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Selling a stigmatized property can be a scary phenomenon.

In a real estate market like we’ve seen over the past 18 months, properties are selling as quickly as they appear on the market. Usually, that is.

But even the hottest seller’s market in history won’t erase a property’s past. Stigmatized properties present a unique challenge for real estate agents, lenders, and appraisers. The National Association of REALTORS® defines a stigmatized property as one that has been “psychologically impacted by an event which occurred or was suspected to have occurred.”

That’s a pretty broad, vague definition. In everyday terms, stigmatized properties are often considered haunted, cursed, or to have a sordid history. They are properties where there is no physical defect, but a property’s past could deter buyers.

Since the mid-1990s, Iowa law has required signed disclosures from both the agent and the seller to protect individuals involved in the purchase. Sellers are obligated to disclose material adverse facts about the property. But Iowa does not require nonmaterial facts to be disclosed.

Those nonmaterial facts can include past events that took place on the property, such as criminal activity, murder or suicide, paranormal phenomena, or a public stigma (such as the site of an infamous event). For some buyers, those facts would not be a deterrent. Others feel differently.

REALTOR® Liz Keller of Re/MAX Concepts says she never took the idea of haunted houses seriously. Until she owned one.

She had only been in the real estate business for a couple of years when she and her fiancé bought a property from a friend going through a divorce. “She needed to sell the home because of her personal situation, so we bought it with the intention of finishing the needed repairs and flipping it,” says Keller. “She had told me she thought there were some weird, unexplained things happening at the house. But we didn’t really believe in that sort of thing, so we weren’t too worried about it.”

During the renovation work, multiple contractors walked off the job and refused to return. Even Keller’s fiancé, who had always been extremely skeptical of haunted house claims, couldn’t explain the drafts of cold air and his dog’s reaction to the house.

“We finally finished the work and got the house on the market,” Keller says. “But we had other REALTORS® tell us they saw a man walking through the house when it was supposed to be empty.”

The home eventually sold, but that experience was enough to convince Keller that stigmatized properties really do exist. “Now, if I have a buyer who’s spooked by the possibility that something could have happened in a property, I tell them that if the house is more than 30 years old, it’s more than likely that at some point something bad happened in that house. That doesn’t mean it’s haunted, but you can’t ever be sure that nothing bad ever happened there.”

Because Iowa law doesn’t require sellers to disclose nonmaterial “defects” or facts, knowing how to market these properties can be a delicate business. Even homes not reputed to be haunted can be stigmatized to the degree that it dramatically affects their value.

The California home where the Manson murders occurred in the 1960s was eventually demolished, and the address was changed in order to overcome its past. The home where Nicole Brown Simpson was murdered also sold for less than its market value, and the address was changed to minimize the publicity.

Even so, a house’s history can be nearly impossible to overcome. According to an article in The Washington Post, it often takes seven years or more for a stigmatized home to regain its fair market value.

For some properties, the stigma associated can become a marketing tool—how long depends on the notoriety of the home.

In his book American Murder Houses, author Steve Lehto says these properties can become tourist attractions until eventually the associated events become “less personal and more historical.” Lizzie Borden’s house and the home made famous by Truman Capote’s book (and later the movie) In Cold Blood, however, both remained tourist attractions for decades.

Just a few miles east of Des Moines, the old Farrar High School building, last occupied in 2002, still stands. The building’s current owners purchased the property after it had sat vacant for several years. Their intention was to renovate it. But its reputation as “the most haunted building in Iowa” and the ongoing tales of unexplained sightings and sounds have turned the building into a tourist attraction instead.

According to the owners’ website, HauntingatFarrar.com, “Over the decades, employees and students reported hearing voices, slamming doors, and sightings of unnatural figures walking the halls.”

Since 2007, the building has been visited by internationally known psychics, the Discovery Channel, and Fox News, among others. Listed for sale again, the property can still be booked for overnight visits for those “brave enough to stay the night.”

While Iowa law may not require sellers or agents to disclose nonmaterial facts associated with a home, most experts advise taking a forthright approach to these stigmatized properties, whether that means full disclosure or an honest willingness to answer questions.

As Keller says, “Some buyers are really spooked by a house’s past. But for most, the stories won’t bother them at all.”

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Attorney Jodie McDougal chairs Construction Law Section Council.

Des Moines attorney Jodie McDougal once considered a career as an architect. She pursued law instead, but she still wears a hard hat on occasion. That early fascination for building things led to a focus on construction law.

This past June, her peers recognized her for that leadership by naming her Chair of the Iowa State Bar Association’s (ISBA) Construction Law Section Council. “My passion lies in legislation and education,” McDougal says, “so being a part of the Construction Law Section Council has been a great experience.”

McDougal has been a member of the group for several years, serving as Vice-Chair for the past two. She is also Chair of the Construction Department at the Dentons Davis Brown Law Firm, where she represents construction and design companies in the commercial and residential construction industries and writes a construction law blog that’s distributed to hundreds of local construction professionals.

“I’ve been doing the blog for over five years now to help educate our clients on legal matters that could affect their businesses,” she says. “With COVID and changing laws, I wrote more than 40 posts this past year alone.”

Recent articles have discussed everything from the federal eviction moratorium to volatile construction material prices. “We have about 20 attorneys in our firm whose work touches in some way on construction law,” she says. “In addition to representing our clients, we work to help them mitigate the risks involved in running a business in the construction industry.”

Her expertise in construction law led to her involvement as the Iowa author for the national lien law resource LienLawOnline.com. She was selected to be part of the Iowa Attorney General’s working group of attorneys that drafted, reviewed, and finalized the administrative regulations relating to Iowa’s new Lien Law in 2012, and she has spoken numerous times at the Iowa State Capitol as a construction subject matter expert.

In addition, McDougal is an active member of several construction and real estate associations and speaks regularly to industry groups and trade associations. “I’ve been particularly proud of our Council’s efforts to effect positive legislative change for the construction industry,” she says. “This past year, one of our biggest efforts was advocating for the passage of a bill to enhance the mechanic’s lien rights of residential contractors.”

The ISBA is a statewide association of lawyers. Sections within the ISBA provide opportunities for members to come together and address issues in various areas of concern. The Construction Law Section Council is one of those.

“It’s a way for lawyers to educate each other and get updated on new laws, as well as advocate on issues affecting our industry and our clients,” explains McDougal. “We review bills before the Legislature and evaluate whether they’ll have a positive or negative effect on the industry and determine what action we should take as a Section Council.”

As Chair, McDougal says her goal is to do her best for the Section and to make it possible to accomplish what the members want to do. “We’ll continue to monitor upcoming legislation and push any affirmative issues,” she says. “We also put on a great continuing education seminar each year.”

In her work at Dentons Davis Brown, she says she gets to experience the best of both the legal and construction professions. “We see deals close and work closely with our clients to help them grow their businesses and mitigate the risks,” she says. “As attorneys, all of our construction department works to help our clients get ahead of any potential problems so they can avoid legal issues.”

But growing up as the daughter of an engineer who was handy around the house, McDougal enjoyed hands-on projects, too. As a construction law attorney, she still gets to enjoy them. “Some days I put on a suit and go to court,” says McDougal. “Other days I put on my hard hat and steel-toed boots and go out to a jobsite.”

McDougal’s passion for legislation and the construction industry and her record of facilitating the needs of others will serve her well in her role as Chair of the IBA Construction Law Section Council. No matter which hat—or shoes—she’s wearing.

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Experts anticipate continued demand in the housing market.

Nearly a year ago shockingly low interest rates were driving homeowners to refinance or purchase new homes at a pace that outstripped lenders’ ability to process the paperwork (see “A Seller’s Market,” BUILD Des Moines, September 2020). The pace might have slowed a bit since then, but the rates haven’t, and local professionals say there’s no end in sight.

“Rates are still below 3% for a 30-year fixed-rate mortgage,” says Bankers Trust’s Kim Downing-Manning. “There really hasn’t been a lot of movement in the past month or two, which is a little unusual.”

GreenState’s Brekken Klomstad says, “The interest rates are just fantastic for both purchase and refinance customers. And they’re forecasting rates to remain this low through the end of the year.”

Because lenders were advising homeowners to refinance last year when rates dropped so significantly, the refinance market is less hectic than the mortgage market this summer. In fact, Downing-Manning says the only thing keeping the mortgage activity from returning to last year’s nearly unmanageable pace is the lack of inventory. “Inventory is so low and there are so many buyers out there, properties get snapped up the minute they’re listed. If there were more inventory, we’d be even busier than we already are.”

The seller’s market that exists right now has made prequalifying an absolute necessity, say both Downing-Manning and Klomstad. “We work hard to educate buyers and ensure they’re prepared when looking for a home,” Klomstad says. “What’s changed is that buyers may not realize they have more wiggle room in their budget than they thought.”

He says that such low interest rates can translate from tens of thousands of dollars more in purchasing power to a minimal difference in monthly payment. “Knowing what a homeowner is comfortable with for a monthly payment is often a better starting point,” he says. “From there, we can give them a more realistic purchase price.”

Downing-Manning says the competitive market has made it important to discuss backup plans with customers as well. “At Bankers Trust we’ve been doing this a long time,” she says, “so there isn’t much we haven’t seen before. That experience allows us to advise our customers on options if they aren’t successful with their first offer. We can walk them through what it’s like in a market like this and help them map out options ahead of time.”

Klomstad agrees. “Preapproval has always been a valuable tool, but that’s even more important now. Not only is the buyer ready when they go out to look at homes, but it saves time later, which is really important when homes are selling as fast as they are right now.”

Downing-Manning says, “In a market like we’re seeing right now, most sellers won’t even look at an offer if the buyer isn’t prequalified. We’ve even provided letters for buyers who were making cash offers to verify that the funds were available so the seller would consider their offer seriously.”

The combination of factors that created the seller’s market we’re experiencing—consumers with money to spend, unbelievably low interest rates, and a shortage of homes on the market—is expected to continue well into the next construction season although the typical seasonal slowdown may provide some respite at the end of the year.

Downing-Manning says one aspect of the home-buying process that is beginning to improve is the verification processes, which will help speed up the prequalification applications.

“Because of COVID restrictions and the strange employment situations so many buyers were in, we had to go through a whole different set of documentation guidelines, especially with employment verifications,” she says. “Things aren’t quite back to prepandemic procedures yet, but it’s getting better.”

Buyers who have those preapprovals in hand are able to shop more confidently in this competitive environment. “Unless there’s an employment change, that prequalification is valid for 120 days,” Klomstad explains. “And if the buyer doesn’t find a home within that time, we simply reverify the credit report, and they’re good for another 120 days.”

With homes selling for well above the asking price, buyers can be inclined to panic or make hasty decisions. Both Klomstad and Downing-Manning say that more than ever their job involves providing their customers with peace of mind.

“I’m a firm believer that everything happens for a reason,” says Downing-Manning. “Buying a home is a huge investment. We don’t want our customers to settle or to make a rash decision. Working with a great REALTOR®, getting the paperwork done ahead of time, and being proactive instead of reactive goes a long way toward accomplishing that.”

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Housing initiative seeks to dramatically increase community’s growth.

For several decades population growth in rural areas has been on the decline. Communities within a reasonable distance of metropolitan areas managed to hold steady, but small towns in rural Iowa have struggled to maintain residents, let alone attract new businesses and homeowners.

Some industry professionals have seen this trend beginning to turn since the pandemic. Developments like Middlebrook in Cumming, Prairie Trail in Ankeny, and Beaverbrooke Pointe in Grimes are attracting residents looking for a small-town feel within easy commute to the metro.

But families longing for a more rural community have also begun to realize that today’s technology makes earning a living from nearly anywhere possible. They can settle in their dream community, no matter where their employer is based.

That creates a different challenge for Iowa’s small towns—attracting builders and retailers to support that potential growth. Marshalltown is well on its way to meeting that challenge.

“Make Marshalltown Home is a cash incentive program that offers home buyers $10,000 when they close on a newly constructed home valued at $180,000 or more,” says Joe Carter, incoming Board Chair of the Marshalltown Area Chamber of Commerce. “The program applies to any permits filed after the first of June within the Marshalltown city limits.”

“The Chamber committee overseeing the program got started late in 2019,” he says. “We held the press conference to announce the program less than 18 months later.” But before the initiative went into effect, news of its potential spurred development in the community. “We have two developments already begun,” Carter says. “Those developers have both said this housing initiative was the impetus for their projects.”

Commercial growth was already taking place in the community of nearly 30,000. A new hospital, new medical clinic, and numerous retail and restaurant expansions are in the works. “We have some multifamily housing and senior residential facilities in development as well,” Carter says. “This initiative is a way to support more single-family projects.”

He says the average number of new homes built has averaged a mere five homes per year since 1975. Now there are enough plans in the works to build 100 in just the next two years.

“Marshalltown is one of the only seven ‘micropolitan’ communities in Iowa—a city with population between 22,000 and 35,000 not directly connected to a large city. But we’re one of the two micropolitans that’s actually growing,” Carter says.

The Marshalltown Area Chamber of Commerce realized that to maintain that and to grow wisely, the city needed a plan. “We wanted to manage the way our community grows,” Carter says. Part of that was ensuring the city had the services to attract new residents, and part of that was drawing the builders who could provide the homes.

“Marshalltown is a great place to live,” he says. “We have a beautiful trail system, and we’re expanding that to connect with other communities and trail systems nearby. We have a wide variety of employment opportunities. We have a diverse population, an historic theater, and so much to offer.”

The Make Marshalltown Home program is initially set to cover only the first 100 homes that qualify. Carter anticipates that it could continue, depending on funding.

Between the multifamily projects and the Make Marshalltown Home initiative, the Chamber hopes to nearly double the town’s population by 2030. “We would like to see steady, managed growth, with more residents living and working here,” explains Carter. “Cutting the commuter rate in half in the next five years is part of that goal. This program will help us achieve that.”

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