The
biggest factor that can affect property
value -- market conditions -- is outside
of your control. But other factors --
including the condition of the property,
certain home improvements and neighborhood
stability and safety -- are not.
For example, specific home improvements
can increase your property value above
the cost of the improvements themselves,
such as remodeling a kitchen, adding a
bathroom, finishing a basement or upgrading
landscaping. Just be sure that quality
pays with remodeling. A bad remodeling
job will do little to boost your property
value.
If you live in a high-crime area, an organized
community watch program not only will
lower the crime rate but can enhance property
values, too. It also helps to live in
an area where other homeowners are upgrading
their homes, which can help pull up your
property value, too.
The bottom line is to measure the cost
of any improvements you want to make against
the overall values in your neighborhood.
If you overimprove for the neighborhood,
you may not necessarily recover your costs
or boost your property value significantly.
Q:
Should
I add on or buy a bigger home?
A:
Consider
these questions before making a choice between
adding on to an existing home or moving
up in the market to a bigger house:
* How much money is available, either from
cash reserves or through a home improvement
loan, to remodel the current house?
* How much additional space is required?
Would the foundation support a second floor
or does the lot have room to expand on the
ground level?
* What do local zoning and building ordinances
permit?
* How much equity already exists in the
property?
* Are there affordable properties for sale
that would satisfy housing needs?
Ultimately,
the decision should be based on individual
needs, the extent of work involved and
what will add the most value.
Q:
What
kind of return is there on remodeling jobs?
A:
Remodeling
Magazine
produces an annual "Cost vs. Value
Report'' that answers just that question.
The most important point to remember is
that remodeling a home not only improves
its livability for you but its curb appeal
with a potential buyer down the road.
Most
recently, the highest remodeling paybacks
have come from updating kitchens and baths,
home-office additions and extra amenities
in older homes. While home offices are
a relatively new remodeling trend, for
example, you could expect to recoup 58
percent of the cost of adding a home office,
according to the survey.
Q:
Are
there government programs for rehab?
A:
The
U.S. Department of Housing and Urban Development's
Section 203 (K) rehabilitation loan program
is designed to facilitate major structural
rehabilitation of houses with one to four
units that are more than one year old. Condominiums
are not eligible.
The
203(K) loan is usually done as a combination
loan to purchase a fixer-upper property
"as is" and rehabilitate it,
or to refinance a temporary loan to buy
the property and do the rehabilitation.
It can also be done as a rehabilitation-only
loan.
Plans
and specifications for the proposed work
must be submitted for architectural review
and cost estimation. Mortgage proceeds
are advanced periodically during the rehabilitation
period to finance the construction costs.
For
a list of participating lenders, call
HUD at (202) 708-1112.
If
you are a veteran, loans from the U.S.
Department of Veterans Affairs also can
be used to buy a home, build a home, improve
a home or to refinance an existing loan.
VA loans frequently offer lower interest
rates than ordinarily available with other
kinds of loans. To qualify for a loan,
the first step is to apply for a Certificate
of Eligibility.
Another
program is the Federal Housing Administration's
Title 1 FHA loan program.
Resources:
* "Rehab
a Home With HUD's 203(K)" brochure,
U.S. Department of Housing and Urban Development,
Washington, DC .
Q:
Can
you deduct the cost of home improvements?
A:
What
you spend on permanent home improvements,
such as new windows, can be added into your
home's cost basis, or amount of money invested
in a home, which reduces capital gains when
it comes time to sell. Capital gains are
determined by the difference in price from
the time a home is purchased and the time
it is sold, minus the cost of any permanent
improvements.
However,
the 1997 tax changes virtually eliminates
the capital gains tax for most homeowners
(the exemption is $250,000 for single
homeowners and $500,000 for married homeowners.).
Still,
it is worthwhile to save all receipts
for permanent home improvements just in
case. They also can be useful documentation
when it comes to marketing your home when
you sell.
Q:
How
do building codes work?
A:
Building
codes are established by local authorities
to set out minimum public-safety standards
for building design, construction, quality,
use and occupancy, location and maintenance.
There are specialized codes for plumbing,
electrical and fire, which usually involve
separate inspections and inspectors.
All
buildings must be issued a building permit
and a certificate of occupancy before
it can be used. During construction, housing
inspectors must make checks at key points.
Codes are usually enforced by denying
permits, occupancy certificates and by
imposing fines.
Building
codes also cover most remodeling projects.
If you are buying a house that has been
significantly remodeled, ask for proof
of the permits involved before you purchase
to avoid future liability for fines.
Q:
What
are some resources for info on home improvements?
A:
If
you're getting ready to embark on a home
improvement project involving contracting
help, "Ready, Set, Build: A Consumer's
Guide to Home Improvement Planning Contracts"
lays out a road map for selecting the right
contractor, obtaining competitive bids up
to what to include in a contract. There
also is information on consumer rights,
liens and financing.
The
book is available for $9.95 through Consumer
Press and Women's Publications, Inc.,
13326 Southwest 28th St., Fort Lauderdale,
FL 33330-1102; (954) 370-9153, bookguest@aol.com.
* Remodeling Magazine's annual
"Cost vs. Value Report", available
for a nominal fee from the magazine; call
(717) 399-1900, ext. 146 or visit Online
Store to order.
Q:
Will
a neighbor problem reduce the value of my
property?
A:
While
it may not reduce the actual value, a cluttered
landscape can detract from the positive
aspects of your home. Review your local
laws, which should be on file at the public
library, county law library or City Hall.
A
typical "junk vehicle" ordinance,
for example, requires any disabled car
to either be enclosed or placed behind
a fence. And most cities prohibit parking
any vehicle on a city street too long.
It
also may be worthwhile to check into local
zoning ordinances. An operator of a home-based
business usually is required to obtain
a variance or permanent zoning change
in residential areas. In addition, if
a neighbor's repair work produces loud
noises, he may be breaking local noise-control
ordinances, which are enforced by the
police department.
Before
bringing in the authorities, you may want
to make a copy of the pertinent ordinance
and give it to your neighbor to give them
a chance to correct the problem.
What
are the pros and cons of adding on or buying
new?
A:
Consider
these questions before making a choice between
adding on to an existing home or moving
up in the market to a bigger house:
* How much money is available, either from
cash reserves or through a home improvement
loan, to remodel the current house?
* How much additional space is required?
Would the foundation support a second floor
or does the lot have room to expand on the
ground level?
* What do local zoning and building ordinances
permit?
* How much equity already exists in the
property?
* Are there affordable properties for sale
that would satisfy housing needs?
Ultimately,
the decision should be based on individual
needs, the extent of work involved and
what will add the most value.
For
more information, check out "The
Do-able Renewable Home," a booklet
published by the American Association
of Retired Persons, available online at
homemods.org.
Q:
What
are some guidelines to follow when trying
to find a contractor?
A:
While
hiring contractors recommended by friends
is usually a safe route, never hire a construction
professional without first checking him
or her out first. If your state has a licensing
board for contractors, call to find out
if there are any outstanding complaints
against that license holder. Also, call
your local Better Business Bureau to see
if there are any complaints on file.
If
you are satisfied with the answers you
find there, interview the contractor candidates.
Ask what kind of worker's compensation
insurance they carry and get policy and
insurance company phone numbers so you
can verify the information. If they are
not covered, you could be liable for any
work-related injury incurred during the
project. Also be sure that the contractor
has an umbrella general liability policy.
If
they pass the insurance hurdle, next check
some of their references. A good contractor
will be happy to provide as many as you
want.
Finally,
don't let yourself be rushed into making
a decision no matter how competitive the
market may seem. Also, never pay a deposit
to a contractor at the first meeting.
You may end up losing your money.
Q:
How
much will I spend on maintenance expenses?
A:
Experts generally agree that you
can plan on annually spending 1 percent
of the purchase price of your house on repairing
gutters, caulking windows, sealing your
driveway and the myriad other maintenance
chores that come with the privilege of homeownership.
Newer homes will cost less to maintain than
older homes. It also depends on how well
the house has been maintained over the years.
Q:
Where
can I get a list of architects?
A:
If you need an architect, contact
a local chapter of the American Institute
of Architects or the national organization
itself at 1735 New York Avenue, N.W., Washington,
DC 20006-5292; (800) AIA-3837; aia.org.
Also contact friends or colleagues who have
recently worked with an architect for referrals.
Take the time to interview several before
choosing an architect.
Q:
Where
do I get information on remodeling?
A:
Try
these sources:
* National Association of the Remodeling
Industry, 780 Lee St., Ste 200, Dex Plaines,
IL 60016; (800) 611-6274; nari.org.
* "Rehab
a Home With HUD?s 203(K)," published
by the U.S. Department of Housing and
Urban Development, 451 7th St., Washington,
DC 20410; call (202) 708-1112; hud.gov.
* "Cost vs. Value Report," by
Remodeling magazine, 1 Thomas Circle,
N.W., Suite 600, Washington, DC 20005;
remodeling.hw.net.
$8.95 per copy; call (202) 736-3447 for
credit card orders.
* "The
Do-able Renewable Home," a booklet
published by the American Association
of Retired Persons, available online at
homemods.org.
Q:
What
repairs should the seller make?
A:
If you want to get top dollar
for your property, you probably need to
make all minor repairs and selected major
repairs before going on the market. Nearly
all purchase contracts include an inspection
clause, a buyer contingency that allows
a buyer to back out if numerous defects
are found or negotiate their repair.
The trick is not to overspend on pre-sale
repairs, especially if there are few houses
on the market but many buyers willing
to buy at almost any price. On the other
hand, making such repairs may be the only
way to sell your house in a down market.
Copyright
2006 Inman News Features
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