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What’s the Right Way to Structure a Marketing Service Agreement?

Real estate practitioners entering into marketing service agreements with lenders, title companies, and other settlement service providers is a well-established practice, but a recent court decision shows why you have to structure these agreements the right way.

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An appellate court just ruled that it’s okay for a mortgage lender to refer business to mortgage insurers who are buying reinsurance from an affiliate of the lender, because the reinsurance is a bona fide service and the insurers are paying fair market rates for it. In other words, the arrangement doesn’t amount to a kickback.

Although the case involves a lender, insurance companies, and a reinsurer, the structure of the agreement is something that applies to the kind of marketing service agreements you might be involved in as an agent or broker. Any agreement you enter into with a lender or title company must be for actual services rendered and priced at fair market rates and not simply an arrangement for referrals.

How do you ensure a marketing agreement is appropriate under federal anti-kickback rules? The most important thing is to have it looked at by an attorney who’s familiar with the Real Estate Settlement Procedures Act, or RESPA. For a general idea, though, there are two tests you can apply:

1.Is the marketing fee you receive based on the number of referrals you make to the company, whether it’s a title company, a lender, or another service provider? If the fee corresponds to the number of referrals, you could be inviting a close look by the Consumer Financial Protection Bureau (CFPB), which is the federal agency that enforces RESPA.

2. If you have an arrangement to split costs on a joint project, like a newspaper ad, is the split reflective of what each of you get in return? For example, if you and the title company are splitting the cost of the ad down the middle, then half the ad should go to the title company and half should go to you. If the title company is covering 75 percent of the cost of the ad but only taking up 25 percent of the space, that split makes it look like the company is subsidizing 50 percent of the ad cost. Again, you could be inviting a close look by the CFPB.

Learn more about the recent court decision in the latest Voice for Real Estate news video from NAR. The video also looks at what was in the budget agreement enacted into law about two weeks ago. Among other things, the new law extends the tax deduction for mortgage insurance premiums and retains the prohibition on taxing forgiven mortgage debt as income. It also looks at why a recent Supreme Court decision on the regulation of bodies of water is important to your inbdustry.

Watch video now.

Robots are Starting to Do Showings

vre 80 stillA company called Zenplace in San Francisco is using robots to help its agents conduct showings. When people arrive at the unit, they’re greeted by what amounts to an iPad on a mobile stand that leads them around, but it’s personalized; it’s the agent’s image and voice that people see and hear. Other companies are coming out with their own versions of this.

It’s a good question whether this type of automation will take off. As people get used to buying goods at automated stores in which everything is done with your phone or credit card and no employees are around, it’s feasible mobile iPads will do the trick at showings.

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Screen grab from Zenplace video

Whether you like the idea or not, it’s a trend that’s poised to hit your industry. There are other tech trends you’ll be faced with whether you like them or not. One is a kind of virtual tour that’s more immersive than what you get by just wearing goggles. You get an additional tactile component, because you’re wearing gloves with sensors. Now you feel the door handle when you open the refrigerator as well as see it in multiple dimensions.

Will this be the norm six years from now? Who knows, but now that the genie’s out of the bottle, it’s not likely to get put back in.

REALTOR® Magazine spent a few days at CES in Las Vegas two weeks ago and brought back coverage of all types of tech innovations coming to real estate. CES stands for Consumer Electronics Show and it’s the big showcase each year at which companies try to wow people with what the’re cooking up for us.

You can learn more about CES and also about real estate robots in the latest Voice for Real Estate video. The video also looks at something the U.S. Department of Labor did a few weeks ago that could eventually be important to you because it promises to get the real estate industry one step closer to setting up association health plans (AHPs) for independent contractors.

The agency proposed adding “working owner” to the definition of employer for purposes of setting up AHPs, which would enable sole proprietors and small business owners to ban together for insurance under the large group market, which could make coverage available more cheaply than under the small group market. There remain a lot of hurdles, but this was a crucial step in the right direction.

The video also looks at the three-day federal government shutdown and what could happen to your pipeline of homes sales if there’s another one in a few weeks, which could happen since the short-term budget law expires in early February. If your buyers are applying for FHA-backed financing, they would probably be okay, although processing might take a bit longer. But if they[re buying a new house in a flood area, they might not be able to get flood insurance, and that would mean a delay in  closing.

Watch the video now.

Do Personality Assessments Work? Sometimes.

@maialisa, 2016. pixabay.com

@maialisa, 2016. pixabay.com

I’ve always been skeptical of personality assessments. After taking the DISC twice—once getting a D/C and more recently getting a high, nearly even I/D—I found that both results matched my personality on some levels and conflicted on others. This is where my skepticism come in. There’s truth in assessments to varying degrees.

Whether or not you’re looking into assessments for personal insight or to use as a tool for hiring, it’s important to find the right one for you. Recently, I wrote a piece for REALTOR® Magazine on EQ vs. IQ, which examines the concept of emotional intelligence and how it relates to working with clients. I interviewed experts in the field who offered actionable tips for getting in touch with your EQ and applying it to your job in real estate. The article is divided into three parts, and in the last section—which is targeted at broker-owners or hiring managers—I dive into how to recruit high-EQ candidates.

As part of my research, I took Keller Williams Realty’s Keller Personality Assessment (KPA), which I found to be the most accurate and enlightening assessment I’ve experienced to date. It encapsulated so many idiosyncrasies of my personality that it was astonishing. But I shouldn’t be surprised since their business model is all about building teams that work well together. What better way to get a window into a person’s true self than by asking them to take an assessment to learn how they’ll fit in with your group? The key word in that question is “window.”

Whether you’re using DISC, a brokerage tool like KW’s KPA, or another test, such as the Caliper Profile, look at it as one piece of the puzzle (e.g. don’t put all your eggs in one basket). You still need to make sure you’re recruiting the right person or making a good hire. Here are some takeaways after taking the KPA:

Know what you’re assessing. Hiring someone just because you like them or you “click” isn’t always a good idea. Really consider the skillset the job requires before administering the assessment. Know what you’re looking for and have a checklist. Make sure you’re judging candidates not only on their strengths but how those strengths might serve as either pros or cons in a specific position.

@Clker-Free-Vector-Images, 2014. pixabay.com

@Clker-Free-Vector-Images, 2014. pixabay.com

Understand that an assessment might not tell the whole story. Some candidates can overthink their responses when taking an assessment, which may affect accuracy. That’s why it’s imperative to ask follow-up questions pertaining to the results of any tests you administer. Ask the candidate how they feel about the results and how accurate they think they are. Ask for examples pertaining to candidates’ assessed strengths as they’ve played out in real-life or on-the-job.

Don’t put people in a box. I hate using that box cliché, but it’s true. Many assessments cement a person as one way or another, failing to consider how one trait might inform other characteristics. For instance, my high responsiveness, spontaneity, and logical problem-solving skills, coupled with my desire for independence, means I work best in environments that are busy, active, and give me a range of responsibilities to manage. But looking at each of those traits independently, you might not draw that conclusion.

In-person interviews are best. It’s much easier to read someone’s comfort level when you see their body language. You can also give them insight into your company culture. And according to Karina Loken, president of The Loken Group with Keller Williams Luxury International in Houston, if a candidate feels your office is a good fit for them, it’s always good for your organization.

 Read More: Is EQ More Powerful Than IQ?

Thank you for visiting today. If this is your first visit, take your time and look around. We have plenty of information and resources available to you. If you are a return visitor, thank you. We would love to hear from you and tell you how we can serve all your vacation and real estate needs.

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Guest Testimonial- Just wanted to give a testimonial to the great experience I had with Aqua Vacations last month. We stayed at Island Towers for 3 days. On the second day our code did not work for the door but a quick call to Aqua Vacations corrected the problems and got us in quickly. Also, I left some special jewelry from my husband for our 50th anniversary. I called Aqua Vacations who found my jewelry and mailed it to me. What a sweet response to my loss. They would NOT allow me to send them money for mailing. I cried when they called saying they had found it and would mail it to me. Thank you Aqua Vacations....a class act!!! Mrs. Vincent
Comfort Breeze manager was very helpful. The vacation rental was clean. I was very happy with the location. I was more than satisfied with the condition of the vacation rental. Overall, I recommend this vacation rental. Reviewer Comments: The view is great along with the access to the beach. The beach area was never crowded and was clean. The home furnishings were nice and decorated well. We did not care for the living room and kids room television to be connected. We could not watch television unless the children were asleep because the the televisions in those rooms play the same channel only. The rental was mostly clean but we did notice the fridge was dirty and we had to clean it before using it. The Shower doors and ceiling fan in the living room was not clean. It was mostly little things but with the cost of the cleaning fee it would be nice if those things were clean. There is also a couple boards coming up on the deck which is a tripping hazard. Overall we had a great time and the area is very quiet and relaxing. Dana was also great to work with. Lorena, Texas said
The Beach Club Resort Cottage 29-Greatest Vacation ever!! The vacation rental was spotless. I was very happy with the location. I was very satisfied with the condition of the vacation rental. Overall, I recommend this vacation rental. Reviewer Comments: The vacation rental cottage was great, we had 5 adults and two small children, and plenty of room! Watson
The Beach Club Cottage 29 manager was very helpful. The vacation rental was very clean. I was more than happy with the location. I was more than satisfied with the condition of the vacation rental. Overall, I recommend this vacation rental. Reviewer Comments: This was a great rental, felt like home away from home! Awesome Vacation! Morton
The Breaker's 31 The property manager was very helpful. The vacation rental was spotless. I was very happy with the location. I was very satisfied with the condition of the vacation rental. Overall, I recommend this vacation rental. Reviewer Comments: Our kids rentes this wonderful condo for our 25th anniversary! A wonferful gift! Fabulous 25th Anniversary Vacation Jodi B. said...
Mother, Daughter and Granddaughters Beach Get-a-way Stayed 9 days in June, 2014 I can't say enough great things about Dana at Aqua Vacations. She was prompt and professional with our booking and went above and beyond to accommodate our special needs which involved a very late arrival and a 10 day girls weekend get-a-way. We had a wonderful welcome waiting for us on arrival and the condo was better than expected. The Breakers location can't be beat and the beach was immaculately maintained. #31 exceeded our expecations in both the spacious size and all the furnishings. We will definitely we back and rent with Dana.
Awesome Vacation! Stayed 11 days in August, 2014 Services from rental manager Services from rental manager: 5 Cleanliness Cleanliness: 5 Location Location: 5 Property condition Property condition: 5 Overall satisfaction: Overall satisfaction: 5 a guest recommends this vacation rental Loved the location of this condo. So close to stores. We saw dolphins and star fish and so much sea life. We will definitely stay here again. Lots of storage. Only thing we would change is the facility does not have an outdoor grill.
breakers 31 Stayed 7 days in September, 2014 Nelson F recommends this vacation rental Condo was clean and comfortable. Pool is a bit small for pick months with lots of people. No complains. Nelson F
Girls Trip Summer 2014 Stayed 4 days in June, 2014 Services from rental manager Services from rental manager: 5 Cleanliness Cleanliness: 5 Location Location: 5 Property condition Property condition: 5 Overall satisfaction: Overall satisfaction: 5 Billie W from Minden, LA recommends this vacation rental We were very pleased with the rental. It was very nice. Billie W
“Great rental. Enjoyed 2013 - Headed back 2014!” Our stay was perfect - plenty of room, well furnished kitchen, beautiful bathrooms. The amenities were awesome. We enjoyed the fitness center, indoor and outdoor pool, yoga class, tennis lessons, and the arcade. The beautiful walk to the beach was perfect. The house was shielded nicely from the wind enabling us to enjoy being outside on the few days when the wind (beach-side) was miserable. Honestly, this vacation has altered our desire for a beach view - we prefer the ease, privacy, and comfort of this rental. No elevators or buggies! The Evan's Family
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