Buying Historic Homes
Some of my clients ask about buying and owning historic homes. It’s easy to fall in love with historic homes and historic neighborhoods! However, there are many things that would-be owners need to understand beforehand. Here are some tips and suggestions to consider before you begin your search.
- Why is this home historic? Did a historic event occur in the home or on the grounds? Was the original owner or builder important? Is the home or property part of a historic area or neighborhood? Is the property considered haunted? Just as important, can any of those claims be proven? You wouldn’t spend hundreds of thousands to millions of dollars on artwork without provenance, yet plenty of unwary buyers spend that on a house without verifying those stories.
- Is the property on the National Register of Historic Places (NRHP)? The NRHP is the national clearinghouse for all properties considered historically significant. While lack of listing should not an automatic bar to purchasing, an unlisted property should merit questions. Or, at least you’ll know that the home’s history may be more important locally than nationally!
- Hire an inspector who specializes in historic properties or who is competent to inspect historic properties. “Historic” implies history. History implies old. Old properties include special challenges like lead-based paint (frequently multiple coats!), rubble/stone structural walls, asbestos insulation, chimneys well past their prime, and construction done well before building codes came into existence. This isn’t the time for a $99 generalist inspection! Be sure to inspect the insulation and check into prior energy bills, too. Many historic properties were never properly insulated. It’s not uncommon for heating and cooling bills to be higher than similar newer properties.
- What are you allowed to repair, and how? Rules that govern historic properties differ markedly from regular properties. For example, some areas all but totally forbid changing the property’s exterior. You may even be forbidden from adding plantings that weren’t originally on the property! Interior changes are generally more relaxed, although you should check with all appropriate authorities first before making any changes. In addition, knowing you have lead paint and asbestos is one thing. Paying to remove them is another! Further, you may have to use special woods to match existing wood, pay an expert to match stains, and must seek out period hardware. Modernizing electric, plumbing, and old fuel oil tanks is an additional challenge that is seldom easy or inexpensive!
- Carefully check into insurance, and check with multiple carriers for quotes. The cost paid for a historic property can be significantly less than restoration and replacement costs. What will your insurance cover? What are the limits, and how are those limits determined? What coverage is offered by what carrier, and will they charge?
- Resale may be difficult. It’s one thing to buy a historic home in a neighborhood of historic homes. It’s another thing to buy a historic home in a neighborhood of standard homes. (Think of the original farmhouse with the farm long converted to a subdivision.) There are generally fewer buyers for historic homes due to their higher purchase price, special restrictions, and additional maintenance expenses. While historic homes generally enjoy above-average appreciation, that appreciation only means something if the right buyer comes along! Wise buyers and knowledgeable sellers plan ahead for an extended selling period.
- Research tax breaks! The National Park Service (NPS) and Internal Revenue Service (IRS) work together to administer the Federal Historic Preservation Tax Incentives Program. Check into state tax credits and other state incentives. (Here in Wisconsin, we have the Historic Renovation Tax Credit. The Wisconsin Historical Society has additional information. Information about tax credits for properties other than homes is here.) Historical easements are another possibility, but be aware that these easements become deed restrictions and may affect the future value of your property when it’s time to sell.
Look into grants! Yes, there are people and organizations out there that may be willing to pay for your work! Begin at the National Trust for Historic Preservation and start researching. You may be surprised at what you find!
Buyers of historic homes needing rehabilitation may be eligible for special loans. For example, you want to purchase a historic property but discover it requires $10,000 in rehabilitation. Some loans allow you to wrap those costs into the loan. Always ask mortgage providers if they are willing to work with you. Remember, the answer is always “no” unless you ask!
Are you looking to add your own chapter to a historic property? If so, I’ll be happy to help. Please email or call me to discuss your next move!