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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 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.
Resources: "Real Estate Investing From A to Z," William
Pivar, Probus Publishing, Chicago; 1993.
"The Ultimate Language of Real Estate,'' John Reilly,
Dearborn Financial Publishing, Chicago; 1993.
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. 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 201 15th St., N.W., Washington,
DC 20005; (202) 822-0200, 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 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 the 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
3 percent between 1994 and 1995, compared to 0.8 percent
for new homes in the same period.
Copyright
1999 Inman News Features
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