Official Newsletter of the REALTORS® LAND

Transcription

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OFFICIAL NEWSLETTER OF THE REALTORS® LAND INSTITUTE
WINTER 2013 Vol. 67 No. 1
2013 REALTORS® Land Institute
& National Association of REALTORS®
Course and Events Calendar*
March 18-20
2013 National Land Conference--Las Vegas, NV
April 1-3
Land Investment Analysis Course —Surf City, NC
April 4-5
Tax Deferred 1031 Exchanges Course —
Surf City, NC
May 6-17
Land: Conservation and an Environmental
Perspective on Redevelopment Hybrid NEW
May 6-31
Legal Aspects of Real Estate Online Course NEW
May 15-16
Land 101: Fundamentals of Land Brokerage—
Lakeland, FL
May 13-18NAR
Midyear Meetings & Expo--Washington DC
June 6-17
Basics of Eminent Domain Law Hybrid NEW
June 3-28
Tax Implications of Real Estate Hybrid
May 27
Memorial Day
July 1-12
Advanced Tax Deferred 1031 Exchanges for
Land Professionals Hybrid NEW
July 4
Independence Day
July 14-23
LandU Education Week—Chicago, IL
August 5-30
Site Selection Hybrid
August 5-30
Ethics in Real Estate Online Course NEW
August 26-27
NAR Leadership Summit Chicago, IL
September 2
Labor Day
September 3 – 27 Timberland Hybrid
September 3 – 27 Essentials of Negotiation Online Course
October 14
Columbus Day
October 9-12
Land Investment Analysis—St. Augustine, FL
November 4 – 29
Land Investment Analysis Hybrid
November 4 – 29
Legal Aspects of Real Estate Online Course
November 6-11
NAR Annual Meetings Conference & Expo—
San Francisco, CA
November 11
Veterans Day
November 28
Thanksgiving Day
December 25
Christmas Day
*Note: Additions and modiﬁcations will be made to this throughout the year.
Check www.rliland.com for updates.
CONTENTS
President's Message ............................................................. 3
News Briefs from National.................................................... 4
Member News .................................................................... 13
Lifetime ALCs ..................................................................... 15
Newest ALCs ....................................................................... 22
Education ........................................................................... 24
Chapter News ..................................................................... 32
FEATURE
Government Affairs Briefing ................................... 8
By Russell Riggs, RLI Government Affairs Liaison
National Association of REALTORS®
The REALTORS®' "Golden Thread" Celebrates
100 Years..............................................................10
By Frederik Heller, Manager, Digital Library & Archives,
Why I'm Optimistic About 2013 ..............................16
By Mark G. Dotzour, PhD, Chief Economist and Director of
Research, Texas A&M University's Real Estate Center
Farmland Auctions Becoming More Common—
Even for Small Farms .............................................18
By Murray R. Wise, ALC, CEO, Murray Wise Associates, LLC/
Murray Wise Capital LLC
New Ways to Connect Buyers and Sellers ................28
By David Hitchcock, ALC, Sales Associate, CBC Sauders Real
Estate in Lakeland, Florida, and Matthew Wengerd, Marketing
Strategist, CBCSRE/CBCSRD
Promote Conflict in Your Real Estate Team ..............29
By Andre J. van Rensburg CCIM, ALC, CIPS, President, Prudential
Commercial Real Estate Jacksonville
Alchemy: De Ja Vu: Turning a Code 1031 Exchange
into a Loss of Equity, Insolvent Intermediaries,
Bankruptcy ..........................................................33
By Dr. Mark Levine, ALC; Dr. Libbi Levine Segev; Dr. Jeffrey
L. Engelstad, Burns School of Real Estate and Construction
Management at the Daniels College of Business
PRESIDENT’S MESSAGE
UNDER ALL IS THE LAN D
BUILDING THE FUTURE
I am honored to be the 2013 National President of the REALTORS®
Land Institute (RLI)—an organization based on commitment that
is clearly stated in the opening lines of the REALTOR® Code of Ethics:
“Under all is land. Upon its wise utilization and widely allocated
ownership depends the survival and growth of free institutes of
our civilization.” With this being the centennial anniversary of the
REALTOR® Code of Ethics, we celebrate the importance of integrity in
the business and that the core of all real estate is our most precious
commodity, the land.
Winter 2013 Edition
Published by The REALTORS® Land Institute
430 North Michigan Avenue
Chicago, Illinois 60611
Telephone: 1.800.441.5263 (LAND)
Fax: 1.312.329.8633
E-mail: [email protected]
Website: www.rliland.com
Editor
Michele Cohen, Executive Vice President
Contributing Editor
Jennessa Berg, Institute Coordinator
Chuck Wingert, ALC
2013 RLI National
President
The business of land has seen changes.
Auctions have become key strategies
in sales, farm prices have risen beyond
expectations, and mineral, oil rights, and fracking (fracing) are
in the news. Many investors in the United States and abroad are
seeking land ownership opportunities since other investments
are not yielding desired income. Land is the “new gold.”
"...the core of all real
estate is our most
precious commodity,
the land."
Cover Photo
Courtesy of Dan Hatfield, ALC
2010 RLI National President
The esteemed Accredited Land Consultant (ALC) designation signifies the highest levels of
land expertise. The ALC designation has gained recognition as representation of those who
are the most experienced, knowledgeable, and highest performing professionals. In this
organization, bonds are built, information is shared, and deals are made.
Photo taken at the foot of the Sierra Vieja
Mountain looking across the Rio Grande River
into Mexico in the Big Bend area of Texas.
RLI’s leadership team, the organization’s committees, and the Board of Directors are devoted
to “BUILDING THE FUTURE.” They will continue to
1.
2.
3.
4.
5.
Develop and provide best-in-class education programs
Promote and increase awareness regarding land experts
and their knowledge
Build membership knowing that “an organization is
driven by its members”
Increase member benefits
Raise the bar at its 2013 National Land Conference in Las
Vegas on March 18-20
The organization’s strategic plan will be reviewed and updated to cover 2014-2017. The
vision and mission of the organization as well as clear action steps will be reviewed and
revised to make sure that we move forward to “build the future.” The organization has a rich
history and the future history being built will be strong.
We have five new courses being rolled out in 2013 offered in face-to-face, hybrid, and online
college classroom deliveries. One-day courses have been added to the curriculum with our
two and three day courses.
LANDU Week will take place on July 14-20; the new optional ALC Advanced tier will recognize
ALCs for their professional development participation; our voice in Washington will continue
to be heard through our affiliation with the National Association of REALTORS®; we will
build upon the LandLIST tool. The new 2013 Member Directory will be available that will
include all members who pay their dues by December 31, 2012.
The list continues.
I look forward to seeing you at the 2013 National Land Conference—LAND: The Real
Deal. If you are in the business of land, it is where you should be on March 18-20.
Here’s to BUILDING THE FUTURE!
Copyright 2013. All rights reserved.
Reproduction in whole or in part without
permission is prohibited. Views expressed
within the publication are not necessarily
endorsed by the REALTORS® Land Institute
and information should not be construed
as recommendations for any course
of action regarding financial, legal, or
accounting matters.
Chuck Wingert
Accredited Land Consultant
Terra Firma
Winter 2013
3
NEWS BRIEFS from NATIONAL
Meet RLI’s 2013 National Board of Directors
Charles “Chuck” Wingert, ALC
2013 National President
Wingert Realty & Land Services
Mankato, MN
[email protected]
George Clift, ALC
RLI President Elect
Clift Land Brokers
Amarillo, TX
[email protected]
Terri Jensen, ALC
RLI Vice President
Farmers National Company
Omaha, NE
[email protected]
Ray Brownfield, ALC
Land Pro, LLC
Immediate Past President
[email protected]
John Dean, ALC
NAR Executive Committee Rep.
Landmart/Dean Land & Realty Company
Leland, MS
[email protected]
Danny Smith, ALC
Accredited Land Consultant Designation Committee
Chair
Smith and Smith Realty
Wildwood, FL
[email protected]
Flo Sayre, ALC
Accredited Land Consultant Designation Committee
Vice Chair
Pasco, WA
[email protected]
Renee Harvey, ALC
Education Committee Chair
Century 21 Harvey Properties, Inc.
Paris, TX
[email protected]
David Hitchcock, ALC
Education Committee Vice Chair
Coldwell Banker Commercial-Saunders Real Estate
Lakeland, FL
[email protected]
George Harvey
Government Affairs Committee Chair
The Harvey Team
Telluride, CO
[email protected]
Kirk Weih, ALC
Government Affairs Committee Vice Chair
Hertz Farm Management, Inc.
Mt. Vernon, IA
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Winter 2013
Terra Firma
Ex-Officio Board Members
John Pierpoint,
RLI Treasurer
Chicago, IL
[email protected]
Russell Riggs
RLI Legislative Staff Liaison
Washington, D.C.
[email protected]
Michele Cohen
Executive Vice President
REALTORS® Land Institute
Chicago, IL
[email protected]
2013 RLI Representatives to NAR Committees
John Dean, ALC
Executive Committee
George Harvey
Global Business and Alliances
Kirk Weih, ALC
Land Use Committee
Brandon Rogillio, ALC
Commercial Committee
Mark Cumbest, ALC
Commercial Committee
Randy Hertz, ALC
Commercial & Legislative Regulatory Subcommittee
Michael Durkin, ALC
Land Use Committee
George Clift, ALC
Professional Standards Committee
John McAllister, ALC
Public Policy Coordinating Committee
Zivko Martinic
Business Issues Committee
Danny Smith, ALC
Commercial Real Estate Research Subcommittee
Bill Burruss, ALC
Commercial Real Estate Research Subcommittee
Bob Turner, ALC
Federal Housing Policy Committee
Derrick Volchoff, ALC
Resort and Second Home Real Estate Committee
Ray Brownfield, ALC
Professional Development Committee
Chuck Wingert, ALC
Institute Advisory Committee
George Clift, ALC
Terri Jensen, ALC
2012 NAR Annual Meeting
In November, 2013, during the RLI Day Installation
and Awards Luncheon, Roger Heller, ALC, 1998
RLI National President, conducted the oath of
office ceremonies for the installation of the 2013
officers: Chuck Wingert, ALC, President; George
Clift, ALC, President Elect; and Terri Jensen, ALC,
Vice President. The traditional passing of the gavel
from past presidents to the current president took
place ending with Ray Brownfield, ALC, 2012
RLI National President, handing the gavel to 2013
National President, Chuck Wingert, ALC.
In addition, the 2012 RLI National Award winners were announced:
Meeks Distinguished Service Award:
Norma Nisbet, ALC,
Vista Properties & Investments in St. Louis, MO
Land REALTOR® of the Year Award:
Danny Smith, ALC
Smith & Smith Realty in Wildwood, FL
Excellence in Instruction Awards:
The celebration continued during a President’s Inaugural Cocktail party.
Members, partners, family members, and friends shared in the celebration.
Congratulations to all of the above for their service and dedication to the
organization, education, and to the overall business of land.
2013 Midyear Meetings in D.C.
The National Association of REALTORS® 2013 Midyear Meetings and
Expo will convene in Washington D.C. on May 13-18. REALTORS® Land
Institute will have strong representation at the committee meetings to
represent the opinions and priorities of all land professionals (see the
NAR committee members on page 4.) Opportunities exist for attendees
to speak with government officials on the Hill.
RLI will hold a meeting for all members who are attending these events
at the Marriott Wardman Park in D.C. RLI Leadership will discuss “RLI
Updates.” Russell Riggs, RLI Government Affairs Liaison through NAR,
will speak at this meeting covering relevant government affairs topics.
Riggs keeps the organization current on what is happening on the Hill.
To see the latest, visit the website at http://www.rliland.com/dcupdates.
The One-and-Only 2013 National Land
Conference
This is the “cannot afford to miss”
conference exclusively for professionals
involved in the business of land. As
Brandon Rogillio, ALC, Louisiana, states,
“I receive a lot of conference information.
The only one I attend for sure each year is
the RLI National Land Conference.”
On March 18-20, learn from the experts,
build bonds with the best-in-thebusiness, make deals, and have a great time in Las Vegas. Award
recipients and new ALCs will be recognized, partner/sponsors will
share trends and strategies to improve productivity, colleagues will lead
round table discussions on hot topics, and treasures will be purchased
at RLI’s GREATEST COWBOY AUCTION ON EARTH (see page 35).
If you are in the land business, this is where you need to be!
James Miller, Esq.
Investment Property Exchange Services, Inc. in Tempe, AZ
A Salute to Accredited Land Consultants
(ALCs)
ALCs had the option of completing an electronic survey to help RLI develop
a promotional statement to bring awareness to others about those who
earned the designation. From the survey of 100 random ALCs, 51 percent
of the respondents are owner/brokers coming from diverse geographic
areas and specializing in one or more of the above segments of land.
Andre J. van Rensburg, ALC
Prudential Commercial Real Estate Jacksonville in Saint Augustine, FL
2012 Chapter Award:
The total volume of business from these 100 ALC respondents was
$979,077,917 in 2012. The single largest transaction reported was
$83,000,000--one of multiple transactions made by a single esteemed ALC.
With a total of 461 active ALCs, this is a small sample, but a clear indication,
of the impressive total business generated by these professionals.
REALTORS® Land Institute salutes the Accredited Land Consultants.
Terra Firma
Winter 2013
5
ALCs Represent Honor and Integrity
In this centennial anniversary of the Code of Ethics of the National
Association of REALTORS®, RLI recognizes and reinforces the importance
of following the values set forth in this document. With this spirit in
mind, the RLI Board of Directors has approved a ten-point ALC Code of
Conduct. A code of conduct is a set of principles that guide decision
making and behavior. The purpose of the code for Accredited Land
Consultants (ALCs) is to provide guidelines for making ethical choices
in the conduct of their work.
Professional integrity is the cornerstone of credibility reflecting high
principles and standards of practice. RLI is proud of ALCs who bring the
highest level of integrity to the business of land.
ALC Code of Conduct
Preamble
Accredited Land Consultants (ALCs) are honorable land professionals
who recognize the importance of land to life. ALCs share in the
responsibility to conduct themselves with high morals following
the ALC Code of Conduct and the Code of Ethics of the National
Association of REALTORS®.
ALC Code of Conduct
1.
Protect and promote the best interest of clients
2.
Display high moral and professional standards
3.
Avoid exaggeration and misrepresentation of relevant facts
4.
Treat all with honesty and respect
5.
Stay current in industry knowledge and trends
6.
Enhance the integrity and professionalism of the industry
7.
Cooperate with fellow real estate professionals
8.
Follow local, state, and national laws regarding disclosure
9.
Will not condone or participate in discriminatory practices
10. Support, understand, and champion institute policies
Tools to Use
Sign into the Members Only area of the website at www.rliland.
com to take advantage of the below member benefits:
LandLIST
More and more RLI members are opting in to RLI’s email listing tool,
LandLIST. If you have not already done so, “opt-in” and get started!
1.
6
Sign-in
Go to www.rliland.com and sign in, using your last name for
your username and RLI number for your password. After
signing in, go to “My Member Profile.”
2.
Go to "E-Lists"
In your profile, locate the E-List section under the tab “My
Features.”
3.
Subscribe
There are 7 LandLISTs:
Winter 2013
Terra Firma
LandLIST (all area)
Midwest LandLIST
Northeast LandLIST
Northwest LandLIST
Southeast LandLIST
South LandLIST
Southwest LandLIST
Join and post to one or all of the lists. Subscribe to each list
individually to post and receive posts for that specific area. Click the
“Subscribe” button to opt into the LandLIST email option.
Note: You will immediately receive a welcome email. If you do not receive it,
please check your spam/junk folder and mark the email as not spam/junk. 4.
Create a Message
Begin sharing your listings with other RLI members
who are participating in this member benefit. Click on
the LandLIST link to enter the menu screen. Posting a new
message will generate an email to all members who have
opted into LandLIST. Participants have the option of attaching
a file and may send listings in PDF format. Responses to the
LandLIST postings will be sent directly to the listing member.
Need assistance? Call 1.800.441.5263 and ask for Jen. She is
standing by to assist.
Peer White Papers
Many ALC candidates developed white papers on topics covered
during the 2012 National Land Conference. These white papers are
posted in the member’s only section of the website and area relevant
to the diverse land segments. The topics include Wind and Air Rights,
The AG Bubble, Real Estate Auctions, Ranch and Recreation, and more.
White papers will be added after the 2013 National Land Conference
by those who attend the conference as a course option. If you would
like to participate in the Conference as a Course Option, visit http://
www.rliland.com/elective-course-credit-option.
Member Profile
The Member Profile is an excellent marketing tool. Daily, the “Find a
Consultant” area of the website is utilized by those looking for land
professionals. RLI National also uses this information to refer people
who call asking about professionals in certain locations who specialize in
specific land segments. In addition, the profile information is the source
for the Member Directory and the Land Conference Registrant Roster.
Each member keeps his/her profile current at http://www.rliland.com/
member-login. Once you have logged in, select “update your profile.”
The next screen will be your profile page. By choosing “Edit Profile”
you can update your personal information, add a picture, and even
write up a short biography!
Member Volunteers
Members drive organizations; member volunteers create a strong
organization. Make a difference and make connections. In May, all
members will receive a “Call for Volunteers” notice via email. If you
would like to serve on a 2014 committee—Education, Government
Affairs, and/or the Annual Land Conference—let leadership know
upon receipt of the notice. Members make a difference!
Feature
GOVERNMENT
AFFAIRS BRIEFING
•
Capital Gains
Capital Gains rate stays at 15% for those at the top rate of $400,000
individual and $450,000 joint return. After that, any gains above
those amounts will be taxed at 20%. The $250/$500k exclusion for
the sale of a principal residence remains in place.
•
Estate Tax
The first $5 million dollars in individual estates and $10 million for
family estates are now exempted from the estate tax. After that,
the rate will be 40%, up from 35%. The exemption amounts are
indexed for inflation.
•
Farm Bill
The cliff deal included a one-year extension of the 2008 Farm Bill.
The bill expired Sept. 30, 2012, and the deal essentially re-authorizes
the farm bill until Sept. 30. The extension means negotiations will
begin anew on a five-year farm bill. The bills previously approved by
the House Agriculture Committee and full Senate in 2012 are moot.
Lawmakers may find it harder to pass a farm bill in 2013 as Congress
starts searching for ways to cut costs on March 1.
Russell Riggs, RLI Government Affairs Liaison,
News and Notes from Inside the
Beltway
Congress, President Avoid Fiscal
Cliff………For Now!
On January 1 both the Senate and House passed H.R. 8, legislation to
avert the “fiscal cliff.” The bill was signed by the President on January 4.
However, this deal only gets us halfway; a plan to reduce government
spending is required by the bill and will take up much discussion and
air time in Congress over the next two months.
Here is a summary of provisions in the bill that may impact land
professionals.
Apart from narrowly avoiding the fiscal cliff, other items of interest
to land professionals include:
•
Real Estate Tax Extenders
Mortgage Cancellation Relief is extended for one year to
January 1, 2014.
Deduction for Mortgage Insurance Premiums for filers
making below $110,000 is extended through 2013 and made
retroactive to cover 2012.
Leasehold Improvements: 15 year straight-line cost recovery
for qualified leasehold improvements on commercial properties
is extended through 2013 and made retroactive to cover 2012.
Energy Efficiency Tax Credit: The 10% tax credit (up to $500)
for homeowners for energy improvements to existing homes
is extended through 2013 and made retroactive to cover 2012.
•
Permanent Repeal of Pease Limitations for 99% of Taxpayers
Under the agreement so called “Pease Limitations” that reduce the
value of itemized deductions are permanently repealed for most
taxpayers but will be reinstituted for high income filers. These
limitations will only apply to individuals earning more than $250,000
and joint filers earning above $300,000. These thresholds have
been increased and are indexed for inflation and will rise over time.
Under the formula, the amount of adjusted gross income above the
threshold is multiplied by 3%. That amount is then used to reduce
the total value of the filer’s itemized deductions. The total amount
of reduction cannot exceed 80% of the filer’s itemized deductions.
These limits were first enacted in 1990 (named for the Ohio
Congressman Don Pease who came up with the idea) and
continued throughout the Clinton years. They were gradually
phased out as a result of the 2001 tax cuts and were completely
eliminated in 2010-2012. Had we gone over the fiscal cliff, Pease
limitations would have been reinstituted on all filers starting at
$174,450 of adjusted gross income.
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Winter 2013
Terra Firma
NFIP Debt Limit Raised
On January 4, 2013, Congress approved nearly a $10 Billion increase
in the Nation Flood Insurance Program’s borrowing authority for
Superstorm Sandy (HR 41). This is a temporary measure necessary
to ensure the continued payment of claims for the resulting flood
damage, and does not affect either the purchase of flood insurance or
premium rates. NAR will continue to monitor implementation of the
broader NFIP legislative reform package passed last year to keep the
program on a fiscally sensible path over the next 5 years.
Justices Hear Oral Arguments in Property Rights Case
On January 15, The U.S. Supreme Court heard oral arguments in Koontz
v. St. Johns River Water Management District. This case addresses a
Florida landowner’s claim that he is owed compensation by a land-use
agency after it declined to issue permits for a wetlands area he wanted
to develop because he wouldn’t agree to certain conditions. The case
raises major questions about the right of government to impose
conditions in return for permit approval. It hinges in part on whether
Supreme Court precedents limiting the ability of government entities
to place conditions on landowners in exchange for permits applies to
“money, services, labor or any other type of personal property.” The
court is also weighing whether a constitutional violation occurs even
when no permit is actually issued. It is not clear how the court will
rule, although the decision could rest on whether a majority of justices
conclude that a taking, subject to compensation under the takings
clause of the Fifth Amendment, even occurred.
NAR signed on to an Amicus Brief with several other regulated stakeholder
groups. The focus of the Amicus Brief was to further elaborate on the
property rights implications of the case and describe how real estate
development and related activities are adversely affected by these types
of situations. A decision in the case is expected in the Spring.
Feature
Waters of the U.S. Update Guidance Still Under Review
Efforts by the Environmental Protection Agency (EPA) and the Army
Corps of Engineers (ACE) to expand their authority over more waters
of the United States than allowed by the Clean Water Act (CWA) remain
bottled up at the Office of Management and Budget. The EPA and
the ACE have for years sought to expand the reach of the Clean Water
Act to waters beyond what is defined in the CWA as “navigable” and
waters “adjacent” to navigable waters. If CWA jurisdiction is expanded
to more waters of the U.S., it would result in more regulation, permits
and onerous requirements on development. The most recent efforts
is a “guidance” document that, despite EPA’s statement to the contrary,
increases federal authority over more kinds of U.S. waters. At a
recent meeting with EPA’s Assistant Administrator of Water, officials
acknowledged that the guidance was still under review and that
discussions regarding a formal rulemaking were still “under discussion”
between EPA and the ACE.
About the author: In his position with
the National Association of REALTORS®,
Russell Riggs serves as RLI’s Government Affairs Liaison in Washington,
D.C., conducting advocacy on a variety of
federal issues related to land. Riggs will
be a presenter at the 2013 National Land
Conference in Las Vegas, Nevada, taking
place on March 18-20.
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Terra Firma
Winter 2013
9
Feature
The REALTORS ’ “Golden Thread”
Celebrates 100 Years
®
Frederik Heller
Manager, Digital Library & Archives, National Association of REALTORS®
The year 2013 marks the centennial of the Code of Ethics and Standards
of Practice of the NATIONAL ASSOCIATION OF REALTORS®. The Code
establishes the standards of ethical practice that all REALTORS® agree to
follow as a condition of their membership. These ethical requirements
are a key factor separating REALTORS® from all other real estate
practitioners. The Code, a living document that today undergoes
annual review and revision, has been called a “golden thread,” uniting
those devoted to raising the standards of professionalism and service
in real estate.
When the National Association of REALTORS® was founded in 1908,
the real estate industry was a much different world than it is today.
Aside from a few municipal ordinances, there were virtually no laws
regulating how real estate brokers conducted their business. No real
estate licensing laws were in place, and there was no national Code
of Ethics—although some local real estate boards, beginning with
the Baltimore board in 1858, adopted codes of conduct for their own
members.
While there were plenty of trustworthy people trying to build
successful careers in real estate and help their customers work through
the increasingly complex world of property transactions, there was also
no shortage of people seeking to take advantage of an unwary public
and make a quick buck. Curbstoners, as dishonest brokers were called,
were holding back the real estate industry, with almost no way for the
public to tell which brokers were trustworthy and which were swindlers.
Anyone could put out a sign advertising their expertise as a real estate
broker. “It is easier to become a real estate man and handle thousands
of dollars’ worth of property and money,” complained R. Bruce Douglas,
executive secretary of the Milwaukee Real Estate Exchange, in an
address before the members of several Midwestern real estate boards
in 1907, “than it is to become a barber charging 10 cents for a shave.”
Those devoted to the real estate business needed to find a way to raise
the standards of their chosen career, gain the public trust, and chase
away the curbstoners.
It was largely in response to this situation that the National Association
of REALTORS® was organized in Chicago in May 1908. In her 1958
book Real Estate in American History, author Pearl Janet Davies recalled:
“A code of ethics for the real estate business had been the national
real estate organization’s primary objective. Its constitution had a
mandatory provision for a committee on code of ethics. Its founders
realized that one principal task must be to formulate in clear words
the essentials of proper real estate business conduct. Those rules of
conduct must be such that men in the business could agree upon
them. They must be an expression of the group consciousness.”
At NAR’s second annual convention, in 1909, Milwaukee broker Edward
Barber, first chairman of the Ethics Committee, presented an address
in which he summarized the task ahead. “Never go into a deal with a
person without first having a definite and distinct understanding as to
10 Winter 2013
Terra Firma
just where his interests leave off and yours begin,” Barber declared. “We
must insist that no dishonest deal be permitted to pass through our
hands.”
During the first few years of NAR’s existence, members of the Ethics
Committee were not yet prepared to produce an actual code of ethics.
Instead, through speeches at the national meetings, presentations
to local boards, and articles in the National Real Estate Journal, the
committee explored and debated the concept of ethics as it applied
to real estate and discussed ways to incorporate meaningful rules that
could apply to real estate practitioners across the country.
10
yea
Two enduring features of today’s Code were developed during this
period. In 1910, ethics committee chairman C. F. Harrison of Omaha,
NE, pointed out that a code of ethics “naturally divides itself into two
parts, the broker’s duty to his clients and the broker’s duty to his fellow
brokers.” Today’s Code has a third section: duties to the public. Frank
Craven of Philadelphia, PA, in June 1912 suggested the Golden Rule as
an ideal starting point, a concept which is now incorporated into the
Code’s Preamble.
At the same 1912 meeting in which Craven presented his idea, John T.
Sears of Kansas City, MO, submitted his real estate board’s statement
of ethics to help guide the National committee in its work. The Kansas
City code had been developed in January 1912, and was divided into 13
“positive” and 14 “negative” rules.
This move seemed to have had the desired effect, as the committee
finally put pen to paper and wrapped up five years of intensive work
and debate over the concept of ethics in the real estate business. In
July 1913 at the National Association’s annual convention in Winnipeg
(Canada was part of NAR’s territory until the early 1940s), the committee
submitted its long-awaited proposal for a national Code of Ethics.
The 1913 version of the Code was largely adapted from Kansas City’s
code, and was divided into two sections, “The Duty of Real Estate
Men Towards Their Clients” and “The Duty of Real Estate Men Towards
Other Real Estate Men.” It was adopted by the National Association
after a brief discussion, with recommendations that it be printed and
distributed to all members and adopted by local boards.
The 1913 Code was considered to be a first attempt at a national
code of ethics for the real estate industry, one that would be revised
and perfected over time. William V. Ebersole, 1914 chair of the ethics
committee, invited all members of the association to “carefully consider
the code of ethics adopted at Winnipeg, suggesting such improvements
or changes as may seem advisable, adopting the spirit and text of
the rules as far as practicable, the object being to enlist the personal
cooperation of each individual member of the National Association, in
this great movement forward….”
Feedback was quickly gathered, and the Code was almost completely
Feature
revised and expanded by July 1914. The new Code was divided into three sections,
with a section of ten rules outlining the broker’s duty to clients; five rules outlining
duties to prospective buyers; and another ten rules outlining duties to other brokers.
It was revised again in 1915, this time modeled after the Chicago Real Estate Board’s
own code and featuring two new sections, one addressing the “Duty to Organize”
and another listing four “Suggestions to Owners and Investors.”
One interesting aspect of these first renditions of the Code is that they included no
provisions for enforcement. The general assumption was that brokers, once made
aware of the rules, would simply abide by them. That didn’t always prove to be
the case, however, and by 1915 the National Association was actively encouraging
local real estate boards to develop their own enforcement procedures. Adoption
of the Code was also voluntary, so even after the national Code was presented
in 1913, some state and local associations continued to develop and use their
own rules of conduct. The New York State association, for example, issued its “10
Commandments of Real Estate” in April 1915, a concise version of the Code of Ethics
intended to dissect the National Association’s “elaborate treatises” of 1913 and 1914.
In October 1923, ten years after the Code was first adopted, the National Association
finally amended its bylaws to make it mandatory for each local board to adopt the
national Code of Ethics and put in place a system to enforce the Code among their
members.
00
ars
The following year, 1924, the Code underwent its third revision, making the articles
more relevant to the rapidly changing structure of the real estate industry. Several
new provisions were added to help correct the problem local real estate boards
were experiencing in enforcing the Code among their members. “Any code that we
adopt […] should carry an adequate provision for its own enforcement,” explained
ethics committee chair A. H. Barnhisel of Tacoma, WA. “The jazz and joyride stage of
realty operations has had its day. It is the business of REALTORS® to see that the new
era of service to the individual and civic responsibility has come to stay.”
The 1924 Code of Ethics also included what is perhaps the best-known feature of
today’s Code, both among REALTORS® and the public: the preamble. The familiar
“Under all is the land” language setting forth the social responsibilities of the
association and its members was not part of the original Code, but was written by
Barnhisel and adopted along with many other revisions to the Code in 1924. The
preamble’s language was modernized in 1955, but REALTORS® were so unhappy
with the results that the changes were overturned in 1961. No further attempts
were made to alter the preamble until the early 1990s.
One further change was made to the Code in the following years, when an
amendment addressing the problem of “horseback appraisals” (what we would now
call drive-by appraisals) was added in 1928.
After 1928, the Code, which was originally intended to be a fluid, ever-changing
document, was declared “complete” and wasn’t altered again for over twenty years.
Although the enforcement process was refined and the concepts of mediation and
arbitration were developed during those two decades, the Code itself remained
unchanged. Even the Committee on Ethics, an integral part of the National
Association since its founding, had completely vanished by 1933.
Even after twenty-plus years of stagnation, the Code of Ethics was still seen as a vital
benchmark for conducting real estate business the right way, and calls to revitalize it
grew louder. Lead by Philadelphia’s Roland R. Randall, the Code’s supporters finally
got their chance in May 1946 with the formation of the Committee on Professional
Standards, filling a gap left by the old ethics committee. “The idea of a Committee
on Professional Standards grew out of criticism from members of the National
Association of Real Estate Boards that the term REALTOR® ‘didn’t mean anything,’”
explained Randall. “Some members felt that the Code of Ethics was not adhered
to rigidly, if at all. Other members felt that, after 25 years, changes should be made
in the Code and additions made to it. The Professional Standards Committee
was therefore appointed […] to devote its attention to the raising of professional
standards nationally in the transaction of business concerning real estate in all its
branches.”
A Code of Ethics for Farm & Land Brokers
Today’s Code of Ethics acknowledges the specialized
expertise and services provided by farm and land
brokers in Article 11, which states: “The services which
REALTORS® provide to their clients and customers shall
conform to the standards of practice and competence
which are reasonably expected in the specific real
estate disciplines in which they engage; specifically,
residential real estate brokerage, real property
management, commercial and industrial real estate
brokerage, land brokerage, real estate appraisal, real
estate counseling, real estate syndication, real estate
auction, and international real estate.”
The mention of land brokerage is a very recent
addition to the Code, and took many decades to
achieve.
The National Association’s Farm Lands Division,
established in 1920, made no mention of the Code in
its bylaws. The bylaws stipulated that the Division’s
members be REALTORS®, however, who by definition
were required to follow the principles set out in the
Code.
In 1928, NAR’s Home Builders & Subdividers Division
created its own Code of Ethics. Its members were
required to follow NAR’s Code, in addition to the
Division Code, which addressed situations specific to
home builders and subdivision developers, such as
specifying which improvements and utilities would
be included with the purchase of a lot.
The Farm Lands Division saw advantages in creating
a similar code for farm and land specialists, and soon
appointed a Committee on Ethics and Standards of
Practice to examine the matter. The Committee was
told to make its recommendation at the Division’s
annual meeting in 1929.
The dire condition of the farm economy, coupled with
the onset of the Great Depression, caused many of
the Division’s members to leave the business in 1929,
including several of the ethics committee members,
and so the proposed farm specialists’ code was never
written. A second unsuccessful attempt at writing a
farm code was made in 1933.
When the REALTORS® Land Institute was founded
in 1944, the organization’s bylaws specified that
members “shall agree to abide by the Code of Ethics of
the National Association of Real Estate Boards.”
So throughout the decades, members of the Farm
Lands Division and the REALTORS® Land Institute have
always been required to abide by the REALTORS® Code
of Ethics, although the Code itself didn’t mention
farm and land brokerage. Commercial and industrial
property, international real estate, real estate auction,
and other specialties were acknowledged as specific
disciplines when Article 11 was amended in 1995.
Land brokerage was finally added to that list in 2010.
Terra Firma
Winter 2013 11
Feature
The new Professional Standards Committee immediately set about
revising the Code of Ethics. “It has been 23 years since a change has
been made in our Code of Ethics and as changes have come in our
business life over the last two decades, it has become quite apparent
that new provisions should be added and certain sections should be
clarified,” declared Randall, the committee’s first chairman.
renumbered and rearranged the Code’s articles to follow the original
1913 format, and omitted several articles that were outdated or
redundant. A number of new provisions were also included, covering
such topics as multiple offers, the REALTOR®’s duty to keep abreast of
market conditions and changes in the law, and the necessity of keeping
escrow funds in a separate account.
In the summer of 1947, just as the revisions were about to be presented
to the National Association’s board of directors for consideration, the
federal government brought an antitrust action against the National
Association, putting the Code’s planned updates on hold. At issue was
the Code’s Article 9, which required REALTORS® to follow their board’s
published commission rates and fees. The National Association said the
provision protected consumers from paying unfair and arbitrary rates
for real estate services, but the Department of Justice called the rate
setting anticompetitive. The case eventually reached the U.S. Supreme
Court, which ruled in 1950 that Article 9 was a clear violation of the law.
Since 1955, the Code of Ethics has been subject to regular reviews
and been revised or amended over thirty times. REALTORS® serving
on NAR’s Professional Standards Committee have labored long and
hard to ensure that the Code is a living document that protects the
sellers, buyers, landlords, tenants, and others who place their trust in
REALTORS®; that the Code’s obligations are phrased in clear, objective,
and unambiguous terms; and that the Code remains relevant and
meaningful in the constantly changing real estate environment.
The National Association immediately revised Article 9 to bring it in
line with the Supreme Court ruling. Over the next few years, though,
further attempts to revise the rest of the Code were rejected. A special
committee appointed to review proposed revisions to the Code in
1952 concluded that “the task of putting such a Code through would
be enormous.”
In November 1955, the Professional Standards Committee’s tried
again, and this time the revised Code of Ethics was finally accepted,
constituting the most significant changes to the Code since 1924. It
12 Winter 2013
Terra Firma
About the author: Frederick Heller,
Manager of the Virtual Library &
Archives at the National Association of
REALTORS®, preserves documents from
the real estate industry’s past and makes
them available for future use. Before
moving to the NAR group in Chicago
in 2006, Heller was a manager of NAR’s
Washington D.C. library.
Member News
Dwayne Anderson, ALC, was named Illinois
Land Broker of the Year by the Illinois Farm &
Land Chapter of REALTORS® Land Institute at its
annual meeting in October 2012. His nomination
acknowledged his professionalism, ethics as a
REALTOR®, dedication to community service, and
his knowledge and expertise regarding the Illinois
land market. He is president of Dwayne Anderson
Land Company and Anderson Grain Farms, Inc.
Mac Boyd, ALC, will be inducted into the National
Association of REALTORS® RPAC Hall of Fame at
the 2013 NAR Mid-Year meetings held in Washington,
D.C., on May 13-18. RPAC is a voluntary political
action committee whose membership consists of
REALTORS® interested in actively and effectively
protecting the real estate industry by participating in
government affairs at the local, state and federal
levels.
Jerry G. Brewer, ALC, was inducted into the Mississippi Association of REALTORS® Hall of Fame during
its 2012 Annual Convention. During his career,
Brewer has served as the 2000 State President of the
MS Association of REALTORS®, as well as the 1988
National President of the REALTORS® Land Institute.
In 2004 he served as the Regional Vice President of
the National Association of REALTORS®, representing MS, AL, GA, FL, Puerto Rico, and the U.S. Virgin
Islands. Brewer is the co-owner of Brewer Realty
and Brewer Appraisal Service.
Ray Brownfield, ALC, was the recipient of ASFMRA's
2012 D. Howard Doane Award. This award is given
to an agriculture professional that has made outstanding contributions to the field of agriculture
with emphasis on farm management and rural appraisal. Brownfield is the owner and managing
broker of Land Pro LLC, an all-service real estate
company in Illinois.
George Clift, ALC, was a presenter at the 2013
Keller Williams annual company event on February
18, 2013, in Dallas, Texas. He participated in the
Grow Your Farm and Ranch Business session. Clift
will also be a presenter at the Century 21 Global
Conference on March 12, 2013 covering Farmland:
The Hottest Commodity in the World and The Value
of the Accredited Land Consultant Designation.
Congratulations to Beth Cristina, ALC, of Stirling
Properties in New Orleans, Louisiana, for her 2013
election to the Louisiana Association REALTORS® board as the Secretary/Treasurer. Cristina
has over thirty years of successful experience in
commercial real estate sales, leasing, development
and investments.
Bob Turner, ALC, will be a presenter from the RLI
Speaker Center at the Century 21 Global Conference on March 12, 2013. Turner will conduct the
following two sessions: New Home Sales: Working
with A Builder and Land Development for New Home
Subdivisions.
Turner is the Chair of the 2013 National Land
Conference in Las Vegas, Nevada, on March 18-20,
2013. He will emcee the event and be the ALC
Moderator of an armchair chat with esteemed
economists (see page 20).
Dan Hatfield, ALC, 2010 RLI National President,
Vice President of Texas Homestead Real Estate, was
inducted as the 2013 Vice Chair of the Texas Association of REALTORS® (TAR). He served as chairman
on the 2012 Land Use, Property Rights, and Environment Committee with NAR.
Myers Jackson, of United Country Real Estate and
Auction Services in Tallahassee, Florida, is the 2013
President of the Georgia Auctioneers Association.
Myers will be leading a round table at the 2013
National Land Conference in Las Vegas, on Wednesday, March 20, 2013, on “Online Only Auctions".
James Logan, ALC, of Mossy Oak Properties-Logan
Land Company in Eutaw, Alabama, was the national
Mossy Oaks Properties “Agent of the Year” award
winner. The Agent of the Year award is given annually to the salesperson that has the highest yearly
sales volume in the Mossy Oak Properties network.
John A. McAllister, Jr., ALC, owner of John McAllister Realty Consulting, LLC, was appointed to
serve on The National Association of REALTORS®
(NAR) Meeting and Conference Committee. NAR’s
Meeting and Conference Committee oversees the
planning and execution of the 2013 Midyear Meeting in Washington, DC and the 2013 Annual Conference and Trade Show in San Francisco, CA.
Terra Firma
Winter 2013 13
Member News
Norma Nisbet, ALC, Vista Properties and Investments, LLC, was the recipient of the 2012 Meeks
Distinguished Service Award which recognizes an
ALC who demonstrates long-term commitment
and service to fellow Institute members, the land
profession, and the community. Nisbet has been a
Board Member for the South County Chamber of
Commerce and the Missouri Chamber of Commerce. She chaired the Missouri REALTOR® Association Economic Development Summit and serves
on the Missouri and St. Louis Association REALTOR®
Boards. She is involved with Zonta International
and was the 2004 RLI National President.
Danny Smith, ALC, of Smith & Smith Realty, Wildwood, FL, is the 2012 recipient of the Land REALTOR® of the Year Award. This award recognizes
members of RLI for their effort and work expended
in the interest of their fellow Institute members,
their profession, and their communities. Smith
serves on the Florida REALTORS® Board Executive
Committee; the Florida REALTORS® Commercial
Alliance Committee as the 2013 Vice Chair; the
Florida REALTORS® Land Use, Property Rights, and
Sustainable Development Committee; and the REALTORS® Association of Lake and Sumter Counties
as the President of the Board of Directors.
Lee Vermeer, ALC, Vice President of Real Estate
Operations for Farmers National, retired as VP of
Real Estate Operations at the end of January, 2013.
Vermeer has had a distinguished career to date of
31 years with Farmers National. He will continue
with Farmers National as a sales associate and will
work with investor clients. He is a past member of
the RLI Board of Directors.
Derrick Volchoff, ALC, was named the new Vice
President of Real Estate Operations at Farmers National Company. Formerly of Cabelas Trophy Properties, Volchoff is an active participant in RLI and
an advocate for education for professionals in the
land business. He is on the RLI Education Committee and is the RLI Representative to the NAR Resort
and Second Home Committee.
Be a Champion
Members who spread the word about RLI are true winners! Each quarter, RLI recognizes the efforts current
members make to recruit new land professionals to this one-of-a-kind organization.
During the first quarter of 2013, join in the effort: Win and be a Champion Today! :
•
Bringin5newmembersandreceiveafreeregistrationtoLAND:THEREALDEALNational
Land Conference
•
Bringin3newmembersandreceiveacomplimentarynightattheFlamingoHotelduring
the Land Conference
•
Eachtimeyouchampionanewmember,yournameisplacedintoaquarterlydrawingfor
$100 gift card.
*This campaign will run until March 17, 2013, prior to the 2013 National Land Conference in Las Vegas on March
18-20. In order to earn credit for recruiting a new member, that new member must write your name on their
membership form in the “referred by” section and join between December 1, 2012 and March 17, 2013.
Congratulations to RLI members Mac Boyd, ALC, of Farmers National Company in Arcola, Illinois, and Glenn
Green of Paul Green & Associates Inc., in Natchez, Mississippi for recruiting new members during the third and
fourth quarters of 2012. Each won $100 for spreading the word on REALTORS® Land Institute.
14 Winter 2013
Terra Firma
Lifetime ALCs
Life Time Membership
Achieved Since September 2012
Life Members have held Candidate, Accredited, or Associate Membership in the RLI organization for at least 20 years, maintain a category of
membership in the National Association of REALTORS®, and continue to be active in the real estate business. Emeritus members have the same
criteria but are retired from business. Congratulations to the below life time and emeritus members:
Carl Maier, ALC – Emeritus
Beaverton, Oregon
Hazel Forbus, ALC
Tucson, AZ
James Maxwell, ALC
Ridgefield, WA
Larry “Tom” Lund, ALC – Emeritus
Hamilton, Montana
Carol Hebel, ALC
Louisville, KY
Richard Miller
Midland, MI
Buddy Almy, ALC
Granbury, TX
Patricia Hoffman, ALC
Red Lodge, MT
Gooley Orr, ALC
Kerens, TX
Marvin Branch, ALC
Santa Barbara, CA
Donald Johnson, ALC
Nampa, ID
Virgie Orr, ALC
Kerens, TX
Jack Brown, ALC
La Grange, GA
Robert Jones, ALC
Twin Falls, ID
George Schneider, ALC
Fresno, CA
Arland Brown, ALC
Grapeland, TX
Klaus Knoll, ALC
Byron Center, MI
O. Joy Temme, ALC
Tucson, AZ
Joan Dodd, ALC
Phoenix, AZ
Keith Lineback, ALC
South Bend, IN
Richard Wood, ALC
Pittsburg, KS
Terra Firma
Winter 2013 15
Feature
Why I’m Optimistic About 2013
Mark G. Dotzour, PhD
Chief Economist and Director of Research
Texas A&M University’s Real Estate Center
As I write this article at the end of 2012, a lot of uncertainty still clouds the
horizon for the American economy in 2013 and beyond. Has Congress
fixed Fannie Mae and Freddie Mac? Not even close. Have they and the
President developed a tax policy that business owners and investors can
count on? Nope. Do we have an immigration policy that encourages
smart people from all over the world to move to the US? Not a chance.
Have the bureaucrats in Washington written all the hundreds of new bank
regulations required by Dodd-Frank? They are way past due. Does our
federal government support American energy independence? Don’t know.
With all this uncertainty, one thing is certain. A lot of investors all over
the world fear the prospects of higher inflation in coming years. They are
voting with their dollars. People buy gold at $1,700 per
ounce because they fear Congress and the President
will never have the courage to tell the American
people that the tooth fairy has died. Nobody has the
courage to tell the American voters that they need to
expect less from the government in the future. Social
security, Medicare, Medicaid and Welfare programs will
have to be reduced. So will government spending on
everything else. Taxes will have to be increased as well,
if we want to have a chance of preserving the solvency
of the US government.
Here are three more reasons that I’m optimistic about 2013 and
beyond.
Reason three: Americans do not tolerate deferred gratification. Many
families have postponed important decisions for nearly five years since
the financial system collapsed in 2007. Many have postponed retiring.
Others have postponed getting married or having children. Retirees have
postponed purchasing a second home near the kids. After five years of
postponing decisions, there is a lot of pent up demand. As an example, the
average age of autos in America is at a record high of around 11 years old.
We don’t like driving old cars, walking barefoot on old carpet or using old
computers and cell phones.
I heard a speaker recently encourage their membership
to remain politically active because “history is being
bent.” I agree that history is being bent. I guess this
is another way to say that we are moving to a “new
normal.”
Here is where the “bending” is becoming obvious.
Two generations of Americans, the Bob Hope group
and the Boomers, are waking up to find that the long held belief that you
can work until age 65 and then retire and live off of a pension and Social
Security is gradually vaporizing before their eyes. The federal government
cannot afford to pay for benefits they have promised to the voters. States
and local governments can’t either. Their pension fund and medical care
liabilities are eating them alive. Private companies have the same problem.
I used to joke about how General Motors had become a health care plan
and pension fund that built a few cars on the side; and that they would
ultimately have to take bankruptcy. Well, now the federal government is in
exactly the same predicament.
Here are the first two reasons for my optimism going forward into 2013.
Reason one: The American voters are finally starting to hear the truth that
Social Security and Medicare and essentially the federal government are
on the road to insolvency. My theory is that once Americans know the
truth, they will take action to preserve the economic future of the country.
Reason two: Younger Americans do not have the same belief in the
promise of Social Security and other government subsidies to retirees.
Almost every college student that I talk to thinks they will get nothing out
of Social Security. They are not being brought up in the indoctrination that
the government will take care of you from cradle to grave. So each decade
that goes by, less and less of the American electorate will fell the sense that
they have a “right” to government sponsored health care and retirement.
16 Winter 2013
Terra Firma
Reason four: American families have increased capacity to buy things
again. The percentage of our income that goes to pay back loans for stuff
we already have purchased is plummeting from a historic high of nearly
14 percent down to a recent reading near 10.5 percent. This is huge for
economic growth prospects in coming years. “Demand” means you want to
have something. “Effective demand” means you want something and you
have the ability to pay for it. Effective demand drives economic growth.
Reason five: The real estate sector of the economy has been a “headwind”
against economic growth in the U.S. Well the wind is changing direction.
We will look back on 2012 as the year when the housing market turned the
corner. Home sales volume is picking up dramatically. Prices are increasing
in many parts of the country and homebuilding is starting to increase again.
Housing construction is a vital part of economic recovery. The multiplier
effect is huge, creating jobs for homebuilders, contractors, building
suppliers, concrete firms, retailers, title insurance companies and numerous
other industries that provide goods and services to homebuilders.
These five reasons for optimism are potent. Even more important, these
trends are going to happen even if Congress and the President continue
mismanage our government and fail to create a positive environment for
business. If some miracle happens and they actually do something that
encourages business owners and investors, that will be an unexpected
bonus.
Feature
About the Author:
Dr. Mark G. Dotzour is the Chief
Economist and
Director of Research for the
Real Estate Center
atTexasA&MUniversity in College
Station, Texas. As
Chief Economist, he is currently doing market
research to monitor how global and national
trends are likely to impact residential and commercial real estate markets. His research findings and comments have been published in
the Wall Street Journal, Money Magazine, USA
Today and Business Week. Dr. Dotzour is a presenter at the 2013 National Land Conference in
Las Vegas, Nevada, on March 18-20.
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Terra Firma
Winter 2013 17
Feature
Farmland Auctions Becoming More
Common—Even for Small Farms
Murray R. Wise, ALC
CEO, Murray Wise Associates, LLC / Murray Wise Capital LLC
“When you’re ready to retire, I want to buy your farm.”
That’s something practically every farmer has heard from a neighbor
or even a relative. And if that farmer is your client, it’s tempting to just
handle the sale and pocket an easy commission.
But in a time of rapidly rising farmland prices, it may not be clear how
much that friend or relative should pay. In any given year, the amount
of farmland sold is notoriously small—1 percent or less, per year in
many of the better farming areas. That means there may be few true
“comps” on which to base a meaningful appraisal.
So what are your choices? Basing the sales price based on the sale of
a farm eight months ago, three counties over? With farmland prices
going up 20 percent per year or more, as they have for several years,
such comps could be hopelessly out of date or invalid due to differences
between the two properties.
It’s not hard to sell a farm these days, because demand is strong. But
getting the full value out of the farm in a rapidly rising market is more
of a challenge.
An increasingly popular solution is to sell the property at auction. That
neighbor or relative can still buy the property, but the competition
of the auction will ensure that he or she buys it at a fair price. Such a
scenario is actually pretty common. At Murray Wise Associates, we had
two examples in 2012 alone in which a family member had wanted to
buy the property but was outbid once other prospective buyers got
involved. It means, of course, that it’s important to evaluate the seller’s
objectives. If it’s important to keep a farm in the family, an auction
probably isn’t a good idea, because you won’t know who the buyer will
be. It could be the seller’s best friend or somebody he’s never heard of.
Similarly, if a farmer wants to sell his farm and lease it back to continue
farming, he probably would be better off with a private treaty sale.
In the past, auctions tended to be used more for large farms, but today,
they’re being used for agricultural properties of all sizes. A major reason
for this is that higher farmland prices have changed the math—making
auctions cost-effective even for small farms. Let’s say you have a client
who owns a 150-acre farm in a good location. A few years ago, that
might have been worth $3,000 per acre—a $450,000 sale. Today, that
same farm might be expected to sell for $10,000 or more, which would
make it a sale of $1.5 million.
And that means the stakes are higher than they were just a couple
of years ago. An auction—especially one that promotes the property
beyond the obvious buyers—is the single most reliable way to be sure
you’re getting a fair and full market price.
So let’s say you and your seller have decided on an auction. Now what?
Finding the right auction company
Nothing is more important than selecting the best auction company
for the job. And the “best” company is the one best suited for the task.
As with everything else, there are tradeoffs. For example, a small, local
auction company may know the market better, whereas a bigger one
18 Winter 2013
Terra Firma
might be in a better position to attract investors and other bidders from
outside the area.
The growth in land auctions has attracted a lot of newcomers who may
know a lot about other assets, but not much about farmland. Some
real estate brokers have branched out into the land auction business
to capitalize on the opportunities there. Meanwhile, auctioneers
who have historically sold antiques, vehicles and other assets are
promoting farmland auctions. In either case, there are some very good
professionals who may do an excellent job at marketing a farm. But
why take the chance?
I recommend you interview several different auction companies,
of different sizes. Pay special attention to their success rate. What
percentage of their properties actually get sold and closed? If an
auctioneer dodges this question, that’s an unhealthy sign. Ask past
customers about specifics, such as how well the auctioneer kept them
informed along the way.
“When you’re ready to retire, I want
to buy your farm.”
And of course, it’s preferable to look for an auctioneer that’s comfortable
working with REALTORS®. The network of real estate brokers and agents
in a community is a powerful tool, even with an auction. That’s why my
firm, Murray Wise Associates, makes it a practice to work closely and
partner with brokers whenever possible.
One word of caution: Don’t shop “price” alone. There’s no point in paying
a low commission if you don’t get the land sold—or if you end up
selling at a price that doesn’t reflect the true market value. Remember:
An auction will generally result in a sale at the best possible market
value, but only if the qualified bidders are there. An auctioneer who’s
working for a rock-bottom commission may not be able to put in the
time and effort that a property deserves. This is a matter of simple
economics! You don’t want your client’s precious asset to be part of
someone’s volume business. Nor do you want an auctioneer who’s
so desperate he’ll take your auction at a loss. As with anything else,
common sense is your best guide.
Secrets to a successful farmland auction
Offer the land in multiple tracts, where feasible. If a farm can be
offered in more than one tract, you bring more bidders into play. This is
easy to see on a large property—let’s say, 800 acres or more—because
there may be a limited number of people with the resources to buy
that much land, or with the capacity farm it. But let’s say you offer the
land in tracts of 100 acres, or even 50. Now, you suddenly have a much
wider pool of prospective buyers! It’s worth noting that in auctions
conducted for Murray Wise Associates, the average buyer purchases
about 80 acres.
Feature
Think beyond the local community. As we have already seen, a
major benefit of an auction is its ability to “cast a wider net” and reach
prospective buyers outside the community. Farmland has become
established as an excellent investment, and investors range from large
pension funds to local individuals. While operating farmers are buying
three-fourths of the farmland selling at auctions these days, investors
are still an important part of your universe of prospective bidders.
Remember, also, that a growing number of farmers are investors as well.
Many will work their farm while buying additional farms—sometimes
over a surprisingly wide geographic area—and leasing them out.
Take your auctioneer’s advice. As with any professional, you’ll get the
best results if you take his or her advice. Assuming you have chosen
well, your auctioneer will be equipped to handle every stage of the
process, including signs, brochures, direct mail, open houses, Internet
marketing, advertising and auction day arrangements. Because he’s
done this many times, he generally knows what is most likely to work
for a given property. Trust him.
Avoiding the temptations
Selling at auction isn’t without its traps, especially for those who lack
experience. Here are some of the most common I see.
Relying on the land to “sell itself.” The bull market in farmland can lull
some sellers—and auctioneers—into expecting good results without
really communicating and marketing the property’s features. Farms
are not generic!! Prospective buyers need to know about soil type and
drainage, just for starters. They want to know how the property has
been managed, what crops have been grown, and what it has yielded.
Make sure prospective buyers understand any benefits of the land’s
location. If it’s close to river or rail transportation, that can reduce the
cost of getting grain to market and make the property more profitable.
If it is currently owned by an investor, what has it been renting for?
What are cash rents on surrounding properties?
Skimping on marketing costs. One of the few certainties is that
people won’t show up for an auction they don’t know about. Reaching
prospective buyers, informing them about the farm and motivating
them to show up and bid costs some money. By all means, you will
want to review the elements of the campaign and ask tough questions
about what target audiences they are intended to reach. But don’t cut it
back to the point where your campaign doesn’t get the job done.
Neglecting the ground work. Some people think you can just put a
property up for sale, buy a bunch of ads, mail brochures and wait for
the phone to ring. If only it were that simple! While much of this article
has dealt with the auction’s ability to reach buyers from a broader area,
you also want to make sure the auctioneer does everything possible
to engage the local community. Have a frank discussion with your
auctioneer about this.
Is an auction right for your client?
So is an auction the best choice for your seller? Ultimately, only you
and the seller can determine that. However, by understanding the big
picture, you can provide the guidance he or she needs.
About the author: Murray Wise, ALC,
is the CEO of Murray Wise Associates,
LLC—a leading national agricultural
real estate marketing and auction company headquartered in Champaign, Illinois, with the land brokerage and farm
management office located in Clarion
Iowa. He is also the CEO of Murray Wise
Capital LLC, a financial advisory firm for
the agribusiness industry. Wise may be
reached at 217.398.6400.
&
A P S  RLI
Uniting affluent buyers with distinguished land professionals since 1992
WWW.FARMANDRANCH.COM
FnR_Hp_ADforRLI.indd 1
Terra Firma
1/4/13 10:25:01
Winter
2013 AM19
www.rliland.co
Experience the “Real Deal” with the best in the land business at the
2013 National Land Conference at the Flamingo in Las Vegas, Nevada.
The Flamingo Las Vegas, March 18-20
Tuesday, March 19th
Monday, March 18th
www.rliland.com
www.rliland.com
Pre-Conference Committee Meetings
8:00 AM – 8:45 AM
9:00 AM – 9:45 AM
RLI Chapter Presidents Council
RLI Government Affairs Committee
RLI ALC Designation Committee
RLI Education Committee
RLI Chapter Development Task Force
RLI Membership Development &
Retention Task Force
(concurrent sessions)
7:00 AM
Conference Registration and Exhibits
Open
7:00 AM – 8:00 AM
Welcome Continental Breakfast
8:00 AM – 8:15 AM
Conference Welcome
8:15 AM – 10:30 AM
Current Land Values: Are They
Sustainable
2013 and Beyond Economic Outlook
Moderator: Bob Turner, ALC
Nickels, Dimes, and Economics
Speaker: Dr. Mark Dotzour, Chief
Economist and Director of Research –
Texas A&M University
The New Administration’s Impact on
the Economy
Speaker: KC Conway, CRE, MAI,
Executive Managing Director of Real
Estate Analytics – Colliers International
7:00 AM – 8:30 AM
Wednesday, March 20th
Hot Topic Breakfast Game Tables
Appraising Land
AuctionSuccesses
Counseling–GettingtotheBottomofIt
CreatingaSuccessfulALCApplication
DeferredSalesTrust
DepartmentofInterior:Multi-Species
ConservationPartnerships
DevelopinganInternationalLandPractice
Land Ops in Canada
Mapping
Mineral,Oil,Gas,SurfaceRights
OnlineOnlyAuctions
RanchandRecreationMarketConditions
TheStateofUSFarmlandValues
SocialMediaMarketing
TechnologyandtheLandBusiness
Today’sTransitionalOpportunities
Speaker: Dr. Brent Gloy , Director of
the Center for Commercial Agriculture,
Associate Professor at the Department
of Agricultural Economics, and Associate
Director of the Center for Food and
Agricultural Business - Purdue University
10:45 AM – 11:00 AM
Economists & ALC Armchair Chat
11:00 AM – 12:00 NOON
House Rules: Government and Land Affairs
DC Update
Speaker: Russell Riggs, Government
Affairs Liaison – National Association
of REALTORS®
Pre-Conference Events
2:00 PM – 5:15 PM
Registration
Mingle with Sponsor Partners
5:30 PM – 6:15 PM
Deal the Cards
Speed Networking
6:30 PM – 7:30 PM
All In!
Conference Welcome Reception
12:15 PM – 1:30 PM
4:15 PM – 4:50 PM
10:00 AM – 12:00 NOON
RLI Board of Directors
High Roller Awards & ALC Induction
Luncheon
Special Guest: Steve Brown, NAR
President Elect
1:45 PM – 4:00 PM
Know the Rules of the Game:
About the Earth/Land
Climate Change Impact on Land
Speaker: Dr. Peter Backlund, Director
of NCAR External Relations and the
Integrated Science Program - NCAR
Wind and Solar Leases: What Land
Professionals Need to Know
Speaker: Kimberly Diamond, Esq. –
Lowenstein Sandler
Economics of Ranch and Recreation
Speaker: I Ling Thompson, Vice
President of Communications –
Outdoor Industry Association
PR and the Land Business
Speaker: Randy Hertz, ALC - Hertz Farm
Management, Inc.
4:55 PM – 5:30 PM
Auctions
Speakers: Charles Wingert, ALC, 2013
RLI President – Wingert Realty & Land
Services; George Clift, ALC, 2013 RLI
President-Elect – Clift Land Brokers
Vineyards and Orchards
Timberland—Who is Buying?
Surface and Mineral Conflicts During
Co-Development
Speaker: Randy J. Feuerstein, Esq.,
Director, Dufford & Brown
4:15 PM – 5:30 PM
6:30 PM – 7:45 PM
8:45 AM – 9:30 AM
11:15 AM – 12:15 PM
How to Turn a Sales No Into a Sales Yes
SPACESHIPONE – A SPACE ODDITY
Post-conference Activities
2:00 PM
Hoover Dam Group Tour
(separate registration)
6:30 PM
Exclusive ALC Round-Up
Informal networking gathering for
ALCs
Companion Tour
10:00 AM – 4:00 PM on Tuesday,
March 19, 2013
Pahrump Valley Winery Tour,
Tasting, and Lunch
(separate registration)
Limited Space Available
Win with Strategies for Success
Speaker: Frank Belzer, Vice President
Sales Strategy, Kurlan & Associates, Inc.
9:30 AM – 11:00 AM
Exploring New Opportunities
Agricultural Investing, A Global
Approach
Speaker: Randall E. Pope, President &
CEO – Westchester Agriculture Asset
Management
Delaware Statutory Trusts
Speaker: Joe Michaletz, President &
CIO - Discipline Advisors, Inc.
Speaker: Tony Correia, ARA, MRICS,
Founder – Correia- Xavier, Inc.
Odds are In Your Favor: The Market
Place, Trends and Opportunities
Closing Keynote Presentation
Speaker: Brian Binnie, former United
States Navy officer and one of the
test pilots for SpaceShipOne, the
experimental spaceplane developed by
Scaled Composites.
12:15 PM – 12:30 PM
Bringing it all Together
Chuck Wingert, ALC, 2013 RLI National
President
George Clift, ALC, 2013 RLI President
Elect
12:30 PM
Time to Fold: Conference Adjourns
Headquarters Hotel
Flamingo • 3555S.LasVegasBlvd.•LasVegas,NV89109
(Conference rate upon availability)
Forreservationscall888-373-9855andaskfortheREALTORS®LandInstitute(Code:SFRLI3)conferencerate.
Speaker: Samuel J. Radcliffe, Vice
President- Prentiss & Carlisle
Ante Up at the Cowboy Auction & Reception
Sponsors
Thank You to our Valued Partners
REALTORS® Land Institute extends special recognition to our partners for
their commitment to the organization and to the business of land.
Platinum Partner
Platinum Conference Partner
Gold Partners
Education Programming Contributor
Conference Partners
Ray Brownfield, ALC
Terra Firma
Winter 2013 21
Newest ALCs
Congratulations to the Newest Accredited Land Consultant
Designees of the Realtors® Land Institute.
Jesse“Butch” Armistead, ALC
Murray Company
REALTORS®
Griffin, GA
770-227-8661
butch@
murraycompanyrealtors.com
Armistead is a native of the Middle Georgia area
and is a graduate of the University of Georgia.
He has been active in the Real Estate business
for the last 10 years. Armistead is involved in the
cattle business and has enjoyed selling income
producing properties .Armistead is an Associate
Broker with Murray Company REALTORS®.
Max Brand, ALC
Max Brand Realty
Navasota, TX
936-668-1528
[email protected]
Brand is the owner/broker
of Max Brand Realty, a member of the Houston
Association of REALTORS®, and serves on the
Board as a Director with Bryan College Station
Region of REALTORS®MLS.
Edgar Gaddis, ALC
United Country/Gaddis
Realty
Coushatta, LA
318-932-3333
[email protected]
Gaddis is the only REALTOR® in Coushatta, LA,
a small town of 2,300 people and located in the
piney woods of north Louisiana—right in the
middle of the Natural Gas, Haynesville Shale
Field and along the Red River. Twelve years into
his third career as a real estate agent, Gaddis is
the most seasoned gentleman to earn the ALC
Designation.
Virgil George, ALC
Rocking X Land Company,
Ltd.
Burlington, CO
719-346-5420
[email protected]
In 2005, George founded Rocking X Land
Company, Ltd., and today remains committed
to buyers and sellers alike, as the employing
broker. He is a member of Colorado Association
of REALTORS®.
22 Winter 2013
Terra Firma
Cody Harris, ALC
United Country Texas Land
& Ranch
Palestine, TX
903-723-1117
[email protected]
Harris is one of the youngest ALC’s in the nation.
At age 29, he has made a career representing
Texas oil barons and professional athletes
in the purchase and sale of premier ranches
across Texas. Cody is a graduate of Texas A&M
University.
Linda Pillard, ALC
Bella Vie Real Estate
Brooks, CA
530-713-6121
[email protected]
Pillard has lived in Yolo
County, CA since 1988. After working in the
environmental field and raising her sons, she
became a REALTOR® specializing in country
properties. With more than 5 years of experience
in land sales, Pillard currently lives on a 70 acre
working ranch.
Patricia Purvis, ALC
Texas Land Sales, LLC
Fort Worth, TX
817-682-4333
[email protected]
Purvis is a native of central
Texas and has been active in rural real estate
marketing and sales since 1997. Purvis is a
graduate of the Texas Christian University Ranch
Management Program and has a lifetime of
hands-on experience with land and livestock.
She is the owner/broker of Texas Land Sales LLC.
Russ Russell, ALC
Russ Russell Commercial
Real Estate
Huntsville, AL
[email protected]
In business for 25 years,
Russell has a large number of commercial
listings in North Alabama. He earned his real
estate degree from the University of Alabama
and is currently the only broker in the State
of Alabama to hold CCIM, SIOR, CEA and ALC
designations.
Ryan Schroeter, ALC
Land Pros Realty
Gretna, NE
402-932-5499
[email protected]
Schroeter is an Associate
with Land Pros Realty specializing in farm,
ranch and recreational properties in Nebraska
and Iowa. He is also working toward getting his
certified general appraisal license.
Jeramy Stephens, ALC
Mossy Oak Properties of
Stuttgart
Stuttgart, AR
870-672-4820
jstephens@
mossyoakproperties.com
Stephens is the Principal Broker and Owner of
Mossy Oak Properties of Stuttgart Land & Auction
Company. He specializes in row crop farmland
and recreational hunting land throughout
Arkansas. He has been in the real estate business
for 10 years and was a Vice President & Branch
Manager in the Farm Credit System.
Luke Worrell, ALC
Worrell-Leka Land Services
Jacksonville, IL
217-245-1618
[email protected]
Worrell joined the family
business in 2007. Since then,
he has become a licensed broker, Accredited Farm
Manager (AFM) and Accredited Land Consultant
(ALC). He specializes in agricultural real estate
and farm management in central Illinois.
New Candidate Members
Welcome New Members/ALC Candidates
They are more than real estate people…they are land people!
Jennifer Bhatt
Equity Real Estate
Toquerville, UT
[email protected]
John Dugdale
Burford & Ryburn
Dallas, TX
[email protected]
Bradley Miller
My Realty Company
Douglas, WY
[email protected]
Taruna Lombeshkon
Keller Williams
Boca Raton, FL
[email protected]
Daran Becker
Peoples Company
Indianola, IA
[email protected]
Patricia Dunaway
Coldwell Banker
Hockley, TX
[email protected]
Robb Nelson
Live Water Properties
Windsor, CO
[email protected]
Chia Valdez
Saratoga Land Sales, LLC
Saratoga, WY
[email protected]
Brandon Bird
Munn Bro’s Hood Canal Properties
Quilcene, WA
[email protected]
Terry Garmon
United Country Heartland Realty
& Auction
Bowling Green, KY
[email protected]
Jeffrey Post
First Colorado Land Office
Salida, CO
[email protected]
Jim Van Sickle
Coldwell Banker Select
Sapulpa, OK
[email protected]
Michael Pottebaum
Realty Executives of Wichita
Wichita, KS
[email protected]
Candy Vaughan
All-American Realty Homes &
Land
Charleston, IL
[email protected]
Frank Bowman
Frank Bowman
Pleasant Plains, IL
[email protected]
Jill Carbonelli
Prudential Commercial Real
Estate FL
Land O Lakes, FL
[email protected]
Kyle Cato
Carter Group Real Estate
Jesup, GA
[email protected]
Phyllis Clary
Keller Williams Realty Lake Conroe
Lake Conroe, TX
[email protected]
Eric Cromer
Hayden Outdoors
Pratt, KS
[email protected]
Tom Damon
Oregon Opportunities
Medford, OR
[email protected]
Scott Doggett
Burford & Ryburn
Dallas, TX
[email protected]
Shane Drawe
Jim Maloof
Metamora, IL
[email protected]
Kurt Gremley
Landmark
Tampa, FL
[email protected]
Deborah Henderson
Realty Of Maine, Maine
Recreational Realty Group
Bangor, ME
[email protected]
Kurt Hollenberg
United Country Missouri Land &
Home
Columbia, MO
[email protected]
James Keeth
Mossy Oaks Properties
Shreveport, LA
[email protected]
Austin Maas
Ruhl & Ruhl
Muscatine, IA
[email protected]
Peter McPhail
United Country McPhail Realty
Lincoln, ME
[email protected]
Philip McPhail
United Country McPhail Realty
Lincoln, ME
[email protected]
Glenn Preuss
Compass Investments
Gonzales, TX
[email protected]
Joseph Rapp
Legacy Ag Group, LLC
Austin, TX
[email protected]
Michelle Salyer
Century 21 Judge Fite Co.
Weatherford, TX
[email protected]
Teri Shaifer
Paul Green & Associates
Natchez, MS
[email protected]
Ken Shebib
Colliers International Inc.
Edmonton, AB
[email protected]
Dawn Shipman
Jim Maloof REALTOR®
Pekin, IL
[email protected]
Denise Weinmann
Rvg Milner / Carpenter
DeKalb, IL
[email protected]
Stephen Welliver
Wellson Group, Inc.
Grand Rapids, MN
[email protected]
Debra Windish
Maloof Realty
Edwards, IL
[email protected]
Beth Young
Tuttland Company
Birmingham, AL
[email protected]
Daphne Zollinger
Daphne Real Estate
Krum, TX
[email protected]
Chuck Simpson
Village Real Estate Services Franklin Office
Franklin, TN
[email protected]
Terra Firma
Winter 2013 23
Education
About the ALC Advanced
Goal Statement:
The Accredited Land Consultant (ALC) designation is an indication of
a professional who is the most accomplished, the most experienced,
and the most knowledgeable land expert. Staying current in trends
and information is inherent in being the best in the business. The ALC
Advanced tier is designed to offer opportunities to ALCs to stay current
in the area of land to assist clients through up-to-date knowledge.
Program:
ALC designees have the option to participate in 30 hours of continuing
education within a three-year period. If fulfilled, the participant would
become an ALC Advanced for a three-year period. The following
counts toward these required hours. All of the below must be from
options available through the RLI:
•
•
•
•
•
•
•
•
•
One-daycourses:8contacthours
Two-daycourses:16contacthours
Three-daycourses:24contacthours
AnnualLandConference:16contacthours
ALC-to-ALCTeleConferenceFacilitation:1hour
ALC-to-ALCTeleConference:1hour
WebSeminarDevelopmentandFacilitation:30hours
WebSeminarAttendance:1contacthour
ComprehensiveCourseUpdates:15hours
24 Winter 2013
Terra Firma
• MinorCourseUpdates:Basedonupdatessubmitted
• NewCourseDevelopment:60hourspercompletedcourse
• ShortCourseInstruction:5hourspersession(maximum
of ten hours per year)
• Leadership:30hoursayear
• BoardofDirectors:2hourspermeetingattended
• CommitteeChairs:10hoursperyear
• CommitteeViceChairs:10hoursperyear
• CommitteeMembers:1hourpermeetingattended
• OtherRLI-relatedactivities:MustbesubmittedtotheRLI
Education Director for approval at least sixty days prior
to submitting the three-year report.
Administration:
ALCs will submit their thirty hours with proof of attendance and/or
completion of the activities once a year to RLI. These will be collected
between January 2-January 10 on the year following the due date
(i.e. For 2013, the records would need to be sent to National for credit
between January 2-January 10 of 2014).
If an ALC Advanced designee desires to keep that designation tier, he/
she must submit proof of having fulfilled the requirements every three
years (i.e. If an ALC Advanced, submits the fulfilled requirements in
January 2013, he/she would need to reapply in January of 2017 with
professional development taking place in 2013-1016).
Education
LANDU Education
Week Plus
The 2013 LANDU Education Week
Plus is more than a week—it’s ten
days of best-in-class education!
From July 14-23, Complete
one to six courses during the
2013 LANDU Week Plus taking
place in Chicago, at the historic
REALTORS® Building in the heart
of Chicago.
The three required courses and
three elective courses for earning
the Accredited Land Consultant
(ALC) designation are scheduled.
These total 104 hours, the total
required hours needed for the
education portion of the ALC
Application! This is also a unique
opportunity to earn hours toward
the ALC Advanced.
PLUS...the Essentials of Negotiations course is being offered as
a traditional course for the first
time!
See the full schedule for LANDU
Education Week Plus and make
your plans to increase your
knowledge which will increase
your productivity!
P.S. If you have time...take in Second City or a baseball game with another
student!
Something for Everyone…Including You
Whether you are working toward earning your ALC, are an ALC, working
toward the ALC Advanced, or simply want to gain knowledge in certain
areas, LANDU has “something for everyone.” Five new courses developed
and instructed by experts in their fields have been added to the seasoned
courses—bringing the total to sixteen—with more to be added in 2014!
“Essentials of Negotiation provided me with an insight
into negotiation that I had not seen before. I was able
to use the philosophy of EON this morning to get seller's
POA to rethink his strategy and made headway in keeping
a purchase agreement active and headed to closing.”
– Terry Pauling, ALC Candidate, Iowa
LANDU Course Choices
2013 National Land Conference Course Option - (16 contact hours)
NEW Advanced Tax Deferred 1031 Exchanges for Land
Professionals - (8 contact hours)
Land Development - (16 contact hours)
Agricultural Land Brokerage and Marketing - (16 contact hours)
NEW The Basics of Eminent Domain Law for Real Estate
Professionals - (8 contact hours)
Practical Navigation for Land Professionals - (16 contact hours)
Essentials of Negotiations - (16 contact hours)
Land Investment Analysis* - (24 contact hours)
NEW Legal Aspects of Real Estate - (16 hours)
Site Selection - (16 contact hours)
Tax Deferred 1031 Exchanges* - (16 contact hours)
NEW Ethics in Real Estate and Business - (16 hours)
Tax Implications of Real Estate - (16 contact hours)
Land 101: Fundamentals of Land Brokerage* - (16 contact hours)
New Land: Conservation and an Environmental Perspective
on Redevelopment - (8 contact hours)
Site Selection - (16 contact hours)
Timberland - (16 contact hours)
*These courses count as requirements toward earning the prestigious Accredited Land Consultant Designation. 104 total course contact hours are required toward earning the designation.
Note: These courses count toward reaching the 30 hours required for earning the ALC Advanced tier.
Terra Firma
Winter 2013 25
Education
2013 Course Schedule
Below is the Current Schedule for upcoming courses. These are subject to changes and additions:
NEW! Advanced Tax Deferred 1031 Exchanges for Land
Professionals
July 1-12, 2013: Hybrid Course (8 contact hours)
Register online or call RLI National at 800.441.5263
NEW! The Basics of Eminent Domain Law
June 6-17, 2013: HybridCourse (8 contact hours)
Essentials of Negotiation
September 3- 17, 2013: Online Course (16 contact hours)
NEW! Ethics in Real Estate
August 5-30, 2013: Online Course (16 contact hours)
Land 101: Fundamentals of Land Brokerage
Independent Study Opportunities available throughout the year
at learninglibrary.com
May 15-16, 2013: Lakeland, FL(16 contact hours)
Contact Lisa at [email protected] or 813-879-7010
NEW! Land: Conservation and an Environmental Perspective
on Redevelopment
May 6-17, 2013: Hybrid Course (8 contact hours)
Land Investment Analysis
April 1-3, 2013: Surf City, NC (24 contact hours)
Carolina’s RLI Chapter
Register at http://ncrli.com/Events.html or contact 336-854-5868
or [email protected]
November 4 - 29, 2013: Hybrid Course (24 contact hours)
October 9-12, 2013: St. Augustine, FL (24 contact hours)
NEW! Legal Aspects of Real Estate
May 6-31, 2013: Online Course (16 contact hours)
November 2013: Online Course (16 contact hours)
Site Selection
August 5-30, 2013: Hybrid Course (16 contact hours)
Tax Implications of Real Estate
June 3-28: Hybrid Course (16 contact hours)
Tax Deferred 1031 Exchanges
April 4-5, 2013: Surf City, NC (16 contact hours)
Carolina’s RLI Chapter
Register at http://ncrli.com/Events.html or contact 336-854-5868
or [email protected]
Timberland
September 3 - 27, 2013: Hybrid Course (16 contact hours)
Introducing the AUCTION ALC Fast Track
ALC-to-ALC TeleConference
The RLI Education and ALC Designation Committees
along with the Board of Directors have approved an ALC
Fast Track Program for those who have earned the CAI
(Certified Auctioneer Institute) and are in good standing.
Auction candidates must fulfill all of the ALC requirements
including the following:
They must substantiate their
participation and portion of commission in at least 5 closed land
auctions totaling $10,000,000, or a minimum of 25 separate
auction events of which no more than 80 percent involve
residential lot sales, or a comparable level of volume dependent
upon the land specialty and type(s) of real estate services provided.
On Tuesday, February 12 at 10-10:45 a.m. CT the RLI Education
Committee presented a free teleconference exclusively for ALCs
titled 2013 Land Issues and the Government. Russell Riggs, Senior
Regulatory Representative in the Government Affairs Division
for the National Association of REALTORS® addressed the key
issues and fielded questions. Stay tuned for two more ALC-to-ALC
TeleConferences to be announced.
Other Fast Track Programs apply to the following designations:
CRE, ARA, AFM, CCIM, RPRA, AAC, MAI. For additional information
about earning the ALC designation through the fast track
programs, call 18.800.441.5263 or write to [email protected].
26 Winter 2013
Terra Firma
Hot Topic Web Seminar by Dr. Mark
Levine, ALC
On January 23, Dr. Levine, ALC, covered “Current Real Estate
Tax Issues.” The information was relevant to professionals
and investors regarding the use of exchanges, installment
sales, and other approaches to defer and/or eliminate taxes.
The presentation was captured on a link and a CD and
may be found in the RLI General Store on the website at
www.rliland.com.
Education
The 2012 Excellence in Instruction
Awards Went to…
James Miller, Esq.
Andre J. van
Rensburg, ALC
James Miller, Esq. and Andre J.
van Rensburg, ALC, were chosen
by the members of the Education
Committee as the recipients of
the 2012 Excellence in Instruction
Awards. They exemplify the best
in instruction delivery and in
volunteerism to helping build
the LANDU Curriculum.
Miller has been an approved instructor for RLI since 2007.
During that time, he has authored and updated courses on 1031
Exchanges—including the new one-day course on Advanced 1031
Exchanges for Land Professionals. Since laws change regularly, he
keeps the courses and exams current and is open to bringing fresh
delivery ideas to education. He also assists when members have
general questions regarding 1031 Exchanges. Miller is the AttorneyManager for the Southwest Region of IPX1031.
The students who have had van Rensburg as an instructor
repeatedly state in evaluations that they cannot wait to take
another class from him. He engages his students and gives extra
assistance and hours to make sure that understanding exists. He,
too, is open to fresh delivery methods and updates the materials
to best assist the students in the learning process. Andre J. van
Rensburg, ALC, is the principal of Prudential Commercial Real
Estate in St. Augustine, Florida.
Jesse Lane, ALC, 2011 RLI President (left), and Ray Brownfield, ALC, 2013
Immediate Past President (right) mix fun with business at the 2012 Conference and
Expo held in Orlando, FL.
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•
Go to http://www.rlifarmandranch.com/membership.aspx
Visit the RLI Farm and Ranch booth at the National Land Conference
Questions?
515-771-8316 or [email protected]
Terra Firma
Winter 2013 27
Feature
New Ways to Connect Buyers and Sellers
David Hitchcock, ALC
Sales Associate
Coldwell Banker Commercial Saunders Real Estate in Lakeland, Florida
Matthew Wengerd
Marketing Strategist
CBCSRE/CBCSRD
The ways companies connect to consumers is changing at break-neck
speed and it can be hard to know where to start and what’s working.
Digital marketing in particular can be alluring and intimidating all at
once. Sometimes the gains are clear and valuable and there are other
times where the benefits can be more subtle.
We have found that email marketing done right is almost a necessity
today. The challenge is in capturing email addresses in ways that are
considered appropriate since the CAN-SPAM Act of 2003. We use one of
the many great email services available that keep us in compliance with
this act and provide great tracking and measuring tools to monitor the
effectiveness of our campaigns. We have found that a smaller list of
better-targeted people, who have given us permission to email them,
is more effective than targeting a larger list of harvested or purchased
names. Additionally, we have been surprised by the types of subject
lines that generate the best response in our testing. It is not uncommon
for an email simply titled “CBCSRE Newsletter” to earn a much higher
open-rate than one whose subject had been carefully written to entice
the reader to open it.
At CBC Saunders Real Estate, we have launched a campaign to provide
potential buyers the opportunity to virtually fly our large land listings
from the comfort of their office (or easy chair) with our Fly-the-Groves
Aerial Video Technology. We have spent more than a year researching
equipment and techniques to provide the most effective way for
viewers to view our properties from the air. We have been using aircraft
to video record our properties and editing them in-house to showcase
on You Tube and our website (some may be seen at FlyTheGroves.com).
We have experienced positive feedback from buyers and have found it
to be a great tool for bringing attention to all of our listings.
In addition to aerial videos, we utilize a custom iOS app called Florida
Land for Sale to provide buyers with 360o views of properties. We
are able to send our agents out with a camera that captures these
panoramas and then process them in-house and upload them to
our app, where users can view the property in all directions either by
moving their iPhone or iPad around or by swiping their hand across
the screen. Traffic to our website through this app represents a large
portion of all of our referral traffic (visitors who arrive on our page by
clicking a link on someone else’s website). You can download the app
from the app store by searching “Florida Land for Sale.”
We use QR (Quick Response) codes, or 3D barcodes, on nearly all of our
print materials. These images direct Smartphone users to pages we
designate when we create them. We utilize multiple QR codes for each
property in order to determine whether a user scanned the code on a
flyer, postcard, or other location. While the traffic generated from these
is very low, the minimal effort needed to create them, as well as the
impression they give of a forward-thinking, technologically-inclined
office have been factors in our continued use of them. If you choose
to use QR codes in your own campaigns, it is worth noting that it is
not wise to use them where the distraction of using a phone would be
considered unsafe, particularly places where viewers are most likely to
see only while driving a vehicle.
28 Winter 2013
Terra Firma
While digital marketing certainly is appealing, we believe that there are
some things that are most effectively communicated by ink and paper.
That is why we create printed flyers for every listing and send several
postcard campaigns per week to targeted lists of potential buyers. We
have found that in the large-acreage land market, there are still many
people who are not technologically inclined and, in many cases, simply
do not have email addresses. While response to these methods is often
harder to track than links in digital marketing, we have seen good
response to our postcard campaigns and often find buyers through a
simple printed card.
There is no one-stop solution for marketing and what works for us
might not work for you. The important thing is to track effectiveness
as much as possible and to hone in on your approach to best suit your
ideal buyers.
About the Authors: David Hitchcock, ALC, REALTOR®, is a Sales Associate with CBC Saunders
Real Estate (CBCSRE) with a background in citrus,
industrial, and agricultural businesses. He earned
the 2010 Bronze Circle of Distinction award from
Coldwell Banker Commercial®. A thirty-year
veteran of the Florida Agribusiness industry, his
specialties include Central and South Florida
agricultural properties, agriculture transitional
properties, and land use issues. Hitchcock is Vice
Chair of the RLI Education Committee and a member of the 2013 RLI Board of Directors.
Matthew E. Wengerd, Marketing Strategist,
leads the Florida marketing efforts for CBC Saunders Real Estate, the land real estate brokerage
and CBC Saunders Ralston Dantzler Realty, the
commercial real estate brokerage, both located in
downtown Lakeland, Florida.
Feature
Promote Conflict in Your Real Estate Team
Andre J. van Rensburg CCIM, ALC, CIPS
President, Prudential Commercial Real Estate Jacksonville
Traditionally real estate practitioners worked alone. However, in recent
years many real estate companies employed real estate teams. Why?
Because it works! TEAMS - Together Everyone Achieves More Success.
However, conflict in teams cannot be avoided. Most people perceive
conflict as negative or destructive. It can, however, if identified early
and managed effectively, provide a positive and beneficial outcome.
Teams should embrace conflict as a part of high-performing teams;
these tensions should not be discouraged as they can be productive
and can increase a team’s performance if handled correctly.
Conflict can mean different things to different people. Much of the
perception depends on our individual take on the circumstances.
Some may define conflict as a difference of opinion while to others it
may mean war. Ultimately, conflict involves opposing views on one or
a number of matters including relationships, tasks, territories, values,
principles, and commodities.
Research has shown that to understand how conflict impacts team
performance, we need to distinguish between two types of conflict:
a) Relationship-focused conflict
This primarily refers to interpersonal interactions between
individuals, personalities, emotions or values causing tension and
animosities between the individuals personally rather than the
task at hand. These conflicts are often seen as personal attacks
due to personal disagreements or emotional interactions between
team members. This type of conflict is generally considered
to be destructive, negative and dysfunctional if not managed
expeditiously. If these conflicts are not resolved quickly, it may
compromise team moral, focus, cohesiveness, and energy while
facilitating distrust, apathy, disengagement from the team,
cynicism and even hostility.
b) Task-focused conflict
This primarily refers to the interactions over the nature of tasks,
issues, ideas, processes or principles. It involves disagreements
between team members relating to issues that focus on a
common goal. Many researchers agree that this type of conflict
can be constructive, beneficial and positive. It can improve team
efficiency, effectiveness, cohesion, empathy, understanding
and commitment while reducing complacency, apathy and
dissatisfaction.
Team conflict could be caused by any of
the following:
•
•
•
•
•
•
•
•
•
Lackofeffectiveleadership
Lackofobjectives,goals,focusandpurpose
Lackofcleardirectivesastoteamandindividualroles
Lackoftoleranceforculturaldifferences
Unclearornon-existentcompanypolicy
Uncertaintyduetostaffturnover
Uncertaintyduetomergersoracquisitions
Uncertaintyaboutavailabilityofresourcesandsupport
Incompetenceorinadequateskillsandabilitiesbysomeofthe
•
•
•
•
•
team members
Poortimemanagement
Poorcommunication
Personalproblems
Personalityconflicts
Self-promotion(wantingallthecredit)
Conflict exists when observing the
following behaviors:
•
•
•
•
•
•
•
•
•
•
•
Notcomingtowork
Notcompletingworkontime
Notreturningphonecallsoremails
Notsharingimportantinformationnorrequestingappropriate
information
Notfollowingordersorcompanypolicies
Beingaggressiveorpassiveaggressiveatwork
Beinghostiletowardscoworkersandemployers
Beinglateformeetings
Usinginappropriatelanguageandbeingverballyabusive
Complainingconstantly
Filinglawsuitsorgrievancesreports
Individual incidences of the above behaviors do not always indicate
conflict as people sometimes miss meetings, don’t complete work
on time or respond to email in time. If however, these behaviors
continue over a prolonged period of time, it will have an impact on
team performance and may cause severe or irreparable harm to the
wellbeing of the team. Expeditious intervention is required to prevent
the perpetuation of the behavior.
The first step in conflict management is to learn how to prevent or
minimize negative conflict and promote positive conflict. Some of the
ways to achieve this include:
• Launchtheteamwithpersonalintroductions,acommunication
plan and team goals. Set the ground rules early and let there
be a buy-in from all members of the team. This should include
behaviors, policies and processes that the team will allow and
prohibit. As soon as conflict arises the leader can refer to the
ground rules for guidance as a good objective guideline.
• Identifyanddevelopteamnormsandrules
• Regulatingteambehaviorbypostingtheserulesoncompany
message boards thus allowing for self-regulation.
• Developteamagreementonhowtheteamwillresolveconflict
when it occurs. The focus then becomes on how to create good
resolution behavior and prepares the team for the process that
is followed when necessary.
• Attendformalconflictandcommunicationtrainingasateam.
• Identifyandfocusontheteamgoals.Rectifygoalmisalignment
as soon as it is identified.
• Makesureallnewmembersontheteamunderstandthegoals
of the team and are adequately trained in the skills to support
the team.
Terra Firma
Winter 2013 29
Feature
The way conflicts are managed can determine if it will be destructive
or constructive. It is imperative for teams to be able to identify the
differences between healthy or destructive debates. It is a reality
that teams require some conflict to operate effectively. Healthy or
cooperative conflict can contribute to effective problem solving and
decision making by motivating people to examine their point of view
to solve a problem. This can be achieved by encouraging the expression
of many ideas; energizing people to seek a superior solution; and
fostering integration of several ideas to create high-quality solutions.
The key is to understand how to handle it constructively. If members
understand how to do it, differences that arise can result in benefits
for a team.
Direct and open discussion of disagreements results in greater
understanding of other people’s ideas and motives and motivates team
members to question the accuracy and completeness of one’s own
views. These open debates allow team members to see the limitations
of their own perspectives and allows every team member to get a
better understanding of opposing opinions, perspectives and views.
This allows team members to incorporate the best and most reliable
information from others resulting in higher quality decisions.
Healthy debates include listening and responding to different ideas,
being open to other people’s ideas and views, staying objective, staying
focused on the facts, and systematically analyzing the situation to find
solutions without getting bogged down with tangential details.
Manage or facilitate healthy conflict by:
• takingchargeandbeassertiveastheteamleader
• creatingasetofrulesforcommunicatingandlisteningpolitely
and being respectful
• aimingtogetresolutionandmoveontothenextissue
• invitingconstructivefeedbackduringthemeeting
• paraphrasingeachother’sideas
• openlyexaminethedifferencestogainandunderstandingofall
perspectives
• openlydiscusstheconcernsoftheteamorindividuals
Manage or facilitate unhealthy or
negative conflict:
Traps that worsen conflict:
1. Avoid limiting the options or forcing team members to choose
between given options
2. Avoid depending on management to resolve conflict simply
because conflict is too painful
3. Avoid the temptation to avoid conflict altogether
4. Prevent individual team members from giving into the group,
who later will act as a victim of group pressure
5. Prevent team members from discussing team issues outside the
team as these issues should have been resolved in the team or
contextual meetings.
There are 5 steps to resolve negative conflict
1. Recognizing the existence of conflict
2. Finding common ground by putting the conflict in the context
of the larger goal of the team and the organization
3. Understanding all perspectives of the issue, which means that
everyone is not requested to agree with the opposing view
4. Attacking the issue and not the members of the team
5. Developing an action plan that describes how each member of
the team will solve the problem or issue.
30 Winter 2013
Terra Firma
Possible ways of handling negative conflict:
1. Direct Approach
The leader confronts the issue head-on and this may be the best
approach of all. Although conflict is uncomfortable to deal with,
it is best to look at issues objectively. We should face them when
they occur. Criticism must be constructive. This approach usually
leaves everyone with a sense of resolution.
2. Bargaining
This is a great technique for when both parties have ideas for a
solution, but cannot find common ground. Often a third party,
such as the team leader, may be needed to assist with the
compromise. Compromise involves give and take on both sides.
Parties usually end up with both walking away equally satisfied or
equally dissatisfied.
3. Enforcement
This technique should only be used when it is clear that a member
refuses to work with the rest and does not want to be a team player.
This method should be avoided, as it can bring about hard feelings
toward the leader and the team. If enforcement has to be used on
an individual, it may be best for that person to find another team
4. Retreat
Only use this method when there isn’t really a problem to begin
with. By simply avoiding it for a while or working around it, a
leader can often delay long enough for the individual to cool
off. When used by an experienced leader and in a specific set of
circumstances, this technique can help to prevent minor incidents
like someone merely having a bad day from becoming real
problems.
5. De-emphasis
This is a form of bargaining where the emphasis is on the areas of
agreement. When parties realize that there are areas where they
are in agreement, they can often begin to move in a new direction.
A Team Resolution Process for resolving positive conflict should initially
attempt to resolve the conflict on an informal basis between the
individuals involved. This will allow time for resolution or self-correction
by the respective individuals. If the conflict remains unsettled, a
mediator can be brought in to assists resolving the situation. If
resolution is still not achieved, the dispute should be openly discussed
in a team meeting. If resolution is not achieved after being addressed at
the team level, the escalating process of Team Resolution is as follows:
1. Collaboration (One-on-one)
Approach the problem on a person-to-person basis. Base the
discussion on as many facts as possible and relate the issues to
customer, team, or organizational needs. Be open and honest and
conduct the meeting in a private setting. Document the concerns
or issues, the dates, and the resolution, if any, and have both
parties sign it.
2. Mediation (One-on-one with Mediator)
If collaboration did not work or may be inappropriate, approach
the problem with a mediator. The mediator must be trained in
conflict resolution, understand policy and ethics, be trusted by
Feature
the individual team members, and have the ability to remain
neutral. Gather facts and talk over the issue with the people
involved. Reference as many facts as possible and relate the issue
to customer, team, or organizational needs. Be open and honest
and conduct the mediation session in private. Take minutes of the
meeting and have all parties sign.
3. Team Counseling
©2013 Cabela’s Inc.
The conflict has now become a definite issue to the team.
Collaboration and/or Mediation did not work, could not be done
or were not appropriate. Approach the conflict at a team meeting;
put the problem on the next agenda and invite the necessary
individuals and the whole team to the meeting. Again, bring up the
facts; relate the issue to customer, team, or organizational needs.
Be open and honest, discuss it in a private setting, document it,
and have all parties sign it. Anyone on the team can put an issue or
problem on the team agenda; however, this step should be used
only after Collaboration, and Mediation has been ruled out.
Let’s face it, hunting isn’t just
something you do. It’s who you
are. At Cabela’s, we feel the
same way. That’s why it’s in
our nature to support you with
thousands of experts, more than
50 years of experience and every
last bit of expertise, so you can
treasure this passion for the rest
of your days.
Conflict in teams could be very healthy and foster positive and
beneficial outcomes for a team if managed effectively. Teams should
deal with conflict immediately and avoid the temptation to ignore it.
Always be open other people’s idea and thoughts. If people have issues,
they need to be expressed immediately and not allowed to fester.
Teams always need to ensure to practice clear communication by
articulating thoughts and ideas thoroughly. They need to practice
active listening by paraphrasing, clarifying, questioning and identifying
assumptions and demonstrate respect to team members. Always keep
issues within the team.
Conflict should not become personal and should always attempt to stick
to facts and issues, not personalities. Looking for blame in any situation
is counterproductive and we should rather encourage ownership of
the problem and solution. Focusing on actionable solutions and not
belaboring what cannot be changed, encouraging different points of
view and insisting on honest dialogue should always be the goal.
CABELAS.COM | 1.800.237.4444
Financing farmers
and ranchers since 1916...
2202_RLI_IIYN.indd 1
1/4/13 8:06 AM
Conflict should not be avoided as it can be productive and can
help teams to perform better. Efficient leadership and effective
communication hold the key to healthy team conflict.
Acknowledgements: This article was written based on research from a
number of papers. To appropriately acknowledge these papers please visit
www.andrejvanrensburg.com for a list.
About the Author: Andre J. van Rensburg
ALC, is the President of Prudential
Commercial Real Estate and Asset Risk
Management Services based out of
Jacksonville Florida. Van Rensburg has
taught various specialty commercial real
estate courses and delivered presentations
all over the world. He received the 2009,
2010 and 2012 REALTORS® Land Institute
Excellence in Instruction Awards and
the 2011 CCIM Instructor of the Year Introduction to Commercial Real Estate.
...and we’ll be here tomorrow.
THE
farmcredit.com
Terra Firma
AGGREGATOR
SUBSCRIBE TODAY!
Winter 2013 31
TM
Chapter News
Carolinas
The Carolina’s chapter is building knowledge and members. It is
offering two traditional courses in April:
Date: April 1-3, 2013
Location: Surf City, NC
Tax Deferred 1031 Exchanges
Date: April 4-5, 2013
Location: Surf City, NC
The organization welcomes you to come out to North Carolina to
participate in two of the required courses for earning the esteemed
Accredited Land Consultant Designation (ALC). For information,
contact Ashley Boykin at 336-854-5868 or [email protected] or register
online at http://ncrli.com/Events.html .
Colorado
The Colorado Chapter held their first 2013 meeting on January 17 and 18
in Denver, Colorado, coinciding with the National Western Stock Show.
Thursday opened with a short chapter meeting, covering the upcoming
chapter schedule and national events. RLI success stories were shared
to demonstrate the power of RLI networking and actual deals done
between members as a result of being part of the organization. This
was followed by a marketing session with nearly every property
showcased though PowerPoint presentations. In the afternoon a "cash
board" was showcased to connect buyers with potential properties
followed by networking activities.
An educational session took place on the final day with a presentation
on Colorado water law and history by Colorado Supreme Court
Justice Gregory Hobbs. As Kirk Goble, ALC, stated, “This meeting
demonstrated the power of RLI networking, business, and education.
Attitudes were very high and people left with great education and
potential business for the coming year.
Florida
Florida will offer two onsite courses during 2013:
Land 101
Date: May 15-16, 2013
Location: Lakeland Fl. (tent.)
Date: October 9-12, 2013
Location: St. Augustine Fl. (tent.)
business conducted from January
through December 2011. Recipients
were honored at the September
RLI Land Trends and Values Press
Conference and Awards Luncheon.
Congratulations to Jon Hjelm, ALC,
Farm & Land Broker of the Year; Dick
Meade, for Deal of the Year; Eric
Schlutz, ALC, the Rookie of the Year,
and Jeff Obrecht, for Volume Sold & Acres Sold for the Year.
Texas
The RLI Texas Chapter met for a great two-day session in January.
The session included education from Texas Southwest Cattle Raisers
Association, Texas AgriLife, and a Cowboy Winery. The Historic
Stockyards of Fort Worth were the venue area where wonderful food,
dancing, and networking took place.
2013 RLI Chapter Presidents
Congratulations to the leaders of the RLI state chapters:
MS
Mike Flannes
AL
Michael Delaney, ALC
MT
Patti Davis,ALC
AZ
Rick Padelford
Carolinas Christina Asbury, ALC
CO
Bart Miller, ALC
OK
Sandy Bahe, ALC
FL
Sage Andress, ALC
PAC NW Flo Sayre, ALC
GA
Dan Crocker, ALC
TN
Bob Turner, ALC
IA
Kyle Hansen, ALC
TX
Steve Anderson, ALC
IL
David Klein, ALC
VA
Jeff Huff, ALC
KS
John Rupp,ALC
WY
Ivan Judd, ALC
LA
Brandon Rogillio, ALC
MN
Wendy Forthun
Chapter Presidents Council
The next meeting of the 2013 Chapter Presidents Council will take place
at the National Land Conference on Monday, March 18, at 8:00 am. The
2012 and 2013 chapter leaders, education chairs, and administrative
representatives of chapters are invited to attend. Terri Jensen, ALC,
the 2013 Vice President, will facilitate the meeting. The second meeting
of the year will be a conference call on July 25th at 11:00 am CT, and the
final meeting is set for RLI Day at the National Land Conference in San
Francisco on November 7th.
Georgia
This past November 2012
the Georgia Chapter installed
their chapter leadership and
featured three guest speakers
on topics of Water Resources,
Asset Protection and Georgia
Forestry. Committed to keeping
land professionals current and in
building knowledge, the Georgia
Chapter of RLI will be offering
an educational workshop entitled, “A Mapping, Marketing and Technical
Workshop for the Land Broker.” This workshop will be held in Forsyth, GA at
the Georgia Forestry Association Headquarters. For additional information,
contact Chapter President Daniel Crocker, ALC, at [email protected] or
(229) 403-6297.
Iowa
The 2013 chapter officers were installed by Ray Brownfield, ALC on
September 27 in Ames, Iowa at the Iowa RLI Annual Meeting and Dinner.
The Iowa Chapter of RLI also recognized the performance of members for
32 Winter 2013
Terra Firma
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make Clift Land Brokers
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Specializing in farms, ranches, large agriculture
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Feature
Alchemy: De Ja Vu: Turning a Code 1031 Exchange into
a Loss of Equity, Insolvent Intermediaries, Bankruptcy
Dr. Mark Levine, ALC; Dr. Libbi Levine Segev; Dr. Jeffrey L. Engelstad
Burns School of Real Estate and Construction Management at the Daniels College of Business
INTRODUCTION:
The title of this article referred to Code §1031 exchanges.1 Under
this tax law, assuming the requirements of Code §1031(a) are met,2
the taxpayer could be allowed deferral of Federal (income) taxable
gain. (See the Footnotes in this article for more details on this issue.)
However, the summary position of Code §1031(a)(1) provides that: “No
gain or loss shall be recognized on the exchange of property held for
productive use in a trade or business or for investment if such property
is exchanged solely for property of like kind which is to be held either
for productive use in a trade or business or for investment.”
This definition of “tax-deferred exchanges” emphasizes that a taxpayer holds
the property for “trade or business or for investment” purposes. That is,
the property that could possibly qualify under Code §1031 for a real estate
exchange must be used in the trade or business or held for investment.3
In addition to showing the proper type of property to be used in the
trade or business or for investment, the property must also be what
is referred to as “like-kind property.”4 (This generally means, in the real
estate field, exchanging real estate for real estate.)
If the property is qualified trade or business or investment property, is
“like-kind property,” generally meaning “real estate for real estate,” and
assuming that the property is not otherwise excluded from Code §1031,
then the property might fit for the requirements of an exchange under
Code §1031. (See Code §1031(a)(2) as to specific items not allowed for
exchange, as determined by the U.S. Congress.5 Such items that cannot
be exchanged under Code §1031 include stock in trade, stocks, bonds,
notes, certain other securities, interests in partnerships, certificates of
trust, choses in action, and other property noted in the interpretations
as a result of the Treasury Regulations.6)
The focus of concern when undertaking a real estate exchange,
assuming that the requirements are met for the property
to come within Code §1031(a), would often be that such
property must be "held" for business use or for investment.7
The word “held” has been interpreted in numerous cases to be
contrasted with a taxpayer who is acquiring property for purposes of
resale (inventory property), as opposed to holding the property for use
in a trade or business or for investment use.8
SETTING FOR THE EXCHANGE:
EXAMPLE 1: A taxpayer cannot undertake a qualified real estate
exchange by Taxpayer X transferring X-1 property, directly to Taxpayer
Y, for the Y-1 property, if the X- or Y-1 property is not “held” by X for use
in a “trade or business or for investment” purposes.
Taxpayer X, in transferring X-1 property (to Taxpayer Y), could not
receive from Y any cash, as an example, and then have Taxpayer X
immediately invest the cash received. Such property would not be
“like-kind property.”9
In this Example, Taxpayer X cannot transfer X-1 property and not
receive, at the same time (simultaneous) the “like-kind” property that
would qualify for the real estate exchange.10 If Taxpayer X is attempting
to show that the property acquired has “come to rest” in Taxpayer X’s
hands, then Taxpayer X cannot acquire the Y-1 property and then
immediately retransfer the Y-1 property. This is true even if the property
acquired was “real estate for real estate.” If Taxpayer X did not intend
to “hold’ the property acquired from Taxpayer Y, in the above Example,
it would not be property “acquired” for the purpose of “holding” the
property, as opposed to acquiring the property with the intent to retransfer the property.11
EXAMPLE 2: (QI): There are additional issues to contend with to keep
within the real estate exchange requirements within Code §1031.
Taxpayer X might desire to exchange or transfer his property (called
“relinquished property”) to Taxpayer Y, but Taxpayer X does not intend
to acquire the Y-1 property. Rather, he might desire to have the W-1
property (labeled the “replacement property”) from Taxpayer W.
To facilitate this transaction, often the arrangement is to have Taxpayer
Y not tender cash to Taxpayer X; rather, Taxpayer X might request that
Taxpayer Y acquire the W-1 property from Taxpayer W.
Taxpayer Y would then transfer, in Step 2, the W-1 property, acquired
from Taxpayer W, to Taxpayer X in exchange for the X-1 property.
Often there may be a desire by Taxpayer X to have the real estate
exchange, but Taxpayer X is not certain as to the property that Taxpayer
X desires. In those situations, Taxpayer X might be willing to transfer his
X-1 property to Taxpayer Y, with the agreement that Taxpayer Y would
place cash within the hands of a third party. The third party would hold
the cash, acquire a property designated or identified12 by Taxpayer X, at
some future time, when X “finds” the property he desires.
In summary, Taxpayer X desires to undertake a real estate exchange.
Taxpayer X knows that X cannot acquire cash from Taxpayer Y, because
to receive cash by X would destroy the potential of using Code §1031 to
defer the Federal, taxable income gain. The cases and other authority
support the position that Taxpayer X could cause Y to place Y’s cash
in the hands of a third party, which we might label as the “Qualified
Intermediary” or “QI.”13
The Qualified Intermediary (QI), as an institution, would “hold” the cash,
thereby not tainting the transaction for Taxpayer X, since X did not
“receive” the cash. Taxpayer X would properly transfer the X-1 property
or “relinquished property,” and Taxpayer X would properly identify the
property to be acquired, the Y-1 property or “replacement property,”
to complete the “tax-deferred exchange.” In other words, Taxpayer X
properly conveys the X-1 property, to be transferred to Taxpayer Y, or to
the QI (Qualified Intermediary), who would in turn transfer the property
to Taxpayer Y.
This is a setting of a “nonsimultaneous,” qualified “tax-deferred
exchange,” generally meeting the requirements of Code §1031(a)(3).
Terra Firma
Winter 2013 33
Feature
ESSENCE OF ARTICLE:
ADVERSE IMPLICATIONS:
Having stated the essence of the function of Code §1031, “tax-deferred,”
“nonsimultaneous” exchange, by using a QI, this Note can now focus on
the essence of this article: What happens if the monies “held” or placed
in “escrow” from Taxpayer X to the third party QI are not timely used,
or not used at all, to acquire the “replacement property” that X desires,
when transferring his X-1, “relinquished property.”14
The negative implications of the decision by the Court in this
bankruptcy proceeding sent shockwaves to those involved in the taxdeferred exchange area.
QUALIFIED INTERMEDIARY AND
BANKRUPTCY:
CURRENT LAW: The question raised at this point is the concern with
undertaking the “nonsimultaneous,” tax-deferred exchange utilizing
the third party Qualified Intermediary (QI).
There has been great concern with the tax and legal implications when
the “Qualified Intermediary” (QI)15 defaults or declares bankruptcy, and,
thus, fails to complete the exchange.16
What if the QI is insolvent and does not properly complete the taxdeferred exchange? What if the QI (Qualified Intermediary) absconds
with the escrow funds?17 These questions raised the concern that if the
QI did not properly or timely complete the real estate exchange, the
damage for loss of the tax-deferred exchange, as well as, potentially,
loss of the equity, could fall upon Taxpayer X.
CASES:
(See full article for this coverage as this article has been abridged.)
TAXPAYER LOSES ON FUNDS PLACED WITH
QUALIFIED INTERMEDIARY: RECENT LAW:
In re LandAmerica: Even more detrimental results to the taxpayer was
in the case of In re LandAmerica.27 In this case, the taxpayer suffered a
major loss because of the actions of the QI.
This 2009 case involved LandAmerica as the Qualified Intermediary
that declared Chapter 11 bankruptcy. Over 85 adversarial proceedings
were brought by many customers of LandAmerica. The 85+ cases
involved former customers that took the position that the monies
they deposited into bank accounts with LandAmerica, to support the
exchanges, were “trust” funds. As such, the taxpayers argued that the
trust funds should not be held as assets of the bankrupt, LandAmerica,
but such funds should rather be held for the benefit of the taxpayers,
and that such funds should be returned to the taxpayers as being
involved in “relinquishing” their properties in “exchange” for their
“replacement properties.” (There is some relief for Taxpayers under Rev.
Proc. 2010-14.)
The Court concluded, and created great turmoil in doing so, that the
monies in question would be held by the Trustee in bankruptcy and
would not be held as exchange funds for the various parties. These
parties claimed that they were entitled to a return of their funds
involving the relinquished properties; the funds were to provide
monies to have the acquisition of the “replacement properties.”28
34 Winter 2013
Terra Firma
In turn, such position encourages taxpayers to consider, maybe to the
benefit of the taxpayers, the risks that they face when undertaking a
tax-deferred exchange involving a QI.
Some states have attempted to address the issue of Qualified
Intermediaries by requiring bonds, licensing, escrow accounts,
disclosures and other steps to, hopefully, protect those involved in the
attempted exchange.
Taxpayers and their advisors should re-examine the inherent potential
risks in the non-simultaneous exchange which necessitates the use
of a QI to facilitate the tax-deferred exchange and avoid the taxpayer
receiving any property which is not “like-kind.” (As indicated in this Note,
receipt of “non-like-kind property,” such as cash or other disqualified
property, will destroy the potential of deferring taxable gain under
Code §1031. This could result in Taxpayer X being required to pay taxes
or actually lose the monies for the attempted tax-deferred exchange.)
CONCLUSION: Taxpayers and their advisors should consider suggestions
to avoid some of the pitfalls and risks when attempting to undertake
a tax-deferred exchange. There are risks when using a Qualified
Intermediary. Funds could be stolen, misused, or otherwise not
available to complete the tax-deferred exchange. (More suggestions
to avoid the problem with default by QI can be found in the full article;
it has been abridged in this summary article.)
Footnotes may be seen in the Member Resources section of the RLI website
at www.rliland.com.
About the author: Dr. Mark Levine, ALC,
a full-time professor and the director
of the Burns School of Real Estate and
Construction Management at the Daniels
College of Business, has been a real estate
broker, attorney, investor and professor for
more than 40 years, lecturing throughout
the U.S. and internationally. He is a two-time
Fulbright Scholar to China, has written 52
books and over 300 articles.
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Terra Firma
Winter 2013 35
UNDER ALL IS THE LAN D
Official Newsletter of the REALTORS® LAND INSTITUTE
430 N Michigan Ave. Chicago, Illinois 60611
Experience the “Real Deal” with the best in the land business at the
2013 National Land Conference at the Flamingo in Las Vegas, Nevada.
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Official Newsletter of the REALTORS® LAND

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