Finding The Right Home

What are the pros and cons of adding on or buying new?

Ultimately, the decision should be based on individual needs, the extent of work involved and what will add the most value. According to the "Cost vs. Value Report,'' published annually by Remodeling Magazine, remodeling a home not only improves its livability but its curb appeal with potential buyers.

Among the hottest improvement projects in 1995 were updated kitchens and baths, home-office additions and more amenities in older homes in order to compete with new homes on the market.

The highest paybacks come from the latter projects, according to the magazine’s 1995-96 survey of more than 300 real estate professionals. "The resale market is tough right now and you need to give your home every competitive advantage you can," one agent said. While home offices are a relatively new remodeling trend, adding one to a house recoups 58 percent of the costs, according to the survey.

Why do I need a title report?

As much as a buyer wants to believe that the home they found is perfect, a clear title report ensures there are no liens placed against the prior owners or any documents that will restrict the new owner's use of the property.

A preliminary title report provides buyers an opportunity to review matters affecting the property which will not be covered by their title insurance policy unless they are removed before the purchase is final.

When reading a preliminary report, a buyer's priority is checking the extent of their ownership rights. The report will note in a statement of vesting the degree, quantity, nature and extent of the owner's interest in the real property. The association states the most common form of interest is "fee simple" or "fee," which is the highest type of interest an owner can have in land.

Liens, restrictions and interests of others that are being excluded from coverage will be listed numerically as exceptions in the report.

Interests of third parties, such as easements granted by prior owners that limit use of the property, need to be considered. Some buyers attempt to clear these unwanted items prior to purchase.

In addition, a list of standard exceptions and exclusions not covered by the title insurance policy may be attached. This section includes items the buyer may want to investigate further, such as any laws governing building and zoning.

What do all of those acronyms in the ads mean?

The old adage that a picture is worth a thousand words certainly holds true when home buyers are trying to decipher the cryptic code used for home listings. "Finding the home of your dreams should be fun. But first-time buyers who already are struggling to understand financing, purchase contracts and contingency clauses should not be daunted when looking at listings in their local publications. While the writer of a recent newspaper classified advertisement was generous enough to describe their home as "impeccably maintained," others in the same paper save space (and advertising charges) by relying on the word "Clean," "Rmdl" or "Updates." Note that such terms do not convey the same meaning, so be sure to ask exactly what is meant by the seller. Here are some abbreviations and the meaning of each, taken from a recent newspaper classified section:

*assum. fin. -- assumable financing
*dk -- deck
*gar -- garage, garden is usually abbreviated gard.
*expansion pot'l -- may be extra space on the lot, or possibly vertical potential exists for a top floor or room addition. Verify actual potential by checking local zoning restrictions prior to purchase.
*fab pentrm -- fabulous pentroom, a room on top, underneath the roof that sometimes has views
*FDR -- formal dining room
*frplc, fplc, FP -- fireplace
*grmet kit -- gourmet kitchen
*HDW, HWF, Hdwd -- hardwood floors
*hi ceils -- high celings
*In-law potential -- potential for a separate apartment. Sometimes, local zoning codes restrict rentals of such units so be sure the conversion is legal first.
*large E-2 plan -- this is one of several floorplans available in a specific building
*lsd pkg. -- leased parking area, may come with an additional cost
*lo dues -- find out just how low these homeowner's dues are, and in comparison to what?
*nr bst schls -- near the best schools
*pvt -- private
*pwdr rm -- powder room, or half-bath
*upr- upper floor
*Wow! -- better check this one out.

Do we dig deep and buy a dream home or settle for a starter home?

Choosing between a smaller house in an affluent neighborhood, an older, bigger house in a more working-class community or a brand-new home is not easy. Buyers in this situation may want to start by examining their own priorities and asking the following questions:

*Is the surrounding neighborhood or the home itself the most important consideration?
*Is each of the neighborhoods safe?
*Are the quality of the schools an issue?
*Do any of the areas seem to attract more families with children or adult residents?
*And where do you fit in?

As for the return on the investment, home price appreciation is hard to predict. In the late 1980s, the more expensive move-up housing appreciated wildly. But during the recession of the last five years, smaller homes have held their value better than more expensive ones. The most important consideration should be your own personal priorities.

What are the disclosure laws?

Disclosure laws vary by state, but in some state law requires the seller to complete a real estate transfer disclosure statement. Here is a summary of the things a buyer can expect to see in a disclosure form:

*In the kitchen -- a range, oven, microwave, dishwasher, garbage disposal, trash compactor.
* Safety features such as burglar and fire alarms, smoke detectors, sprinklers, security gate, window screens, intercom.
*The presence of a TV antenna or satellite dish, carport or garage, automatic garage door opener, rain gutters, sump pump.
*All amenities such as a pool or spa, patio or deck, built-in barbecue and fireplaces.
*Practical concerns like central heating, solar panels, condition of electrical wiring, and gas supply.
*The type of water heater, water supply, sewer system or septic tank also should be disclosed.

Home sellers also are required to indicate any significant defects or malfunctions existing in the home's major systems. A checklist specifies interior and exterior walls, ceilings, roof, insulation, windows, fences, driveway, sidewalks, floors, doors, foundation, as well as the electrical and plumbing systems.

The form also asks sellers to note the presence of environmental hazards, walls or fences shared with adjoining landowners, any encroachments or easements, room additions or repairs made without the necessary permits or not in compliance with building codes, zoning violations, citations against the property and lawsuits against the seller affecting the property.

Also look for settling, sliding or soil problems, flooding or drainage problems and any major damage resulting from earthquakes, floods or landslides.

People buying a condominium must be told about covenants, codes and restrictions or other deed restrictions, if the homeowners association has any authority over the subject property and ownership of common areas with others. In addition, buyers should note that the simple idea of disclosing defects has broadened significantly in recent years to include locally mandated disclosure forms, burgeoning home inspection and warranty industries and a more alert group of brokers and agents who have their own detailed disclosure obligations. Be sure to ask questions about anything that remains unclear or does not seem to be properly addressed by the forms provided to you.

Should I include an inspection contingency?

Home buyers can protect themselves by including an "inspection contingency" in their purchase offer, which will allow them to cancel closing on the deal if an inspector finds problems with the property. As soon as the seller accepts a written offer, the document becomes a legally binding contract. It supersedes any previous oral agreements, so be sure it contains clear references to any promises made by either party during negotiations, writes real estate columnist Edith Lank in her book, "The Home Buyer's Kit," 3rd Ed., Dearborn Financial Publishing, Chicago; 1994.

The purchase contract could be written to include a contingency for any repairs found to be needed or related items the seller must take care of before closing. If these are not attended to, the buyer could hold the right to delay or possibly cancel the closing. Otherwise, buyers face losing their deposit. There also may be costly legal implications stemming from backing out of a contract.

The buyer usually has the right to choose the inspector and also is responsible for paying for the inspections. In addition to an overall inspection for structural soundness, buyers can request a satisfactory pest control inspection report, roof inspection report or contingency for no potential environmental hazards such as asbestos or radon gas.

Contingency clauses should satisfy the concerns of both the buyer and seller. "The sellers will be nervous about contingent offers," Lank states. "They will be taking their house off the market on your behalf, without any guarantee that the sale will go through. So it's customary to set a time limit on contingencies."

For example, Lank says the contract might state that it is "contingent upon buyer's receiving a satisfactory engineer's report on the property within three days of acceptance of this offer" or "contingent upon approval by the buyer's husband when he arrives in town before next Saturday, Sept. 11, at 6 p.m."

Buyers also can protect themselves by inserting additional necessary contingencies. Indicate which items like curtains and appliances are to remain with the house. Then stipulate you have the right to personally inspect the home 24 hours before closing to make sure all is in order.