BUYER FREQUENTLY ASKED QUESTIONS
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» SHOULD WE BE BRACING FOR ANOTHER REAL ESTATE DOWNTURN?
The market value of assets such as real estate natural rises and falls in cycles. But informed observers mostly agree that the exceptional “downturn” that happened in about 2008 was the result of several extraordinary conditions that came together at the same time. One of the major components was unrealistic home value expectations on the part of both home buyers and re-financing homeowners.
Home value recovery since the downturn has been slow but steady, and now, even in our current market of briskly rising prices, lenders and home buyers are far more cautious than in the frenzied past – as are homeowners. As a real estate brokerage, we’re now consulted on a regular basis by homeowners who want informed input about current market values and how much they should realistically spend in improving their homes, either for sale or for their own enjoyment. That major component of the previous and exceptional downturn is gone.
Will a similar downturn happen again? No one knows for certain. Is it likely to happen in the foreseeable future? No, and even less likely in our costal California area, and even less likely in the relatively affordable manufactured home market.
Should we be preparing anyway? Yes, but only to the extent that it’s always advisable to be financially thoughtful and conservative. And, apparently, as a whole, we’re doing that.
» IS THE PROCESS OF BUYING A MOBILEHOME DIFFERENT FROM OTHER REAL ESTATE PURCHASES?
The process is different in many ways. In fact, in most cases it’s not a real estate transaction at all, strictly speaking. Most mobilehomes and manufactured homes are personal property, not real property, and in California the transfers of title are regulated by the state Department of Housing and Community Development. That’s not a negative feature, it’s just different. Every part of the purchase transaction, from federal and state regulations, to financing, to the quality and characteristics of the parks and the homes themselves is unlike other real estate transactions, and requires specialized knowledge and experience of your real estate agent. Most agents aren’t familiar with these differences.
» IS IT TRUE THAT MOBILEHOMES LOSE THEIR VALUE?
Like any commodity, it’s important to differentiate between a mobilehome’s intrinsic value and its market value. The intrinsic value of a mobilehome or manufactured home, meaning, the value of its component parts, will theoretically depreciate over years, like any physical asset. The market value of the home is an entirely separate consideration. That will follow general real estate trends of the local area and will go up or down accordingly. Since our economic “downturn,” the value of mobilehomes has been going up at a steady rate in the general California coastal region.
» WHAT’S THE DIFFERENCE BETWEEN A MOBILEHOME AND A MANUFACTURED HOME?
In California, mobilehomes and manufactured homes, as defined by law, are very similar, but not entirely. Both are single-family dwellings of a certain minimum size that are built in a factory on a permanent chassis and are transportable (in one or more sections) on public roads. The law requires that they include certain basic systems, such as plumbing, heating, and electrical, and that when they’re installed they are connected to utilities. They can be used with or without a permanent foundation.
These homes are intended for long-term residential use and are more or less permanently installed. Other types of transportable dwellings, such as various kinds of trailers, motor homes, recreational vehicles, etc., are defined separately and are not mobilehomes or manufactured homes. (The California Mobilehome Residency Law, however, does govern other types of transportable vehicles under certain circumstances.)
More specifically, a home is considered a “manufactured home” if it was built on or after June 15, 1976, otherwise it’s a mobilehome (spelled as one word in state law). June 15, 1976 is the date that minimum construction standards were set by the federal government (HUD Manufactured Home Construction and Safety Standards). Manufactured homes are built under controlled factory conditions and most are built to very high standards. They are often better made than many site-built homes.
We use the terms “mobilehome” and “manufactured home” interchangeably.
Other factory-built homes and structures, such as modular homes and panelized homes, are constructed under local, not federal, codes and vary more as to construction methods and quality.
» IS THERE PROPERTY TAX ON MANUFACTURED HOMES?
No – and yes. First, remember that land and “improvements” (structures, usually) are assessed individually for taxes. In the case of manufactured homes, many are located in parks where the land is rented, so the homeowner pays no tax on the land. This, alone, can be a big monthly savings as compared to other kinds of home purchases. As regards structures, manufactured homes built before July 1, 1980, regardless of whether they’re classified as mobilehomes or manufactured homes, are not subject to the tax that is assessed on the value of the structures of newer homes.
Ah, but there’s an exception (as there always must be where taxes are concerned): Any additions built after 1978, such as rooms, decks, and even sheds, are subject to assessment for tax purposes. So, some homes, even though the original house was built before 1980, will pay a small annual tax on the value of certain improvements.
Homes built (“first sold”) on July 1, 1980 or later are assessed an annual tax, but it’s a personal property tax, not real property tax. The value of the structure, for tax purposes, is often assessed at the market value of the home each time it’s sold – but not always, especially as regards homes in parks where the land is rented. The state is not clear on this point. Click here to access the state FAQs about manufactured home taxation.
In parks where the homeowners “own” the land, real property taxes come into play. In most such parks, the individual homeowners own the land in common with all the homeowners, or sometimes they own shares of a corporation or other entity that owns the land. The real property taxes are typically then apportioned to each homeowner. How the taxes are assessed is currently under review in some parks. It’s best to contact park managers for updates on this issue.
Owners of homes built before 1980, where there has been no tax assessment on added rooms or other structures, pay a small annual “renewal” fee to the California Department of Housing and Community Development. That fee is very often near or under $100 for the year.
» IS FINANCING FOR MANUFACTURED HOMES THE SAME AS FOR OTHER REAL ESTATE?
Lender financing for manufactured homes is very different from other real estate loans, and only a select few lenders offer it. Down payment requirements are typically higher, as are interest rates, and loan terms shorter. However, many manufactured home lenders today do offer a greater variety of loan programs featuring both adjustable and fixed rate loans. And there are some alternatives to institutional lender financing that we can discuss with you.
» CAN YOU HELP ME FIND A GOOD LENDER?
Yes. Lenders, like many professionals, tend to specialize in certain types of properties or certain types of loan situations. Sometimes going directly to a bank or other “institutional” lender is best; sometimes a mortgage broker can best serve your needs; sometimes seller financing is the answer. We can give you a good overview of your options and help you take appropriate steps.
» WHY SHOULD I HIRE AN AGENT WHEN I CAN DO MY OWN SEARCH ON THE INTERNET?
Sorting through and finding the right market information is only the beginning of a complex process in which, as some point, nearly all buyers will engage the help of a real estate agent. The critical question is, which agent? One that you bump into on the Internet or one that you actively interview and choose to advise and represent you. The best agents will streamline the process and protect your interests from the very beginning.
» HOW CAN I DETERMINE THE RIGHT MARKET VALUE BEFORE I MAKE AN OFFER?
Each home is unique, so arriving at market value is more art than science. Don’t try to rely on the statistical sales information you’ll get from real estate web sites; very often that information does not apply to your prospective home. Work with an agent who has extensive experience with the type of home and the specific neighborhoods you’re considering. Ask for “comparables” and for non-statistical sale conditions that may have influenced those particular transactions.
» I CAN DO BETTER WITH A “FOR SALE BY OWNER,” RIGHT?
The odds here are really not in your favor. First, you don’t stand to buy for less. Realistic asking prices are based on market value, not market value plus commission, and people selling “By Owner,” it’s safe to say, are adamant about saving the commission for themselves, not sharing it with buyers. Second, there are many legal requirements and consumer protections in place that are very likely to be either unwittingly or intentionally excluded in “By Owner” transactions.
» ISN’T IT TRUE THAT ALL REAL ESTATE AGENTS PROVIDE PRETTY MUCH THE SAME SERVICE?
Absolutely not! This myth takes its toll in money, headaches, and heartaches. Agents vary widely in how they understand and approach their business, how seriously they take their responsibilities to their clients, and how skilled they are in advising, communicating, negotiating, and providing customer service. Trust your intuition on this. If something about the agent you hire seems lacking, it probably is.
» WHAT MAKES AN AGENT GOOD?
A good real estate agent will help you sort out all available market information, understand which of it pertains to your home search, and will show up on time to meetings. A great real estate agent will understand your needs to the extent that he or she can see the current market from your point of view, will find the relatively few homes that truly meet your needs, and will be able to advise and help you through to the very end of your purchase process.
It all comes down to experience, expertise, good communication, and diligent follow-up.
» HOW DO YOU SUGGEST I FIND A GOOD AGENT?
You’re hiring someone to assist you with a huge financial transaction and to provide what’s ultimately a very personal service, so interview! No matter where the contact comes from — family, your best friend, an agent at open house — or somebody with a web site — interview him or her and don’t hesitate to ask candid and direct questions. Your first question might be: “What questions should I be asking you?” You’re looking for someone you can trust to be honest, thoughtful, thorough, knowledgeable, and diligent.
» SHOULD I HAVE SEVERAL AGENTS WORKING TO FIND MY HOME?
When you do find an agent you feel good about working with, work exclusively with him or her for as long as the results are satisfactory. An agent who knows you’ll be loyal is far more inclined to work hard and be diligent on your behalf. That agent, knowing your needs and buying criteria, is the likeliest to find the right home for you.
» DOESN’T THE BEST DEAL COME FROM WORKING DIRECTLY WITH LISTING AGENTS?
The best deal comes from smart and uncompromised negotiation — through an agent — with the seller of a home that meets your needs. An ethical listing agent can represent you in this. But any listing agent who says or implies that he or she can get you a better deal because of having inside influence on the seller is already behaving unethically. That’s not who you want advising you!
» CAN YOU PROVIDE ASSISTANCE WITH MORE THAN JUST MY PURCHASE?
Absolutely. we will advise and help you with finding professionals for the appropriate inspections, the right lender, vendors for any move-in work, packing, and moving. And we can help you with the sale of your current home anywhere, either working with you myself, locally, or referring you to appropriate agents in other areas.
» DO I REALLY NEED TO GET A HOME INSPECTION?
Yes. Even if you have your own experience with construction, the trades, or home repairs, it’s still money well spent to have a specialist in home inspections do a thorough examination of your prospective home. That said, as with everything, some inspectors are more knowledgeable and careful than others. That’s one reason why your agent (as well as you, if possible) should be present at inspections and raise questions.
» WHAT ABOUT SHORT-SALES, FORECLOSURES, AND AUCTIONS?
These types of purchases have become fewer recently, but they’ll always be a part of the market where deals can be found. These can be difficult, upside-down, inside-out transactions where conventional real estate practices and protections don’t exist, and both buyers and agents can end up bewildered. We can give you the current pros and cons of distress-sale buying.
» WHAT DO YOU MEAN BY A “FULL SERVICE” REAL ESTATE BROKERAGE?
— Direct access to the advanced training, licensing, and expertise of a real estate broker, not only the salesperson licensee.
— Full and personal attention given to you and your home search in every aspect of the purchase process. Our practice of real estate is relationship-based, which means our business model is centered entirely on providing comprehensive personal service to our clients.
— Experience with your type of residential property. We work extensively with single-family homes ranging from estates to condominiums to manufactured homes, and also with multi-family investment properties.
— Broad experience in probate, estate, and trust sales; interacting with related attorneys and other professionals; and experience in court confirmation processes.
» WHAT’S BETTER ABOUT A SMALL, INDEPENDENT REAL ESTATE BROKERAGE?
Complete confidentiality for your purchase coupled with the same services and same access to the real estate market that the large companies have. And our company does not have any of the administrative fees, transaction fees, or late-closing fees that many of the big real estate companies charge.
» WHAT EXACTLY IS THE MLS?
The Multiple Listing Service is a database of properties for sale within a certain locale or region. It’s produced from within the real estate industry and is available to all real estate agents who are subscribers. In that respect, it’s a private Internet-based database, not available to the public. MLS listings typically are more extensive, more accurate, and more up to date than the public web sites. Agents can forward that information, with photos, to their buyers.
» WHAT’S THE DIFFERENCE BETWEEN AN AGENT, A BROKER, AND A REALTOR?
In California real estate, “agent” is a generic term applied to both a real estate salesperson and the broker who employs that person. A salesperson is an individual who’s passed certain minimum course requirements, some background screening, and the real estate salesperson exam. A salesperson can only do business under the supervision of a licensed broker. By far, most agents in California are licensed as salespersons.
A real estate broker is an individual who has specific advanced real estate education and experience, and has passed background screening and a rigorous state broker licensing exam. A broker can function as a salesperson and/or operate a real estate brokerage and employ salespersons.
A Realtor is a member of the California Association of Realtors. This is a trade organization which both salespersons and brokers can join, for an annual fee. Membership in the Association of Realtors is not required to practice as a real estate agent or broker in California, nor does it indicate a particular level of expertise. “Realtor” is a trademark term that, strictly speaking, should be applied only to members of the Association of Realtors, not to all real estate agents.