from 152 days, a buyer’s market, to 110 days. At 110 days, the Orange County housing market was a balanced market. A balanced market is one that does not favor either buyers or

sellers. During the same period in 2017, the inventory increased by 14 percent and demand increased by 35 percent, which dropped the Expected Market Time from 68 to 57 days, a hot seller’s market. This year’s market is completely different from what we’ve experienced in the past seven years. From 2012 through 2018, housing moved to a seller’s market by the end of January. In most instances, it quickly moved to a hot seller’s market with Expected Market Times

Figure 1. In 2019, the Orange County housing market experienced its coldest start since 2011 with an Expected Market Time of 152 days, buyer’s market territory.

below 60 days. That was not true for 2019. Instead, the market moved to a balanced market. Sellers were not in the driver’s seat like they had been from 2012 through 2018. Orange County housing started the year off on a completely different foot in 2019, and it was all because of the shift in the market

during 2018. The shift was a move away from the recurring theme of “not enough homes on the market” to “not enough demand.” For years, the story was that housing was suffering from a supply problem, but that morphed into a demand problem late last year. It was good old-fashioned supply and demand from Econ 101. These shifts

Figure 2. From 2012 through 2018, the story in housing was that there were not enough homes on the market to satisfy the demand, a situation that put sellers in the driver’s seat. But by January 2019, the market had moved to a balanced position, one in which the inventory had increased, the demand had dropped, and the Expected Market Time was 140 days.

Figure 3. Although the active listing inventory was up 57 percent at the end of January over last year at the same time, demand was down 18 percent.

caused the market to change. Since 2012, housing has had very little supply and plenty of demand, which favors sellers. But, in 2018, as the supply increased and the demand dropped, the market shifted from a seller’s market to a balanced market to a slight buyer’s market (see Figure 2). That is precisely where housing started 2019, as a slight buyer’s market. A slight buyer’s market is one in which prices are not falling that much at all, but buyers no longer must trip over one another to purchase. Buyers can take their time and call more of the shots in the purchase contract. They are in control. By the end of January, the market had thawed enough to shift to a balanced market. This paves the way for a Spring Market that will be better than the end of 2018 but will not be as sizzling as what everyone has become accustomed to. The best time to sell a home, with the lowest Expected Market Time readings for the year, occurs from the Super Bowl through mid-May. This year will be no exception; it simply will not be as robust as it has been during the past seven years. Many homeowners and sellers are holding their collective breath with high expectations for the Spring Market. Remember, it is a balanced market, not a seller’s market. It will remain balanced until mid-May. Demand will remain relatively stable while more homes come on the market. As a result, the Expected Market Time will rise from mid-May through the Summer Market. Why will Orange County housing not be hotter in the spring? The answer is simple: supply and demand. The supply of homes, the active listing inventory, was up 57 percent over last year at the end of January. Demand, the last 30 days of pending sales, was down 18 percent (see Figure 3). With more competition among sellers and less demand from buyers, the market feels a bit sluggish. The last time the Orange County housing market was balanced during the spring was in 2011.

Steven Thomas has a degree in quantitative economics and decision sciences from the University of California, San Diego, and more than twenty years of experience in real estate. His bimonthly Orange County Housing Report is available by subscription and provides housing market analysis that is easy to understand and useful in setting the expectations of both buyers and sellers. His website is www.ReportsOnHousing.com. OC REALTOR®

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MARCH | APRIL 2019

COVER STORY

THE MODERN GREEN HOME Increasing insulation, installing high-performance windows, replacing old lightbulbs with more efficient ones, improving air circulation and ducting, using a smart thermostat to control heating and cooling, and installing a solar system to provide power can transform an older tract house into a modern green home.

Helping an Ugly Duckling Mature into a Graceful Swan How one family gradually converted an older house into a modern, green home. By Olesya Drozdova REALTORÂŽ AND GREEN COMMITTEE MEMBER

nce upon a time, not so very long ago, there was an ordinary 1977 tract house in desperate need of a makeover. Attracted by its location backing to a natural trail and overlooking Serrano Creek, new owners agreed to buy it on short sale, faults and all. Somehow, they sensed that, with time, money, and imagination, they could help this ugly duckling mature into the graceful swan it was meant to be. Their first project was a new air conditioning system. Removing asbestos and installing new ducts was only the beginning. During the process, they realized that the old air return vent, which had been placed downstairs, was inefficient because it sucked the cooler air that collected on the lower floor into the system rather

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COVER STORY

than gathering the warmer air that naturally collected upstairs. By moving the air return upstairs, they enabled the system to operate more efficiently. It also became apparent to these new homeowners that it would not be necessary to heat the entire 2,500 square feet of their home equally all the time. And they realized that the north side of their house did not require as much cooling as the south side did. Thus, they came up with the idea of splitting their house into four separate climate zones rather than taking the much more common twozone approach. Addition of a smart home thermostat enabled them to heat and cool these zones individually as needed. They added a whole house fan to complement the air conditioning system, put new insulation in the attic, and installed a betterinsulated front door and garage door. Probably the easiest transformation they made was to replace older incandescent lighting with LED lighting throughout. And they added a smart light switch. While this might seem like gadgetry overkill, it is not. Imagine coming home late at night and being able to turn on the lights in your house before you touch your garage door opener or put your key in the front door Continued on Page 28

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COVER STORY

Continued from Page 27

lock. The safety and convenience are priceless, but not costly. They replaced old windows with windows that have both ultraviolet- and infrared-protective coatings. These windows are not only aesthetically more pleasing but also play an important role in preventing sun damage, keeping heat out, and helping to stabilize the indoor environment. To generate electricity, these homeowners installed two solar systems, one for the house and one for the swimming pool, which has reduced their electric bills by an average of $25 each month. These homeowners also took a “zoned approach” to landscaping. Both the front and back yard are served by a smart drip irrigation system, which they can program according to their needs and preferences and operate with their smartphones. The front yard has both a traditional green-grass zone and a drought-tolerant zone, surprisingly with blooming and fruiting blueberries, strawberries, and oranges.

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The back yard features a covered paved patio with drop-down screens and a ceiling fan, and a zone for fruit trees. (By the way, the patio cover not only provides shade but also serves as a base for the solar system that heats the swimming pool.) One side yard proved to be ideal for an herb-and-vegetable garden. The other side yard houses the “utility” units needed to filter the pool and air condition the house. And finally, there is a compost bin in which the homeowners develop natural fertilizer to feed their lawn and plants. Because security and safety are important, these homeowners installed motion detectors and a security system that can alert them to any open doors. A Ring electronic doorbell allows them to see, hear, and communicate with visitors remotely and, if necessary, check later to learn who visited their door.

A Schlage smart lock makes it possible to open the door with a smartphone or with a voice command rather than fumbling for a key. And this lock will automatically lock itself after a few minutes, a feature that comes in handy when the homeowners return home with groceries or children or dogs, haven’t enough free hands to lock the lock immediately, and might forget to do so later. An ugly duckling older house can mature into a graceful swan home if its owners are willing to spend the time and money to make it happen and if they understand that “going green” is not only about preserving precious resources but also about solving problems, increasing convenience, and making a home truly serve the needs of its residents. n

COVER STORY

Aging Solar— Should I Be Concerned? Electrical rates from utilities in Southern California are increasing faster than solar panels are degrading. A solar panel installed today will still be generating at 70 percent of initial output thirty to forty years from now.

olar photovoltaic (PV) systems have experienced phenomenal growth in recent years, evolving from a niche market to a mainstream electricity source for residential buildings. Today, the electric energy future belongs to those homeowners who innovate, and many Southern California homeowners have done exactly that by installing photovoltaic systems on their homes over the past twenty years. Now, some early adopters of solar energy are asking, “Is it time to replace or upgrade my system?” If you are keeping your home, it is natural to consider the value of new PV because prices have dropped more than 80 percent in the past ten years. Other people are considering purchasing an existing home with solar and are concerned about both PV system failures and the effect an older system might have on roof integrity. So, should you worry about that solar photovoltaic system on the roof? Simple answer: If it isn’t broke, don’t fix it! Those existing panels are doing quite well in producing electricity for you day after day with as little maintenance as By Gene Beck washing the panels off with a hose once EXECUTIVE DIRECTOR, or twice a year and making sure there GREEN NRG INSTITUTE is no shading throughout the day and the season. And they have been protecting your existing roof extremely well over the years. Unless you need to replace your roof or want to change its appearance, leave things alone. Quality and reliability continue to be critical elements for steady growth in the solar industry. The equipment is expected to perform reliably on a roof for more than twentyfive years, with a maximum degradation of only 10 percent in ten years and 20 percent in twenty-five years (even in extreme environmental conditions). California will not allow solar photovoltaic panels to be sold in the state without this minimum guarantee from the manufacturer.

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New panels on the market have a small improvement in output per square foot but not enough to consider upgrading for economic reasons. Yes, the cost of purchasing solar panels has dropped by as much as 80 percent in ten years and is still declining; however, the panels and related equipment represent only 35 percent of the total cost of the photovoltaic system. Installation, permits, and the support equipment needed account for 60 to 70 percent of the cost (see Table 1), and these costs have gone up, not down. In 2010, the installed cost of solar panels was $7.24 per watt, and in 2017 costs went down to $2.80 per watt. This downward trend will continue, albeit at a slower pace. The National Renewable Energy Laboratory (NREL) also reports that failure rates are relatively low at 5 in 10,000 installations annually. You can be sure that the roof will wear out long before the photovoltaic system will fail or no longer be productive. Not long ago, the California Building Standards Commission (CBSC) unanimously confirmed new standards requiring that solar photovoltaic panels to be installed on new low-rise residential buildings starting January 1, 2020. Builders who do not incorporate solar PV in new construction will not be able to pull permits to build. My bet is that a solar panel installed today will be up and running (and still generating at 70 percent of initial output) thirty to forty years from now. The truth is that electrical rates from utilities in Southern California are increasing faster than solar panels are degrading! n Gene Beck is the Executive Director of the Green NRG Institute and author of Grid Parity: The Art of Financing Renewable Energy Projects and the Dictionary of 21st Century Energy Technologies. His email address is gbeck@greennrg.us.com.

www.istockphoto.com/Patrick Civello

Causes of Solar Panel Degradation n Extremely cold climates—heavy wind and snow loads n Extremely hot climates—with long periods of ultraviolet exposure n Anything “caked” on the panel—including dust, dirt, leaves, cement dust, and paint overspray

Photovoltaic System Owners Should n Obtain copies of the original contract and all permits n Obtain copies of the warranties on all system components n Evaluate the shading from nearby structures or landscaping

n Check out the manufacturer(s) n Inspect applicable homeowners’ association documents n Inquire about the financial stability of homeowners’ associations in surrounding areas. Their lack of tree trimming may affect the output of your panels!

Table 1. Solar Replacement Considerations Fixed-Tilt Residential

SOURCE: National Renewable Energy Lab

OC REALTOR®

MARCH | APRIL 2019

Photos: Honomobo

Photos: Kubed Living

COVER STORY

Shift Your View of Shipping Containers Expand your living space with a creative granny flat. By Sabrina Blair DIRECTOR OF COMMUNICATIONS

ccessory dwelling units (ADUs), or “granny flats,” have regained popularity as a result of housing shortages and affordability concerns. In the recent years, the California Legislature passed AB 2299, AB 2406, and SB 1069, which required cities to allow accessory dwelling units within single-family residential zones. ADUs are a great option for maximizing large residential lots and adding living space to your home. One inventive option for ADUs that has been growing in popularity is shipping containers. Yes, the kind that are stacked and loaded onto ships! Shipping containers are an eco-friendly alternative to traditional building materials, and they are both durable and portable. Many companies now specialize in converting shipping containers into homes.

site-built houses. Because these units are custom built for each client, the company can tailor the façade to match the primary residence—as many cities currently require. The price of Kubed Living’s shipping-container units starts at $55,000 and varies with size and customization.

n Kubed Living offers custom-built shipping-

Each city has its own regulations and guidelines for ADUs. We recommend that you check with your city before purchasing or constructing. Visit www.ocar.org/adu to view the municipal codes and contacts for each city. n

container units that vary in size from a 160-squarefoot studio to as large as you can imagine. Kubed Living follows international building codes, and its units require building permits exactly like

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n Honomobo, another vendor of shipping-

container homes, offers several predesigned options. Honomobo’s Mstudio, a one-piece 273-square-foot studio, is ideal for an ADU and utilizes every square inch to become an efficient and adaptable space. Honomobo units are factory built and are shipped to your property complete. The base price of the Mstudio is $98,318. Larger units cost more. Pricing does not include local taxes, site services, foundations, delivery and setup, or permits.

COVER STORY

Four Surprising Benefits of ShippingContainer Homes

Surplus shipping containers may offer one way to make more houses available and to make housing more affordable. By Marissa Hughes COMMUNICATIONS COORDINATOR

here are many ways to make your home green or greener, but a shipping-container home takes green to the next level. Have you ever imagined yourself living in one? Well, you might want to consider it! Shipping containers are made to endure all kinds of abuse from water and weather while protecting the goods inside. Here are four benefits of shipping-container homes.

1.They are affordable.

Because shipping containers are not in high demand for use as homes, buying one is much cheaper than purchasing a house. Container homes come preconstructed with a ceiling, walls, and floors so all you need to do is arrange the interior to your liking. Having them preconstructed saves time and money because dividing the interior space requires far less time and far fewer materials than constructing a traditional home from scratch.

They are portable.

hipping containers can offer you freedom! How nice S would it be to take your home with you when you travel? Well, you can if you design yours to be moved. If you mount your shipping-container home on a trailer bed, you will have the freedom either to travel around the country with it or to park it and stay put. Theoretically, you could ship your home anywhere in the world because a system for transporting shipping containers on both land and sea already exists.

If you want something that is affordable, eco-friendly, durable, and portable, then a shipping-container home just might be what you are looking for! n

They are eco-friendly.

illions of shipping containers M around the world go unused. Rather than allowing them to sit in junkyards while they deteriorate, people are buying them and turning them into homes. By repurposing one of these containers, you reduce not only the amount of waste that goes into the environment but also the need for building materials like brick, concrete, and wood.

3.They are durable.

Photos: www.istockphoto.com/ Nerthuz

A shipping-container home will last. The core structure is a high-quality steel box designed to withstand tough weather conditions and temperature extremes. And because shipping containers are made of steel, they are impervious to insects like termites and carpenter bees!

OC REALTORÂŽ

MARCH | APRIL 2019

GADGETRY

MySmartBlinds are simple and can be customized to save energy and reduce heating and cooling costs They are easy to install, can run on solar battery power, and can be connected to a smartphone or other smart home device to allow either advance scheduling or on-demand control. By Albert Ornelas DIGITAL MEDIA SPECIALIST

“With MySmartBlinds, homeowners can maintain their home’s security, temperature, privacy, and light— all in one convenient place.” — Emily Brimhall, CEO and Founder of MySmartBlinds

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ySmartBlinds are horizontal blinds that can be customized to fit the windows in any home. They come in two colors, white and walnut. Patented SmartLock technology allows homeowners to snap the blinds in place with the push of a lever and eliminates the need for specialized tools or professional installers. Emily Brimhall, CEO and founder of MySmartBlinds, came up with the idea for this product. While struggling to install new blinds in her own home, she wondered if it might

be possible to eliminate the need either to use tools or to hire help to install window coverings. As the result of Brimhall’s musings, her company has designed easy-to-install blinds, an Automation Kit for smartphone control of these blinds, a Smart Switch for remote access within Bluetooth range, the Bridge (which connects to either Amazon’s Alexa or Google Home devices), and the Solar Panel (which powers a continuously charging battery). “With MySmartBlinds,

The Smart Bridge is the exclusive WiFi bridge for the MySmartBlinds product family. With this device, customers can use either Amazon Alexa or the Google Assistant with voice control to adjust the tilt of the blinds while they are away from home.

Patented SmartLock technology allows homeowners to snap MySmartBlinds in place in seconds with the push of a lever. There is no need either to use tools or to hire a professional installer. MySmartBlinds are powered by a solar battery. Smart communication between the motor and the blinds can result in substantial savings on heating and cooling bills.

homeowners can maintain their home’s security, temperature, privacy, and light—all in one convenient place,” explains Brimhall, whose goal was to help homeowners get back to the things in their lives that matter most. The MySmartBlinds Automation Kit controls the tilting of the horizontal blinds on a schedule and on demand from a smartphone. After downloading the app for an Apple iOS or Android smartphone, homeowners can increase either light or privacy on demand. And this kit gives them the power to maintain room temperatures more efficiently, thereby lessening the need to operate either heating or cooling appliances. By setting the daily and weekly schedules on their smartphones, homeowners can use sun-tracking to maintain the light levels they prefer even as times and seasons change. The MySmartBlinds system includes a peel-and-stick Smart Switch that can be placed on a wall, cabinet, or other furniture. The switch is removeable for handheld capability to adjust blinds

throughout the house. Using only one switch, homeowners can control up to thirty-two blinds. The switch can override scheduled preferences for on-demand control when there is an unexpected need for increased light or more privacy. The Bridge, the exclusive WiFi bridge from MySmartBlinds, was launched as a successful Kickstarter in 2017. The pitch was to users who might want to access their window coverings through the Amazon Echo or Google Home devices. With the Bridge, users can control their blinds with voice commands when they are away from home and outside Bluetooth range. The MySmartBlinds Solar Panel is powered by the sun or by the micro USB charging cable for low-light windows. Rather than being bulky, it is a bar that is designed to attach discreetly on the back side of MySmartBlinds, where it converts solar energy into electricity. The Solar Panel was created to eliminate the need for repeated charging via an electrical outlet and can hold a charge for about six months. For more information about MySmartBlinds, the Automation Kit, the Smart Switch, the Bridge, or the company’s Solar Panel products, visit www.mysmartblinds.com.

OC REALTOR®

MARCH | APRIL 2019

CRMLS UPDATE

When Farming Goes Too Far:

Expired Listings and CRMLS Rule 12.11 Many homeowners have reacted with frustration and resentment at being contacted by multiple real estate agents when their property listings either expire or cancel from the MLS. Such contacts have had a very negative impact and, under CRMLS Rule 12.11, are illegal.

was sitting in Graziano’s pizzeria for a birthday celebration for my father-in-law when my sister-in-law barreled into the restaurant and went into a tirade about agents who kept calling her. She had received more than a dozen telephone calls, the vast majority being robocalls, since her property had expired from the Multiple Listing Service (MLS) earlier that morning. The few telephone calls that she’d decided to answer resulted in awkward conversations with agents who clearly knew nothing about her property and, in her opinion, did not know what they were doing. (She was a REALTOR® about ten years ago.) Unfortunately, her experience is very typical for a homeowner who has a listing either expire or cancel from the MLS. What many agents don’t realize is that contacting a seller because his or her listing has either expired or canceled in the MLS is a violation of California Regional Multiple Listing Service (CRMLS) Rule 12.11 (emphasis added): “12.11 Use of MLS Information. In recognition that the purpose of the MLS is to market properties and offer compensation to other Broker Participants and R.E. Subscribers for the sole purpose of selling the property, and that sellers of properties filed with the MLS have not given permission to disseminate the information for any other purpose, Participants and Subscribers are expressly prohibited from using MLS information for any purpose other than to market property to bona fide prospective buyers or to support market evaluations or appraisals as specifically allowed by Sections 12.14, 12.15, and 12.16. MLS information may also be used to develop By Edward Zorn Statistics, Market Condition Reports, VICE PRESIDENT AND and Broker or Agent Metrics. Any use GENERAL COUNSEL, of MLS information inconsistent with CALIFORNIA REGIONAL these sections is expressly prohibited. MULTIPLE LISTING SERVICE Nothing in this section, however, shall limit the MLS from entering into licensing agreements with MLS Participants and Subscribers or other third parties for use of the MLS information.” Trolling expired or canceled listings to secure a new listing clearly falls outside the permitted uses of MLS information pursuant to Rule 12.11. My sister-in-law did not agree to have her property listed in the MLS so that it would be easier for an agent to get new business. She placed her home in the MLS to secure a buyer who might be represented an agent other than her own.

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Agents, or worse, computers, that call her are not gaining an upper hand in securing her business. What they are very successful in doing is angering her as a seller and greatly diminishing her respect for the REALTOR® community. At the California Association of REALTORS® Spring Conference in 2018, Elizabeth MillerBougdanos, the C.A.R. staff attorney to the MLS community, provided a legal update at the MLS Committee. She mentioned in passing that agents soliciting for new business could not use expired listings. The room instantly was abuzz with conversation. Many of the agents in the room appeared to be in shock. Elizabeth pointed out that this has always been the rule and is very obvious from the clear language of the rule. She was surprised that a room full of skilled, experienced REALTORS® who were in C.A.R. leadership positions found such an obvious statement to be controversial. As a result of the confusion generated at the Spring Meetings, CRMLS convened a task force to investigate the issue to consider alternatives to this well-established rule. The CRMLS task force was made up entirely of active and working agents and brokers, who sought input from each of their local Association MLS Committees and Boards of Directors. They brought these comments and insights back to task force meetings that explored whether any of the language in the rules should be modified. After evaluating some truly appalling stories of actions taken by agents attempting to secure a new listing and after weighing those negative impressions against the somewhat common practice of marketing directly to expired listings, the task force concluded that there was no need to modify or change the existing rule as written. The task force members decided that the language in Rule 12.11 does prohibit agents from marketing to expired listings; however, they directed the CRMLS Compliance

Trolling expired or canceled listings in an effort to secure a new listing clearly falls outside the permitted uses of MLS information pursuant to Rule 12.11.

Elizabeth Miller-Bougdanos, the C.A.R. staff attorney to the MLS community, mentioned in passing that agents soliciting for new business could not use expired listings. The room instantly was abuzz with conversation.

As a result of the confusion generated at the Spring Meetings, CRMLS convened a task force to investigate the issue to consider alternatives to this well-established rule.

Please remember that the MLS exists to help brokers cooperate with one another in assisting established clients to buy and sell properties.

Department not to issue citations for any alleged violations for that practice. They determined that marketing to expired listings is a very fact-sensitive allegation and would most appropriately be addressed by having either the seller or the prior listing agent report these solicitations to the local Association for a disciplinary hearing. By proceeding in this manner, a local Association’s Professional Standards hearing panel would have the ability to fine up to $15,000 for any violation of Rule 12.11. The CRMLS Compliance Department still routinely receives complaints and reports about agents who are soliciting sellers as a result of their homes having gone to an expired or canceled status. In each of these instances, CRMLS recommends that the reporting party immediately file a complaint with the local REALTOR® Association or Board of the violating member.

In addition, I have personally fielded numerous calls from sellers who have contacted the MLS complaining about the aggressive behavior and invasion of their privacy and personal space by agents soliciting their expired listing. A number of these sellers have even threatened lawsuits. Many expressed frustration and regret about ever having listed their property in the MLS. These activities—and the increased aggression in going after expired listings—has had a very negative impact and has lowered the reputation of the real estate community in our area. Soliciting expired listings is a violation of the rule, and the practice needs to be stopped. Please remember that the MLS exists to help brokers cooperate with one another in assisting established clients to buy and sell properties. The MLS does not exist as a shortcut or method for you to obtain a new client. OC REALTOR®

MARCH | APRIL 2019

REALTY REALITY

2018 NAR Profile Reveals How Buyers and Sellers Find the Agents They Use Instead of “agent shopping,” both buyers and sellers are more likely to rely on relationships, referrals, and reputation.

e have noted that the 2018 National Association of REALTORS® Profile of Home Buyers and Sellers contains valuable information for sellers and their agents as to how buyers find the homes that they ultimately buy. The profile also contains valuable and interesting information as to how both buyers and sellers find the agents that they ultimately use. Eighty-seven percent of buyers used an agent in purchasing their home. That number has increased steadily since 2001, when the figure was 69 percent. Six percent of buyers purchased directly from a builder, and 7 percent bought directly from an owner. Of the 87 percent, how did they find their agent? Not a lot of “agent shopping” takes place among buyers. Sixty-eight percent interviewed only one agent; 18 percent interviewed two. So how do you get to be on the interview list? Referrals are far and away the dominant factor. Forty-one percent of buyers chose to work with an agent who was referred to them by a friend, neighbor, or By Bob Hunt relative (or with an agent who was FORMER NAR DIRECTOR a friend, neighbor, or relative). Twelve percent of buyers chose to work with someone with whom they had previously bought or sold a home. Thirteen percent came from websites, either of a specific property, or without reference to a property. The rest of the sources are widely varied—for example, 4 percent of buyers contacted their agent because the agent’s name was on a “for sale” or “open house” sign. This might seem like discouraging news for new agents, who might wonder, “What chance do I have of connecting with a buyer if I haven’t already built a referral base and a list of past clients?” Here, a new agent wants to remember that “friends, neighbors, or relatives” category. Forty-one

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REALTY REALITY

Photos: www.istockphoto.com/ Jelena Danilovic

“Eighty-seven percent of buyers used an agent in purchasing their home.”

percent of buyers found their agent through referrals from them. You may know a lot of people who aren’t about to buy; but some of them know people who are about to buy. Make a list and make sure your contacts know you are in the business. Not just the first month, but throughout your career. Moreover, there are—just as there always have been—other ways of coming into contact with buyers who may choose to work with you. Some ways work better than others. Five percent of buyers found the agent they used as a result of an open house. Interestingly, only one percent found the agent with whom they worked as a result of walking into or calling an office and meeting the agent who was on duty at the time. In general, “floor time” is not very productive. Agents who do want to get connected with buyers can prepare themselves so that a contact is more likely to lead to a relationship. Fifty-two percent of buyers said that what they wanted most was “help finding the right home to purchase.” In the 2018 survey, ninety-one percent said that knowledge of the real estate market was a very important quality for an agent to have. That is, buyers want agents who have “product knowledge”— agents who know the market and the inventory. An agent who can impress a buyer with knowledge of the market (not just of company listings or the particular house he or she is holding open) is the one who stands a good chance of establishing a relationship with that buyer who walks into the open house or makes a call to the office. Sellers are just as likely as buyers to work with an agent. Ninety percent of sellers had their home listed on the Multiple Listing Service (MLS). But sellers, too, don’t do much “agent shopping.” Similar to buyers, 75 percent interviewed only one agent; just 13 percent interviewed two. Again, referrals and past business relationships were the dominant sources of agent contact. Thirtynine percent used an agent referred by a friend, relative, or neighbor (or an agent who fit one of those categories). Twentyfour percent of sellers employed an agent with whom they had previously bought or sold a home. Other seller contact sources drop into single digits. Interestingly, compared with buyers at 9 percent, only 4 percent of sellers found their agent through a website. Again, there are venues that agents who lack a referral or past client list might want to think about. Open houses account for 4 percent of the contacts that eventuate into a working relationship with sellers. Newsletters and personal contact together account for 7 percent. There’s still some point to knocking on doors, sending out mailers, and dialing the phone. Would-be listing agents would do well to note that the most important factor—31 percent—in choosing a seller’s agent was reputation. Sure, it’s nice to have a track record of sales activity, but there are other aspects to reputation as well. Nineteen percent of sellers said that honesty and trustworthiness were the most important factors in considering an agent. Things like attitude and integrity are also components of one’s reputation. Agents who want to build a business should pay attention to such things. Word gets around. Bob Hunt is a former director of the National Association of REALTORS® and is the author of both Ethics at Work and Real Estate the Ethical Way. His email address is scbhunt@aol.com. OC REALTOR®

MARCH | APRIL 2019

Dave’s

Top To 10

Economic Econo omic and and nd Other Other Factors Factors cttors By David Girling REAL ESTATE ECONOMIST, GIRLING REAL ESTATE INVESTMENT GROUP

eal Estate

That May Affect R

Familiarity with these ten factors will enable you to address questions about the real estate market, especially about real estate values and interest rates today and where they may be headed tomorrow.

ome values are appreciating (but at a slower annual rate), housing affordability is low, interest rates increased throughout most of 2018 but corrected late in the year, and housing inventories are low but increasing. These factors, along with the others discussed in Dave’s Top 10, are interrelated, and each is examined in greater

10.

detail in a more comprehensive web version of this article, which was released in February 2019. The goal of Dave’s Top 10 is to give you some information so that you can better understand the economic issues affecting real estate today, answer questions your clients may ask, and come to some conclusions about where the real estate market may be headed.

ome Sales/Housing Demand. Stock market volatility (which has affected consumer confidence), uncertainty over government shutdown, rising interest rates (until recently), higher home prices (resulting in lower affordability), tax law changes, and slowing global growth (China is at its slowest annual pace since 1990) have caused buyers to pause and home prices to correct. As a result, the demand for housing has declined as evidenced by the decline in existing home sales. (Pending and existing home sales are indicators of demand for housing.)

Source: California Association of REALTORS®

9. 40

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ew Construction. Homebuilders are not keeping pace with the demand for new housing, and homebuilding has slowed. A recent builder survey reports, “Customers are taking a pause due to concerns over increasing interest rates and home prices.” Housing starts were 1,256,000 units in November, but they need to be in the 1.5 to 1.6 million range to bridge the inventory shortage.

OC REALTOR®

Artwork: www.istockphoto.com/ Silver Badge: Totally Out / Circles: Simmo Simosa

GUEST COLUMN

ousing Inventories: Inventories both nationally and in California have been on the rise with supply in California at 3.5 months, up from 2.5 months a year ago (6 months is considered normal). Active listings have also increased, up 31 percent in November year over year. Supply, which has been low the past few years, coupled with reduced demand is bringing the supply-demand equation into equilibrium. But despite some improvement, many factors (e.g., potential for higher property taxes, capital gains, loans with higher interest rates, etc.) are keeping inventory levels low.

Source: California Association of REALTORSÂŽ

tock Market Volatility and Lower Interest Rates. Interest rates increased throughout most of 2018 but fell off toward the end of the year with the volatility in the stock market and economic uncertainty. Investors were selling stocks and investing in safer Treasuries, which brought down yields. The 10-year Treasury, the benchmark for mortgage rates, is 2.65 percent (2/11/19), having reached a high of 3.23 percent in November. The rate for a 30-year fixed-rate mortgage is now approximately 4.46 percent, and the fully amortized mortgage payment on a $500,000 loan is $2,522 per month. With the Federal Reserve indicating that it will be scaling back on its rate increases, expect rates to stay close to current levels throughout 2019. However, in view of all the uncertainty associated with the government, expect the unexpected.

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GUEST COLUMN

oreign Investment in the United States. Despite the strong dollar, foreign buyers still see the U.S. real estate market as a “safe haven” and continue to impact the U.S. real estate market. The top five countries of foreign buyers are China, Canada, the United Kingdom, Mexico, and India, and the top five states for purchases by foreign buyers are Florida, Texas, California, New Jersey, and Arizona. Among purchases by foreigners, 44 percent were all cash, 10 percent were over $1 million, and the median sales price was $302,290, compared with the U.S. median price of $263,800 (Source: NAR study for the period 4/2016–3/2017).

ome Values. Home values have been appreciating at unsustainable rates for the past few years; but over the past six to nine months, they have been decelerating and leveling off. Although median prices for California and Orange County at $557,600 and $785,000, respectively, were up 1.45 percent and 1.3 percent in November, they appreciated at levels below what we have seen previously. Expect home values to increase, but at reduced rates, in the 2 to 3 percent range in 2019.

ortgage Originations. With rising interest rates, loan refinances in December as a percentage of total mortgage originations were 29 percent, down from 40 percent a year earlier. Adjustable rate mortgage (ARM) originations were also the highest ever at 9.2 percent of total originations (5.6 percent the year before), reflecting the lower rates in December and borrowers looking for additional flexibility when competing for a home purchase. Lending is very challenging today, and lenders will need to become more creative with their loan programs to promote more purchase loans and maintain the overall level of originations.

Disclaimer: The opinions expressed and the conclusions reached in this article are based on best-efforts analysis and are offered solely for informational purposes. The accuracy of the information is deemed reliable but is not guaranteed by the author, who is not responsible for typographical errors or other inadvertent inaccuracies. Any individual or entity intending to rely on this information should seek verification through personal investigation or investigation by qualified individuals. All information is provided “as is,” without any warranty of any kind, either expressed or implied.

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OC REALTOR®

GUEST COLUMN

2. 1.

illennials. “It’s not that they’re not going to buy homes,” said the Deputy Chief Economist at First American. “It’s just that they’ll purchase these homes later in life.” Millennials, the largest generation in history, are tech savvy, educated, ethnically diverse, and are marrying and having children later in life. Their homeownership rate is 8 percent below that of the Gen Xers and baby boomers at the same age. They are postponing homeownership because of high levels of student loan debt, difficulty in accumulating funds for a down payment, affordability challenges, and delayed marriage and household formation. The good news is that millennials still see homeownership as a big part of the American Dream and that millennial homeownership rates are projected to increase.

.S. and California Homeownership Rates. Across the United States, the homeownership rate now stands at 64.4 percent, reflecting a steady increase from its low of 62.9 percent a few years ago. The rate in California is 55.2 percent, the third lowest behind Washington, D.C., and Hawaii. As mentioned above, look for millennials to drive the homeownership rate. Upward.

ffordability. Higher interest rates and home price appreciation have impacted affordability such that the percentage of Orange County homebuyers who can afford to purchase a median-priced, existing, single-family home is currently 20 percent. The percentage for California as a whole is 27 percent. According to C.A.R., the income needed is $125,540 in California and $177,050 in Orange County. Affordability is the biggest challenge faced by the housing market, and it does not appear to be showing any significant improvement, even with the correction in interest rates in late 2018 and the slowing appreciation rates for home prices. Housing affordability will define our market for the next few years.

David Girling completed his undergraduate degree at the University of Southern California and earned an MBA from the Anderson Graduate School of Management at UCLA. In 2008, he formed Girling Real Estate Investment Group (Girling REIG) with his father, Bing. They are affiliated with Villa Real Estate. Dave was President of the Newport Beach Association of REALTORS® (NBAOR) in 2015 and has been a Newport Beach Harbor Commissioner since 2012. OC REALTOR®

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MENTIONS

An Opportunity to Learn and Improve Cassie—Thank you very much for your hard work making all the classes so well organized. I used to belong to another Board, but here is the first time I really can find so many classes that are so useful and educational for me. You always send out a reminder, which is so important for us agents who are always overwhelmed with our workload. You walk the extra mile to make sure that we will remember the classes. You are there every time before the

classes and get the class material prepared for us, too—and even show us how to make coffee with the fancy, handsome machine in the lobby. The educational contents are very informative and helpful for our daily job. The classes are definitely helping us to protect our clients’ interest and avoid our own ignorance. I really want to thank you and the Orange County REALTORS® Board for providing us with the opportunity to learn and improve. Lili Bai REALTOR®

Editor’s Note: Lili Bai sent this email to Orange County REALTORS® Education Director Cassie Cardenas in response to an email Cassie had sent to Lili and others reminding them that they were enrolled to take one of the many real estate– related classes offered each month in Fountain Valley and Laguna Hills by Orange County REALTORS®. For information about classes, see Education Central on pages 24–25 in this issue.)

The Article Looks Terrific

I Look Forward to Working with You

Sabrina and Sherri—The land brokerage article looks terrific in the magazine. Thank you much for the editing and presentation. The layout is really first class! Is there a PDF file of the article and/or a link that you could send to me? Cassie—I noticed that the Intro to Land Brokerage course is filling up. That’s awesome!

Danielle—I’ve been attending the Community Leadership Training Program series at Orange County REALTORS®, and it’s been great! I look forward to working with you.

Anna Lisa Lukes Executive Director, Orange County Regional Chapter Community Associations Institute

John Kaye Argus College Editor’s Note: John Kaye has thirty years of experience in real estate development. In 2015, he founded Argus College with the goal of sharing his knowledge with younger generations. His article titled “Land Brokerage Offers Opportunities for Knowledgeable REALTORS®” appeared on pages 36–37 in the January/February 2019 issue of OC REALTOR ®. Beginning in late January and continuing throughout February, he taught a series of classes at the Laguna Hills office. John’s email acknowledges the efforts of Orange County REALTORS® Director of Communications Sabrina Blair and Writer and Editor Sherri Butterfield in preparing his article for publication.

Editor’s Note: When Anna Lisa Lukes wrote an email to Orange County REALTORS® PresidentElect Danielle Corliss, the subject quite naturally turned to the new partnership between Orange County REALTORS® and the Community Associations Institute (CAI) and the exciting opportunities this partnership offers.

CALL FOR CONTENT TO BE INCLUDED ON THE MAGAZINE MENTIONS PAGE The Orange County REALTORS® and OC REALTOR ® welcome emails and social media postings for possible publication on the Mentions page in this magazine. These written materials should be brief (about 150 words) and cover real estate–related topics. They might offer comments, make suggestions, ask questions, or contain tips or ideas based on personal experience and intended to help REALTORS® in some way. Submitted emails and media postings must include the writer’s name and email address (for verification) though only the name will be published. They also should include any title or affiliation by which the writer wishes to be identified in a single line below his or her name. All written material may be edited for content, length, or style and may appear either online or in print. Emails become the property of Orange County REALTORS®. Although some may be answered, none will be returned. Emails intended for publication should be sent either to Director of Communications Sabrina Blair at Sabrina@ocar.org or to Writer and Editor Sherri Butterfield at Sherri@ocar.org. 44

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OC REALTOR®

AFFILIATES IN ACTION

Affiliates Assist at New REALTOR® Orientations in January and February Orange County REALTORS® thanks the Affiliates and others who assisted at the New REALTOR® Orientations on January 16, January 30, and February 13, and congratulates the new REALTOR® members who joined Orange County REALTORS® on these occasions.

January 16 w

Laguna Hills

Affiliates who helped Orange County REALTORS® welcome new REALTOR® members on January 16 in Laguna Hills were (from left to right) Peter “G” Giammarinaro, The Termite Guy; Marcia Edwards, Caring Transitions; Debbie Sinclair, Amethyst Locksmith; Diana Aguilar, Homestead Escrow; Affiliate South Chair Joe Pierce, Iron Key Escrow; Van Gordon, Farmers Insurance; and James Estakhrian, Geneva Financial.

January 30 w

Fountain Valley

Affiliates who helped Orange County REALTORS® welcome new REALTOR® members on January 30 in Fountain Valley were (from left to right) Steve Kaustinen, Goosehead Insurance; Andrew Pasillas, New American Funding; Randy Johnson, Lock-Tech; Dolores White, New American Funding; Heather Hill, Pacific City Escrow; Gina Leslie, Stewart Title; Affiliate North Co-Chair Kerri Finch, J&J Coastal Lending; Kendra Johnson, All Signs and Graphics; Affiliate North Chair Corvi Urling, Planet Home Lending; unidentified female guest; and Jonathan Pettibone, Stewart Title.

February 13 w

Laguna Hills

Affiliates who helped Orange County REALTORS® welcome new REALTOR® members on February 13 in Laguna Hills were (from left to right) Sean Perera, Three D Media; Diana Osborn, Home Warranty of America; Affiliate South Chair Joe Pierce, Iron Key Escrow; Kendra Johnson, All Signs and Graphics; Rajat Jetley, Movement Mortgage; and Gary Bridge (not pictured), First American Title.

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OC REALTOR®