What is the Difference Manufactured Homes Explained

What is the Difference Manufactured Homes ExplainedThe Appraisal Institute’s dictionary of Real Estate Appraisal defines a Manufactured Home as “a factory-built house manufactured under the Federal Manufactured Home Construction and Safety Standards Act, commonly known as the HUD Code.”  There are two types of manufactured homes, Mobile Homes and Modular Homes.  

A Mobile Home is built on a metal frame (like a car chassis), meets HUD’s minimum federal building code, and is otherwise known as a singlewide or doublewide home.  When a mobile home leaves the plant, it has axels and wheels attached to its metal frame and is pulled behind a truck down the highway.  Once the mobile home arrives on-site, it is strapped on top of cinderblock foundation piers and the axels and wheels are removed and it becomes real property.

A Modular Home is a type of manufactured home that is built in compliance with Federal and State building codes.  There are two types of modular homes, “on-frame” and “off-frame”.  An “on-frame” modular home is constructed on a metal chassis and is transported to the homesite and attached to the foundation the same way a mobile home is.  Appraisers value “on-frame” modular homes essentially the same as mobile homes.  If the appraiser is unable to locate any other recent and similar “on-frame” modular homes sales (which is often the case), they then use appropriate mobile homes as comparable sales to arrive at an opinion of value for the “on-frame” modular home.  In other words, it is not acceptable for an appraiser to compare an “on-frame” modular home to an “off-frame” modular home (nor to a site-built home), since it is built on a metal frame.

An “off-frame” Modular Home is built on a wood floor joist platform (like a site-built home) and when it leaves the plant is placed on top of truck bed trailer and delivered to the homesite.  Once an “off-frame” modular home arrives on-site, it is hoisted off the trailer with a crane and placed onto a masonry foundation.  When the appraiser appraises this type of modular home, they first look for other similar style “off-frame” modular homes to compare it to.  If they are unable to locate any recent and similar style “off-frame” modular sales (which is often the case), they then compare it to similar style site-built home sales with similar roof pitches, exterior and interior finishes, etc.  Some people may question why appraisers are allowed to use site-built homes as comparable sales for “off-frame” modular homes?  The rational is that an argument can be made that a modular home is of equal quality (if not better) than a similar style and type site-built home, since it is not exposed to the elements during construction.  In other words, the site-built home gets rained in during construction until its roof and exterior walls are installed, while the modular home stays dry during construction since it is built in an indoor climate-controlled facility.  

In summary, the determining factor of whether a Manufactured Home is valued similar to a mobile home or a site-built home, is whether or not it is built on a metal frame or a wood floor joist platform.  If it’s an “on-frame” modular home, its value is similar to a mobile home.  If it’s an “off-frame” modular, its value is similar to a site-built home.

If you are ready to buy or sell, call  Mary Staton or Bert Ward - they’ll be happy to answer any questions.  

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What is the difference between a CMA, BPO, and an Appraisal?

What is the difference between a CMA BPO and an AppraisalA CMA is a Comparable Market Analysis and is also known as a Broker’s Price Opinion (BPO). A CMA is performed by a licensed real estate broker (or an appraiser) who analyzes similar/comparable recently sold, listed and expired properties, for a prospective or existing client, to formulate an estimated “probable sale price” of a property. A CMA is not the same thing as an Appraisal. An Appraisal is performed by a Real Estate Appraiser and is an “opinion of value”, or expressed in terms of how much a property is worth.

The methodology of performing a CMA and an Appraisal is the same when it comes to researching and selecting similar properties to compare to the subject property. The major difference between the two is, appraisals are required for federally regulated lending transactions when CMAs are not permissible. A couple of other differences between the two is that Appraisers are typically concerned primarily with analyzing recent and similar sales, and they make monetary adjustments to the comparable sale prices - to account for differences between the comparable properties and the subject property. In other words, Appraisers add and subtract quantifiable dollar amount adjustments to the comparable sales, to account for their characteristic differences to make them more like the subject property being appraised. On the other hand, the automated CMA computer programs used by real estate brokers, take the unadjusted sale, list, and expired price averages of the comparable properties to arrive at an estimated probable sale price of the subject property.

In summary, when listing your home for sale, it is not necessary to have it appraised to estimate a probable sale price. What is important, however, is to list with an experienced Realtor who is knowledgeable about pricing and well versed in negotiating contracts and repairs. Once your home is under contract, the buyer’s lender will then send an appraiser out to appraise your home.

If you are ready to buy or sell, call Mary Staton or Bert Ward - they’ll be happy to answer any questions.

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Housekeeping: Spiraling Out of Control

Housekeeping is not an issue in determining a home’s value, as long as the home appears to be in reasonably good condition and not in need of immediate repairs.Here’s another interesting story about a request I received to appraise a home in Greenway Park in Graham, the neighborhood behind the Graham High School Football Stadium. Great I thought, this neighborhood typically has lots of homes that turn over every year and they are pretty much all the same size. Measuring and finding plenty of comparable sales to choose from should be easy. In other words, these are the type homes appraisers love to appraise since they can be completed fast! After accepting the appraisal assignment, I scheduled an appointment with the homeowner and off I went. When I arrived at the home, no one came to the door. I had driven to Graham and had been stood up, which rarely happens to an appraiser since the homeowner has a vested interest in having their home appraised.

When I got back to the office, I called the lender who contacted the homeowner. The lender then called me back a couple of hours later saying that the homeowner was sick and for me to reschedule the appointment. Per the lender’s request, I rescheduled the appointment and went back out to the home the next day. When I arrived, I rang the doorbell and the owner greeted me with the front door partially cracked open. Although her demeanor seemed strange, she told me she had been sick and was sorry she was not able to come to the door the day before. Oh well I thought, at least I hadn’t been stood up again, so I proceeded to measure the exterior of her home.

After finishing up with measuring, I went back to the front door and rang the doorbell again. Same thing happened, the owner spoke to me with the front door partially cracked open, except this time she said she didn’t want me to come inside. I advised her that an interior walk-through was required by the lender in order to refinance her home. Reluctantly she obliged to letting me in, but not before warning me that her home was a mess. I was thinking, yeah-yeah, how messy can it be, I’ve seen countless homes that were less than tidy and clean.

As she opened the door, I immediately discovered why I had been stood up and why she did not want me to come inside her home. I had just walked into a hoarder house, exactly the type home one sees on the TV show Buried Alive, and this was before the show came out. I was speechless and didn’t know what to think, other than I had to see the rest of the home. There was literally stuff stacked throughout the house and all over the place and the only way to go from one room to the next was through a landfill like path. The entire house was filthy and looked like a disaster, to say the least.

After finishing the walk-through, I immediately called my supervising boss asking him what the heck to do. He calmly asked, as best I could tell, how did the exterior of the home look as well as the interior walls and floors? I advised that there did not appear to be anything structurally wrong with the home, that it had good curb appeal with it being a brick ranch, and that it was located in a pretty good neighborhood. He then asked if all the trash was removed from the home, did I think the home would be in reasonably good condition? After carefully considering this question, which seemed like forever, I finally decided that I thought it was in good condition. In response, he said something I’ll never forget, that housekeeping is not a factor in determining the home’s value, if the structure itself is not in need of immediate repair. In other words, unless there were visible and observable red flag issues such as holes in the walls, floors, roof, etc., housekeeping was a non-issue.

I wish I could say this story has a happy ending, but the truth is I don’t know. The sad part is this woman had lost her mother three months earlier and had gotten hooked on prescription pills. She had quit going to work and her life was spiraling out of control. I don’t know if the lender was able to refinance her home or not, but it looked like to me that foreclosure on her home, which she had inherited from her mother, would be inevitable if she didn’t turn her life around fast. At first it was hard to wrap my head around appraising her home, but I had a job to do for my client who was trying to help her, so I completed the appraisal assignment having learned that housekeeping is not an issue in determining a home’s value, as long as the home appears to be in reasonably good condition and not in need of immediate repairs. Having said this, if I had observed that the home was in need of significant immediate repairs, then it would have been necessary for me to have made an appropriate monetary condition adjustment in arriving at my final opinion of value.

If you are ready to buy or sell, call Mary Staton or Bert Ward - they’ll be happy to answer any questions.

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Seller Sabotage

Gas stove burner In the Spring of 2017, I helped a nice young lady sell her home in Mebane. She had recently broken up with her boyfriend, had taken out a restraining order against him, and decided to sell her home and leave town. When I listed her home just before Spring, she had already moved out. The market was good and we had a number of showings. Some of the showing feedback received mentioned a strong pet odor type smell. This seemed odd since the home was vacant, clean, and had hardwood floors. We just thought that these couple of showing agents had very sensitive allergies since she did have a dog when she lived there.

About a week later, the weather turned cold and the showing feedback was the heat would not come on and was not working. The seller had an HVAC technician come out and when he took the outside over off the unit he discovered that someone had put a dead fish in the duct. He even took a picture of it and sent it to us. The seller felt for sure her ex-boyfriend had done it since he had been stalking her, but of course, she could not prove it.

A police report was filed for the incident. Unfortunately, about one week after that, we received showing feedback that her home did not have a kitchen range as shown in the MLS pictures. Someone had broken into the home and stolen it. The police were called out again and another police report was filed.

The seller suspected the ex-boyfriend had stolen it out of retaliation, but none of the neighbors had seen anyone removing the range from her home. The agent that brought the missing range to our attention got the home under contract with her buyer. As a closing condition, the buyer specifically picked out the range they wanted the seller to buy, which she did. This buyer ended up terminating the contract adding more insult to injury. Fortunately, another buyer soon came along and we finally got her home sold.

I had heard stories about these types of things happening to other people and had even seen some similar incidents happen on TV, but I never imagined it happening to one of my sellers. It just goes to show that you will see almost anything imaginable happen in real estate the longer one is in this business.

If you are ready to buy or sell, call Mary Staton or Bert Ward - they’ll be happy to answer any questions.

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Lis Pendens

Lis PendensAccording to dictionary.law.com, Lis Pendens is a Latin word that means "a suit pending, a written notice that a lawsuit has been filed which concerns the title to real property or some interest in that real property”. A Lis Pendens gives notice to the owner of real estate that there is a claim on the property, and the recording informs the general public (in particular, anyone interested in buying or financing the property), that there is a potential claim against it.

Not long ago, prior to closing on one of our seller’s home, the real estate attorney uncovered a Lis Pendens on their home. Our seller was surprised and dumbfounded as to how and why a Lis Pendens was filed against their home. The closing attorney sent an email to the inspections department to find out why it had been filed. After a day or two of having not received a response, I took a copy of the attorney’s email and paid a visit to the inspections department to see if someone could help me resolve the problem. When I met with the city inspector I informed them that the home had caught fire several years ago (which had been disclosed from the beginning to the buyer on the North Carolina Residential Property Disclosure Statement), and provided him with copies of all permitted work which had been completed and approved by the city of Burlington. The city inspector said he would call the judge and be back in touch. Later that afternoon, he called back and said that the Lis Pendens had been removed from the property.

As it turned out, the city had overlooked removing the Lis Pendens after the work had been permitted and completed, and the seller was unaware that they had a suit pending. The city had filed a Lis Pendens as a precaution to prevent the previous homeowner from being able to sell a fire damaged home to anyone, without obtaining the required permits to make it habitable. The city advised that it was standard practice to file a Lis Pendens on any home which had been involved in a fire. A couple days after the Lis Pendens was wiped clean, the home sold/closed and the sellers and the buyer were both happy.

If you are ready to buy or sell, call Mary Staton or Bert Ward - they’ll be happy to answer any questions.

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Three Mentors

Three girls eating cotton candyI don’t believe that life’s journey is meant to be a solitary endeavor in whatever one’s chosen line of work is. Mentors serve as great role models by helping us grow and making life more meaningful. I am no expert to this age-old concept. Aside from my family’s support and guidance, there are three real estate mentors/educators that played an important role in my life in terms of influencing me, from them leading by example, to persevere and succeed in opening and running my real estate appraisal business and real estate firm.

My first mentor was Dan Mohr, who at the time was the owner and lead instructor of Dan Mohr Real Estate Schools. Dan was one of the hardest working men I have ever worked directly under (and tallest, towering at 6’7”). His father was an Army drill instructor who helped write their training manual a number of years ago. Dan followed in his father’s military footsteps by attending a military school, The Citadel. While at the Citadel Dan played on the basketball team with Pat Conroy. When I was working at Dan’s real estate school, Pat was writing a book about their senior year called “Losing Season”. While manning the phones Pat would often call in and ask to speak to Dan about his recollections of the season, coach, and teammates. It was a unique experience talking to Pat and listening to him crack a few jokes about Dan, as only Pat could do. As a student and employee of Dan’s, I hung onto every word of advice he offered. He was dead serious but once you got to know him, he had a wonderful sense of humor. To this day, Mary Staton and I, run our real estate business like Dan ran his school, as a husband and wife team. The one thing that stuck with me about Dan was his business/life philosophy, “Whatever it Takes”. Dan literally did whatever it took to succeed and I’m lucky to have had the privilege of learning and working under him.

Prior to going to work for Dan Mohr, I enrolled in the real estate broker courses at Alamance Community College (ACC), since Dan was not offering them at the time I needed to take them. My expectations about the quality of instruction at ACC were not very high since Dan had established such a high bar of excellence in real estate education. Boy was I surprised how wrong I was and quickly realized during my first broker course how fortunate I was to have another master real estate instructor in the late great Everett Mogul. Everett’s teaching style was totally different from Dan’s. Dan was more of a hard nose dig it out of the book kind of guy, while Everett had the gift of helping his students more easily understand a comprehensive and often complex subject matter. Everett had a wonderful sense of humor too. When it came to the wording of a test question’s fairness (which were often designed to trick you or create doubt or confusion in your mind), his standard response was that “life’s not fair, the fair is in Raleigh. It has cotton candy and all kinds of good stuff, they even have someone who will guess your weight”. In regard to reading the course material, he liked to tell his students, “If you have indoor plumbing, take it with you”. From a classroom lecture point of view, it was a sight to see. The real estate course 500+ page book that he taught from was so worn from use that the hard-bound cover had come apart. He would walk around the classroom holding his tattered book like a minister talking about various topics and reciting sentences and page numbers from having memorized them. Everett made learning fun. Unfortunately, as fate would have it, Everett did not show up to teach one morning and the class was dismissed. I found out the next day that he had died of a heart attack. I am blessed to have had the opportunity to have known and studied under Everett. He was one of Alamance County’s finest walking, talking, real estate encyclopedias. Although his life was cut short, his legacy lives on.

After Everett’s passing, I finished up my broker courses with Dan Mohr and ended up going to work for him shortly thereafter. While employed there, I decided to enroll in the Residential Real Estate Appraisal courses (R-1, R-2, & R-3). Upon completion of these courses I needed one more required appraisal course, G-1 (one of three courses required to be a commercial appraiser), to become eligible to take the residential real estate appraisal exam. As was the case before, Dan was not offering the commercial appraisal course at the time. As a result, I found the course being offered in Raleigh by the owner/instructor, Archibald “Baldy” Williams, of Triangle Appraisal & Real Estate School. While it was not as convenient to commute to Raleigh, it ended up being another blessing in disguise to learn under Baldy and get to know him. Baldy is from Wilson and never graduated from high school since he was recruited to play football for Carolina (yes, hard to believe but back then you apparently didn’t have to have a high school diploma, and yes, that was back in the day when they wore leather football helmets, and he has a scar on his forehead to prove it). Baldy is another master real estate instructor with real-world experience having been in the construction business (both residential and commercial), an appraiser, the former owner of a mortgage broker company - Atlantic Mortgage, and the current owner of an appraisal management portal company. He is hands down the best storytelling instructor I have ever had the pleasure to listen to, informative and funny. One funny story I recall Baldy telling in class one day was when he was a little boy he rode his pony into the local hardware store and it pooped on the floor. While his story was unrelated to real estate, he recognized the importance of not taking oneself too seriously and having a sense of humor. To this day Baldy is politically connected with the North Carolina Appraisal Board, the Appraisal Institute, and the North Carolina Professional Appraiser’s Coalition. I am blessed to know Baldy, he is more than a mentor, he’s a friend and a class act.

Yes, mentors no doubt play a very important role in all our lives. Why not take some time today to reflect and give thanks to some of the mentors that have had a positive influence in your life?

If you are ready to buy or sell, call Mary Staton or Bert Ward - they’ll be happy to answer any questions.

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For Sale By Owner (FSBO)

For Sale By Owner FSBO red sign If you are thinking about selling your home by owner there are some things you should know before putting your home on the market. Most For Sale By Owners (FSBOs) are unaware that there are two mandatory forms required by the State of North Carolina that a seller must complete and provide to the buyer “no later than the time the purchaser makes an offer”. The two required disclosures are the; State of North Carolina Residential Property and Owners’ Association Disclosure Statement (RPD), and the State of North Carolina Mineral and Oil and Gas Rights Mandatory Disclosure Statement (MOG). If these forms are not completed by the seller and given to the buyer prior to them making a written and signed offer, then the buyer may under certain conditions cancel any resulting contract without penalty to the buyer. Stated another way, the buyer could be entitled to be refunded their Due Diligence Money, Earnest Money Deposit, and any expenses they incurred such as inspections, appraisals, lending fees, and the like. Whether you sell your home By Owner or list it for sale with a Realtor, these mandatory disclosures are required by the State of North Carolina. In other words, these forms are mandated by the State of North Carolina, and unlike all other real estate contract forms used by Realtors, they were not created jointly by the North Carolina Bar Association and the North Carolina Association of Realtors, but by the State of North Carolina.

The purpose of the RPD is for the seller to disclose to the buyer material facts about the home in which they have “actual knowledge” about. The form has three boxes for each question in which the seller can check Yes (if they are aware of any existing problems), No (if they are unaware of any existing problems), and No Representation (if they don’t know if there are any problems or not). If a seller is aware of any problems and checks the No box, then they will have knowingly made a “willful misrepresentation”, and could place themselves in legal jeopardy. If they check the No box stating that there isn’t a known problem (as far as they know), and a home inspection uncovers a problem, then they will have made an “unwillful misrepresentation”, meaning that they truly and honestly didn’t intentionally misrepresent the answer to the question. In this instance, the seller should provide the buyer with a corrected and updated RPD. If they check the No Representation box and know there is a problem and don’t disclose it, they will have nonetheless made a “willful misrepresentation”. Lastly, if they check the Yes box disclosing a known problem, they are required to include a written statement on the form describing the issue. Summing up the RPD Disclosure Statement, it is designed for the seller to provide the buyer with truthful and transparent representations (to the best of their knowledge) about the property, prior to entering into a purchase agreement contract.

The MOG Disclosure Statement is a relatively new seller disclosure that came about because national homebuilders, such as D.R. Horton and the like, were buying up large tracts of land after the 2008 financial crisis and severing the subsurface mineral rights when they sold their homes to buyers. One of the reasons builders were severing these rights was that they were valuable to them in locations where energy companies were fracking and doing a lot of horizontal drilling. Since Alamance County is not known for fracking, sellers in older established neighborhoods are not severing their subsurface rights and are continuing to convey them to their buyers (as has historically been the case when homes were sold).

Moving on, let’s say that the FSBO has provided their buyer with these required disclosures which have been completed and signed, and they have entered into a contract to sell their home. From here, it becomes a matter of managing the process which includes, among other things; coordinating the scheduling of the home inspection and negotiating repairs, making arrangements for the pest inspector and appraiser to come out, and coordinating the closing date and time with the buyer’s attorney.

Let’s now assume that the FSBO successfully navigated through this entire process, finalized the sale of their home, and the attorney recorded the deed and disbursed the money to them from the sale proceeds. Now it’s celebration time! Not only have they successfully sold their home themselves, but they also saved thousands of dollars from not having to pay a commission to a Realtor. However, the FSBO really didn’t save the commission, they earned it, by having invested a lot of time and effort in selling their home themselves.

In conclusion, selling your home by owner can be an appealing option if one knows and understands how to manage the process and complete and provide the buyer with the required North Carolina Disclosures, prior to a formal written offer being made. However, if the seller sees the benefit in receiving help with; pricing their home (researching MLS and public records for comparable sales, listings, and expired listings to form a BPO - Broker’s Price Opinion); marketing; advertising; scheduling showings; record-keeping of all the Realtors who have shown their home with showing feedback; negotiating the purchase price, terms and conditions of the contract; negotiating repairs and any seller concessions; scheduling and coordinating appointments with the home inspector, pest inspector, the appraiser, and closing attorney; then it would be well worth their time to engage the services of a professional and experienced Realtor and enter into a Listing Agreement, and pay them a commission to sell their home.

If you are ready to buy or sell, call Mary Staton or Bert Ward at 336-213-0989 - they’ll be happy to answer any questions.

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Client Golf

Two guys standing on a beautiful green golf courseA number of years ago I arranged a golf game at Alamance Country Club with my appraiser training supervisor, and the owner of a leading mortgage brokerage company here in Burlington at the time. The mortgage broker company owner who was a member invited another member to play, and I brought my boss as a guest. The game was set so we decided to play a friendly $5 Nassau to make things more interesting. My boss was from Kinston and grew up playing some golf with his older brother at Kinston Country Club, but rarely played once he settled down with his wife and in his appraisal career. I, on the other hand, went through periods of playing and not playing and had just gotten back into playing again. The mortgage brokerage owner didn’t play much but was a decent golfer and his partner played regularly. It seemed like a perfect and fair match in the making even though we had never played with or against each other.

I don’t remember all the details of the match, but what I do remember, however, is my boss who had played so little at the time and was hitting 2 iron tee shots flying about 240 yards straight down the middle of just about every fairway. He even birdied the first par three and played well on the holes I didn’t. It was the proverbial perfect brother-in-law display of golf between us. Our opponents played competitively on the front side, but we whipped them pretty good on the first 9-hole match. Recognizing that my boss and I were playing well, the dilemma we faced was to essentially throw the match and let our client and his partner start winning some holes on the second nine hole match, or to keep finding out how good we could play right up to finish. Being young in our early thirties at the time, we of course chose to keep playing as good as we could. The second match was similar to the first one and we ended up winning the front side, backside, and overall match, and $15.

The price of winning didn’t come without a cost, however. While our mortgage brokerage client didn’t stop ordering appraisals from us, we did notice a slight decline in volume over the next couple of months and we never played golf together again. If my boss and I had to do it all over again, we would have just played for fun instead of playing them in a match play game for money. Looking back 18 years later we now laugh about it and wonder what the heck we were thinking.

If you are ready to buy or sell, call Mary Staton or Bert Ward - they’ll be happy to answer any questions.

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Calculating Square Footage

Guy with yellow construction hat on calculating Square FootageThe three most important factors that determine a home’s value are; location, square footage, and amenities (number of bedrooms, bathrooms, garages, porches, decks, patios, finishes, etc.). Of the three, location is the most important with square footage being the second most important. Knowing the square footage of the home is particularly important to most all buyers since it provides them with a convenient (although not always accurate, as you will see in this article) method for them to estimate the value of the home in comparison to other properties. Although neither the North Carolina License Law nor the North Carolina Real Estate Commission, require the reporting of the square footage of a home for sale, it is nonetheless common practice among Realtors to report it because of its widespread use among buyers (and Realtors) dividing the asking price by its square footage to arrive at the price per square foot of the property. Therefore, for the accuracy of measuring and calculating square footage, it is essential that Realtors follow the Residential Square Footage Guidelines endorsed and adopted by the North Carolina Real Estate Commission and the American National Standards Institute, Inc. (ANSI) when measuring and calculating the square footage of a home.

When Realtors input the square footage of a home in the Multiple Listing Service (MLS), the two most common mistakes made by new or inexperienced agents are representing finished basement square footage as “above grade (above ground) square footage”, and finished basements and rooms with ceiling heights less than 7’, in the home’s overall “living area” (total heated/finished square footage). An important factor in accurately reporting square footage in MLS is distinguishing between “finished square footage”, “unfinished square footage”, and “living area”. In order for the total square footage to be accurately represented in MLS as “living area”, it is required to have a heat source and be finished, and have a ceiling height of at least 7’, to be counted for marketing and advertising purposes to prospective buyers.

In summary, you may be thinking so what does this mean to me if I’m thinking of buying a home, or selling my home? It comes down to basically three things. First, if you are thinking of buying or selling a home with a basement, then any “living area” below grade (below ground) has less contributory value in comparison to the home’s above grade (above ground) square footage. In other words, a home’s basement below grade (below ground) square footage is worth less than its above grade (above ground) square footage. And, if the basement is finished and heated, it is worth more than a basement that is unfinished and not heated. Second, if the home you’re thinking of buying or selling has any rooms with a ceiling height of less than 7’, this square footage cannot be included as “living area”, regardless if it is heated and finished. In this case, it still may have some contributory value, but its value will essentially be treated by appraisers as a finished attic or as a finished basement storage area. Last and most important, since most buyers obtain a loan when purchasing a home, their lender will send an appraiser out to appraise the home when it is under contract, and the appraiser will not give the same amount of value for finished heated basements and rooms with ceiling heights less than 7’ than they will for an above grade (above ground) finished and heated square footage (living area). In other words, the appraisal may come in less than the contract price causing the buyer’s financing to fall through, and thus the sale.

If you are ready to buy or sell, call Mary Staton or Bert Ward at 336-213-0989 - they’ll be happy to answer any questions.

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Two Pigs in a Trailer

Is it safe for to walk through a home with two pigs in the house?I wanted to share a funny story that happened to me when I was first getting started in the appraisal business. On this particular day, I received an order to appraise a double wide home located in Eli Whitney, a township situated at the crossroads of HWY 87 South and Greensboro-Chapel Hill Rd, in southern Alamance County, known for its annual “Uncle Eli’s Quilting Party” and home to the late great real estate instructor Everette Mogul. I was looking forward to this assignment since I enjoyed driving all over Alamance County and visiting places like Lake Cammack, Glencoe Mill Village, Bass Mountain, Saxapahaw, and Snow Camp, as well as other picturesque tranquil settings located throughout the county. As an added bonus, I was happy to be appraising a double-wide since it took less time to appraise, and paid the same amount of money as most larger homes did which was the typical $300 at the time.

When I arrived at the home midday, I did the same thing I always did, greeted the homeowner at the front door and then proceeded to measure the exterior. Within about ten minutes I finished sketching the dwelling and jotting down my measurements, so it was now time for me to do an interior walk-through of the home, to certify that I had been inside and that it was in good condition. When the homeowner opened the door to let me in, the first thing I noticed was that she had her stereo cranked up, was drinking a margarita, and dancing in the middle of her living room with two full-grown pigs by her side – I kid you not! As if this was not a sight to see in and of itself, I was totally taken back (to say the least), when she then asked me if I wanted to party? Pausing for a split second to collect my thoughts as to what the heck was happening before my eyes, I instinctively and politely said no thank you, and asked if it was safe for me to walk through her home with her two pigs in the house? She said not to worry that they were her pets and friendly animals.

Having grown up a city boy in Country Club Forest and never been around a pig that wasn’t fenced in, I proceeded with caution to complete my walk-through while keeping a close eye on the two pigs, got the heck out of there as quickly as possible, and went back to my office to complete the appraisal report.

If you are ready to buy or sell, call Mary Staton or Bert Ward - they’ll be happy to answer any questions.

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Tips for Staging Your Home to Sell

Kitchen stagged for selling the homeDe-Clutter your home
The first and most important task when staging a house will be getting rid of clutter. A clean and almost empty house will always make it look bigger. Remove personal items, photos, knick-knacks, and pieces of furniture that are not necessary to the room. It is good to keep a few items of furniture to identify the room and show ideas how to arrange the furniture, but not so much that it makes it look cluttered. Get rid of furniture that you won’t be moving with you, or store away furniture that will be coming to your new home but will not be needed for staging.
With the clutter gone, do a deep cleaning and make your kitchen and bathroom sparkle. Dust off the blinds, clean the windows and sills, clean carpets if needed. Open the windows and air out the house. Hire a cleaning company for a deep clean if you have it in the budget.

Paint
Another good idea is to paint the walls throughout the main living area one neutral color. Use a light gray or light greige color that will make your home look nice and bright and airy, and will make your house look bigger.

Brighten up your home
The lighting of your home is also important. Buyers typically like to see bright rooms. Open blinds and pull open curtains if someone is coming to see it. Turn the lights on throughout darker areas of your home. Maybe even put lighter bulbs in the light fixtures or lamps to make your home look nice and bright and airy.

Arrange furniture
The position of the furniture is also something to think about to make your home look its best. Position couches, chairs, and tables away from your walls. Anchor the space with an area rug, even if the room has wall-to-wall carpet. This creates a cozy, intimate space, ideal for chatting with friends and family.

Curb appeal
The exterior of your home is the first thing a potential buyer will see. Get them in the door by creating a nice exterior look. Here are a few easy things to do for the outside of your home.

  • Power-wash your house and walkways.
  • Clean your windows.
  • Make sure your house number is easy to read.
  • Mow the lawn.
  • Trim shrubs and weed natural areas
  • Plant flowers around a mailbox and put potted flowers by the front door to add color.

Add little extras
Some other nice little touches would be to put a bowl of fresh vegetables on the kitchen counter. Add a vase of fresh flowers to the entryway or living room. Put some scented plug-in air fresheners around the house, nothing too strong, perhaps a cotton scent or beachy scent, or an apple-cinnamon scent in the kitchen. It’s the next best thing to homemade apple pie!

If you are ready to buy or sell, call Mary Staton or Bert Ward - they’ll be happy to answer any questions.

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Wee Doggie!

Here’s another funny story going back to my days at Mill Creek. One of the little things I enjoyed was driving across town through Burlington and Haw River on Church St./HWY 70 to work in Mebane.  

On this particular day, it was hot so I decided to stop off at the Little General convenience store before turning onto Dodson Rd. to take the back way by Eastern Alamance to Mill Creek. Wearing my coat and tie, I jumped out of the car, got a drink and walked up to the counter to pay. Behind the counter was a young girl sitting in an upholstered rocking chair watching tv, with her mother tending the cash register.

The little girl looked up at me and said Wee Doggie! At that moment, I thought that was a strange thing for her to say but paid for my drink, got in my car, and went on my way. After pulling out of the convenience store parking lot it dawned on me that she was commenting in her own country way about how I was dressed, saying exactly what Jed Clampett would say, Wee Doggie!

Reflecting on the moment, it made me smile and laugh. I still pass by the little General in my travels to Mebane from time to time and still think about that moment, but I haven’t stopped in since. I may stop in again sometime just for the heck of it, but if and when I do, I can assure you I won’t be wearing a coat and tie to attract any unwanted attention.

If you are ready to buy or sell, call Mary Staton or Bert Ward - they’ll be happy to answer any questions.

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What to Look For When Needing Rental Property Insurance

Bright sunshine through the tree branches - Photo by Jeremy Bishop on UnsplashMost anyone who owns a rental house (and there are a lot of people out there who do – more than you would probably think), knows that obtaining insurance coverage at a reasonable price can be challenging. If you are new to the landlord business, thinking about buying a rent house or thinking about switching insurance carriers, this article may be worth your time to read.

The first challenge is finding an insurance agent who will write the insurance policy at a competitive rate. Some insurance companies refuse to even write insurance on rental properties, while others will for a premium, and the remaining ones will write it at a reasonably good rate if the home measures up to their standards. Shopping around for a good insurance carrier is the easy part of the coverage process since there are a lot of insurance agencies in the marketplace to choose from.

The next step is where things can get tricky. In order for most carriers to write it, they will typically require an insurance inspector to make an on-site inspection of the property. If you don’t know what the important things they are looking for, be prepared to be blindsided. Planning and preparation ahead of the on-site inspection are all-important, to ensure that you are not surprised and that everything goes well. If the home is relatively newer in age, there is less to be concerned about than if you own a home that is older in age. Having said this, this article is written in mind for those looking to rent and insure an older home.

Some of the most important things the insurance inspector is looking for and will be taking pictures of to include in their report are; condition of the roof and whether the gutters are clogged or not, and if the gutter downspouts appear to be properly draining rainwater away from the home’s foundation; whether or not there are any big trees overhanging, or located near the home; whether the electrical panel has fuses and are in need of being upgraded to breakers; the condition of the power line connected to the house and whether or not it is in need of upgrading; the age and condition of the HVAC and water heater, and if they appear in need of repair or near the end of their life expectancy; if there are any grills located directly underneath the house soffit vents; and whether or not there is any firewood or wood debris stacked up against the home’s foundation. Of course, there are other things the insurance inspector will make note of in their report, but the aforementioned head to the top of the list.

So in a nutshell, what does all this mean to the person who is looking to obtain rental house insurance at the best rate possible? If you know what the insurance inspector is looking for, then you can plan ahead and address any issues with your home before the inspector comes out. If you fail to prepare in advance, you could run the risk of the insurance carrier refusing to insure your investment property based on the findings of the insurance inspector’s report. If you currently own a rental property that is being insured, but at a rate higher than you feel it should be, you may want to think twice about moving it to another carrier who may be offering a lower rate. Knowing what an insurance inspector looks for is especially important if you are not in a position to make any needed improvements to the home you may be currently renting, thinking about renting, or considering buying to rent.

If you are ready to buy or sell, call Mary Staton or Bert Ward - they’ll be happy to answer any questions.

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Coming Soon

Guy holding a bottle in his hand excited about a new listing A trend you may have noticed over the past couple of years that is becoming more common is the “Coming Soon” home.  Generally speaking, the concept behind this marketing strategy is to build up the anticipation and excitement of a new listing prior to it hitting the market.  The idea is to attract the interest of multiple buyers based on the principle of scarcity by creating an auction effect, in which buyers will want a home more if they believe that other buyers want it too.  A typical example for marketing your home as “Coming Soon” is when another home is listed in your neighborhood, is similar to your home, and you need to do some finishing touches to get your home ready before it is put on the market; but you want prospective buyers who may be considering the other home to see your home, before they make a buying decision on the other home.  

“Coming Soon” listings do have a downside however and that is the listing agent, buyer agents, and homeowners, are not permitted to show the home to any prospective buyers before it’s beginning list date (as stated in the written listing agreement and it is typically the day the home is listed in MLS).  This rule is in place to prevent anyone from gaining an unfair advantage of selling the home before other interested prospective buyers have a chance to see it and make an offer. 

In summary, it is not essential to create buyer excitement by marketing your home as “Coming Soon”.  If a home is priced to sell the day it hits the market, a new listing will have the same effect as “Coming Soon” since other Realtors and buyers will recognize a properly priced listing and will want to quickly see it and submit their offers.  So if your home is ready and priced accordingly, you may want to just go ahead and put it on the market and let the showings begin and offers come in.  If your home is not ready but you want to get a head start marketing it before it goes on the market, then you may want to consider entering into a “Coming Soon” agreement with your Realtor.

 If you are ready to buy or sell, call Mary Staton or Bert Ward - they’ll be happy to answer any questions.

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Preparing Your Home to Sell

Man working on home project of fixing lightIf there is only one thing I recommend anyone do in preparing their home to sell, it would be getting their home inspected and making as many repairs as reasonably possible prior to putting their home on the market. The benefits of doing this are twofold. First, it gives the seller more leverage to negotiate the best price and terms in the sale of their home. Second, it gives the buyer a greater peace of mind that the home is in good condition prior to entering into a contract to purchase the home. Furthermore, the contract is less likely to be renegotiated or fall through during the critical period of the due diligence process. Think of it this way, if you were looking to buy a pre-owned car from a reputable dealer, they will check it out and certify that the vehicle is in good condition before they sell it to you. Makes sense this would be the best way to sell your home for top dollar, right?

Having said this, I recognize that getting your home inspected before putting it on the market may not be the best course of action for every seller. For example, if the seller doesn’t have the money to make needed repairs, the seller should be prepared to expect the unexpected. If a buyer enters into a contract and their home inspector uncovers a lot of issues with the home, they will surely want to renegotiate the contract by amending the purchase price, or even worse, exercise their option to terminate the contract during the due diligence period. An exception to this scenario would be if the home is priced aggressively to sell where most of the issues are observable and obvious, such as noticeable wood rot, an old and worn out roof or HVAC, or foundation cracks. In this case, such deferred maintenance will be factored into the price and what you see is pretty much all there is. In this event both the buyer and seller would have a mutual understanding that the home is being sold “as is”.

If you are ready to buy or sell, call Mary Staton or Bert Ward - they’ll be happy to answer any questions.

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Going the Extra Mile

Mary Staton Ward and Bert Ward Owner/Appraiser/Broker/Realtor/GRI Black Diamond Real EstateGoing the extra mile has to an extent become a common cliché that some people may say and know they should do but seldom put into practice. Napoleon Hill defined Going the Extra Mile as “the habit of rendering more service and better service than one is expected to render (or paid to do) and doing it in a positive mental attitude”. This article illustrates what going the extra mile means to Black Diamond Real Estate.

In the Spring of 2019 an accountant friend referred to me a seasoned women, who was looking to sell and lives alone at Caswell Beach, seldomly leaving her home, and doesn’t have email, internet, nor a cell phone. The only method to communicate with her is by land line phone or paying an in-person visit. As a personal favor to my friend, I spoke with this sweet and kind lady who wanted to sell a one acre lot she owned on Westbrook Avenue, in the Alamance County part of the Gibsonville city limits. She told me about someone who wanted to buy her lot and gave me his name and number. I called the prospective buyer who informed me that he was interested in growing an organic vegetable garden on her lot and was only willing to pay $7,000 since her property did not have access to city sewer, only city water.

Performing my job in accordance to the Realtor Code of Ethics I conveyed the offer in which the seller, understandably, flat out rejected the offer. My next call was then to the Gibsonville Planning Department to take a deeper dive into investigating the peculiars of the lot. They confirmed that city water ran down Westbrook Ave in front of her lot but the city sewer did not. They even emailed me a map showing where the city sewer lines ran throughout the bordering subdivision, and on the adjacent corner across the street on Westbrook Ave. The only options for seller’s property to have access to city sewer was for at least one of the four bordering property owners to grant her an easement, or to tap into the sewer line across the street. Tapping into the sewer line across the street was not only a bureaucratic process involving in-person meetings and hearings, but would be a seller incurred expense and therefore was not economically feasible. In other words, the time and expense involved to connect to the sewer line across the street would not net the seller more money, in fact it would cause her to net less money. The more feasible option seemed to be trying to get one of the four bordering home owners to buy her lot, since there was no incentive for them to grant her a sewer easement without monetary compensation. The last option was to see if the city of Gibsonville would allow a septic system. They shot this final option down saying that if you have access to city water, you are required to connect to city sewer.

Determined not to give up on helping this seller sell her lot, the next thing I did was mail letters to the bordering property owners to see if any of them would be interested in buying her lot, since it seemed to me that it would be great investment opportunity for any one of them. I received a call from one of the letter recipients who expressed some interest and had a plumber come out to give him an estimate of how much it would cost to run a sewer line through his property. When the cost estimate came back at $20,000, his interest in the lot turned luke-warm. I followed up his response with a question by asking if his neighbor would be interested in going in on buying the lot with him? Unfortunately, he said that he didn’t get along with his neighbor, so this wasn’t an option either.

What to do now was the question? After exhausting all my efforts to no avail, I called up the Gibsonville Planning Department again and posed the question, how is this fair to this seller not to allow a permitted septic system when connecting to city water was not a viable option? I explained that if a septic permit was not permissible, then this seller had more or less an unmarketable property, not even worth about half its tax assessed value of $15,000. And, that if her property had city sewer access her property, it should sell for around $40,000+/-. About an hour later after we got off the phone I received an email from the Gibsonville Planning Department with an attached document they found that allowed an exception to allowing a septic system inside the city limits when connecting to city sewer is not “reasonable accessible”.

Finally, good news, but there was still more work to do in order to get this property ready to list and sell on the open market. First, we needed the seller to get a new and current survey of her property so that we could apply for a septic permit. Once the survey was completed, we would need to apply for a four-bedroom septic permit with the Alamance County Environmental Health Department.

After we obtained the new survey and septic permit, we would then need to get the listing agreement signed, since we now had a marketable and saleable property. Emailing or faxing the listing agreement was not an option, so we would need to snail mail it to the seller or drive to Caswell Beach to personally go over the listing agreement with her to sign. Determining it was in the best interest of my seller, I decided to literally and figuratively, Go the Extra Mile, and drove down to Caswell Beach on a Wednesday and returned home the next day. On Friday we listed her lot in MLS for $37,000, and on Sunday, we received two cash offers, both with a two week closing. The seller verbally accepted the best offer and I drove down again the following week for her to sign the contract. Two weeks later, we lined up a public notary and returned to Caswell Beach for my third and final trip for her to sign the deed and her seller documents. That afternoon, my seller arranged a light house tour for my wife and I, and afterwards we went out to dinner and spent the night at Sunset Beach. The next day we drove home and closed on the lot that afternoon.

In conclusion, going the extra mile for our seller paid off in more ways than one. First, in doing the right thing and looking after our seller’s best interest, we were able to sell her lot for top dollar which netted her three times more than she would have received if we had given up on finding a solution to the sewer/septic problem. Second, the satisfaction we received in helping our seller, far outweighed the monetary compensation we received from selling her lot. After factoring in the time value of money and the expenses we incurred, we only netted about $500 in selling her lot. In other words, going the extra mile to Black Diamond Real Estate means doing whatever it takes to lawfully, morally, and ethically serve the best interest of our buyers and sellers. First and foremost we are in the business of helping people, and if we do the best job we are capable in doing that, then we consider it to be a successful outcome, regardless of our bottom line.

Bert Ward
Owner/Appraiser/Broker/Realtor/GRI
Black Diamond Real Estate
BDRE.com

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Jackpot

Hands on pile of moneyBeing in real estate sales you often never know who your next buyer is going to be or where they are going to come from.  As fate would have it, a Chapel Hill Realtor who sold one of my listings in Mebane last year referred a buyer to me looking to buy a home in Burlington.  Not knowing the particulars of the buyer, other than they were a cash buyer, I referred him to Mary Staton since I was busy working another deal.

After accepting the referral, we discovered that our buyer came into a large source of cash by winning the North Carolina lottery.  After showing him several homes, we finally found the perfect one which he bought for his parents. Using the left-over money, he bought a new car for himself and put the rest into savings. When the sale closed, we paid a referral fee to the referring agent and couldn’t help thinking how mysterious this business can sometimes be.   

 If you are ready to buy or sell, call  Mary Staton or Bert Ward - they’ll be happy to answer any questions.

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Due Diligence Explained

Due Diligence ExplainedDue Diligence is a negotiated period of time in exchange for a negotiated amount of monetary consideration (if any), between buyer and seller.  The due diligence clause of the Residential Offer to Purchase and Contract is the “option” clause of the contract.

The purpose of due diligence is to give the buyer an opportunity to investigate the property (allow time to get the home inspected and appraised, for example), in order to make an informed decision to either move forward with the purchase of the property or terminate the contract.  Although the Offer to Purchase clearly states that the “property is being sold as in in its current condition”, the home inspection may reveal hidden defects or material facts about the property that were not known to either the buyer or seller at the time the contract was executed.  If such concerns arise, the buyer will typically submit a Due Diligence Request and Agreement form to the seller (prior to the expiration of the due diligence period) in order to renegotiate the contract for consideration of repairs or concessions, rather than terminate. The seller then has the option to either renegotiate the contract or not.  If the seller agrees to renegotiate the contract (make repairs, reduce purchase price, or pay closing cost, for example), they will need to sign the Request Agreement before the expiration of the due diligence period. If the seller refuses to make any concessions, then the buyer has the option to proceed with the purchase or terminate the contract (In fact, the buyer has the option to terminate the contract prior to the expiration of the due diligence period, without any reason, and before entering into a written and signed Due Diligence Request Agreement).  In the event the buyer terminates the contract, they will forfeit their due diligence money as it is non-refundable. Their earnest money deposit is refundable however, as long as the buyer terminates prior to expiration of the due diligence period.

When negotiating the due diligence period and amount of money, the buyers typically want a three week examination period with as little money down as possible.  Reasons for this include allowing sufficient time to get the home inspector and appraiser out to the property and complete their reports. Since the buyer incurs these expenses, as others, they are not looking to invest a lot of money that is non-refundable should the home inspection uncover a bunch of issues.

From the seller’s perspective, they are looking to be compensated appropriately for tying their home up under contract during the due diligence period.  Should the buyer decide to terminate the contract, the due diligence money is the seller’s compensation for the inconvenience of having taken their home off the market.  Therefore, it is in the seller’s best interest to get as much due diligence money as reasonably possible. It basically boils down to how much the due diligence time is worth to the buyer and the seller, with consideration of fairness taken into account in regards to their respective interest.  

Since buyer and seller are often at odds over what’s in their best interest, obtaining a reasonable and appropriate amount of compensation can sometimes be challenging for the seller.  For example, if the home has been on the market a while and there is only one interested buyer in the property, the seller may be in a weaker position to negotiate the most favorable terms to them.  However, if the home is a new listing and priced to sell and/or has multiple offers, then the seller is in a stronger position to negotiate the most favorable terms to them.

In a perfect world, all sellers would have a pre-home inspection done on their home and repair all serious/material issues before they list it for sale.  All repairs that were made and any that were not, would then be disclosed to the prospective buyer before entering into a contact. In this situation, both parties would gain a peace of mind knowing what the home’s current condition is while increasing the odds that the sale will close with mutual satisfaction.

However, since we live in the real world, some sellers do not want to spend the money to have their home inspected since they may not have the money nor be interested in spending the money to have any repairs made.  While I understand this position, especially if the seller doesn’t have the money, it can end up costing them more money in the long run having to renegotiate the contract (or cause the buyer to terminate the contract) than if they made repairs prior to listing their home for sale.

At the end of the day, if both buyers and sellers enter into a contract in good faith and feel like they are being treated fairly, then most sales end up closing.  The sales that typically don’t close are usually the result of one or both parties engaging in win-lose negotiating tactics, or from having unreasonable expectations.  If either the buyer or seller (or both) feel that they are being treated unfairly, they will typically try to find a way to respond in kind, causing the sale to implode.

In summary, negotiating the due diligence part of the contract is a function of time in relationship to how much it is worth to the respective buyers and sellers.  In other words, the less time desired should equate to less due diligence money down, whereas the more time desired should equate to more due diligence money down.  

If you are ready to buy or sell, call  Mary Staton or Bert Ward - they’ll be happy to answer any questions.

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When is a Bedroom a Bedroom?

When is a Bedroom a BedroomThis past spring my wife, Mary Staton, and I showed a condo in Burlington that was listed for sale as having two bedrooms. In preparation for the showing we pulled the original MLS listing when the condo was first sold in 2007, as well as the current active listing, and the public property tax record. All three documents represented this condo as having two bedrooms. So far we have a two-bedroom condo, right?

The showing was going as expected until we went upstairs and saw the second bedroom which was located adjacent to the second full bathroom and bonus room loft area. The first two things we noticed about the room being counted as a bedroom were the skylight in the middle of the ceiling and a double door closet. Was this bedroom really a bedroom? Drawing from my appraisal experience I recalled that a bedroom must have an accessible window or an exterior door for egress access - for safety reasons in case of a fire. This room with a closet and skylight apparently didn’t meet the egress requirement of it being called a bedroom.

Knowing this, Mary Staton and I decided to investigate the matter further since this home was being represented as a two-bedroom condo. Afterall, just because I suspected that this room wasn’t a bedroom doesn't mean it’s not a bedroom, right? Doing what any professional Realtor would do, we contacted the North Carolina Real Estate Commission, the attorney with the North Carolina Association of Realtors (NCAR), The North Carolina Appraisal Board, a local Home Inspector, the City of Burlington Inspections Department, and the City of Burlington Fire Department to get their opinions.

The Appraisal Board said that it was up to the appraiser to determine whether or not they considered it to be a bedroom, but if they did the appraiser should provide detailed comments in their report as to why they were classifying it as a bedroom. In other words, the appraiser could theoretically call it a bedroom, but it would be inadvisable from a professional liability standpoint.

The Burlington Fire Chief referred me to the City of Burlington Inspections Director who said that the second bedroom did not meet egress code which states that upper story windows shall have a total glass area of no less than 5’.7” square feet and be no less than 44” off the floor.

The local home inspector concurred with the City of Burlington Inspections Department that this condo’s second-floor bedroom did not meet egress code, and that they always note in their home inspections that bedrooms without proper egress access are safety concerns. The home inspector said he commonly encounters this situation with rooms in basements, without windows, being used as bedrooms.

After speaking with the attorney with the NCAR, he advised that since this room with the skylight did not meet local egress building code, then it couldn’t be represented as a two-bedroom condo, and that the listing agent of the condo should correct the listing and market the property as a one-bedroom unit or count the loft area as a bedroom.

So, the question is how was the builder, Keystone Homes, able to market and sell this condo as a two-bedroom property in the first place? Mary Staton researched Keystone Homes’ website and found an almost identical floorplan that they were selling where the second-floor loft was an “optional” bedroom. Apparently, when this homeowner bought this condo in question, they decided not to convert the loft to a bedroom. In order for them to make this condo appear as a true functional two-bedroom unit, the owner should sheetrock up the half wall in the loft, install a closet, and put up a bedroom door for privacy.

One last word about bedroom classifications. While many rooms are called and sometimes used as bedrooms, common sense should prevail when in doubt, especially when it comes to functional utility. Contrary to popular belief, a closet is not a requirement for a room to be counted as a bedroom, as long as the room functions appropriately as a bedroom and meets the egress requirement.

To illustrate the point, there’s a home that comes to mind that was being marketed as a four-bedroom property. The second story has a bedroom with its own private and separate bathroom. One of the other two bonus rooms on the second floor was being counted as a bedroom by the listing agent but did not have direct access to a bathroom without having to pass through the bedroom. There is however another full bathroom located on the first floor in the foyer hallway, located adjacent to a first-floor bedroom. If someone were sleeping in the upstairs bedroom (or getting ready at the same time in the morning or evening), the other second-floor bedroom occupant would have to walk downstairs to use the other bathroom. This inconvenience makes this fourth bedroom a functional utility issue, adversely affecting the home’s overall value and marketability. As a result, it would be a stretch to call this additional second-floor bonus room a bedroom. A professional Realtor or Appraiser would not count this as a bedroom and sellers shouldn’t either since most buyers and Realtors will recognize the deficiency and not consider it a true functional bedroom.

If you are ready to buy or sell, call Mary Staton or Bert Ward - they’ll be happy to answer any questions.

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Why Homes Don’t Sell

The primary reasons why a home doesn’t sell are location, condition, financing, marketing, and price.  

Location is the only factor in which no one has any control over since it cannot be changed.  For example, if a home is located on a busy street or near railroad tracks, this detracts from its value (unless zoning permits it for commercial use in which case it’s highest and best use is most likely not residential property).  On the other hand, if a home is located on a golf course or lake, for example, there are always buyers who are willing to pay more for these unique locations. Of all the determining factors of value, location is the most important.

Another factor that determines a home’s ability is its condition.  If a seller wants to get top dollar for their home, it must be in top condition.  If the home is not in good condition and the seller is not in a position to make repairs it should be priced accordingly.  Common examples that adversely affect a home’s condition are an old roof, old HVAC systems, damp crawl spaces, old windows, and exterior and interior deferred maintenance.

Financing involves a buyer’s ability to obtain a mortgage loan.  This is self-explanatory in that a buyer will need to come up with a larger down payment and have more income to buy an executive type home.  In the $200,000 +/- price range the down payment is less of a factor with FHA loans being prevalent and income playing a larger factor in obtaining a mortgage loan.     

About fifteen years or so ago, in order for buyers to find out about homes for sale in the market area they were looking in, they needed to engage a Realtor to find out about them.  Today when a Realtor markets a home for sale, it is inputted in the Multiple Listing Service (MLS) which streams to a service called ListHub that disseminates the listings to a number of real estate websites such as Realtor.com and the like.  So generally speaking, if your Realtor is a member of MLS, then a seller’s home will be exposed on-line for buyers to see without having to contact a Realtor.  If a buyer is interested in finding out more about this property they will either call the listing agent directly or contact a Realtor friend. This is how the majority of homes are bought and sold.  As a result, Realtors who are members of the local MLS are able to market homes to the public at large like never before. A final word about marketing is that all the marketing in the world won’t sell an overpriced listing, it will just let more people know it is overpriced.

Price is another factor in which a seller has control over it since it is not the Realtor’s job to set the listing price.  The Realtor’s job is to help the seller come up with a list price by performing a Broker’s Price Opinion (BPO) but the seller ultimately determines how much to ask for their home.  Only once a home is listed and exposed on the market will a seller find out what their home is worth.  Based on the number of showings, showing feedback, and offers or lack of offers will a seller get a realistic picture of what buyers are willing or not willing to pay for their home.  Price is primarily a function of time. If a seller is in no hurry to move or can’t or won’t move unless they can get a certain price, they will have to wait longer and hope that the market improves.  If a seller has been relocated, chances are they will need to sell their home relatively quickly and they will either price their home to sell from the onset or reduce the price accordingly to sell at market value.  At the end of the day, a home priced properly overcomes all buyer objections.

Of course, there are other conditions that affect the salability of a home such as the number of bedrooms and bathrooms, upgrades/finishes, the functionality of the home, and the seller’s motivation or reason in wanting to sell.  The purpose of this article was to address the primary factors of why some homes don’t end up selling. 

If you are ready to buy or sell, call  Mary Staton or Bert Ward - they’ll be happy to answer any questions.  

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