Real Estate NUGGETS - The McLean Real Estate Team BLOG

The 15 Essential Items Every Short Term Rental MUST HAVE  

The 15 Essential Items Every Short Term Rental MUST HAVE 

Whether you're listing your space on Airbnb, VRBO, Homeaway, or with a professional property manager, you will need a whole bunch of items that guests expect to see and make your life as a host easier and more profitable.  Here's a list of the 15 things we've identified that every STR needs.

1 - An extremely detailed HOUSE MANUAL to make it easy for guests to follow the rules and enjoy themselves. This goes for in-house signage too.  Don’t assume anybody knows anything about anything 

2 - A CLEANING PLAN!! You have options!  But whatever you decide (professional maid service, hire someone specifically and train them, your spouse, your nephew, assistant) make sure whoever is cleaning knows EXACTLY WHAT YOU WANT THE PLACE TO LOOK LIKE WHEN THEY ARE DONE.  I CAN’T STRESS THIS ENOUGH. Use a meticulous Housekeeper Checklist to make in-between-guest-cleanings easier and faster...even if it is YOU doing the cleaning. 

3 - A very detailed, stern, honest, fair, gracious, and welcoming HOST who has the capability to run a tight ship through any storm.  A lot of your STR success will depend on you, your systems, your rules, and your common sense.  You are awesome for even wanting to do this in the first place. Don’t let one bad review or one picky guest rock your boat. 

4 - A WHOLE BUNCH OF CLEANING SUPPLIES and to make sure your guest know where they are!  When humans get together and embark on activities there is no predicting what strange messes will occur!  Puke! Baby poop! “Service Animal” Accidents! Muddy Boots! Pizza Sauce! Red Wine! YOU WANT TO GIVE YOUR GUEST THE EASIEST AND FIRST OPPORTUNITY TO CLEAN UP MAJOR MESSES AND SPILLS AS THEY HAPPEN. Have carpet cleaner, clorox wipes, rags, sponges, paper towels! everything! 

5 - Entertainment! Something to do!  Whether it’s TV’s a whole bunch of magazines, board games, decks of cards, Frommer's books about the area, whatever, have something for your guests to do while they’re stuck indoors on a rainy day. 

6 - Rules about NOISE.  You must make it very clear to your guest that they must not disturb the neighbors.  See our House Rules in the Saved Responses Section of the Airbnb Paperwork System for our wording on how we charge a fee if the neighbors complain to us about guests’ noise. 

7 - Coffee Machine.  Drip, Keurig, whatever...just have one. 

8 - Cooking supplies...you will NEED at least a few pots and pans of various sizes. Nothing special, stirring spoons, tongs, ladles, a cutting board, mixing bowls, all the normal stuff you’d see in a kitchen - the guests expect it.  A lot of guests will go grocery shopping on the way to your home. 

9 - Enough Place Settings (plates, bowls, silverware, glassware, cups, mugs, etc) for everyone that you have room for.  If your listing says you can sleep 12 people, you better have more than 6 place settings. 

10 - Vacation Rental Insurance.  VERY IMPORTANT. If you have a major insurance claim or a fire or something, and your insurance company finds out you were renting out rooms or the whole house and you never told them, you and I both know that insurance company will do everything in their power not to pay. 

11 - Fire Extinguisher.  The Application for Vacation Rental Insurance from CBIZ specifically asked if the home has a fire extinguisher in the home. 

12 - First Aid Kit.  Accidents happen! 

13 - A very clear, detailed, easy-to-read, RENTAL LISTING with lots of Pictures.  The more info you can give to your guests and the more transparent you can be about all the different and unique aspects of your property or hosting style will pay you dividends. 

14 - Dishwasher! Not negotiable. 

15 - A sense of humor.  You are embarking on a really cool and really fun journey.  You are going to have some amazing guests who will touch your heart, and they will be immediately followed by some finicky frugal Freddie who will steal your salt and pepper shakers.  You’re about to have all kinds of “You Can’t Make This Stuff Up” kind of stories. You must have thick skin and the ability to laugh when things seem like they’ve gone wrong.

We know there are more than 15 things you need in the home, so comment below of there's anything you would add to the list.

WE CAN HELP with a a few of these items too!  For a detailed House Manual, Cleaning Checklist, and MORE, see our whole Airbnb system HERE: https://www.associatedhousing.com/airbnb-system

The "Zestimate" is Fake News 

As real estate professionals, we are starting to get really sick of the word "Zestimate." 

Simply put, it's a bunch of crap. 

Zillow calculates the accuracy of Zestimates by comparing the actual sale prices of homes to the Zillow Zestimates for those same homes right before they sold. 

Zillow's typical error?  6.1%, according to Zillow. 

The median error of 6.1% and when you factor that into the median home price of $229,737, you get a typical error $14,000. 

READ: THE TYPICAL ZILLOW ZESTIMATE ERROR IS $14,000.  BUT YOU DON'T KNOW IF IT'S $14,000 TOO HIGH OR $14,000 TOO LOW. AND IT GETS WORSE BECAUSE HALF THE TIME ZILLOW ZESTIMATES ARE OFF BY MORE THAN $14,000, SOMETIMES A LOT MORE THAN $14,000. 

Also, the Zestimate changes almost every day, sometimes multiple times throughout the day.  Do you think that's right?  Do you think the value of your home goes up and down throughout a typical workday? 

On one hand, it's amazing that Zillow can get so close to the actual sale prices just by looking at public and other data on the houses (especially without ever coming inside and seeing holes int he floor or new granite countertops!)...But on the other hand, for home buyers and sellers, the estimates are so inaccurate they're unusable for pricing homes.  Not just unusable, but downright FINANCIALLY DANGEROUS.  Call someone who knows how to evaluate and price homes in your area.  Don't rely on the Zestimates or any other computer-generated value predictor. 

Also, resist the urge to talk about your home in terms of "tax value" because tax assessment and market value can be quite unrelated.

What is Earnest Money? Why does a buyer need it? Why would a seller want it?  

Earnest money is kind of tough to explain, sometimes.  So we asked a few experienced agents for their favorite "one-liners" to help describe it, and here are a few good answers: 
"It shows you're making an offer in good faith." 
"It's like getting engaged, and the Earnest Money is the ring.  You usually don't get engaged without a ring."" 
"It's a deposit you put down to show that you're serious about the house so the sellers feel comfortable taking their property off the market. It is credited back to you at closing." 

So...in the state of North Carolina, our OFFER TO PURCHASE & CONTRACT (Form 2-T), has several lines under the "Sales Price," and Due Diligence Fee and Earnest Money are two of them. The DD check gets written directly to the seller and is usually not refundable in most circumstances.  The Earnest Money Deposit, or EMD, on the other hand, gets written to the Escrow Agent - usually the closing attorney.  The attorney WILL CASH THE CHECK, so it must be good funds, and they'll hold it in their "trust account" or "escrow account" throughout the transaction.  If the buyer cancels the contract "for any reason or no reason" BEFORE THE END OF THE DD PERIOD, then the EMD is completely refundable to the buyer.  However, if the buyer does not cancel the contract before the end of DD (intending to close), then the EMD will go to the seller--either at the closing as a credit toward the Sales Price, or to the seller as consideration for the buyer breaching the contract and not closing. 

Sellers want to get as much Earnest Money from buyers as they can, because it shows the buyer will have some skin in the game, and at least some financial wherewithal to complete the transaction.  Buyers give some Earnest Money to show sellers they are serious.  EMD is a moving part on our contract that is negotiable.  In a hot sellers' market, sellers will get more earnest money.  In a buyer's market and sellers are desperate, they will take contracts with very little or even no earnest money.

Security Deposits: What's the big deal? 

A lot of this post comes straight from the NC Tenant Security Deposit Act: "Permitted Uses of Security Deposits."

The common belief that the security deposit belongs to the owner is false. The security deposit that is paid by a tenant when they move into a rental dwelling actually belongs to the tenant and is held in trust until their tenancy is terminated. At the time of termination, there are only 7 permitted uses for the security deposit by the Landlord according to the Tenant Security Deposit Act, North Carolina General Statutes (NC GS 42-51). The permitted uses according to this act are as follows: 

1 - Nonpayment of rent that is due. 
2 - Damage to the premises (other than damage due to “ordinary wear and tear”). 
3 - Non-fulfillment of the rental period (future rent due under the lease agreement when the Landlord is unable to re-rent the unit for a similar amount after diligent efforts to do so). 
4 - Unpaid bills from the tenant’s occupancy which become a lien against the property. 
5 - The cost of re-renting the premises after a breach of the lease by the tenant. 
6 - Costs of removal and storage of tenant’s personal property. 
7 - Court costs and legal fees in connection with terminating a tenancy. 

The most common dispute over a tenant deposit is regarding #2 stated above, damages above and beyond normal wear and tear. There are no statutes or court decisions that clearly define what “ordinary wear and tear” is, mostly due to these determinations being made on a case by case basis. There is a lot of grey area involved in determining what is “normal wear and tear” and what is “above and beyond normal wear and tear.” The North Carolina Department of Justice and The North Carolina Real Estate Commission have published consumer information to provide guidance for Landlords, Property Managers and Tenants. Here are some examples of both as outlined in the publication: 

Damage due to “normal wear and tear”: 

-Worn, old or dirty carpeting 
-Faded or cracked paint 
-Dirty windows 
-Dirty walls 
-Frayed or broken curtain or blind strings 
-Leaking faucets or toilets 
-Small nail holes in walls (from picture hanging) 
-Worn lavatory basin 
-Burned out range heating elements 

Damage due to “Above and beyond normal wear and tear”: 

Crayon marks on walls 
Large holes in walls 
Stains, holes, abnormal wear or abrasions in the carpets, flooring, walls, ceilings or otherwise, caused by humans, animals, chemicals
Broken windows 
Burned spots or stains in carpeting 
Bizarre or unauthorized paint colors 
Broken counter tops 
Burn marks in floors, appliances, fixtures, countertops, bathrooms, or kitchens
Filthy appliances (such as ovens and refrigerators) requiring extraordinary cleaning 
Exceptionally filthy premises (in general) requiring extraordinary cleaning 

Landlords and property managers may not use the tenant security deposits to cover the expense of correcting problems resulting from “normal wear and tear.” These expenses are considered to be part of the Landlord’s cost of doing business. Deductions may be made from a tenant security deposit to cover the expense of repairing “damage not due to normal wear and tear” which occurred during the tenancy.  Many of the disputes that arise of these situations are avoided by utilizing a move-in checklist or inspection and before pictures to document the condition of the property when the tenant took occupancy.  This will help curb the defense by the tenant, “That was like that when I moved in.”  It also helps to set the expectation up front when signing the lease agreement with the tenant to explain what they will be held responsible for maintaining the property. 

To obtain more information regarding the tenant Security Deposit Act or the Landlord and Tenant Law, you can visit the North Carolina Real Estate Commission website at http://www.ncrec.gov/Brochures/Print/tenant.pdf for a list of frequently asked questions and answers regarding tenant security deposits and http://www.ncrec.gov/Brochures/Print/Renting.pdf for general questions and answers regarding renting residential real estate. 

The 10 Commandments of Buying a Home 

When you are under contract to buy a home, the lender will be watching your every financial move, up until the closing.   

We have seen deals fall apart right before closing because the buyer quit their job, or "needed" to buy a new truck.

The 10 Commandments of Buying a Home: 

1. Thou shalt not change jobs, become self-employed, or quit your job. 

2. Thou shalt not buy a car, truck, or van (or you may be living in it!!). 

3. Thou shalt not use credit cards for any reason, or let current accounts fall behind. 

4. Thou shalt not spend money you have set aside for closing. 

5. Thou shalt not omit debts and liabilities from your loan application. 

6. Thou shalt not buy furniture. 

7. Thou shalt not originate any inquiries into your credit. 

8. Thou shalt not make large deposits without checking with your loan officer. 

9. Thou shalt not change bank accounts. 

10. Thou shalt not co-sign a loan for anyone for any reason. 

Seriously though, this list is a true story.  If you're getting a loan to buy a home, chances are the lender will be checking up on you throughout the entire transaction.  THEY MAY EVEN PULL YOUR CREDIT REPORT ONE MORE TIME, THE MORNING OF CLOSING.

FOR HOME BUYERS: What happens during a Home Inspection?  

When you are BUYING a home, the homebuying process looks something like this: Get preapproved for a mortgage, find your "dream home" and win the bidding war. But before you can move those boxes in and start enjoying your new property, you have one more major step to take: the home inspection. 

A home inspection isn't an appraisal. In fact, an inspection has nothing to do with your home's value -- or how much your lender is willing to finance. It's simply a way to assess a property's safety and long-term viability. 

Here's what you should know about home inspections: 

What it is: A home inspection is an independent, third-party evaluation of a home's structure, systems and features. The inspector will look for potential problems or deficiencies on the property. 

Why you need it: A proper inspection ensures the home is safe to live in and helps you examine the condition of the entire property you are considering.  A good home inspector will find problems (and features!) that you should know about to help you decide if the home is a good investment for you and your needs. 

When it happens: Home inspections generally occur after the seller has accepted your bid but before closing day. This gives you the opportunity to withdraw your offer, should there be any major issues with the property. 

What's covered: A home inspection includes the roof, foundation, insulation, appliances, HVAC systems, plumbing, electrical systems and more. 

How you're involved: You are not required to be on-site, but it's in your best interest to be there. The inspector can walk you through any defects he or she finds. 

The home inspection is designed to protect you, your family and your investment, so choose your inspector carefully. Make sure the home inspector is experienced and licensed and insured where required. And don't forgo an inspection just to save a little cash. If anything, a home inspection report can give you extra leverage in negotiations.