LIMITED SERVICE AGENCY

YES, IT'S TRUE. AFTER NINE SPLENDID YEARS we're selling our wonderful home in NW Washington DC. As a licensed Virginia realtor, I am limited as a FSBO (for sale by owner) in the degree of ordinary realty services I can provide to myself as my own representative in a jurisdiction other than the one in which I am licensed. One of these is the legal ability to post my property and receive inquiries from buyers' agents who depend daily on the local MLS (Multiple Listing Service). Listing property on the MLS is almost mandatory in attracting the quality buyer, the one who knows what he needs and is ready to address those needs, in greater numbers than any other online or old or new media service available.

In seeking to save myself a substantial amount of money in these cash-strapped times, I must seek out a relatively new phenomenon in real estate law called Limited service agency.

Here is an addition made to the original law which took effect on 1 July, 2007.

“Limited service representative” means a licensee who acts for or represents a client with respect to real property containing from one to four residential units, pursuant to a brokerage agreement that provides that the limited service representative will not provide one or more of the duties set forth in subdivision A 2 of §§ 54.1-2131, 54.1-2132, 54.1-2133, and 54.1-2134, inclusive. A limited service representative shall have the obligations set out in the brokerage agreement, except that a limited service representative shall provide the client, at the time of entering the brokerage agreement, copies of any and all disclosures required by federal or state law, or local disclosures expressly authorized by state law, and shall disclose to the client the following in writing: (i) the rights and obligations of the client under the Virginia Residential Property Disclosure Act (§ 55-517 et seq.); (ii) if the client is selling a condominium, the rights and obligations of the client to deliver to the purchasers, or to receive as purchaser, the condominium resale certificate required by § 55-79.97; and (iii) if the client is selling a property subject to the Property Owners’ Association Act (§ 55-508 et seq.), the rights and obligations of the client to deliver to the purchasers, or to receive as purchaser, the association disclosure packet required by § 55-512. A limited service representative may act as the agent or representative of the client only by so providing in writing in the brokerage agreement. If the brokerage agreement does not so state, the limited service representative shall be deemed as acting as an independent contractor of the client.

Over the next few days my task will be to find someone who actually knows of this form of agency, and is willing to provide me the small service of posting my information on the MRIS (the local MLS) for a small fee. There are those agents with a bit more seasoning than I have who speculate that limited service agency will actually become rather popular once the public and the industry begin to detect its advantages over traditional agency.

NORTHERN VIRGINIA MARKET IMPROVING

THE HOUSING MARKET IN THE AREA is beginning to stabilize. Just today, my wife and I spotted an UNDER CONTRACT sign posted on a $900,000 palatial homestead on Lovettsville Road. Metropolitan Regional Information Services has released its July statistical report. There is some very good news. Both single family and townhouse inventory is moving at a clip, dropping a whopping fifty percent or better from a year ago across the area. Median prices are holding firm from July a year ago, although 2009 year to date median sales price numbers still average 11-20% lower than 2008 prices year to date indices.

Click below for each report (pdf):

LOUDOUN COUNTY

FAIRFAX COUNTY

FREDERICK COUNTY

ARLINGTON COUNTY

FAUQUIER COUNTY

But before we draw too many false conclusions on the wall, let's give some attention to one common misconception in the real estate statistics game. Dictionary.com defines ‘Median’ as “the middle number in a given sequence of numbers”.

Studying the linked statistics above must be done with that definition applied. Keep in mind that the median price is not the average, nor is it the mean price, which is expressed as half the house prices in any given category rise above and half the house prices in that category fall below the mean price. The median price just means that if there are 7 sales—the price of the number 4 sale is the median home price.

One cannot draw the conclusion that all prices have fallen x% when comparing July ‘08 and ‘09 median home price figures. Remember many of the sales are foreclosures. Much of the movement in our market is in the lower price points and in the most distressed price points—hence a lower median price.

Median home price is still a valuable indicator in the market but one must be careful of the conclusion one draws from the information. There is no denying prices have fallen precipitously. But, it’s important to evaluate the numbers in the right context.

CONTINGENCIES, NO KICK OUT

DON'T LOOK NOW BUT THERE SEEMS to be a wee bit of confusion among the water cooler crowd about what the MRIS designation—Cntg/NO KO—actually means, and how does it effect ordinary buyers and sellers who may want to know how to structure a real estate contract to best protect their own interests while also keeping a realistic approach to the realities of a given market. This "Cntg/No Ko" shorthand is found on many listed properties these days, as is the "Cntg/Ko" tag. So, given the nature of the beast, I thought this an excellent topic for the TPG market Push, and here's what I found from a rather trusted resource:

Active—Indicates that the property is available with no contingencies, contract or application registered against it. Contact an agent immediately for showing.

Contingent/KO—(Contingent with Kick Out) - Indicates that the property is available but has a contract with at least one pending contingency that includes a kick out clause. Sellers are accepting contracts on these properties if the buyer meets the criteria to "kick out" the existing contract. Contact an agent for more details.

Contingent/NO KO—(Contingent with No Kick Out)- Indicates that property is available, but has a contract with at least one pending contingency. The pending contingencies do not contain a kick out clause. These properties should be watched in case the existing contract falls through. Contact an agent for more details.

Pending—Indicates that property is under contract. The pending status means there are no contingencies except normal inspections, title search, and possibly loan approval. These properties should be watched in case the existing contract falls through.

But what does kick out actually reference? To find out I searched an online glossary for the term "kick out clause" and found this clarifying entry:

Definition: A term that refers to a real estate contract contingency that's often used when a home buyer places a house under contract with the understanding that he must sell his current house before finalizing the new purchase.

Sellers holding a contract with a kick out clause continue to market the home. If they receive another offer the buyer has a specific amount of time as stipulated in the clause to remove the contingency and move forward to buy the house, whether his existing house is sold or not. If the buyer cannot move forward, the seller can back out of the original contract and sell to the new buyers.

Final analysis for those of us still muddled: the "kick out" occurs when a contingent buyer is kicked out of the contract by another buyer who comes in with a more appealing offer to the seller.

However, what does it mean when a property is advertised as having a ratified contract with contingency but with a no ko, or no kickout clause attachment? This type of contact protects the buyer from other potential buyers but the buyer must still meet deadlines of the contract.