Summer weather roared in with blazing high temperatures and strong storms here in Grand Rapids, Michigan! It's been a little while since I've been able to look out my window at a clear blue sky and gently swaying trees. In some ways the recent rush of climatic activity is a metaphor for the real estate situation here in West Michigan.
2008 has been a year in which we have seen some stormy conditions. The year commenced with the down draft in the mortgage sector due to the sub-prime lending crisis. In fact, until just recently, most of West Michigan was considered a declining market which meant that New Home Buyers were being asked to bring additional money to the closing table to close loans. Money which many of them were hard pressed to find. Zero down programs evaporated into the cosmic ethers.
Yet, not all the news was bad. In the midst of this tempest, affordability levels increased as the prices of homes plummeted sharply creating all sorts of opportunities for buyers and investors to pick up properties at rock bottom prices. Home owners learned hard lessons about the laws of supply and demand Because bank owned properties now constituted almost 1 out of every 3 sales, marketing times increased to almost a year and homes that were not priced correctly were all but ignored.
In an environment in which so many winds of change are raging, it's often difficult to decipher exactly what is going on. Recently, Jennifer Granholm the Governor of Michigan signed some important legislation into LAW! It's the Agency Responsibility Act (ARA) I think that this legislation is one of the best things to emerge out of the storm which has engulfed our industry.
The Governor's signature on the acts is the culmination of the Michigan Association of Realtors hard fought efforts to clarify for consumers the real estate services that were being provided by various agencies. This movement was brought about by the amazing discovery that the ONLY duties imposed by statue or rule of law when representing seller or buyers or real estate property were:
The duty of agents to present offers to sellers within a reasonable period of time
The duty of listing brokers to review and sign the closing statements.
ASTOUNDINGLY, THAT WAS IT!
While most Realtors® were offering substantially MORE than this, the public had limited understanding of the potential vast difference of service levels between brokers because all brokers were using the "Exclusive Right to Sell Contract." (Buyers usually are serviced under a Buyer Agency Agreement)
As a result of this legislation, brokers who do NOT provide the required MINIMUM service levels will now have to use a LIMITED SERVICE AGREEMENT form which clearly defines exactly what they are doing or NOT doing. The ARA also amends the law to make it a VIOLATION of the Occupational Code if a Realtor FAILS to provide all Statutory Services unless they are expressly waived by a client in a limited services agreement.
The is a huge advancement forward for the rights of consumers to ensure they understand exactly WHAT they are getting when they sign up with a real estate broker. I think it will help to dispel some of the misunderstanding and confusion which has marred the positive perception of the real estate industry.
Sometimes, it takes a storm to bring out the best in nature. Today, my lawn is a gorgeous green and the flowers are blooming. It may have been a little rough getting here, but the results I'm witnessing make it worth it. The Act becomes effective as law on July 1, 2008. My hope is that the turmoil in our industry will continue to yield changes which serve the good of our profession and the clients we have the privilege of assisting.
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