February 20th, 2008 categories: Design, Investments, Real Estate
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t takes flexibility, communication and realistic expectations to work successfully with an architect. Here’s a round-up (by MSN Real Estate) of some tips from architects and homeowners.
Pay attention to personality. Most people hire an architect only once in their lives. Searching for one is akin to finding a financial planner, architects say. Look for an architect who has designed projects that are similar in style and scope to yours. “There’s no substitute for experience,” says Todd Strickland, a partner with Historical Concepts, an Atlanta architectural firm. Because designing a home is such a personal project, it’s important that you feel able to communicate with your architect.
Liza Nugent, 41, and her husband needed an architect to combine their apartment on Manhattan’s Upper East Side with a neighboring unit; they got referrals from friends. The first architect they called made a snippy remark about how “unsophisticated” co-op boards in buildings on side streets such as theirs make renovations difficult. “I thought, with that kind of attitude, we definitely wouldn’t get along,” Nugent says. After calling two more architects and interviewing three others, the Nugents picked a longtime acquaintance who had creative design solutions for their project.
Is the site free of utility constraints? What about topographical features that could increase the cost of building? Paying for four or five hours of evaluation is likely to save money in the long run.
Bring visuals. Pictures help an architect understand your vision, whether it’s a rough sketch you’ve made, magazine photos of homes you like, or a coffee-table book featuring interiors by your favorite designer. Snapshots of specific lighting fixtures or cabinet styles are helpful, but so are pictures that convey intangibles: the sense of place created by sunlight streaming through a skylight, or a library room with a “warm” feeling.
Dallas architect Marc McCollom, who designs modern houses, says clients also should bring pictures of things they don’t like. Architects will regard the client’s visual portfolio as a cue for whether they’ll make a good team. “If they show me pictures with crown molding and decorative wallpaper, I shouldn’t take that job,” McCollom says. “I’m not going to be happy, and we shouldn’t work together.”
Find a listener. A relationship with a designer is like a marriage: Go with someone who listens, cut your losses with someone who doesn’t — or risk getting a house you don’t want to live in. When Jim Jenkins began a $1.5 million renovation of his Alamo, Calif., home, he hired a local who had designed other houses in the neighborhood. But 18 months into the process, the architect still hadn’t produced a design that the Jenkinses liked or that could get past the local homeowners association.
“He wouldn’t design what we were looking for,” Jenkins says. “My wife’s looking for something Caribbean and he kept thinking California Ranch.”
Jenkins pulled the plug on that designer and hired a Berkeley architect, Robert Nebolon. “He read the codes, had some creative ideas and within six months I got what I was looking for,” Jenkins says.
Clients need to listen, too. Telephones, faxes and e-mail aren’t the best ways to communicate about home design. Avoiding in-person meetings will delay construction. A good architect won’t act on any part of a project without clear approval.
Talk money upfront. A flat fee may be appropriate for projects whose scope is very defined. But construction projects often include unforeseen challenges, and for that reason most architects prefer to charge by the hour or by a percentage of building costs. Some architects charge by the hour in the concept stage and then charge fees ranging from 8% to 18% of construction costs after hiring. For projects costing $1.5 million plus, expect fees to range from 12% to 18%, says James P. Cramer, chairman of Greenway Group, a design-industry consulting firm.
Some architects ask clients for a wish list of features, fixtures and qualities along with an estimated budget. “Sometimes people’s expectations aren’t realistic, given what their budgets are,” says Manhattan architect Darby Curtis.
Consider full service. Architects will be as involved as you want them to be. They can simply do design conception and deliver drawings. Or they can visit sites, coordinate contractors and observe construction. Many architects advise clients to retain a designer through construction. “In the long run you’ll save yourself from headaches and extra construction,” Curtis says.
Have a strong marriage. Architects offer this last bit of advice in all seriousness. Money tends to cause stress in a relationship, and building a home involves a lot of money. Building a house together, McCollom says, “is not going to save your marriage.” Full Story
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February 14th, 2008 categories: For Fun, Home Buying, Investments, Real Estate
Looking for a commanding view of the collapsing housing market? According to a recent article in the Wall Street Journal, some 138 mountaintop acres next to the landmark Hollywood sign in Los Angeles are going on sale Wednesday for $22 million.
Abutting the largest urban park in the country –- and just west of the giant sign’s H, the property atop Cahuenga Peak has been privately owned for years. Eccentric billionaire Howard Hughes bought it before World War II in hopes of building a mountain hideaway for his then-girlfriend Ginger Rogers. She demurred. It passed undeveloped into Mr. Hughes’s estate and was sold in 2002 to Chicago-based Fox River Co. for $1.68 million.
Two years ago, city officials, residents and conservationists launched a fundraising drive to buy the property atop the 1,820-foot-high peak, which affords sweeping views of Los Angeles and the San Fernando Valley and the San Gabriel mountains. Their stated goal was to make the peak part of Griffith Park, the municipal land that practically envelopes it. Safe to say, they didn’t raise anywhere near the current $22 million asking price.
Griffith Park has suffered two damaging wildfires in the past year. Any potential developer is certain to face obstacles getting building permits.
Still, rare hill properties in Los Angeles can attract determined buyers, while the overall housing market remains depressed. In Los Angeles County, notices of default outnumbered home sales in the fourth quarter of 2007, and the median price of homes continues to fall, according to DataQuick Information Systems, a La Jolla, Calif., real-estate research firm. From the lofty heights of Cahuenga Peak, the view isn’t necessarily rosy. Full Story
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January 25th, 2008 categories: Real Estate
As tax season moves into full swing, realtors are quick to point out that home ownership allows a lot of tax advantages not available to someone who merely pays rent. A homeowner can deduct points used to obtain a mortgage when buying a home, mortgage interest paid during the year, and property taxes.
Those are the basics.
There are rules and guidelines to these deductions, however. Even though we have the best intentions, sometimes we’re a little “fuzzy” about exactly what is deductible. RealEstateABC.com offers us some clarifying points about what is in fact tax deductible to help cure homeowner’s confusion.
What are Points?
When most people buy a home, they generally obtain a mortgage. Mortgages have costs and one of those costs is the “loan origination fee.” The loan origination fee is usually a percentage of the loan amount, generally expressed as “points.”
For example, one “point” on a $150,000 loan would be $1500. One and a half points on the same loan amount would be $2250.
On VA and FHA loans, points are often broken down into two categories: loan origination fee (which is usually one point) and discount points (which are also a percentage of the loan balance). Both are deductible.
The loan origination fee must be expressed as points in order for it to be tax deductible.
Deducting Points when Buying a Home
When buying a home, points are deductible in the year they are paid, providing they meet certain conditions. The main conditions are that the mortgage is secured by the home you live in most of the time and that you used this mortgage to either purchase or build your home.
However, there are other conditions.
Your lender cannot inflate the points to include other items you would normally be charged. When buying a home, there are normally other charges such as appraisal fee, title insurance fee, property taxes, settlement fees, and so on. If by some miracle you are not charged these fees but your “points” are higher than normal…
In that case you can’t deduct the points. Sorry.
The cash you put into the deal must also exceed the amount charged in points. In other words, if your points were $3000, but you only had to put in $2000 to close, the IRS knows something is up. Your lender is inflating your loan amount to cover your points. Although a lender can technically do this, you wouldn’t be allowed to deduct the points.
The only other major condition is that the points must be clearly stated on the HUD1 Settlement Statement. This is a document you receive after closing that clearly lays out all the costs involved in buying the home. The seller also receives a HUD1.
Deducting Seller Paid Points
When purchasing a home, sometimes the buyer negotiates for the seller to pay some closing costs, including the points. Since the seller pays them and not the buyer, one would assume they could not be deductible, right?
Wrong.
If the seller pays the buyer’s points, the Internal Revenue Service allows the buyer to deduct this as an expense on their federal tax returns. However, the seller cannot deduct them, too. Paying the buyer’s closing costs, including points, merely reduces the net gain on the home for purposes in calculating capital gains taxes (which are usually deferred).
Deducting Points on Second Homes
Points paid to finance the purchase of a second home must be deducted over the life of the loan, not in the year in which they are paid.
If You Make Too Much Money…
If you make too much money, there are limits on what you can deduct, and for that you should see a Certified Public Accountant. In the year 2000, if your “adjusted gross income” was over $128,950 there is a limit placed on what can be deducted. For married couples filing separately, the figure is half that.
Other Deductible Closing Costs
With two exceptions, other closing costs are not deductible. Those exceptions are pre-paid interest and pro-rated property taxes.
When you buy a home, you may close on any day of the month. However, most lenders want their mortgage payment due on the first of each month. So if you close on the 20th, for example, you “pre-pay” ten days of interest as part of your closing costs. The ten days of interest pays you up to the end of the month. Your first mortgage payment will not be on the first of the following month, but the month after that. Unlike renting, where you pay in advance, mortgages are paid in arrears.
Since interest is a deductible expense, prepaid interest is also deductible.
A similar thing happens with property taxes. The seller’s last property tax payment may have covered part of the time where you will actually be the owner of the home. The settlement agent will calculate how much of that last bill you should pay and charge it to you as a closing cost called “pro-rated property taxes.” This is also deductible.
Certified Public Accountants
Whenever you reach a point where you begin itemizing deductions, it is best to have your tax returns prepared by a Certified Public Accountant. Internal Revenue Service rules and regulations can quickly become…confusing.
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January 23rd, 2008 categories: Design, Home Buying, Home Ownership, Home Selling, Real Estate, Trends
According to Iconoculture’s latest consumer observations newsletter, a backlash against Mansion Mania is taking place in America and is seeking to put the squeeze on house size. Here’s what they say is happening and their comments about what this means to business…
WHAT’S HAPPENING
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WHAT THIS MEANS TO BUSINESS
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