The Pros and Cons of Buying an Old House

Warm and lived-in, with a majestic fireplace, wood craftsmanship from another era, and a crooked old apple tree in a beautiful garden—only an older house comes with its own personality.
But that personality could come with a steep price in upkeep and renovations to meet the needs of your family and your modern tastes. How do you decide if an older home is worth it? Consider our list of pros and cons:

Con: Outdated building code compliance and other maintenance

Homes with old heating systems or inefficient plumbing can be in such bad shape that they do not comply with modern building codes. It is a good idea to take a careful look at each system in an older home (heating, wiring, plumbing, air conditioning, etc.) to make sure they are modern, efficient and safe. Replacing these systems can be expensive. Chimneys may need realignment or need to be fitted with draft excluders. Older windows may need to be replaced.
 

Pro: Location, location, location

Older homes are often built closer to the center of town, making it easy to walk to local shops, schools and other amenities. If you happen to find an old house out of town, it could still have local shops, schools and other amenities within walking distance.
 

Con: Lack of storage

People tend to buy and own more items now than ever before, so storage in old houses may present an issue. An older home may lack modern closet measurements. They often have sloped floors and imperfect edges, so installing cupboards and shelves may require a professional, which could be expensive. You can do things, however, to make the house more appealing to a younger buyer who likely has more storage needs.
 

Pro: Cost

You will probably pay less for an older home. This depends on condition and location, but generally, a modern house of the same size and in the same area costs more than an older one.
 

Pro: Availability and furnishings

There’s no waiting for a developer’s finishing touches (or delayed schedule). You can move in immediately, barring any immediate renovation plans. When you buy a new build, you may have to wait a year or more to move into an empty home. Some buyers love the style of the previous owner and they can often strike a deal to keep furniture or accessories that they like. Buying a home with furnishings you like can be a real money saver.
 

Pro and Con: Eclectic neighborhoods

Moving into an old house in an old neighborhood can mean that you get an eclectic mix of neighbors. With a newly built block, every neighbor will have bought around the same time; but in an established neighborhood you could have neighbors who have lived in their homes for generations. Some parts of an old neighborhood may have undergone gentrification, while other parts may attract unsavory characters. Get to know a neighborhood before you buy.

Pro: A long-term investment (if upkeep isn’t too pricey)

Old houses are in limited supply. As some decay or are torn down, supply decreases even more. Yet, demand remains. When looking at an old house, take time to talk to people in the area with similar properties to see how much their homes have increased in value over the past decade.
 

Con: Roots, and we don’t mean metaphorically

Old houses often come with old trees—and root problems. Older, taller trees often have long, strong roots that grow in toward the foundations and plumbing systems beneath the home. Pipe replacement or foundation work can be expensive.
 

In sum, an older house can offer benefits—and character—that a modern home doesn’t have. But it’s worth taking extra time to educate yourself on the potential pitfalls and fully vet and inspect any older property you are considering.

How to Judge a Neighborhood's Quality of Life

Location is a huge factor in successful homeownership. Just a mile—in some cases just a city block—can make a difference in home values, health risks, crime and the general quality of life for you and your family.

Everyone has different priorities but neighborhoods that are more likely to cause trouble for your housing investment often share certain qualities. What makes or breaks a neighborhood, and what are the signs of decline?

Here are four ways to evaluate an area:

Home Prices
Sale prices in an area offer a good barometer of what’s happening on the ground. A neighborhood where homes linger on the market for years, where owners constantly drop their selling prices or sell for much lower than they initially asked for, might not serve as a great investment for a new home buyer. Most of that information is publicly available. A REALTOR® can answer questions too. Pay very close attention to small fluctuations in urban areas. In San Francisco, for example, by merely crossing to the other side of the street you can pay up to 25% more for a comparable house.

Looks That Aren’t Deceiving
If you see streets dotted with “out of business” signs, or if the schools look in dire need of upgrades, the area may not be for you. Evaluate the quality of transportation—areas with better transit options tend to hold their value more. If you spy dirty streets, poor local services, few recreational facilities, or a shortage of restaurants and other amenities, you may be witnessing signs of a neighborhood in decline. Purchasing property in such an area could put your investment at risk and create havoc in your daily life.

Focus on the Details
If you’re looking at a specific house or apartment, pay close attention to what’s nearby. Some things that might signal a less desirable area:

• Lots of traffic and noise
• Potential hazards such as a power plant
• Built on a landfill or former swampland
• Roads and sidewalks in disrepair
• Shabby, rundown or vacant buildings
• Near railroad tracks, under flight paths
• Near commercial or industrial areas

Careless Neighbors
Driving through a prospective neighborhood and looking at the condition of properties nearby can help you spot other signs of a declining neighborhood. Poor yard maintenance, shoddy landscaping, discarded junk in driveways, gardens growing weeds and broken fences could mean owners lack pride in their homes, and possibly in their community.

How to Handle Homebuyers Repair Requests

If you are selling your home and have gotten an offer, you may concerned about the prospective buyers asking you to make costly repairs that potentially could cut into your profit.
Repair requests can be negotiated under most circumstances, but it’s important to recognize that your ability to negotiate depends on the contract proposed by your buyers. You and your listing agent need to carefully read and understand the implications of that contract.

Home Sale Contract Options
Standard real estate contracts vary by location, but all of them are completely negotiable.
As a seller, you should never sign a contract until you fully understand its obligations, particularly where it concerns your responsibility for repairs. The best contract for a seller would be for the buyer to agree to purchase your home “as is” or to request an “information only” home inspection, thus absolving you of any need to pay for any repairs.

In most cases, though, your contract will include a clause that says the purchase is contingent upon a home inspection. Some contracts will expressly state that the buyers cannot request any cosmetic repairs to be made and can only ask for fixes to structural defects, building code violations or safety issues. State laws may also impact your liability as a seller for any issues uncovered during an inspection, so it’s important that your REALTOR® understands these regulations. If you are uncertain about the contract, you can also consult a real estate attorney.

Market Conditions
While buyers are always advised to have a home inspection so they know what they are buying, when there are a limited number of homes for sale and buyers need to compete for homes, they are more likely to waive their right to ask a seller to make repairs. In a buyers’ market, though, sellers may find that buyers are more aggressive in asking for work to be done on the home.

Repair Negotiations
Your ability to negotiate depends on the way your contract has been written. In most cases you don’t have to agree to make cosmetic repairs. If a home inspection finds other problems, though, you are typically better off making repairs rather than having the buyers walk away from the transaction. For one thing, the next home inspection is likely to find the same problems so you may not be able to sell your home without fixing the issue.

Most contracts stipulate that the home inspector will provide a free copy of the report to the sellers as well as to the buyers. If you receive a copy of the report and it describes defects in your home, you’ll need to disclose those defects to the next prospective buyers.

Before you jump into negotiating requested repairs with the buyers and their agent, you should discuss the home inspection report with your REALTOR®. You can get bids from several contractors to find out how much a repair will cost and then decide what to offer the buyers.

Some buyers prefer to request a credit at the closing to pay for repairs that they will handle themselves after the settlement, rather than have the sellers make the repairs beforehand. Another option to consider is to offer to pay for a home warranty for the buyers that will cover future issues with the home’s systems and appliances. However, a warranty only covers features that are working, so if you have a broken water heater, you will probably have to pay to have it fixed before your transaction can be completed.

Whether you get a minor or major repair request, rely on the professional advice from your REALTOR® or real estate attorney to help you handle the issue.

When Is the Right Time to Sell Your Home?

Timing the housing market to the moment when interest rates are low and buyer demand is high may seem ideal, but if everyone had the ability to see exactly when home values are at their peak, we’d all be millionaires.
The decision to sell your home should be based on a variety of factors that are both financial and emotional. While you should definitely pay attention to market conditions as part of your thought process—and those conditions will absolutely impact your home sale—you should always keep in mind that the choice to buy or sell a home is completely individual.

Reasons to Sell
Homeowners have a variety of reasons to sell their home at any given time. Some of the obvious reasons include an expanding family or a shrinking family that changes the amount of space you need; a job change or retirement to a different location; a local job change that impacts your commute; or a desire to move to a particular school district as your children get older.
In other cases, the reason to move can be purely financial: Your income has decreased, you’ve recently divorced and you need to live in a less costly home, or your income has significantly increased and you can now afford to live in a different neighborhood or a more expensive property.

How to Decide When to Put Your Home on the Market
Once you have made up your mind that you want to sell your home, you need to gather some information before you determine when to put it on the market.
First, find out your loan payoff amount so you have an accurate idea of what your sales proceeds will be after you’ve paid off all home loans and paid your closing costs, including the REALTOR®’s commissions.
Next, find out the recent sales price of comparable homes in your community. You will need to interview several REALTORS® and consult with them about current market conditions to estimate a listing price and how long it may take for your home to sell.
Many sellers opt to put their homes on the market in the spring because that’s when more buyers are looking, but you can choose to sell at any time of year. If your home attracts families and is in a sought-after school district, you are just as likely to get offers in the summer as in the spring because buyers want to settle in before school starts. On the other hand, if your home is located in a resort area or appeals to young professionals or empty-nesters, the school calendar is meaningless.

Prepare Your Home for Sale
An important element in determining when to list your home is its condition. You will need time to make repairs and improvements, to deep-clean your home, and to clear away many of your possessions.
If you have a large, disorganized home with overflowing closets and a garage with no space for a car, you may need weeks or months before you’re ready to put your home on the market.
It’s extremely important to recognize that today’s buyers have high expectations of your home’s condition, so don’t expect to be able to work on your home after it’s listed. Your home should be priced correctly and in prime condition on day one in order to sell quickly and for the best possible price.

6 ways to ensure a remodeling project pays off

By Josh Garskof, Money Magazine contributing writer

(Money Magazine) -- Just a few years ago you could count on getting the bulk of your money back for almost any home-improvement project you took on. Today merely replacing a toilet seat can feel like throwing caution, and cash, to the wind. According to a study from Remodeling magazine, the average return on value for an upgrade declined from 87% in 2005 to 64% in 2009. But these six new rules will help you maximize your return on your remodeling investment.

Rule No. 1: Repairs get the biggest returns

The smartest money now goes into "undeferring" needed maintenance. That's because while buyers might appreciate enhancements like Jacuzzis and Sub-Zeros, they won't tolerate a house with a leaky roof or antiquated plumbing. "If a property is known to have issues, today's buyers won't even look at it," says Austin real estate appraiser Jim Amorin.
And trying to keep problems a secret can cost you big-time. If buyers discover them during inspection, it's now common practice to ask sellers not only to pick up the tab for the repair but also to pay a penalty to compensate the buyer for the inconvenience of having work done.
So the $20,000 you saved by putting off a roof repair, say, could turn into a $30,000 credit to the buyers at closing, says Amorin.

Rule No. 2: Remodeling beats adding on

McMansions have gone the way of the SUV -- and large additions don't pay off either. "There's been a fundamental shift toward quality over quantity," says Warwick, R.I., real estate agent Ron Phipps.
Having a big, formal living room plus an everyday family room is less desirable than having one multi-use common space. So rather than adding on, you're better off repurposing existing square footage by reconfiguring the floor plan or capturing unused basement or attic space.

Want an eat-in kitchen? Knock down the wall between the kitchen and dining room ($2,000 to $8,000, depending on whether it's load-bearing or contains plumbing). That will instantly create a large eat-in kitchen and give the whole house a more open feel -- without a huge investment to make up at resale.

Rule No. 3: Eco-friendly upgrades can save cash

Some green improvements pay you back long before you sell your house. Install energy-efficient features, such as EnergyStar appliances and extra wall insulation, and you'll see lower energy bills every month.
Add in the federal tax credit of up to $1,500 that lasts through 2010, plus many local rebates and tax incentives (see dsireusa.org), and the work may pay for itself in just five years. Green features are also increasingly a selling point, says Phipps. "Most people in the market right now are first-time homebuyers in their thirties, and they've been raised to care about carbon footprints and being ecofriendly," he says.
The best way to go green is with a while-you're-at-it job: When it's time to replace your furnace, for example, upgrading to super-efficiency might add only $500 (after tax credits), compared with standard new equipment, but it will save you -- and your buyers someday -- $150 or more in annual heating costs.

Rule No. 4: Tech infrastructure trumps cool gadgets

Home electronics seem like a deal, since prices have fallen about 50% over the past three years and continue to drop, according to Stephen Baker, president of industry analysis at NPD Group, a market research firm.
Still, that doesn't change the fundamental problem with expensive built-in technology: Put in a $10,000-plus dedicated home theater today, and something better will come along tomorrow and make your system look as if it's from the Mesozoic Era. With buyers seeking any excuse to low-ball their offers, they're not going to reward you for an out-of-date system.
Tech infrastructure is different, however. Anytime you're opening up walls for a construction project, have cabling and Ethernet ports installed. At about $80 a room, it's a low-cost way to provide the capability for whatever technologies come along.

Rule No. 5: Let the Joneses be your guide

During the boom, you could be the first on your block to have a luxury kitchen, spa bathroom, or in-ground pool and count on others following suit. And even if the neighbors never took your lead, there was plenty of equity growth to cover your costs.
Nowadays that fudge factor is gone. "You really have to keep your house's amenities in line with the neighborhood now," says Kermit Baker, director of the remodeling futures program at Harvard University's Joint Center for Housing Studies.
If other houses on the block have real marble countertops, by all means add one to your house, but if everyone still has faux blue-marble Formica from the '70s, you're not getting your money back.
Also, keep your projects design-neutral so they'll appeal to the greatest number of people. Choose neutral colors and traditional electrical and plumbing fixtures unless your house has a modern architectural style.

Rule No. 6: The new payback time is five years
 
As with any volatile investment, the longer your time frame, the lower the risk. Don't take on a big project if you're likely to move in less than three to five years. There's just too much chance that any money you put in -- aside from necessary repairs or superficial cosmetic work -- could be lost while the housing market continues to meander.
But if you plan to stay awhile, don't delay starting a project. Home improvements are a bargain right now, with contractors bidding 10%, 20%, even 40% lower for the same work than just a year or two ago, says Bernie Markstein, senior economist for the National Association of Home Builders.
Grab them while they're hungry for work and make it clear that you'll be getting multiple bids so they'll be motivated to undercut one another's prices. You'll fulfill the first rule of investing: Buy low. Then hope that when you're ready to move, you can sell high.

What's the big secret?

By Leah L. Culler of MSN Real Estate
A hidden room or secret passageway isn't any fun if it's not hidden well. We've gathered images of entryways hidden in all sorts of homes. Take a look at these pictures and see whether you'd know there was more than meets the eye.
If you're stumped, click through to the next image to see what it looks like when the room or passageway is open.




















This wall of bookcases in Arizona sure looks fancy. If you weren't reading about secret rooms, would you suspect that one could be concealed here?

 

 

It's just a wall, right? There's no way this wall and the nearby grand piano could somehow work together to do something magical.

 

 These built-in bookcases are in the basement of a home in Montana. Architect Andrew Porth designed the house as a second home for the Gorum family from Georgia. The family's children, ages 20 and 17, had one request: a hidden room.


 

 

This dresser, in a home in South Dakota, was part of a home makeover for "Extreme Makeover: Home Edition," on ABC. Yes, those are real, working drawers.

 

This fireplace was part of Creative Home Engineering's display at the International Builders Show one year, but what's so special about it?

The fireplace slides over, revealing a secret room. It's activated by what appears to be an ordinary chess set nearby.
"You could play a round of chess and never know it was a key," Humble says. It's wireless; so as long as it's within 100 feet, it can open the door.
There's another way to open the fireplace door, and this one is really something taken right out of a TV show — the old "Batman" series, to be specific. Remember the Shakespeare bust that had a secret button to open a passageway? Well, if you tilt back the head on this bust, you find a fingerprint scanner that triggers the fireplace.

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