A Log Home Story

Solving problems while maximizing valuespay $156,000 for this eyesore, but the agent doesn't
This story has a few good lessons and observationsresearch anything and can't come up with the proper
that no doubt can be used by you to takedocumentation for the original well and septic
advantage of hidden opportunities that often lie inapproval. Therefore, the relocation company sends
plain view for all to see, however, most people haveout its own engineer to backtrack and he blows the
not been trained or instructed on how to recognizedeal clear out of the water because he doesn't know
or find them.local protocol and has no original paperwork either. As
The following true story begins with a classic loga result the potential buyers back out and the house
home package, engineered, manufactured, approvedsits empty for another six months. Meanwhile, our
and delivered for use in Alaska. A friend of mine, inpoor relocated owners back in New Jersey are still
1996, built the home, and I helped him pour thepaying a mortgage on this while facing percolation
foundation. This leads to our first observation intests for a special $10,000 septic tank that isn't
analyzing this deal: If you know the full history of aneeded.
property, your confidence and position on the dealWhat we have now is a classic stigmatized home and
can be enhanced.its value is plummeting, the costs are rising and the
You can begin to research history and succession ofagent is plumb worn out with phone calls, septic tank
ownership through county records, tax rolls and bymanufacturers, engineers, state regulators, cancelled
contacting previous owners as far back as youcontracts and the sellers groaning constantly. You
possibly can. Optimally you want to end your searchname it - this thing is looking pretty bleak.
by getting to the original owner and builder of theEnter the white knight, i.e., the educated investor.
property.What a relief - someone who knows what to do!
Now, back to our story. My friend had built thisUpon watching this carnival of events unfold for a
house himself and I knew for a fact that he is anwhile, I decided to step in. What finally drove me to
intelligent perfectionist. This gave me the confidenceact was a call to my office that presented an end
of knowing that this owner-built home was a solidgame. What I mean by this is a military officer called
structure through and through, not to mention thatto ask if I had a place that he could rent for two
when the energy rating, otherwise known as a "blowyears. At that moment, I told him that I might and
test," was conducted the house was so tight (no airthat I would get back to him.
leaks) that he had to artificially ventilate it.As our friend Paul Harvey says, here is "the rest of
At this point, I had the following information: I knowthe story!" The first thing to do was to inspect the
who built it, the quality of construction, it's energyproperty; repairs were mostly cosmetic. Next, I went
rating and it's value based on what my friend hadand drilled the agent for information and at this point,
sold it for to the new owners. This brings us to ourthe agent was giving me every scrap of insider
next phase of the investigation, the current owners.information that could legally be disclosed. I now
Now we turn our attention to the current ownersknew that this property could be had for $137,000.
who are selling and the history behind them. OriginallyAdditionally, I would get a 3.5% commission and the
they paid $159,000, which by some strangeseller would pay the closing costs! I had a solid
coincidence was the asking price. I'm sure if thetwo-year tenant lined up and willing to pay $1,350.00
asking price was $160,000, it would have appraiseda month and he would pay his own utilities. An
for that but my friend made it appear cheaper byappraisal had been done six months earlier on the
keeping below the higher $160,000 bracket. This isdeal that had fallen through and it pegged the value
known as a pricing strategy.at $160,000.00.
Our research on the new owners revealed that theyThe only thing left to do was to get the original
had been relocated from New Jersey and they haddocumentation from the owner- builder that would
one child. The neighbor, who is a home inspector andresolve the septic issue. I called him up (as he lived
general contractor, tells me a few more details aboutless than a mile from his old log home) and he said,
the family, their habits and the upgrades, and"Sure Dan, I have all the paperwork right here...the
improvements and modifications that have beencurrent agent never asked me for it!" I looked it over
made to the home. Once again I'm getting goodand here is what he had: the original design and
signals that the home is a good one but the ownersconstruction survey, the engineer's original approval
are a little squirrelly as to their habits and designof well and septic, the building department's approval
choices.and the department of environmental conservation's
Here is where opportunity starts knocking, folks.waiver granting permission to install according to the
When you have people who do things that are outplans. This completely removed all obstacles to
of the mainstream of what most people do, you willfinancing and the appraiser agreed. Problem solved in
notice that when it comes time to sell, many buyersless than two hours!
are turned off by the non-conformity of the home'sNow the green light was flashing, so I had the
general appearance. Let me explain.lieutenant sign a two-year lease, give me a check for
These people did the following things: first, theyone and a half month's rent upfront plus last month
installed a spiral staircase and painted it a fuschiaand a half month as a security deposit for a total of
purplish-pink. Yuk! This alone was said to have turned$4,050.00. I then bought the house! I painted,
off more than one potential buyer. Also, the originalcleaned, trimmed and tweaked the house in 8 days it
paint had pencil and marker lines scribbled here andis now a beautiful showplace on 1.77 acres worth
there, the faucets and caulking needed some repair,$27,000 more than I paid for it in less than one
the glass in one of the kitchen cabinets was missing,month. In addition, there is a positive cash flow of
the walls needed new paint and the yard wasover $300.00 a month above my mortgage and
overgrown. Along with a few other small details, thisescrow payment obligation.
was all cosmetic but people couldn't look past it.I would also like to add that the spiral staircase is
Let's get to the real "nails in this coffin" of lost resalenow painted white and it stands as the most
value. The following information deals with choosing abeautiful centerpiece to a home as anyone could ask
good real estate agent who will properly handle yourfor! All it needed was a vision, some labor and paint.
affairs, if in fact you cannot do them yourself,Let's hit the highpoints and drive home some of the
although you should actively participate. Here islessons from this series of events.
where this agent's ineptitude will seal these relocated1. Research and obtain as much history on the
owners' fate. Let's set the stage: We are now atproperty as you can.
2003; our sellers are being transferred and are2. Pay attention to the quality of construction and
moving after five years. This is right in keeping withtypes of materials used.
the national average that says that people tend to3. Use comparable sales, costs of construction,
move every five years. So in conjunction with therecent sales prices, assessments, existing appraisals
move, a relocation company becomes involved. Hereand take into account the cost to cure existing
comes the red tape!defects to begin to determine a reasonable value.
Our sellers chose a local real estate agent who works4. Look for easily correctable problems that turn
half days and delivers newspapers the other half (notother people off and correct them.
too professional). So this agent signs our owners up5. Pay attention to landscaping and the ability to
and proceeds to boggle most everything from theimprove upon its appearance.
day our sellers are transferred out. The agent does6. Analyze the series of events that led up to the
nothing to prepare the home to show well and thesale and the seller's current position.
topper on this one was the agent had left an7. Have a plan or end game in mind for using the
inflatable monstrosity of what used to be aproperty once you acquire it.
swimming pool/fun center half-deflated with stagnant8. Always try to ask less than full asking price and be
water, breeding mosquitoes at the base of theprepared to walk away if you don't get the price and
entryway stairs. What a first impression and such anterms that you feel justify the purchase.
easy fix!9. Stay abreast of market conditions and events and
That's just the beginning because now our agent bybe patient; these deals will come your way when you
some stroke of luck has found someone willing toare prepared to see them.