| 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.
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Copyright 1999 Inman News Features |
