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©
2002 Ruth E. Campbell. |
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Frequently Asked Questions Owning
Your Home - Q & A Q: How do you increase the value of your property?
A: The biggest factor outside of a homeowner?s control
is market conditions. But other issues -- including the condition
of the property, specific home improvements and neighborhood
stability and safety -- can influence property values. The greatest
rise in home prices occurs when the economy is strong and the
number of home sales is increasing. Though markets
vary, that has occurred twice in recent history -- in the early
1970s and the late 1980s. However, single-family homes appreciated
much more than condominiums. While overall market conditions
are out of the homeowner's control, other factors are not. For example,
specific home improvements can increase the value above the cost
of the improvements. According to Remodeling magazine, which publishes
an annual "Cost vs. Value" remodeling report, a remodeled
bathroom returns 81 percent to the owner, a bathroom addition,
89 percent and a master bedroom suite, 82 percent. Remember,
quality pays. Well-planned and well-executed remodeling jobs
are a good investment while bad work seldom enhances value or
livability. If you live
in a high-crime area, an organized community watch program not
only will lower the crime rate but also have been known to enhance
property values. Q: How can I improve the value of my property?
A: The biggest factor outside of a homeowner?s control
is market conditions. But other issues -- including the condition
of the property, specific home improvements and neighborhood
stability and safety -- can influence property values. T he greatest rise in home prices occurs when the economy is
strong and the number of home sales is increasing. Though markets
vary, that has occurred twice in recent history -- in the early
1970s and the late 1980s. Specific home improvements can increase the value above the cost
of the improvements. According to Remodeling magazine, which publishes
an annual "Cost vs. Value" remodeling report, a remodeled
bathroom returns 81 percent to the owner, a bathroom addition,
89 percent and a master bedroom suite, 82 percent. Remember, quality
pays. Well-planned and well-executed remodeling jobs are a good
investment while bad work seldom enhances value or livability. The safety and security of a neighborhood can affect property
values, too. If you live in a high-crime area, an organized
community watch program not only will lower the crime rate but
give home values a boost, too. 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:
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 gov't 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) 708-2720. 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, 7th and D
streets S.W., Washington, DC 20410. 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. Resources: * "The Ultimate Language of Real Estate,"
John Reilly, Dearborn Financial Publishing, Chicago; 1993. 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., Dept. SR01, 13326 Southwest 28th
St., Fort Lauderdale, FL 33330-1102; (954) 370-9153. Resources: * Profiting From Real Estate Rehab, Sandra M. Brassfield,
John Wiley & Sons Inc., New York; 1992. * Remodeling magazine's
annual "Cost vs. Value Report", available for a nominal
fee from the magazine; call (202) 736-3447 to order a copy. 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. Resources: * "Neighbor Law: Fences, Trees, Boundaries
and Noise," Cora Jordan, Nolo Press, Berkeley, Calif.;
1991. Q: What are the pros and cons of adding on or buying new?
A: Before making a choice between adding on to an existing
home or buying a larger one, consider these questions:
Ultimately, the decision should be based on individual needs,
the extent of work involved and what will add the most value.
According to Remodeling magazine's annual "Cost vs. Value
Report," remodeling a home not only improves its livability
but its curb appeal with potential buyers. The highest paybacks
come from updating kitchens and baths and, most recently, adding
on a home office, according to the survey. For more information, check out "The Doable Renewable Home,"
a free booklet available from the American Association of Retired
Persons, Fulfillment Department, 601 E St., N.W., Washington,
DC 20049; (202) 434-2277. >> Next page |