real estate

Know rules when buying historic home

5. Home insurance.  Brace yourself when buying homeowner insurance for your piece of history, Randolph says.

"If you have a historic property, you want to be sure you can get replacement cost coverage," he says. "Replacement cost is a little more problematic when you're dealing with a historic building because you're talking bigger numbers. Sometimes you get outside of the comfort zone of a number of insurance companies; they either won't do it or the cost is pretty stiff."

6. Taxation.  Taxes in a historic district may be the same as or higher than surrounding neighborhoods, depending on whether the district levies a special tax.

Some tax incentives, grants and low-interest loans may be available in areas where restoration is a priority.

7. Energy bills.   It is not uncommon for historic homes to cost more to heat and cool because of restrictions such as single-pane windows. Ask to see a full year's energy bills on the house before you buy.

Demolition by rehabilitation

Historic preservation can be a double-edged sword, both bolstering your home's value and restricting it.

In a sense, a historic district creates a micro-market where home values may reflect a host of intangibles.

"Certainly, one thing you can eliminate real quick is any discussion of square-foot price or cost," says Randolph. "You can pay one dollar figure per square foot and get truly abused and you can pay $200 more a square foot and make an absolute steal, because there are lots of nuances as to location.

"Sometimes that's a problem when appraisers from outside the market won't have the knowledge to recognize that. In a market like this, the difference of a block or two or three can have a major impact on what its value is."

Reiter says her challenge is to prevent what she calls "demolition by rehabilitation," in which homeowners attempt to skirt the intent of the historic district for their own gain.

"There are people who say, 'I'm just going to take out some rotten wood,' and the next thing you know, we've got nothing but four studs left," Reiter says. "We're trying to make it obvious that you cannot strip every piece of historic fabric from the building.

"It's tricky though. This year, we have about three instances where they've found a few pieces of rotten siding and just kept going."

Despite the restrictions, Reiter says the coveted historic district designation continues to appeal to those looking to reclaim the look and feel of classic American neighborhoods.

"We have two districts trying to get review status right now," she says. "We have more people wanting it than we have staff to cope with it."

Jay MacDonald is a contributing editor based in Texas.

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