Advancing the Business of Real Estate

After much consideration and after the approval of C.A.R.'s boardof directors, the Association distributed copies of its WINForms® electronic-forms software program to the entirety of the organization's membership. In partnership with California's 123 local REALTOR® associations, C.A.R. delivered CD-ROMs containing WINForms® software. Through this new member benefit, for the first time, all California REALTORS® had free, unlimited access to the electronic version of C.A.R.'s standard forms; as a result, members could instantly complete, print, and e-mail the contractsthey need for their transactions. In October 2002, C.A.R. introduced WINForms Online™, the Web-based version of the e-forms software that allows users to store their transaction files online and access that information anytime, anywhere, via a high-speedInternet connection. By year's end, 49,700 members had registered WINForms® as users, more than a fivefold increase in the number of member users from just a year prior. And in the single quarter WINForms Online™ was available, 3,500 members had registered as users.

On a national level, C.A.R.'s RE FormsNet subsidiary, which is co-owned by C.A.R. (through the Association's Real Estate Business Services subsidiary, REBS), NAR, other state and local REALTOR® associations, and CBF Systems Inc., enhanced itsposition as a leading supplier of electronic standard forms to the nation's real estate industry. By year's end, RE FormsNet's ZipForm product (distributed under the WINForms® banner within California) was distributed in all 50 states and had over 150,000registered users nationwide. In all, including the 130 standard forms comprising C.A.R.'s line of standard forms, RE FormsNet maintains a library of 9,682 forms containing 11,296 pages for various states and private real estate brokerage companies throughout the nation.

Likewise, C.A.R. expanded its role as a power player in the real estate industry with its acquisition of the Senior Advantage Real Estate Council, which offers the Seniors Real Estate Specialist (SRES) designation. Subsequently, C.A.R., through REBS, entered the national education and professional designation market. After receiving approval from NAR, C.A.R.'s SAREC subsidiary now can confer the (SRES designation upon those REALTORS® who have completed advanced training on how to meet the housing needs of the ever-expanding senior population. By the end of 2002, SRES was recognized as the sixth-largest REALTOR® designation in the nation with 6,000 members.

In an effort to expand its array of state-of-the-art products and services for members, C.A.R., through its REBS subsidiary, acquired Santa Clarita-based Natural Hazard Disclosures, LLC (NHD), one of the state's market leaders in the field of natural hazard disclosure reports - an essential element in the majority of residential real estate transactions. As a member of the C.A.R. family of companies, NHD is covered under C.A.R.'s User Protection Agreement. In addition, NHD carries $20 million of errors-and-omissions insurance on every report and allows brokers to be named as insured parties.

Developing Innovative Solutions
 
With the median price of a home in California continuing on a steady uphill climb for more than a decade, concerns about housing affordability took center stage in 2002. Over the 12-year period spanning 1990 to 2002, the state's median home price increased 63 percent, from $193,770 to $315,870, while median household income rose only 52 percent during the same time period, from $35,800 to $54,280. Moreover, recent analyses of the housing gap indicate that the state faces a housing shortfall of 80,000 to 100,000 units each year.

In an effort to address the state's housing-affordability problem, C.A.R. broadened the scope of its activities beyond legislative advocacy to direct action: Acting on the direction of its 2001 Leadership Team, the Association in 2002 founded the C.A.R. Housing Affordability Fund (C.A.R.H.A.F.), a charitable, non-profit fund whose proceeds will be distributed through local REALTOR® associations to be used to promote homeownership and address housing-affordability issues in local communities. During C.A.R.'s year-end business meetings in October, the Association's board of directors approved a $500,000 contribution to theFund as one of the first steps in raising a goal of $20 million over the next five years. To coordinate the Association's myriad efforts on the housing-affordability front, C.A.R. also created the Housing Affordability Task Force, which is composed of REALTORS® from throughout California.

Another initiative introduced by the Association last year was the C.A.R. Tech Hotline for members. As a new member benefit, the Tech Hotline provides immediate answers to REALTORS®' tech-related questions. The free hotline, available by calling (800) 773-8630, is staffed by live technicians who can provide information about popular real estate software applications like WINForms®, Top Producer and Lightning CMA Plus!; the Microsoft Windows, Macintosh and Palm operatingsystems, among others; common business programs, including Microsoft's Office suite of applications (Word, Excel, Access, PowerPoint, Publisher, and Outlook), ACT!, and Goldmine; e-mail programs; Internet browsers; popular desktop, laptop and portable computers; and more.

Communicating Essential Information

In an effort to keep members abreast of the critical information they need to remain competitive in today's dynamic business environment, C.A.R.'s communications strategy encompassed a broad range of materials in 2002. From the distribution of California Real Estate magazine each month to providing targeted newsletters to key membership demographics to maintaining a dynamically redesigned Web site, the Association delivered information about thekey topics affecting members' business last year: the potential entry of banks into the real estate business; changes in the state's demographic composition; decreases in affordability levels; consumers' attitudes about homebuying and selling; and otherrelated issues.

Significantly, C.A.R. last year communicated directly with more than 38,700 REALTORS® across the state through the Association?s Outreach program, an increase of more than 36 percent over the number reached in the previous year. Through theprogram, C.A.R.'s 2002 Leadership Team and key staff visited more than 240 local associations, brokerage offices, and industry events to present information about current topics ranging from the new California Residential Purchase Agreement (RPA-CA) and C.A.R.'s sponsored legislation in Sacramento to using WINForms® the latest data about market trends.

C.A.R.'s research division continued to provide monthly reports about sales activity, median prices, and affordability levels, as well as in-depth reportsabout market activity and membership trends. In addition, research efforts expanded in 2002 with the release of the Association's "Member Use of Technology" survey, whose findings were presented during the annual Tech Tuesday event in October, and the publication of C.A.R.'s "Survey of California Home Sellers," which complements the Association's annual "Internet Versus Traditional Buyers Survey."

C.A.R. also introduced two new components to California Real Estate magazine: an in-depth report about thrive in the current market was distributed in June and, in August, the inaugural edition of a targeted broker/manager section in the magazine delivered information about business models brokers and managers throughout the state are using to maximize their operations' profitability.

The Association ramped up its efforts to maximize the efficiency of e-mail communications. C.A.R. Newsline, a weekly e-newsletter containing information about industry developments and breaking legal and legislativenews, was delivered to all members whose e-mail addresses were on file with the Association. Likewise, C.A.R.'s Realegal® publication was delivered as needed to alert members as about the latest legal and risk-management information. By year's end, nearly 80,000 REALTORS® received both publications.

In the area of electronic communications, the Association refined and further enhanced C.A.R. Online, the organization's official Web site. Following a comprehensive redesign that debuted late in 2001, C.A.R. Online offered enhanced navigation functionality; an advanced search engine; customizable user sessions; expanded editing functions for members' individual Web pages; direct access to WINForms®; and more. Much of the content in individual sections of the site was broadened to provide members with in-depth resources to use in their business. A new section for local associations also was created. In a related development, HomeOwner's Guide, C.A.R.'s free, members-only e-mail newsletter distributed to consumers, received a facelift in 2002. In addition to sporting a new look, the revised HomeOwner's Guide now offers enhanced functionality to allow REALTOR® subscribers to further customize their copies by adding links to listings, selecting (or adding their own) articles, maintain e-mail marketing lists, customizing the title, and utilizing other advanced features.
 
Shaping Public Policy

As part of its mission to promote the preservation of real property rights and enhance REALTORS®' freedom to conduct their business with integrity, C.A.R. actively shapes public policy at the local, state, and national levels through its aggressive legislative advocacy and political affairs programs. In 2002, C.A.R. tracked over 2,100 individual pieces of legislation introduced in Sacramento to ensure that they didn't adversely affect REALTORS® and their clients. Throughout the year, C.A.R. sponsored, supported, or opposed measures relating to housing affordability, land use and development, environmental concerns, transactional issues, and private property rights.

The Association scored major legislative victories with the passage of three C.A.R.-sponsored bills focusing on the housing issue that eventually were signed by Governor Gray Davis. AB 369 (Dutra), Housing Supply, promotes the development of housing by allowing a prevailing plaintiff (builder/developer) who has complied with all of a local government's development requirements to receive reasonable attorney's fees in an action against the local government that denies a low- or moderate-income housing development project or that reduces the density below a level that renders the project economically feasible. As a result, city attorneys likely will advise city councils and boardsof supervisors that they must approve developments that are in compliance with the general plan and zoning codes.

Also on the housing front, AB 1866 (Wright), Density Bonus, promotes the development of first-time homebuyer and rental housing by prohibitinglocal governments from adopting restrictions that deprive developers of the ability to increase the density of a development for condominiums and second units. It also puts the burden of proof on local governments and permits courts to award attorney's fees in actions to enforce the law, among other things. A related measure, AB 2292 (Dutra), Downzoning, promotes the development of housing by prohibiting a city or county from arbitrarily reducing the density of a housing development, unless the city or county can produce substantial evidence that any reduction of the housing development application is consistent with its adopted general plan, including its housing element.

C.A.R. also worked vigilantly to preserve REALTORS®' interests by persuading the authors of two measures ultimately signed by Governor Davis -- SB 771 (Figueroa), Telephone Solicitations, and AB 1574 (Lowenthal), Point-of-Sale Insulation Retrofit - to amend the legislation as originally proposed. SB 771 could have eliminated REALTORS®' ability to call former clients as a result of the maintenance of a statewide "do not call" list by the California Department of Consumer Affairs. However, at C.A.R.'s request, the author adopted amendments to provide exclusions for independent contractorsand C.A.R. removed its opposition.

Likewise, AB 1574 could have added thousands of dollars to the cost of a transaction by requiring upgraded insulation in every house built before 1992 before it could be sold. Facing strong C.A.R. opposition, the authoragreed to remove the point-of-sale trigger, requiring instead that standard home inspections include comments on the insulation and energy features of a home.

Another key accomplishment on the legislative front was the passage of AB 2546 (Nation), Unreasonable Restrictions on Condo Sales. This measure prohibits homeowners' associations from enacting rules such as "showing" or "gate" fees that arbitrarily or unreasonably prevent an owner/agent from marketing and showing a property for sale. The new law alsobars an association from establishing an exclusive relationship with a real estate broker.

Of note to REALTORS® who have faced concerns about toxic mold, the state Legislature in 2002 passed, SB 2098, a follow-up measure to the Toxic Mold Protection Act of 2001. SB 2098 clarifies that disclosure of the known presence of mold in a building for rent or sale that exceeds exposure limits don't apply until the January 1 or July 1 that occurs at least six months after the state Department of Health Services adopts the standards and guidelines regarding exposure limits and remediation of toxic mold.

After an unprecedented volume of public comments, including tens of thousands of letters and calls from REALTORS®, agents nationwide earned a victory when Paul O'Neill, former secretary of the U.S. Treasury Department, announced the agency wouldn?t issue a final decision about a proposed regulation that would allow banks to enter the real estate brokerage business. The Community Choice in Real Estate Act (HR 3424) andits companion bill in the Senate, two measures that specifically would have prohibited banks from entering the real estate business, gained widespread bipartisan support in both houses of Congress. Although the 2002 Congressional Session adjourned beforethe measures passed, their overwhelming support and NAR's commitment to keep banks out of real estate signaled a promise to introduce similar legislation in 2003.

Other highlights of C.A.R.'s advocacy efforts at the federal level included support of NAR initiatives focusing on leasehold improvements, FHA downpayment simplification, brownfields reform, increased loan limits, mold, predatory lending, and credit score disclosures. One key REALTOR®-supported measure that was signed into law by President George W. Bush, S. 2239, makes permanent the FHA downpayment-simplification calculation, indexes the FHA multifamily loan limits for inflation, and removes a scheduled increase in the Ginnie Mae guarantee fee.

In addition to its legislative-advocacy efforts, C.A.R. also participates in political affairs through its political action committees (PACs), which allocate funds in support of or opposition to candidates and ballot measures. Funds were distributed through the Association's PACs, the California Real Estate Political Action Committee (CREPAC), CREPAC/Federal, Board of REALTORS® Political Action Committee (BORPAC), and California Real Estate Independent Expenditures Committee (CREIEC). 

The Association's Issues Mobilization Political Action Committee (IMPAC), which receives funding from C.A.R.'s Political Action Fund and Issues Action Fund, allocated funds to such entities that pursued precedent-setting court cases to benefit private property rights and helpd change the state's civil-justice system and liabiltiy laws. In addition, funds were allocated to help local REALTOR® associations statewide to fight everything from the California Coastal Commission to just-cause eviction ordinances.

Minimizing Risk & Liability

C.A.R.'s ongoing commitment to raising members' awareness about professional standards and risk-mitigation strategies continued in 2002, with efforts ranging from revising standard forms and fielding a record number of calls on the Member Legal Hotline to producing videos focusing on ethics and professional-standards issues in the field. C.A.R. also refined its Risk Management program to offer multiple subscription levels for individual REALTORS®, top producers or REALTORS® with assistants, and brokers or office managers.

To reflect changing business practices and market conditions, C.A.R. last year introduced 11 new standard forms and revised 27 existing forms, including the recently introduced California Residential Purchase Agreement (RPA-CA), which replaced the previous RPA and Area Edition Purchase Agreement (AEPA). Revised to include fixed times for deliver of disclosures and removal of contingencies; an allowance for buyers to cancel without first requesting sellers to make repairs; a cancellation right for sellers if buyers don't meet their contractual obligations; and other new clauses; the RPA-CA is now the single uniform purchase agreement backed by C.A.R. for use throughout the state.

In the courts, C.A.R. remained vigilant in defending REALTORS®' business practices, with the Association's Legal Action Fund monitoring developments in a number of cases dealing with land use and takings, malicious prosecution, the California Coastal Commission and other issues that have a direct impact not only on real estate brokerage practices within California, but also on private property owners' rights.  In a key decision for REALTORS®, the U.S. and Patent and Trademark Office denied a legal challenge to the "REALTOR®" and "REALTORS®" trademarks, upholding NAR's right to use the terms exclusively to designate membership in the National Association of REALTORS®.

Also in 2002, the U.S. Supreme Court agreed to hear Holley v. Meyer, a case in which a corporate owner/officer broker was held personally responsible for the fair-housing violations of a salesperson employed by the corporate brokerage firm. C.A.R. filed an amicus curiae (friend of the court) brief and maintained its position that an individual's liability for discrimination shouldn't be based solely on her status as an owner, officer and designated broker of corporate real estate firm.

Providing Professional-Development Opportunities

On the education front, C.A.R. launched the Real Estate Professional Assistant certification program in an attempt to provide advanced training forthose individuals who act as assistants and support staff to individual REALTORS® and brokerage offices. Overall, C.A.R.'s educational services continued to flourish in 2002, as myriad REALTORS® completed the Graduate, REALTOR® Institute program offered by C.A.R. in partnership with Professional Realty Institute and 1,580 people used the Association's award-winning 45-hour course package to meet their license-renewal requirements. In addition, 4,850 REALTORS® received WINForms® training in 2002, and an estimated 2,700 REALTORS® participated in training about the new California Residential Purchase Agreement (RPA-CA).

C.A.R. also offered opportunities for professional growth and development during Tech Tuesday and the 2002 California REALTOR® EXPO held in Long Beach in October. As the most successful event on record, the 2002 EXPO drew a record 8,500 total attendees. The three-day event, which began with the second-annual Tech Tuesday, provided opportunities for REALTORS® to complete continuing-education courses, participate in live, hands-on training sessions and product demos, and learn about essential business issues like Internet data exchange (IDX), mold disclosure, market diversity, and more.

Creating Foundations

Building on the success of the Association's accomplishments in 2002, C.A.R. is poised to meet the challenges and maximize the opportunities facing REALTORS® in their business both now and in the future. In keeping with its mission of developing and promoting programs and services that will enhance members' freedom and ability to conduct their business successfully with integrity and competency, C.A.R. remains committed to leading the way in professionalism in real estate.