| Q:
|
Can
you negotiate the price on new homes? |
| A:
|
It can be difficult to negotiate the sales
price with a developer because they may claim
their prices are based on fixed construction costs.
But it doesn't hurt to try.
Experts say
builders are more likely to be flexible on price
at the very beginning and the very end of a
development project. Early on, most developers
want to move people in quickly so the project
picks up momentum. Later, developers may be
more inclined to accept lower offers when only
a few units remain.
If negotiating
the price doesn't work, buyers commonly negotiate
for better amenities (upgrade carpet, light
fixtures, etc.) or lot location. Experts say
a developer will rarely pass up a deal over
a couple hundred dollars' worth of carpeting,
for example. |
|
| Q:
|
Should
I buy a vacation home? |
| A:
|
Today a vacation home can be purchased for
investment purposes as well as enjoyment. And
yes, there are tax benefits.
Some people
buy a vacation home with the idea of turning
it into a permanent retirement home down the
road, which puts them ahead on their payments.
Another benefit is that the interest and property
taxes are tax deductible, which helps to offset
the cost of paying for a second home. A vacation
home also can be depreciated if you live in
it less than 14 days a year, or 10 percent of
the rented days - whichever is greater.
|
|
| Q:
|
What
do you think of a vacation home as an investment?
|
| A:
|
You can buy a vacation home today for investment
purposes as well as enjoyment. And yes, there
are tax benefits.
Some people
buy a vacation home to use as a permanent retirement
home later, which allows them to get ahead on
their payments. Another benefit is that the
interest and property taxes on a vacation home
are tax-deductible.
Some real estate
experts predict that vacation homes will appreciate
in value due to rising demand from the aging
Baby Boom generation. You also can depreciate
the property if you live in the house less than
14 days a year, or 10 percent of the number
of rented days - whichever is greater.
You also need
to consider whether you can afford to carry
two mortgages, pay for the extra utilities and
maintenance costs, and how this investment fits
into your total personal finance picture. |
|
| Q:
|
Do
builders give financing? |
| A:
|
Builders often include financing programs to
help move more buyers into a project early on.
If it's a buyer's market in your area, you can
be sure that developers will offer incentives
such as low-down-payment financing. |
|
| Q:
|
Where
can I get a list of home builders? |
| A:
|
For a list of home builders, contact the National
Association of Home Builders at 1201 15th St.,
N.W., Washington, DC 20005; (800) 368-5242, www.nahb.org;
or your local Building Industry Association office.
|
|
| Q:
|
Should
I hire a home inspector for a new home? |
| A:
|
Most experts recommend having a home inspected,
new or old. For a new home, ask the builder to
provide copies of any inspection reports on the
property, architectural plans, surveys and pertinent
construction documents for your inspector to review.
Your inspector should either be a professional
home inspector, an engineer, an architect or a
contractor.
If you hire
a professional inspector, look for one who belongs
to one of the home inspection trade organizations.
The American Society of Home Inspectors (ASHI)
has developed formal inspection guidelines and
a professional code of ethics for its members.
Membership to ASHI is not automatic; proven
field experience and technical knowledge about
structures and their various systems and appliances
are a prerequisite.
Rates for the
service vary greatly. Many inspectors charge
about $400, but costs go up with the scope of
the inspection. |
|
| Q:
|
What
are some new-home cautions? |
| A:
|
When you buy a resale home, you can find out
a lot more about the property and the neighborhood
before you buy than when you buy a new home.
Land to support
new-home developments usually is located on
the outskirts of town. Potential buyers should
ask the developer about future access to public
transit, entertainment activities, shopping
centers, churches and schools. Find out how
far it is to the nearest library, for example.
Local zoning
ordinances also should be reviewed. A rather
remote area can turn into a fast-food-chain
haven within a couple of years. Try to ensure
that the neighborhood, if not strictly residential,
will not begin sprawling out of control. |
|
| Q:
|
What
about new versus previously owned? |
| A:
|
Although new homes typically have a higher
sales price than comparable existing homes, buyers
are willing to spend more upfront with an understanding
that part of what they are paying for is assured
low maintenance costs. A builder's warranty, along
with brand-new roof, appliances, furnace and other
operating systems that make major repairs unnecessary,
work together to counteract possible slower appreciation
initially.
Data from the
U.S. Census Bureau's 1991 American Housing Survey
suggest that operating costs per house are lowest
for brand-new homes, slightly higher for relatively
new existing homes but lower on average for
older existing homes. Measured per square foot
of living space, however, operating costs are
consistently higher for progressively older
existing homes.
Utility costs
are the largest component of operating costs.
Energy consumption per square foot depends on
size of the home, insulation, window quality,
air leakage and efficiency of the furnace. Operating
costs also include expenditures for both routine
maintenance and major repairs. |
|
| Q:
|
What
are considerations to buying a new home?
|
| A:
|
Builders may have a target market in mind for
their new-home projects. Some may tout communities
as glamorous to upscale urban professionals seeking
amenities such as a golf course, hot tubs and
tennis courts. Yet a playground and swimming pool
might be central to a project geared toward families
while the next one offers seniors a walking trail
and an easy-to-care-for yard.
Do not be tempted
to move into a "glamorous" community
where you might be able to afford the house
but not the lifestyle. In addition, similar-looking
new houses often come complete with restrictions
imposed by the developer on house color, landscaping,
renovations and anything else a homeowner possibly
could do to make their house deviate from the
preferred look.
Marketing experts
try to appeal to buyer's tastes by their promoting
images for their developments. Don't buy into
it. Form your own opinions and only buy a home
where you feel comfortable. After all, you're
going to have to live there.
|
|
| Q:
|
What
is the return on new versus previously owned homes?
|
| A:
|
Buying into a new-home community may seem riskier
than purchasing a house in an established neighborhood,
but any increase in home value depends upon will
same factors: quality of the neighborhood, growth
in the local housing market and the state of the
overall economy.
One survey by
the National Association of Realtors shows that
resale homes do have an edge over new homes.
The trade group's figures show the median price
of resale homes increased 4.3 percent between
1999 and 2000, compared to 2.8 percent for new
homes in the same period.
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