Red flag homes-what are they and why you shouldn't buy them.

You might not know the first thing about what a red flag home is. As a full time real estate appraiser, I’ll give you a few hints. Many times, home owners think that they are getting a great price on the perfect home. Little do they know, they are about ready to buy a red flag home. These are homes with issues that you usually don’t want to buy. Let’s go over some of them. These are in no particular order.

Flat roofs

These may be common in some areas, but in the Northwest, they are rare and in most cases, they are non-conforming to the market area. This means that there are few to no similar sales to these types of homes. A flat roof means that the roof is flat and horizontal. Some times the roof can be flat, but the roof tilts to one side of the other. Most of the problems occur what you have a flat roof with no tilt. Many times people many not like the looks of these types of houses. Most of the time, the roof fails and will need more work. It is more difficult to get financing for these types of homes and they are more difficult to appraise. If you have a choice, stay clear of homes with flat roofs.

Metal roof

Metal roofs may be acceptable in your market area, so on this one, it really just depends. If you live in an area with lots of snow, metal roofs are common. If you live in the city, most of the time, they are non-conforming. These types of roof offer a different appeal. Like flat roof, they do not conform to some market areas. The most common area for metal roofs is in areas of high snow fall and or log homes with metal roofs in the northwest. So be on the look out for metal roofs in areas where most of the home offer composition roofs.

Tile roof and Stucco home

Tile roofs and stucco homes usually go together, but not always. In the south, I’m sure that these are really common homes. But put one of these in the Northwest and you’ll find a home that does not conform to the market area. Any home that does not conform to the market area may be difficult to appraisal. Surely, this will make the value fluctuate much more than other homes in your market area. This is because the appraiser will have to use whatever is available at the time of the appraisal. As a result, your appraisal value will fluctuate much more than typical.

Log siding

Most banks will want at least two log sided homes, if your home offers log siding. If you live in an area where log siding is acceptable, then this will really not be a red flag home. But make no mistake about it, if you have a log home within the city and it is not common, your home will be non-conforming.

Geodesic home and Dome home

Once I appraised a geodesic home. I had to go back three years in time and open up the market area to the entire area to find just two homes that offer some type of geodesic home. The two homes in the area did not even look any thing like the subject, but I had to use these two homes to support homes in the market area. The bank accepted this appraisal, but many times, if you have homes like this, the bank will not even loan on these types of homes. So if you have a home like this, be up front with your bank and find out if they will even loan on these types of homes.

Manufactured homes

Manufactured homes are lenders worst nightmare. I get several calls of home owners looking for a lender that will lend to manufactured homes. So I went out of my way and called every lender myself to see if I could compile a list. For the number of lenders and loan officers I called, I can assure you that the number of lenders loaning to manufactured homes is bleak. I used to complete a lot of appraisal for one bank that would loan to manufactured homes. Guess what. I spoke to a rep a year ago and they even stopped loaning to manufactured homes. He told me it was the biggest money pit the bank had.

One bedroom homes

There are limited sales and a limited market for one bedroom homes. Here’s some friendly advice. If you have a two bedroom home, keep it that way. If you have a three bedroom home, keep it that way. Nothing has a better change of ruining your value than ripping out walls and converting your home from a two bedroom to a one bedroom or from a three bedroom to a one bedroom or two bedroom home. If you have the square footage, figure out how to make your home a two bedroom home or larger. If you don’t have the square footage (meaning your rooms will be too small anyway), then it is what it is. Leave you home as is.

Homes with non-conforming heat source (i.e. baseboard heaters)

This is a biggy for many lenders. They want conforming heat sources and heat sources that are built in. There’s not much you can do about this one. Just make sure you have a heat source and that its works properly. If you have baseboard heaters (the ones that you used to melt crayons on when you were a kid), make sure that they work properly

Manufactured homes with basement

This falls in the category of the nightmare statement. These types of homes are non-conforming. They are difficult to appraise because there are limited sales and the appraiser will usually have to find homes on the other side of town, or worse yet, in a difference town to find comparable sales. Once I had to appraise a log sided manufactured home with a basement. That was fun. (Joke).

Manufactured homes with the tag numbers removed

Do not remove the tag numbers from your manufactured home. These are the rectangle, metal tags attached to the outside of each section of your manufactured home. If these are removed, don’t buy the home until you have this resolved. Your home will be difficult to sell and refinance until you figure this out. I’d just keep looking.

Shake sided homes

Homes that offer shake siding when all of the others offer lap, wood or vinyl siding or, for that matter, any other siding that is more typical for the area.

So there you have them. When you’re about ready to buy a home, make sure that is it not a “red flag home." This might make your life easier.

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