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Extensive Remodeling Decision

Take Away Points: Extensive remodeling may be more costly than building a new home if you do not do the work yourself. Adding new rooms need to be planned for. Solid footing costs should be considered prior to a complete construction renovation. Use modular home prices for earmarking comparison costs.

DEAR GEORGE: My wife and I jut bought a 900 square foot ranch that had been neglected for years. We love the location and it has a nice view. It needs a new roof, kitchen cabinets and a lot of cosmetic work on the interior. The heating system is outdated expensive electrical heat to boot! The outside of the home is neglected as well. There are areas where water damage has caused rot. The foundation is cracked in places. Is it better to remodel and add new rooms or should we rebuild? We both work and have little time to devote to a do it yourself remodeling project. Tom B., Lake Tomahawk, NJ

DEAR TOM: Every situation is different and there are a truckload of variables that factor into making an informed decision as to whether or not it is better to remodel an existing home or scrape it clean and start over. The most important factor is, do you intend to live there for 10 or more years or are your intentions to make a dollar by flipping the house and trading up? Is your family going to grow where you need new rooms to fit the increase? Try looking into the future to get a feel how much your family might grow.

Considering a small 900 square foot home for a new family future needs. An additional 1,000 sq. ft. down the road may become a top priority. How would the floor plan of the addition fit into the ranch's overall layout? Would you be popping the roof off and constructing a second floor or would you sprawl out the the addition? If you decide on a second floor, a sound footing is important. Many older ranch homes lack proper the depth in footings especially in colder climates. A 3-foot footing is normal however a deeper footing is preferable in colder regions.

The cracked block leads me to believe that the footing in not the proper depth. In many older homes, building codes were not enforced. Undermining the footings and digging down can be a formidable task if you do it yourself. It may be hard to find someone willing to dig, re-establish the footing and rebuild the cement blocks properly. The work is hand work and impossible for a machine to accomplish in most cases.

Naturally you want to replace the roof. But before you do that, consider the cost of modular. A new modular homes look just like a site-built home and many are very well constructed. When it comes to selling your home, the modular will sell for the same price as a stick built home and appraisal market values are the same. The cost of demolition and a masonry foundation plus the cost of the modular may make financial sense if most of the value of the home you bought was in the land and not the building. Also, if you don't have a basement, now would be the cost effective time to provide for one. In less than 8-weeks, you could have the modular in place.

Since you already love the location and the neighborhood, consider the new market value or the home with the modular home in place. Find the property value of your land from a local real estate agent or appraiser. Subtract that value from the price you paid for you home and you'll arrive at the current value you paid for the home. That is also a price you should keep in mind for the fire insurance. Dirt don't burn.

Also consider the ever-rising energy costs into the decisions. An older home may have countless air leaks. These thermal leaks are caused by inefficient insulation, old windows and leaky doors. You can spend hundreds if not thousands of extra dollars per year to keep your house reasonably warm in the winter. A newer energy-efficient home with efficient heating and cooling equipment, state-of-the-art windows, insulated doors allows a homeowner to redirect those energy saving dollars into a higher mortgage payment on the newer home.

Quality of life issues also should be considered. A problem-free new home can make people feel better and avoid the emotional and financial stress of constant projects.

Runaway spending is cannibalizing the working man. Politicians don’t give voter a bill for what they propose or intend to propose and the voters think that if it’s from the government it’s free. State sales taxes get passed to taxpayer and the insidious property tax keeps many a workingman poor.

One of the remedies in the wake of declining real estate values is to look for lower priced comparable homes to you own and to appeal your property taxes. Many of the property tax appeals average 20-30 percent reduction in taxes. Seeking a property tax reduction is not as hard as it looks. A successful appeal is well worth the effort. Left unchecked and unchallenged the authorities will simply continue to tax your property at the higher amount. Go to http://www. propertytaxax.com for cheap do-it-yourself kit to win your appeal.

There are many areas to look into besides finding lower comparables. The condition of your home may have deteriorated with time and many costly items may need replacing like the roof. Simple depreciation tables will allow you to make adjustments. There may be errors in calculations that need addressing plus a host of areas to look into. We give you all these categories to look into when you sign up for our newsletter.

Existing home sales have fallen to a record low and continue to sink. It’s the lowest since the National Association of Realtors began tracking the data. Single-family homes sales fell to a 90-year low. Prices are falling and the supply of homes is at an all time high. You should have no problem finding good comparables.