Understanding the Tax Appeal Process in Westmoreland County, PA

In Westmoreland County, PA, a significant number of homeowners find themselves grappling with property tax assessments that seem higher than they ought to be. In some cases, property owners don’t even know what their assessed value is or how it relates to their property tax consequence. This is a crucial issue because with the common level ratio set at 10, an over-assessment means you're likely paying more in property taxes than you should be.

As an example, my own experience sheds light on this problem as I have recently applied for an appeal. My condo has an assessed value of $26,590, which implies a market value of $265,900 according to the common level ratio. Yet, the highest sale price within my plan has only reached $203,000 and this sale was a unit that had been completely gutted and remodeled.

If you're facing a similar predicament, it's important to know that appealing your tax assessment is a viable option. The appeal process, while it might seem daunting, is quite straightforward when broken down into its components. The first step involves examining your assessment to gauge how your assessed value compares with what you believe your property is truly worth. This initial step is crucial for setting the stage for your appeal.  Westmoreland County has not re-assessed since 1972 and is using these base year values for your property. With the current common level ratio at 10, take your assessed value and multiply it by 10. If this number is higher than what you feel your property’s current market value is, then you could be paying more in taxes and be a good candidate to file for an appeal.

Gathering evidence becomes your next task. Seeking the expertise of a professional appraiser can significantly strengthen your appeal. A detailed appraisal report not only provides solid evidence to support your claim but also demonstrates a professional evaluation of your property's market value. The cost of the appraisal can be a small investment compared to the amount of taxes you could be saving going forward.

Being mindful of deadlines is equally important. The appeal process is bound by strict timelines, and missing a filing deadline could delay your appeal by a year. Westmoreland County has a deadline of August 1st and missing this deadline could mean waiting another year to save on your taxes.

Finally, preparation for the hearing is the culminating step. This involves not just being ready with your documentation and evidence but also understanding the nuances of how to present your case effectively. The hearing offers you a platform to argue your case, and being well-prepared with a certified appraisal in hand can significantly influence the outcome in your favor.

Navigating the tax appeal process in Westmoreland County doesn't need to be an overwhelming challenge. With a methodical approach, starting from understanding your assessment through to the hearing, the path to potentially reducing your tax burden becomes clearer. As an appraiser myself, I'm navigating this path alongside many of you, aiming not just to reduce my own tax liability but also to ensure fairness and accuracy in property tax assessments. The objective is to ensure that each homeowner pays their fair share, based on a true and fair valuation of their property. If you feel that your property is over-assessed, considering an appeal is a step worth taking.

Decoding Knob and Tube Wiring: How It Impacts Your Home's Value

If you own or are looking to purchase an older home, there might be lurking in your home something that could affect its value – knob and tube wiring. Due to the age of many homes in Westmoreland County, I still see plenty of homes with some functioning knob and tube wiring. This old-school electrical setup was once a popular way to install electricity in a home. But now, it's like the outdated ancestor of today's electrical systems, and it comes with some problems.

What Is Knob and Tube Wiring?

Back in the late 1800s to the early 1900s, knob and tube wiring was the go-to for electrifying homes. It used ceramic knobs and tubes to keep wires in place. Fast forward to today, and it's not holding up so well.

Example of Knob and Tube Wiring

The Hidden Dangers

The materials used in knob and tube wiring, like rubber or cloth insulation, have probably seen better days. That means a higher risk of fires. Plus, there's no grounding conductor, which makes the chance of getting a shock higher and incompatible with three prong plugs. Insurance companies see these homes as risky, making it harder and more expensive to get coverage.

How It Affects Your Home's Value

Now, let's get to the point – how does knob and tube wiring impact your home's value?

Safety Worries

People worry about safety when they hear about knob and tube wiring. The fear of fires or electrical problems can make buyers think twice, lowering your home's value due to the smaller buyer pool. This can also have a negative impact on the insurability of the home due to the safety concerns. Many insurance companies will not cover a home with known functioning knob and tube wiring due to the known safety concerns.

Cost To Upgrade

Upgrading from knob and tube to a modern electrical system is a big job and can be costly. Buyers might consider this cost when deciding on a home, potentially lowering its value.

Appraisers Take Notice

When appraisers are on site to look at the property, they're likely to consider the knob and tube wiring in the overall quality and condition rating of the home. Homes that are not updated from systems installed almost 100 years ago have a lower quality and condition rating which, when compared to a home that is updated with newer systems, have a lower value.

If there are safety concerns when it is inaccurately spliced into a more traditional wiring system (I’ve seen this many times), frayed insulation on the wires, or being wired to newer 3 prong outlets, an appraiser might call these out to be repaired as a part of the loan process.

What Can You Do?

If you find yourself dealing with knob and tube wiring, it's not the end of the world. Get a qualified professional to check it out and fix any problems. Upgrading your electrical system can make your home safer and more attractive to buyers.

Will A House With K&T Wiring Qualify For A Mortgage?

The underwriting guidelines for all the major mortgage agencies (Fannie Mae, Freddie Mac, FHA, VA, and USDA) all allow for knob-and-tube wiring as long as the system is deemed to be safe, functional, and typical for the area. Just understand that while many loans will allow for this type of wiring, the house still might not qualify to be insured or there might be safety concerns that need to be repaired in order to qualify.

 In the world of home values, knob and tube wiring is like an old family secret – it can affect things more than you realize. Knowing the risks and doing something about them can make your home safer and keep its value strong. So, whether you're a homeowner or looking to buy, understanding this hidden issue is key to making smart decisions about your home.

Demystifying Square Footage Discrepancies in Real Estate: What You Need to Know

Confidence in the size of your home is a fundamental aspect of real estate, but have you ever wondered why the reported square footage can differ from one source to another? In this article, we will delve into the reasons behind these discrepancies and underscore the significance of precise measurements in the real estate world.

When you bought your house, someone, whether it was a real estate agent, a builder, or a published source, provided you with an estimate of its size. However, this estimate may not always be consistent or entirely accurate. Let's explore the factors that contribute to these variations.

Every source of square footage data follows different standards and regulations when measuring and reporting. Online real estate platforms like Realtor.com, Zillow, and Redfin rely on an IDX system, which aggregates information from regional MLS systems. The square footage displayed on these platforms is typically entered by the listing agent. Unless that agent has been trained in specific measuring standards, the data may originate from sources like tax records or the homeowner.

In Pennsylvania, for instance, assessors are not required to adhere to professional measuring standards like ANSI, leading to square footage estimates based on rounded or estimated measurements. Furthermore, many agents include areas like finished basements or unheated enclosed porches in the square footage, even if they are not considered above-grade space. This is done to represent the property in the best possible light and attract the right buyer.

So, why do appraisals often reveal differences in square footage? Appraisers must adhere to precise standards that dictate what can be counted as above-grade square footage. Using the ANSI Z765-2021 measuring standards, as enacted by Fannie Mae in 2022, appraisers must measure with precision down to the nearest inch or tenth of an inch. (Let’s not debate that these are two slightly different measurements- I didn’t write the standard.) There are also areas of a structure that cannot be included in above-grade square footage, such as spaces with a ceiling height of less than 7 feet. If any part of a level is not entirely above ground level, it cannot be included in the square footage calculation. Additionally, in homes with two-story ceiling heights, like large open foyers or great rooms, the open area is counted only once for the main level.

If you receive an appraisal report that indicates a different square footage than what you believed your house to be, it's essential to investigate further. Compare the source of your initial knowledge to the sketch in your appraisal report to understand the discrepancies.

In the world of real estate, understanding square footage variations is crucial. It can impact the value of your property, as well as your buying or selling decisions. Being aware of the different standards used by various sources can help you make informed choices and ensure that your home's size is accurately represented.

Does an Appraisal Have an Expiration Date?

Appraisals do not expire. Every appraisal report is required to have an effective date which reflects the date the value opinion relates to. This date is important because it is the date that becomes the benchmark reflecting the research and analysis of the market trends that impacted the development of value. If at any time after that effective date the market trends change, then the value result could be impacted proportionately.

It is important to note that while there is technically no expiration date, lenders may have their own designated time period for which an appraisal is good for. Most accept an appraisal for 90 days, however, in a rapidly changing market, this time period often can be reduced to 30 days.

Dollars and Sense: The Significance of Knowing Your Home's Worth

You would have to be living under a rock or in an area that is completely off grid to not be somewhat aware that real estate prices have been fluctuating and increasing significantly in many areas over the past couple of years. If you have not purchased or refinanced recently, your homes value might have changed from where you thought it was just 12 -18 months ago. Knowing the value of your home can be important for many reasons of which, here are a few:

Financial Planning

The value of your home is a significant component of your overall net worth. Your home is likely one of your most significant assets. Knowing its value allows you to calculate your net worth accurately. Understanding its value helps you make informed decisions about your financial planning, such as determining your assets, calculating your equity, or evaluating your borrowing capacity.

Selling or Renting

If you're considering selling or renting out your property, knowing its value is crucial. It allows you to set a competitive price that aligns with the market, ensuring you don't undervalue or overprice your home.

Refinancing or Home Equity Loans

When refinancing your mortgage or applying for a home equity loan, the value of your home plays a vital role in determining the amount you can borrow. Lenders assess the loan-to-value ratio, which compares the loan amount to the home's appraised value, to determine eligibility and interest rates.

Property Taxes

The value of your home often influences property tax assessments. Local tax authorities use property values to calculate the amount of tax you owe. Knowing your home's value helps you ensure that you're being taxed fairly and can plan for potential increases.

Insurance Coverage

Understanding the value of your home is essential for obtaining the appropriate insurance coverage. If your home is underinsured, you may not receive sufficient compensation in the event of damage or loss. Conversely, overinsuring your home means paying more in premiums than necessary.

Investment Decisions

If you're considering real estate as an investment, knowing the value of your home can help you assess its potential return on investment, evaluate rental income potential, or make informed decisions about buying additional properties.

It is important to note that home values can fluctuate over time due to various factors such as market conditions, location, renovations, or changes in the neighborhood. Therefore, regularly monitoring and assessing your home's value is important for staying informed. If you would like to check out more information regarding the importance of knowing your homes value, check out the following articles:

https://www.homes.com/blog/2017/03/benefits-of-knowing-your-homes-value-whether-you-are-staying-or-selling/

https://www.homelight.com/blog/check-house-value/

Reducing the Stress of Divorce: The Vital Role of an Experienced Appraiser

We understand that going through a divorce is an incredibly challenging experience, both emotionally and legally. In these turbulent times, it becomes crucial to alleviate some of the stress involved in the process. One effective way to achieve this is by engaging the services of an experienced and qualified appraiser who has been established as an expert witness in divorce litigation. In this blog post, we will delve into the significance of hiring an appraiser with expert witness testimony experience for divorce appraisals, offering invaluable support during this trying period.

Understanding the Legal Process

An appraiser with expert witness testimony experience possesses an in-depth comprehension of the legal process involved in divorce appraisals. They are well-versed in the intricacies of presenting their findings in a clear and concise manner, ensuring that their testimony carries maximum weight in the courtroom. Their familiarity with legal procedures enhances the likelihood of a favorable outcome.

Credibility and Reputation

One key aspect of hiring an appraiser with expert witness testimony experience is the credibility and reputation they bring to the table. By engaging such an appraiser, you can rest assured that their testimony will be taken seriously by the court. Having established a track record of providing objective, unbiased opinions, I have successfully demonstrated my expertise in numerous courtrooms located in Armstrong, Westmoreland and Indiana Counties, thereby earning the reputation of a reliable and trustworthy appraiser.

Crucial Role in Court

In my professional opinion, the importance of hiring an appraiser with expert witness testimony experience cannot be overstated in divorce appraisals. The appraiser's opinion often serves as pivotal evidence in supporting one party's claims over the other, making it imperative for their testimony to withstand rigorous cross-examination. By selecting an appraiser with this specific experience, you minimize the risk of having your clients' arguments weakened or dismissed.

Reducing Stress During Divorce

Navigating through a divorce is an emotionally taxing experience. By ensuring that you choose an appraiser with the necessary qualifications and expertise to provide expert witness testimony, you can alleviate some of the stress associated with the process. The knowledge that your appraiser is capable of delivering accurate and unbiased valuations to support your case will provide you and your clients with peace of mind, allowing you to focus on other crucial aspects of the legal proceedings.

In the event that you require an appraisal during the course of a divorce, we invite you to contact our office, where we guarantee the utmost standard of excellence in appraisals, coupled with the professionalism necessary to deliver expert witness testimony, should the need arise.

Gratitude and Triumph: Celebrating Two Consecutive Gold Badge Wins in the Best of Westmoreland Contest!

At Town & Country Residential Appraisals, we are overflowing with appreciation as we extend our sincerest thanks to those who have supported us throughout our journey. It is with immense pride and joy that we accept the honor of being awarded the Gold Badge for the second time in a row in the highly regarded Best of Westmoreland contest.

Our success wouldn't have been possible without the support of our nominators and voters, the trust given to us by our valued clients, and the faith placed in our services by the community we serve. Your confidence in our expertise drives us to continuously raise the bar in providing exceptional residential appraisal solutions.

While this is only the 2nd year for the contest, it grew exponentially for 2023 and we faced formidable competition from six other distinguished appraisal offices. However, we secured our position as the reigning champions for both years.

Such a momentous achievement is truly a cause for celebration, and we couldn't be prouder to share this milestone with you all. It is a testament to our unwavering commitment to delivering accurate and reliable appraisals and a reminder of the exceptional team behind Town & Country Residential Appraisals.

Thank you for joining us on this incredible journey. Your continuous support and trust inspire us to reach even greater heights, and we look forward to serving you with the same passion and dedication for years to come.

We can’t say thank you enough.

Our goal is to continue providing the best in real estate appraisal services

throughout the entire County of Westmoreland.

Our services include appraisals for divorces, expert witness testimony, bankruptcy, estates, pre-listing, consulting for subdividing large parcels, pre-construction, renovations and lender work.

Choose the two-time Gold Badge Winner in the Best of Westmoreland contest for your residential appraisal needs, and discover the difference that sets us apart, where excellence meets recognition, results exceed expectations and as we say here “Where Values Matter!”

Appraisal Reviews: Ensuring Accuracy and Compliance

Recently, after completing a few courses and passing the exam offered by Appraiser eLearning through the National Association of Appraisers, I received a Certificate in Appraisal Review from their Professional Certification Board.

Now why would one want to have an appraisal report reviewed? Appraisal reviews play a crucial role in the real estate industry, ensuring the accuracy, quality, and compliance of an appraisal report. An appraisal review involves the evaluation and analysis of an existing appraisal report conducted by another appraiser. It aims to gauge the quality, accuracy, and adherence to standards and guidelines of the original appraisal. Think of it as a comprehensive quality check for property valuation.

Here are some reasons one might want to contract an appraiser to review another appraisers report:

Quality Assurance: Appraisal reviews help identify errors, inconsistencies, or omissions in the original appraisal report. By providing an opportunity for correction or clarification, they ensure the reliability and trustworthiness of the valuation.

Compliance: Appraisal reviews ensure that the original appraisal adheres to regulatory and professional standards, such as the Uniform Standards of Professional Appraisal Practice (USPAP). Compliance is vital to maintain integrity in the valuation process.

Litigation and Dispute Resolution: During legal proceedings or property valuation disputes, an appraisal review serves as an objective evaluation. It helps identify weaknesses, biases, or potential issues that may impact the outcome of the case.

Lender Requirements: Lenders and financial institutions may require appraisal reviews as part of their due diligence process. This ensures that they make informed lending decisions based on accurate and reliable appraisal reports.

If you have an appraisal requiring a second opinion to measure its accuracy, quality, and compliance, be sure to select an appraiser who possesses the education and experience necessary to provide you the review appraisal you need.

VA's Tidewater Process- Riding the Waves to Appraisal Fairness

When it comes to appraising homes for buyers using VA-backed financing, the Tidewater process plays a crucial role in determining fair market value. This procedure, implemented by the Department of Veterans Affairs (VA), aims to protect the interests of veterans.

What is the Tidewater process and what is its significance in VA-backed home appraisals?

The Tidewater process, also known as the Tidewater Initiative, is a specific procedure used by the Department of Veterans Affairs (VA) when appraising a home for a buyer using VA-backed financing. Its purpose is to protect the interests of veterans and ensure fair market value. The Tidewater process primarily applies when the appraised value of the home is believed to be lower than the agreed-upon purchase price.. Here's how it works:

A VA-approved appraiser, impartial and unaffiliated with the transaction, is randomly chosen to conduct the appraisal. The appraiser works to value the property, considering its size, condition, location, and comparable sales in the area. If the appraiser determines that the appraised value appears that the estimated market value might be lower than the purchase price (this can happen at any point in the process), they promptly inform the lender, which initiates the Tidewater process.

At this point, the lender has the opportunity to provide the appraiser with any relevant information that might influence the property's valuation, such as recent comparable sales or a list of property improvements. This information can be provided by any party to the transaction whether the buyer, seller, agents or the lender themselves. The appraiser reviews any additional information and when appropriate, uses this information within the appraisal. Even if this information has already been considered and it did not make any substantial changes to the value, the VA requires the appraiser to make comments within the report reflecting this.

From the buyer’s perspective, if the appraised value remains below the purchase price, the lender informs the buyer. The buyer can then decide whether to renegotiate the price, bring additional funds to closing, or terminate the contract.

The Tidewater process is a vital step in VA-backed home appraisals, ensuring fairness and protecting the interests of veterans. By incorporating additional information and allowing for adjustments, this process strives to establish an accurate appraised value. It also allows those who are parties to the transaction to provide valuable information that most often assisted them in making their purchase decision. Ultimately, it empowers buyers and sellers to make informed decisions based on the appraisal outcome.

For more information take a look at the VA link on their page by clicking on the following link:

https://www.benefits.com/va-loans/tidewater-initiative

Health Risks in Older Homes

When purchasing an older home, whether you intend to renovate with the plan to live in it or “flip it”, there are some risks you should familiarize yourself with before you begin.

Lead- Lead is often found in the paint, plumbing and the settled dust of an older home. Specifically, homes built prior to 1978 all carry the risk of lead based paint. If you want more information I wrote a blog article on the risks associated with this: https://www.tncresappraisals.com/blog/2022/10/14/lead-based-paint-cant-be-that-bad-or-can-it The best way to deal with lead issues is to consult with a certified lead professional before renovating.

Asbestos- Prior to 1980, asbestos was used in insulation, flooring, roof sheathing and even on textured ceilings. The EPA issued a ban on most products containing asbestos in 1989. When the asbestos fibers are damaged or disturbed, the become airborne which is when it poses the greatest hazard as you breathe these fibers into your lungs. This exposure can show up years later in the form of lung cancer and mesothelioma. When you suspect a material contains asbestos, never sand, scrape or drill holes through it. It is best to use an asbestos abatement professional to determine if something contains asbestos and for any type of repair or removal.

Mold- This can be one of the most insidious of the problems as it is a living organism that, when not treated thoroughly, can reoccur continuously. It also can hide and not appear as an issue until it is an overwhelming problem. It is most likely to occur in areas where there is plumbing or water infiltration like a roof leak or poorly sealed window frame. Those with pre-existing health issues such as allergies or lung problems can be overly sensitive to mold spores. In areas where there is more than 100 square feet of affected area, it is strongly recommended that you use a professional to remediate this issue.

While all three of these health hazards can be scary to think about, each of them are treatable with the right kind of professional. Know the risk and evaluate their impact within your decision process.

Why Does the Appraiser Need the Sales Contract?

When it comes to appraising a property, appraisers must take into account all agreements of sale. According to Standards Rule 1-5 in the Uniform Standards of Professional Appraisal Practice (USPAP), we are required to analyze any contracts for sale. That's why it's important for the appraiser to receive a copy of the sales contract.

 By viewing the contract, the appraiser may be able to identify irregularities and comment on them. For example, if the contract includes provisions for concessions, non-real property items included in the sale, or other unusual conditions, the appraiser may need to comment on these provisions in the appraisal report to explain why there is a difference between the indicated market value of the subject property and the contract price.

 The appraiser is likely familiar with the local real estate contract forms, customary terms, and conditions of real estate transactions in the area. This familiarity enables the appraiser to better understand the specifics of the contract and identify any unusual terms that may need to be addressed in the appraisal report.

In summary, providing a copy of the sales contract to the appraiser is essential to ensure an accurate appraisal. Appraisers are required to analyze all agreements of sale. Understanding the specific provisions of the sales contract is critical to producing an appraisal report that accurately reflects the property's value. By providing the appraiser with the sales contract, homebuyers can help ensure that the appraisal report is reliable and based on accurate information.

Clean and Green- From the appraiser's point of view

Clean and Green is a preferential tax assessment program enacted in 1974 under the stated goal of “protecting the Commonwealth's valuable farmland, forestland, and open spaces.” It bases property taxes on use values rather than fair market values. This ordinarily results in a tax savings for landowners..

https://www.agriculture.pa.gov/plants_land_water/farmland/clean/pages/default.aspxPA Clean & Green Program

Once enrolled, the general rule is that the landowner is obligated to continue using the land in a qualified use indefinitely or face the penalty of roll-back taxes for the most recent seven years, PLUS 6% of that difference per year. If a landowner sells a property enrolled in Clean & Green, the buyer will be obligated to continue using the land in a qualified use or pay roll-back taxes and interest.

Clean & Green also has limitations as to subdividing the property. No more than 2 acres can be split off (3 acres where municipalities require a 3 acre minimum lot size) per year for the purpose of building a residence. The total of these types of subdivisions can never exceed a total of 10 acres. These split offs would be subject to the roll back tax but only for the portion that is being split off.

A subdivision can can be made dividing the property into parcels that are more than 10 acres minimum. As long as they remain the same use, it would then not be subject to the roll back taxes.

While enrolling in the Clean and Green program may be free and save thousands in taxes in the short run by reducing the annual tax rate, make sure you are aware of how this impacts your land value. It will limit the use of the property unless you take the steps necessary to remove the enrollment and pay the mandatory differences in the taxes plus a 6% interest rate. If you are thinking of selling the property, it could also limit the size of your interested buyer pool.

Who are reverse mortgages for?

As the Baby Boomer’s retire, an increase of advertisements offering “reverse mortgages” are hitting the airwaves, leaving homeowners (and their children) asking, “Is this a good idea for us?” Due to the ramifications of reverse mortgages, parents should never make these decisions alone without consulting the family who will have to finish the process upon their passing. Today we’ll break down what a reverse mortgage is, and who it might benefit.

“What Is a Reverse Mortgage?
In a word, a reverse mortgage is a loan.”

— Investopedia

A “reverse mortgage” s a financial agreement between the bank and the borrower in which a homeowner relinquishes equity in their home in exchange for regular payments, typically to supplement retirement income. It is in essence a mortgage but instead of receiving the full equity at one time and then paying the bank back over time, you receive the equity in small quantities over time, and pay the bank back at the end - and its that last part where homeowners need to know the dangers of a reverse mortgage.

A reverse mortgage may be a good idea for you if:

You are at least 62 years old

A homeowner must be at least 62 years old to qualify for a reverse mortgage.

You have enough money/energy to maintain your home throughout the remainder of yur natural life

As the homeowner, you will be expected to keep the home in good order over the course of the reverse mortgage. If you fail to keep the home and property up to local codes and the lenders standards, the lender will have the right to foreclose on the property and remove you from the home.

If you can’t afford to have someone else maintain your home, this means that you’ll need to do it yourself until the borrowers date of death.

You have enough money to pay the taxes on your home without the extra money.

Again, as the homeowner, the lender will expect you to pay the taxes associated with the property. If you do not, the lender again retains the right to foreclose on the property and remove you from the home.

You don’t have any heirs.

At the end of the term of the loan, the lender looks to the estate to fulfill the mortgage. Typically this means that the home is sold and the assets used to pay the debt. In the case of jumbo reverse mortgages, the estate may be liable for any shortfall in the debt.

You plan on being healthy and never leave the home until your date of death

Many reverse mortgages have a clause that allows the bank to foreclose if the homeowner is no longer residing at the home for a span of time - regardless of the reason - such as illness.

Sadly, we’ve seen more reverse mortgage foreclosures than we wish, and the story is always tragic. The family is left holding difficult decisions at the same time as the death or extended illness of a loved one. Be careful, there are many ways for a reverse mortgage to end poorly, and only one way for them to suceed - with the help of the whole family.

For more information:

https://www.wtae.com/article/investigation-finds-reverse-mortgages-can-be-risky/30029369

https://www.consumerfinance.gov/ask-cfpb/what-is-a-reverse-mortgage-en-224/

https://www.usatoday.com/in-depth/news/investigations/2019/12/18/reverse-mortgages-leave-families-battling-property-after-death/2597369001/

Does a manufactured home that has been moved more than once qualify for a loan?

If you plan on purchasing a property that is a manufactured home using financing, find out if the unit has been placed there from the manufacturer/dealer or if it was moved after previously being located at another location. In order to qualify for most lender financing, a manufactured home can only be moved ONE time- from the factory or dealer to its original location and permanently attached to an approved foundation system. If a manufactured home is moved a 2nd time, it is ineligible for ANY type of financing other than owner carry or a VA loan. Even then, it would require a special approval from the VA in order to do the loan.

Fannie Mae guidelines state that the unit must not have been previously installed or occupied at any other site or location, except from the manufacturer or the dealer's lot as a new unit. Moving it would mean it wasn't attached to a permanent foundation and therefore, is viewed more as personal property and not real property. Additionally, the manufactured home must be a one-unit dwelling that is legally classified as real property and cannot include an accessory dwelling unit.

This becomes important from a value standpoint because a buyer’s purchasing power affects the value of a property in a market where the predominance of financing a property is through a lending institution. When a property disqualifies a buyer from obtaining mortgage financing, it requires the buyer to purchase using cash. In short, relocating a manufactured home can reduce the value of the property simply for the reason that it would limit the buyer pool to those who have cash.

Greensburg 2022 Market in Review

The year 2022 was a year of historically low inventory and high demand, unlike anything Greensburg has seen in recent history. Interest rates have been a major player in the market this year and definitely caused some of the historic gains to cool off towards the last quarter of the year. As rates rose, activity slowed- at least to a certain extent. As you look through this report, you will notice that the rise in mortgage rates corresponds to other market data events.

 The annual median home sales price for all residential properties in Greensburg rose from $149,950 in 2021 to $173,450 in 2022 which is a 15.7% increase. Compare that to the year 2020 when the median sale price was $135,000 and the increase was at 11.1%.  In looking to this coming year, it is safe to say that these increases will cool down. To what degree will depend on mortgage interest rates, inflation, demand and market saturation.

The general trend in the median sale price over the past year has been increasing with the peaks in those increases showing up during the summer months.

The supply has been historically very low in 2022. The supply appears to have had a sharp increase towards the end of the year which is counter intuitive to cyclical seasonal historical data.

The marketing times (expressed in DOM- days on market) has also been extremely low. However, in the past few months, this has been rising due to a cooling in the market most likely attributed to seasonal cyclical events during winter months and compounded by the rising mortgage rates.

As is expected, the quantity of sales decreased in the last quarter of the year.

One point of data I was surprised to see pertains to the actual number of transactions year over year for the last 3 years. The years 2020 and 2021 had a high number of transactions with 2022 showing a slight drop off. This is conversely affected by the fact that with fewer transactions, there was a higher median sale price.  

The current number of active listings is also decreasing. We will have to wait a few months to see if this starts to increase when the market typically experiences seasonal cyclical events around March or April when sellers like to place their properties on the market.

Not only as demonstrated in the previous chart which showed the number of actives decreasing, the median list price is also decreasing. This could be significant to keep in mind. As the marketing times increase and the list prices decrease, this could have a direct impact on the median sale price going forward. Only time will tell how all of this will affect 2023 sales.

What Makes a Room a Bedroom?

This question is one of the most common questions I get and there is much confusion as to what qualifies a room as a bedroom. While there is no official definition, there is only one requirement a room needs in order to legally qualify it as a bedroom- a window of adequate size so as to allow for ingress/egress.

Most think a bedroom requires a closet which is a misnomer. There are plenty of older homes I have been in where the bedrooms don’t have closets. Think about it… there was a day when most people only owned a few articles of clothing. During these times, when there weren’t closets, many owned an armoire which doubled as a closet and dresser.

So lets put to rest that a bedroom NEEDS a closet.

With that in mind, in todays markets, most expect closets so that they have a place to store their clothing, shoes, bags and whatever else people put in their closets. Here are some other things to consider when classifying a room as a bedroom:

1. Is it of adequate size? A bedroom should be large enough to accommodate a bed and provide some space for movement around the bed, room for dressers, et.. The minimum size for a bedroom may vary depending on local building codes or regulations.

2. Is there a door? A bedroom should have a door that can be closed to provide privacy. A door can also be an added safety feature. It is best to sleep with your door closed in the event of a fire.

3. Where is the room in proximity to a bathroom? A bedroom should be located within close proximity to a bathroom. If all your bedrooms are on the 2nd level of the home and the only bathroom is on the first level, this could be viewed as a functional obsolescence. No one wants to get up in the middle of the night to stumble in the dark through the rest of the house.

These are the basic features that make a room a bedroom. The only feature that is a requirement is a window. However, depending on local building codes, there may be other requirements that a room must meet to be legally considered a bedroom and typically, the market might be expecting more.

Appraisal Racial Bias (part 3)

I’ve been discussing the topic of real estate appraisals and the allegations of racial bias that has the possibility of creating issues for some homeowners or potential homeowners. There have been a few cases that have had the spotlight shown on them and the scenarios are all relatively similar.

It starts with an appraisal that is completed on a home where the occupant is of a minority race- whether the appraiser meets the occupant in person or there are pictures and other personal contents that elude to the persons race within the home. When the appraisal is completed it is perceived to be “low”. A subsequent appraisal is completed in which the home has now been “whitewashed”. If you haven’t heard of the term, it refers to the process of removing all indications of minority race within the home and even having a white person stand in as the fake homeowner. Some of the current cases out there are real life examples and others are experiments in which the entities conducting these are doing it for the sole purpose of trying to prove that the appraisal process is inevitably biased.

In either case, these are serious allegations.

I’d like to ask a few provoking questions that don’t have easy answers.

Does a value that comes in lower than what someone was expecting or desiring automatically mean the value is wrong?

When a homeowner or occupant is of a minority race, if the appraisal value is lower than what someone feels it should be, does that mean racial bias came into play?

Is it possible that the lower value was accurate and that the higher value was a case of reverse bias?

There is one case in particular that took place for a black couple out of northern California where the homeowners make this statement to CNN- “What that appraisal did is what we were actually asking the appraisers to do, to not consider race, to not consider neighborhoods and or the lines that have been drawn and perpetuated by redlining.” Based on this statement, if an appraiser stays within the neighborhood and the neighborhood happens to be primarily occupied by a minority group, does this indicate racial bias was a factor in completing the appraisal?

In the future, I’d like to discuss more the idea of neighborhoods and market areas. For now, I hope these questions have been thought provoking and at least given some pause to consider different angles.

Appraisal Racial Bias (part 2)

As mentioned in part 1 of this series, Federal Fair Housing Laws states in clear terms that when it comes to real estate, an individual cannot discriminate based on protected factors. These protected classes include race, color, national origin, religion, sex, gender identity, sexual orientation, familial status, or disability.

As of this writing, the current edition of USPAP is even more detailed when it pertains to the profession of appraising and it states “An appraiser must not use or rely on unsupported conclusions relating to characteristics such as race, color, religion, national origin, gender, marital status, familial status, age, receipt of public assistance income, handicap, or an unsupported conclusion that homogeneity of such characteristics is necessary to maximize value.”

USPAP is a document that is continually being revised. This task is accomplished by members of the Appraisal Standards Board which is an independent board of The Appraisal Foundation. They have been arduously addressing the matter of bias and as part of the current revisions being proposed, are conducting a comprehensive look into the Ethics Rule. As part of their process, they even consulted with antidiscrimination experts in July 2022.

Currently, the proposed changes to USPAP is in its 4th exposure and while I am not going to disclose the contents of these proposed revisions, it seems very apparent that the goal of the current board is to make it abundantly clear within USPAP that unethical and illegal discrimination is explicitly prohibited. If you are interested in reading the draft, you can find it on The Appraisal Foundation website of click on this link: https://appraisalfoundation.sharefile.com/share/view/s80c9bc7163694f5a809cb401316d53cf

Even though USPAP has for a long time always required appraisers to be unbiased, I am proud to be included in a profession that has chosen to continue taking this matter seriously and clearly spell out where we stand. The public needs to be assured that our profession has not, does not and will not tolerate unethical and illegal discrimination.

Appraisal Racial Bias.... Pardon our Interruption

Part 2 has been written and was ready to drop today except for the necessity to provide you important information regarding fast approaching upcoming hearings. Earlier this year, the CFPB’s (Consumer Financial Protection Bureau) Fair Lending Director, Patrice Alexander Ficklin, stated that they were going to prioritize resources to focus on the role of racial bias in home appraisals

The CFPB has announced that they will be holding a hearing with the ASC (Appraisal Subcommittee) specifically to discuss this issue. This hearing is open to the public but it requires an RSVP.

For information regarding this hearing and to RSVP, visit the CFPB’s website or click on the image below to follow the link:

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