Experts predict this year to be another busy one. The National Association of Realtors says existing-home sales are projected at 5.92 million this year, second only to 6.10 million in 2003. New homes are seen at 1.04 million sales, while housing starts should total 1.78 million in 2004.

"The silver lining now is that interest rates probably won't move much until late in the year when the unemployment rate is expected to drop to 5.4 percent," said NAR chief economist David Lereah.

Lereah said the 30-year fixed-rate mortgage should creep up very slowly, reaching 6.3 percent in the fourth quarter.

"Keeping interest rates close to historic lows will sustain very strong home sales, which should be only a few percentage points below last year's record," he said.

How you develop your selling strategy will depend on the market in your area. In some regions, there are more sellers than buyers, meaning you'll really need to make your house stand out from the rest.

"Although the first-time buyer market in Austin proper has remained fairly strong, the Lake Travis area market has moved at a slower pace than the lower priced markets," said Ron Helle, a Realtor in Lake Travis, Texas. "There have been fewer buyers and more sellers than during the boom period which ended in 2000. While the overall market is slightly lower than it was in 2000, the market has shown some significant recovery in recent months."

In these instances, you'll want your house to sparkle and stand up to the buyer's home inspection. Some ways to do that include:

 

• Make any necessary structural repairs. You may want to consider hiring a professional inspector to give the house a once-over before you put it on the market. That way, there shouldn't be any surprises down the road once a potential buyer makes and offer and conducts their own inspection. A home inspection should cover drainage conditions, your home's exterior, the chimney, decks, the roof, windows, doors, plumbing fixtures, furnace, air conditioner, insulation, ventilation, electrical, heating, and plumbing systems.
• Check out your shingles, make sure there aren't any loose ones.
• Repair and paint your gutters.
• Shampoo your carpets.
• Repaint any dingy-looking walls. Keep colors neutral to attract a broad base of would-be buyers.
• Clear out the clutter. Let buyers see the kitchen countertops. Have closets just half full so they look larger, clean out the garage, get rid of the knickknacks. And if you have a lot of furniture, put some of it in storage. Less furniture will make the room appear larger.
• Make a great first impression. A potential buyer's first impression is what is know as curb appeal. Keep the lawn mowed, trim the bushes and shrubs, clean the front windows, place a nice welcome mat out, make sure there's no clutter by the front door, clean out the spider webs, leaves and other debris near the front door and, speaking of front doors, make yours look great -- whether it's by painting it, cleaning it, hanging a seasonal wreath or adding a stylish new handle.

If you're selling in a hot sellers' market, then you'll still want to follow the above suggestions, but you'll have more leeway in your negotiations. But experts say it's important to not get greedy and to set a fair price. In many areas, like Vermont, if a house is in good shape and priced right, it will sell.

"The real estate market in Central Vermont has been very active this spring," said Margaret Henkel, Rutland County, Vermont. "With mortgage rates still near all-time lows, buyers can get more for their dollar than ever. Homes priced to accurately reflect today's market values and that are in good condition sell very quickly. Today's buyers are looking for homes that are well maintained and ready to move into."

But in the Dallas/Fort Worth area, home prices fell three percent in January and another three percent in February and sellers are adjusting accordingly.

"A lot of people are taking price reductions," Jennie Ling of Virginia Cook Realtors told the Dallas News March 10. "The ones that do cut their prices are often finding that buyers will step up to the plate."

Published: March 16, 2004

As you embark on your venture to buy a home, one of the first decisions to make is whether to buy new or purchase an existing home. Each choice has its advantages, and there is no single answer which works for everyone.

You may be drawn to the shiny new, energy-efficient appliances, the great room, and the beautiful master suite offered in a new home. But you may also like the charm, the canopy of trees that drape over the sleepy neighborhood streets, and the increasing value of an existing home you've been eying.

Here are some things you'll want to ponder as you decide which route to take.

Existing Homes

Existing homes offer many considerations for potential homebuyers, including:

 

• The neighborhood. Many people are drawn to developed neighborhoods for the sense of community that has been established. The mature landscaping and developed trees are often a considering factor.
• Maintenance and repair. If you're considering an existing home, be sure you have a good handle on the working status of all major systems. Hire a professional home inspector to check out the house. As appliances and systems age they naturally require repair and replacement, something which may be reflected in a purchase price.
• Home improvement. If you enjoy small repairs and home improvement projects around the house, then an existing home would be your cup of tea.
• Existing features. When you buy an existing home, you typically don't have to worry about buying the extras, such as blinds for the windows, a security system, or a landscaped backyard.
• Land. In most metro centers, new homes may have less land than older properties. Why? Because of changes in land-use patterns.
• Location. Existing homes are often found in older, more convenient metro core areas rather than outlying suburbs.
• The opportunity to remodel. In some cases buyers may prefer an older home in a particular location which can be modernized or expanded. In effect, use the existing home as a base to build a unique property.
• Price. In general terms, existing homes tend to be less expensive than new properties. As well, existing homes are likely to come complete with items which may represent new home extras -- blinds, landscaping, built-ins, etc.
• Track record. When you purchase an existing home, you know how much the property has appreciated over the years -- in effect, you have an index of sorts which measures the community's marketplace appeal. At the same time, like stocks and bonds, you know that past results do not guarantee future marketplace performance.
• Taxes. Depending on your state, you will likely have lower property tax rates. Also, many older households aren't required to pay for local bonds associated with new development, such as schools, parks, or road or transportation improvements.
• Traditional layout. If you like the formal living and dining rooms, an existing home will likely satisfy you.

New Homes

On the other hand, new home considerations include:

 

• Warranties. Many homebuilders offer 10-year warranties from third-parties who will be there if certain problems develop over time. In additional, appliances and systems also include direct manufacturers' warranties for such items as stoves, clothes washers, etc.
• Modern architecture and layout. If you prefer a great room (oversized family room), bigger closets, more bathrooms, and media niches over formal dining and living rooms, a new home is likely to better accommodate you.
• Options. When you buy a new home, you get to decide the particulars of what you want. You can also select any of the upgrade features the builder may offer, choose the right paint for each room, select the cabinets you want, and do much to customize the property.
• Price. As we saw above, new homes are typically more expensive than existing homes. But, new homes are likely to need fewer repairs or replacements because everything is, well, new; warranties are in place, and normal wear and tear has yet to begin.
• Safety features. Most new homes now have hard-wired smoke detectors on every floor. They are usually interconnected so that if one goes off, they all go off.
• Energy efficiency. Over time homes have become better insulated and energy costs for given purposes have been reduced. Better windows, more efficient heating and cooling equipment, better control of air infiltration, and greater use of insulation, new homes consume half the energy of homes built prior to 1980, according to the NAHB.
• Less maintenance. New homes are often made with materials that require less maintenance, such as aluminum siding, vinyl windows and trim that never need painting, and wood decks made with pressure-treated wood that resists rot and insects.

The Real Answer

So which is the better choice -- new or existing?

There's no single, objective answer that's right for everyone. We each have different preferences, and the values that best suit Jones may be all wrong for Smith.

Moreover, terms such as "new" and "existing" are among the many factors to consider when looking for a home. All homes are unique -- they each offer a combination of factors which no other home quite duplicates. There are trade-offs with every property.

The real question is not which is "better" -- new or existing -- but rather which specific property best meets your needs. The only "correct" answer is unique to you: It's whatever you prefer.

Published: February 3, 2004

The home inspection industry is gearing up with guidelines for a new breed of home inspector who inspects new homes as they are being built.

Unfortunately, few new home buyers will benefit because the vast majority of new homes are constructed by builders who don't give buyers the option for a professional once-over before the home is complete.

Some home builders even refuse to talk about the issue.

Inspecting new homes under construction using "progress," "phase" or "stage" inspections could help ferret out defects that might otherwise become hidden and latent in completed construction, only to reveal themselves years down the road.

Phase inspections are conducted not when the home is completed -- as is the case with most existing or resale home inspections -- but during critical stages or phases during construction -- points when the foundation, flooring, framing, wiring and plumbing, drywall, roofing and final coverings (stucco, siding, etc.) are completed, as well as when the home is completed.

Hiring such a professional to be on site, depending upon how often he or she conducts inspections, could cost hundreds, even $1,000 more than the typical several hundred dollars it costs to hire an inspector to scrutinize an existing home, but the pay off could save tens of thousands of dollars.

"We do those types of inspections here in St. Louis," said Don Norman, president elect of the American Society of Home Inspectors (ASHI).

"I found some fairly significant defects last fall and in the worst case scenario, the roof trusses could have sagged and failed. You couldn't see that if the drywall was in place," Norman said, naming Jones Co., McBride and Sons and Hayden Homes among clients who allowed buyers to hire him for phase inspections.

The work performed by Norman and a growing number of other inspectors is virtually the same as the inspections conducted by municipal building officials, but the booming new home construction industry mass produces so many new homes, local building inspectors can't always keep up with the demand.

"Housewrecked," a Consumer Reports investigation into new home defects, published in its January 2004 edition, said the shortage of government building inspectors is but one reason as many as 15 percent of all new homes sold have a serious defect.

The defects include faulty foundations, serious moisture intrusion and shoddy framing all manifested as cracks, rotting, and inoperable windows and doors -- too often not showing up until long after the buyer has signed on the dotted line, Consumer Reports found.

The National Association of Home Builders chided the report as a "deeply flawed thesis" with "preconceived notions" and said the report was devoid of news of new home consumer satisfaction surveys.

Yet some builders are themselves hiring third-party building inspectors to produce a better quality home and some do allow buyers to bring in inspectors during construction, according to David Jaffe, the National Association of Home Builder's vice president of construction liability.

The home builders' association says it has been working closely with ASHI to partner on inspection standards for new homes and the California Real Estate Inspectors Association (CREIA) is encouraging all new home buyers to hire an inspector with a special designation -- CREIA New Construction Specialist-CNCS. The designation comes with training based on a thorough knowledge of International Code Council building codes, model building codes for the nation designed to produce sound, safe and quality construction.

"I'm a big believer in having the private sector perform inspections on new homes during construction. Every house we build is inspected by a private company at 10 different stages," said Mick Pattinson, owner of Barrat American, Inc., a Carlsbad, CA home builder that cranks out about 700 new homes a year.

Pattinson said the extra inspections are designed to protect the builder and to make sure the home meets or exceeds applicable building codes and standards.

"The 1980s and 1990s left us to realize city inspections were not worth the paper they were written on. We are dealing with a failed system and ultimately the consumer pays. So what the building industry is doing today is what amounts to a form of double duty pay. We still have to allow city inspectors to come and inspect," said Pattinson, also former president of the California Building Industry Association.

But, as with most builders, the buck stops there.

"I'm in favor of private inspections during construction. I'm not saying that should be driven by the customers because they don't own the property until it closes escrow. It should be driven by the builder," Pattinson said.

"We do have some home buyers bring inspectors in at the walk-through, but to be honest, I have not had a scenario where a buyer says they want to hire an inspector. I'm not sure we'd have a problem with it, but what is more important is that what we do allows builders to choose between private and public building inspectors," he added.

Why should it matter who brings in the private inspector?

Citing liability concerns, proprietorship, logistics, work flow concerns and other reasons, builders say it's their job, not the buyer's, to bring quality homes to market.

"God knows what they are afraid of. The buyer is going to have a lot better shot at getting something that's not a problem and the builder gets another set of eyes that protects him from a lawsuit or class action down the road. The smart ones figured it out and are allowing it in Sacramento County and in Los Angeles," said San Mateo, CA-based Jerry McCarthy, a construction consultant and spokesman for CREIA.

Then, say new home consumer advocates, there aren't many smart home builders.

When it comes to the vast majority of new homes built in the nation, new home inspectors are either hired by the builder or brought in by the new home buyer only after the home is complete. Single-site custom home buyers and buyers purchasing homes in small developments stand the best chance of sending a home inspector to the building site before their home is complete.

"We've seen no additional willingness among builders about private inspectors. The concept sounds great, then the big giant production builders tell you you can't do it," said Alan Fields, co-author of Your New House (Windsor Peak Press, $14.95).

"You have a consumer perception issue here more than what the inspectors can or can't do. If consumers decide they were going to insist on inspections and home builders felt sales were slipping because of that contract clause, they would immediately drop it," Fields added.

In California, a little known and relatively ineffectual amendment to the state's Business and Professions Code gives home buying consumers only the right to negotiate bringing in an inspector. In many cases new home contracts expressly prohibit phase inspections or any inspection before the buyer signs on the dotted line.

"To give you an example of why the builders' contracts here are to be feared and avoided, one of the clauses often found is that the buyer has no right to inspect the new home being built," said Mary Pope Handy, with Intero Real Estate Services in Los Gatos, CA.

"To me that is just plain scary. I always, always tell my buyers to inspect," she added.

Over a period of two weeks, several calls, each to the nation's largest home builders, were either unanswered or answered with builders refusing to comment.

Bloomfield Hills, MI-based Pulte Homes, which has won several national customer satisfaction awards, and Arlington, TX-based Milburn Homes (D. R. Horton) never returned calls.

Gail Goodman at Dallas, TX-based Centex Homes simply said "Sorry we couldn't help."

"We are not interested in participating in this story," said Phillip G. Creek, CFO and senior VP of M/I Homes in Columbus, OH.

At Indianapolis, IN-based C. P. Morgan Homes, Scott Bowers initially refused comment stating "I don't want to get into this issue. We are selective in what we talk about. It's a question that has never been asked. It is not an issue that has ever come up. I don't know if we have a policy."

Later, however, he recanted.

"Our buyers have the ability to bring one in if they so choose. We don't restrict them, but what happens is, most of the time, if a buyer does bring in an inspector, it is generally near the end of the construction. But it is a policy that we address code issues, but not preference issues," Bowers said.

Published: January 30, 2004