Buzzword: Brickor Mortis

What it means. This buzzword, derived from rigor mortis, comes to us from Great Britain, where many homes are made of brick and wordplay often takes a macabre turn. With the housing market in some areas across the pond in tough shape, brickor mortis—describing the paralyzed state of home sales and purchases—is said to be setting in at a swift pace.

Why the buzz? England and the United States of America are said to be two countries divided by a common language. We now also share something else: a glut of unsold homes. In January 2008, 32 percent of London residences on the market had been for sale for three months or longer. By August, that figure was up to 51 percent. One silver lining in the trend: the divorce rate in England and Wales is at a 26-year low, according to a BBC report, prompting speculation that plunging house prices might be keeping couples together.

Whether or not U.S. divorce rates follow a similar trajectory remains to be seen. But brickor mortis seems to have set in here, too. On September 17, the U.S. Department of Commerce announced that housing starts for August were fewer than expected, sinking activity to a 17-year low. "Builders understand that there is still a substantial amount of unsold inventory to be worked down," noted Sandy Dunn, president of the National Association of Home Builders, in what could be considered the understatement of the year.

If you are selling or buying a new home, be sure to read our special section on real estate, which tells you the best way to price your home and lays out the right projects to do before you sell your home.

You'll likely get the best return if you spruce up the outside of your home by adding a deck, new energy-efficient windows, or new siding, according to a 2007 nationwide survey of real-estate professionals conducted by Remodeling magazine.—Daniel DiClerico

Essential information: Learn how to get your house ready to be sold from a professional stager. And use our Home Improvement Guide interactive for advice on products and materials for any area of your house.

Q&A: Are propane space heaters safe?

I'm considering getting a propane or kerosene space heater to try to save on heating costs this winter. Any concerns about these heaters?

Propane and kerosene heaters produce a lot of heat, but there are safety issues associated with these units, as we found during our lab tests of two propane and two kerosene last year. For more details, read this story on the safety risks.

If you're in the market for a space heater, read our latest report and refer to our ratings (available to subscribers).

Essential information: Discover easy ways to save energy in the October 2008 issue of Consumer Reports, which also features an in-depth look at the Energy Star program and a review of tankless water heaters.

U.S. housing prices continue slide

What happens when there’s a glut of houses for sale? Beyond the agita unsold homes might cause their owners, one of the obvious results is that prices fall—something sure to spark joy among potential buyers out there.

There’s an 11.2-month supply of homes for sale in this country, according to the National Association of Realtors. And, based on the latest S&P/Case-Shiller index of home prices, which tracks fluctuations in the value of residential real estate in 20 U.S. metropolitan areas, home prices are dropping nationwide. The S&P/Case-Shiller index for April 2008, released today, shows a more than 15 percent decline from a year earlier.

Speaking to The Wall Street Journal, Mark Zandi, chief economist and cofounder of Moody’s Economy.com, said that by next June prices will have dropped about 25 percent from their peak in 2006. (The median price of an existing single-family home in 2007 fell to $217,900, down from $228,200 a year earlier, according to The State of the Nation's Housing 2008 report from the Joint Center for Housing Studies at Harvard University.)

“I think it is going to take another year nationwide for us to work through all of our problems in the housing market, at least to make a significant dent,” Zandi said in an article in The San Diego Union-Tribune. “In some parts of the country, the market will remain depressed well into the next decade. It is going to be a slog.”

Essential information: If you’re planning to move, learn how to sell your home in a buyer’s market.

Q&A: Does it make sense to buy flood insurance?

I live in a coastal area. Should I buy flood insurance?

It doesn't take a Katrina-style coastal disaster to bring flood damage your way. Snowmelt repelled by frozen ground can cause flooding. New development can leave less soil surface to absorb water, making formerly safe homes suddenly vulnerable.

Yet a typical homeowners insurance policy won't cover those perils. You'll need separate flood insurance, which ranges in cost from several hundred to several thousand dollars a year, depending on coverage and risk levels.

"With most insurance, we say if there's any doubt, don't buy it," says Robert Hunter, director of insurance for the Consumer Federation of America. "But in this case it's the opposite."

Learn more about flood insurance in this article on ConsumerReports.org and watch our video (right).

Essential information: Our Storm & Emergency Guide offers practical advice  on dealing with weather-related situations.

10 Questions for . . . Bruce Irving, Renovation Consultant

In this installment of 10 Questions for . . . , Senior Editor Daniel DiClerico speaks with Bruce Irving, a former TV producer who's now a renovation consultant based in Cambridge, Massachusetts. Irving (shown below) shares his thoughts on the remodeling process and talks about ways to save on a major renovation.

How did you become a renovation consultant?
After I left the PBS show This Old House, where I was the producer for 17 years, most people assumed I’d stay in television. But the more I thought about it, the more I realized the TV was secondary. It was the projects themselves that turned me on, the process of transforming people’s houses into places they could really love. I saw how well that could go, and I wanted to offer my clients the same kind of experience.

Why is remodeling such a charged experience for so many homeowners?
From a strictly hard-nosed, economic point of view, your home is the most valuable thing you’ll ever own. And when you think about it, to be able to spend money on fixing it up is a great privilege. So it’s doubly tragic when something you should enjoy and take pride in goes horribly awry. On a psychological level, our homes are a reflection of who we are. They’re very near and dear to our hearts, so operating on them is like operating on one of your kids. You want it to turn out really, really well.

How do you differ from a general contractor on projects?
I’m not a builder, nor am I an architect. But for years and years I stood in the midst of builders and architects, as well as materials suppliers, building inspectors, town officials, and of course, homeowners. I got a very good education in the multiple dynamics at work on a renovation project. When I come to a job, like the renovation of the Georgian Revival home outside of Boston (shown above), I’m not carrying the perspective of a builder or an architect. I’m coming at it almost as a reporter, seeing it happen in many different ways. So what people buy when they hire me is a no-agenda opinion. I just call it like I see it, and I think people appreciate the objectivity. That third-person-in-the-room factor becomes very important during the project, as I make sure that everyone—homeowner, architect, builder—gets heard and heard fairly . . . kind of like a marriage counselor!

What’s the most important lesson your objectivity has taught you?
I’ve come to realize that there’s something unpleasantly contentious about many jobs. People are pitted against one another early on, and echoes of that persist throughout the project. It starts with the bidding process, when you have finished drawings that builders compete from, and it so often boils down to “the number.” It sends a sort of dehumanizing message. I’d rather get the drawings 50 percent there and then bring in a few potential builders. You can get to know them better, and they don’t have to spend hours and hours drawing up a bid for a project they may never get. Once you settle on the builder, you can finish drawings with the benefit of their input. Basically, I’m a big fan of team play on a project.

Q&A: Should we fix or replace our old water heater?

Our storage-tank water heater is on the fritz. Should we get it fixed or buy a new one?

It depends on the nature of the problem and whether your water heater is still under warranty.

Storage-tank water heaters are fairly long-lived, and most are backed by a 10-year or longer warranty. But when one does give out, it usually happens suddenly; you’ll probably notice water leaking out through a corroded spot in the tank. (Note to self: The typical storage-tank water heater holds 40 gallons of water, and a hole in the tank is really the same as an open spigot—the water will keep flowing until you shut off the supply So consider buying a wet/dry vacuum to deal with this type of mess.)

While you can’t salvage a corroded, leaking tank, a leaky drain valve or temperature/pressure-relief valve or a worn-out electric heating element can be repaired. But replacing the heater might make more sense.

First, get a repair estimate. Then weigh that amount against the $500 to $600 you’ll pay for a new heater and its installation. The $100 per hour you’ll pay a plumber for a repair will quickly add up to the cost of a new water heater. So put your money toward installing a new unit, especially if the warranty on your current model has expired.

Essential information: Learn more water heaters, including details on buying a new model. Read about actor/activist Ed Begley Jr.'s energy-efficiency efforts, and look for our report on tankless water heaters in the October 2008 issue of Consumer Reports.

Buzzword: Boomerang Children

What it means. Boomerang children refers to the growing number of young adults who have moved back into their parents’ home after time out of the house, say at a four-year stint at college.

Why the buzz? With the latest crop of college grads having gone through the pomp and circumstance of commencement, a new flood of able-bodied college grads has entered the workforce. Or not. With the “r word”—recession—on every economist’s lips and the U.S. unemployment rate ticking upward, job prospects are less than stellar for the class of 2008.

So rather than light out for the big city in pursuit of entry-level positions, affordable digs, and the sort of twenty-something scraping-by that previous generations accepted as a matter of course, many in the millennial generation are bringing it all back home.

Boomeranging has its supporters and its critics. The pro camp views it as a way for parents and children to forge healthy adult relationships. Those against call the trend perilous pampering that curbs motivation and paves the way for generational conflict.

Consumer Reports can’t settle the debate, but we can help keep the peace by guiding boomerang households through a few potentially key purchases, including:

Mattress
Now that the home office or exercise space you planned or even created has to be turned back into a bedroom, you might be in the market for a new mattress. The process can be perplexing, but our mattresses buying guide tells you what you need to know.

Interior Paint
That reconverted room might need a fresh coat of paint, but who knows how long this boomerang will last? Read our latest report on interior paints, which looks at the issue of one-coat coverage for finishes.

Organizers
After four years of dorm living or, worse, fraternity/sorority rules, your boomerang child may not be so handy with a hanger. So read our report on closet organizers, which includes Ratings of different systems and tips for installing them. The same report covers garage organizers, handy if you suddenly find yourself short on storage space.

Computers
A new computer will help a young B.A. get gainfully employed—or at least keep a Facebook page up to snuff. Our colleagues in the Electronics franchise recently put the latest laptops and desktops through their paces. Check out the results in their report.—Daniel DiClerico

Essential information: The Money page on ConsumerReports.org contains advice on all things financial, including paying for college and planning for retirement—without kids at home.

Rebates and tax credits can lower appliance costs

While you might have back-burnered your plans for a kitchen remodel or a new laundry room, you can’t ignore an ailing dishwasher, a struggling refrigerator, or a washed-up clothes washer.

Fixing these appliances could be an option—see our repair-or-replace-it guide (available to subscribers)—but when you decide to replace appliances, consider more-energy-efficient models. This is one way to spend your federal economic-stimulus payment. And, as unlikely as it might seem, you can also turn to your utility company and the state and local government for some financial relief.

As of mid-May, the Database of State Incentives for Renewables & Efficiency, maintained by North Carolina State University’s Solar Center with funding from the U.S. Department of Energy, lists 732 utility rebate and loan programs for consumers who buy energy-efficient appliances or other home systems. (The DSIRE's map is shown.) The site also includes details on 35 state rebate and loan programs and 13 personal-income-tax-credit or tax-holiday plans.

You’ll also fund information on rebate and tax-credit programs from utilities, states, and partners at the U.S. Environmental Protection Agency’s Partner Activities search; if you don’t see a program listed for your area, look on your utility bill for more information or contact your state taxation office.

These programs can offset the short-term acquisition and long-term operating costs of new appliances. Here’s how to take advantage of these opportunities:

Plug into utility companies’ rebates. Contact the efficiency program at your utility company, which might offer rebates on appliance purchases. Depending on the  offering, you might need to buy either an Energy Star–qualified appliance or one that meets higher efficiency levels, such as a Consortium for Energy Efficiency (CEE) tier. For example, a CEE Tier 1 dishwasher must have an Energy Factor (the number of loads that can be washed per kilowatt-hour) of 0.65 and can't use more than 339 kWh per year, while a Tier 2 model must have an Energy Factor of 0.68 and use no more than 325 kWh annually.

 

In California, the Sacramento Municipal Utility District is offering a $25 rebate on a Tier 1 dishwasher and $75 on a Tier 2 model, provided you’re using an electric water heater in your home. In Oregon, the Columbia River Public Utility District ups the ante to a $100 rebate for a Tier 2 clothes washer that uses water from an electric heater, and $50 for one with water heated by gas, oil, or propane.

Brian Lips, a policy analyst at the North Carolina Solar Center at North Carolina State, notes that even if they don’t offer a rebate, many utilities will offer free pickup of an old refrigerator, saving you the disposal fee. 

Vintage Consumer Reports: Appliance Woes

Most of you probably find Consumer Reports a pretty serious publication and ConsumerReports.org a fairly staid Web site. Both are certainly great sources of testing-based product reports, compelling investigative features, and expert advice for all aspects of your life. But beyond the entertaining Selling It column, neither the magazine nor the Web site has much of a reputation for humor.

At least that's what I thought. I recently was looking at issues from 1967 and came across the amusing cartoon shown here. We've reported on how appliance makers are shortening their warranties, and everyone's heard of planned obsolescence being a business model of some manufacturers. But I never imagined that these were concerns more than four decades ago. Call me naive, but I believed that companies were somehow more consumer friendly back then. As this cartoon from our March 1967 issue illustrates, that wasn't the case. (Click on the cartoon to enlarge it.)

Obviously appliance longevity and extended warranties remain issues today, and Consumer Reports regularly covers those topics. If you're looking for information on whether you should fix or nix an appliance, read "Repair or Replace It?" (available to subscribers). The article  includes  repair-or-replace timelines for many products, including appliances.

And before you buy an extended warranty for a refrigerator, washing machine, dishwasher, or other appliance, read "Why you don't need an extended warranty," which includes repair rates for a number of 3- to 4-year-old products.—Steven H. Saltzman

Essential information: As I mentioned in this recent post, I'm going to tap into our archives to bring you interesting articles and photographs from over the past 70-plus years. Click on my name above to let me know what interests you.

As food prices rise, consider a stand-alone freezer

Interesting article in today’s edition of The Wall Street Journal on how rising food prices have prompted U.S. consumers to buy in bulk and stockpile food (“As Food Prices Rise, Shoppers Stock Up,” by Gary McWilliams and David Kesmodel).

A chart accompanying the article details a 6 percent jump in the overall cost of food for home consumption from 2005 through 2007, ranging from hikes of 3.1 percent for fats and oils and 3.3 percent for poultry to 9.5 percent for fish and seafood and 35.5 percent for eggs. The authors note that the U.S. Department of Agriculture is forecasting a 4 to 5 percent climb in food prices for 2008, double the level of 2005.

If you’re considering buying a separate freezer to store certain foods you buy in quantity, read our buyer’s guide to and review of freezers, which features Ratings (available to subscribers) of manual-defrost chest and upright models and self-defrost uprights.

Follow this advice when shopping for a stand-alone freezer:

Figure the capacity you need. The freezer size you need will depend on the size of your family and their fondness for frozen foods. Freezers are available in compact (5 cubic feet), small (6 to 9 cubic feet), medium (12 to 18 cubic feet), and large (more than 18 cubic feet) capacities. Except for their hanging baskets, chest freezers are wide open so that almost all of the claimed space is usable. Upright freezers have shelves and pullout bins, which make it easier to organize and reach contents but reduce usable space by up to 20 percent.

Weigh manual vs. self-defrost. Manual-defrost freezers, whether chest or upright, are generally quieter and more energy efficient than self-defrosting models of the same type. But manually defrosting a freezer can be a lot of work and take up to 24 hours.

Consider local power problems. If the area where you live is prone to brownouts or power failures, a chest freezer will be the better choice.

Check the controls and lights. Easy-to-reach controls make adjusting the temperature simple. An interior light makes it easier to find foods, especially if the freezer is in a dimly lighted area. A power-on light on the outside of the freezer lets you see at a glance that the freezer is on. That way you don't have to open the unit to check, letting cold air out. Most of the models we tested have that feature. We think all should have it.—Steven H. Saltzman

Essential information: Find out which warehouse shopping club is the best to join—and the best spot to save money.

Kitchen remodeling remains a popular project

My 84-year-old father told us a joke at the dinner table last Sunday (remember, this is a joke): “A guy cutting down a tree with a chain saw accidentally severs his left pinkie. His wife rushes him to the local hospital, where the emergency-room doctor explains to him, ‘You have two choices. We can replace the finger using expensive experimental microsurgery—it’ll cost $75,000—or you can live a perfectly normal life without the digit. Which would you prefer?’

“The guy tells the doctor he needs to quickly talk it over with his wife. The wife comes in, and her husband asks her what he should do. She ponders the question for a moment and replies: ‘I’d rather have a new kitchen.’”

There’s a raunchy version of that joke, but its point is the same: People love to remodel their kitchens, and some are willing to give up a lot to do so. And even in the midst of the economic slump we’re in, kitchen remodeling remains popular in the United States. In fact, kitchen projects are estimated to be the biggest source of remodeling spending in 2008, garnering 18 percent of the total home- improvement dollars American consumers will shell out, according to the Home Improvement Research Institute’s 2007 Project Decision Study. (Adding a bathroom accounts for 7 percent of spending; replacing a roof, 8 percent.) The average kitchen remodel in 2007 cost $6,800, according to HIRI.

Some other interesting findings from the HIRI study:

• 46 percent of U.S. kitchen remodels were completely do-it-yourself, while 62 percent were at least partially DIY.

• “Buy-it-yourself,” or BIY, remodels—in which the consumer buys the products and has a contractor install them—account for 21 percent of kitchen remodels.

• Women initiate most kitchen-remodeling projects. Still, men initiated 31 percent of kitchen remodels, up from 18 percent in 2003.

• The use of built-in appliances in remodeled kitchens is growing. (Read our recent Q&A on the repair history of built-in refrigerators.)

• Average spending on kitchen remodeling projects has not increased much over the last two years.

With inflation on the rise, how have consumers managed not to spend more on their kitchen projects even as prices are increasing? The answer might lie in the BIY trend: Savvy homeowners who shop around for materials and appliances are making wise choices in the products they use and are getting good deals.—Karin Weisburgh, Senior Research Analyst

Essential information: Be a smart shopper yourself and read our report on where to buy appliances.

Tip of the Day: How to spend your federal economic stimulus payment

The economic stimulus payments from the federal government will start hitting mailboxes throughout the country the first week of May. Approximately 130 million Americans will receive $300 to $600 per individual or $600 to $1,200 per married couple, plus $300 for each qualifying child. Checks will go out in order based on the last two digits of Social Security numbers and will be issued through July 11. Check out the Internal Revenue Service Web site to calculate the size of your check and its issue date.

The prudent move might be to pay down any debt you have or save or invest the money for the future. (Read this entry from our Money blog for details on investing or using your check.) But since Uncle Sam really wants you to stimulate the economy with your windfall, you might consider spending the money on your home, if you can swing financially.

To help you make smart purchases for the home, here are our suggestions of top-performing home-related products you might consider buying. They’re listed in alphabetical order within each product.

If you’ve already decided how you’ll spend your stimulus check, please share what you’re doing with the money by leaving a comment at the end of this post.—Daniel DiClerico

Air Conditioners (check back for updated information in early May)
Frigidaire FAA067P7A (Lowe’s), $150
Frigidaire FAC107P1A (Lowe’s), $240
GE ASM05LK, $180
GE ASM06LK, $200
GE ASM08LK, $260
Haier ESA3105, $250
Kenmore (Sears) 76081, $200
LG GL6000ER, $230

Cordless Drills
Black & Decker FS14PSK, $65
Bosch 32614-2G, $160
Bosch 33618-2G, $190
Craftsman (Sears) 11561, $90
Hitachi DS12DVF3, $80
Hitachi DS18DMR, $200
Hitachi DS18DVF3, $150
Makita 6347DWDE, $200
Makita 6390DWPE, $140
Makita 6980FDWDE, $200
Makita BDF451, $280
Makita BDF452HW, $200
Milwaukee 0824-24, $300
Panasonic EY6432GQKW, $200
Ryobi P230C, $130
Ryobi P813, $170

Dishwashers
Kenmore (Sears) 1374[2] , $650
Bosch SHE33M0[2]UC, $540
Whirlpool DU1055XTS[Q] , $350
Kenmore (Sears) 1373[2], $500
Whirlpool DU1100XTP[Q], $450

Dryers
GE DBVH512EF[WW], $650
GE Profile DPSE810EG[WT]s, $500

Gas Grills
Blue Ember by Fiesta FG50069-U409 (Home Depot), $450
Char-Broil Commercial Series 463268008 (Lowe’s), $300
Kenmore (Sears) 16233, $400
Weber Genesis E320, $700

Protect Your Investment: Avoid shoddy home construction

A few years back, a Consumer Reports investigation found that 15 percent of new homes had serious problems and defects, requiring homeowners to spend millions of dollars on repairs. During that building boom, the fast pace of construction was a major cause of shoddy construction, according to experts interviewed for the story.

While today’s real-estate market has weakened significantly compared with the robust market of recent years, you still need to be on the lookout to avoid buying a flawed home. (Our exclusive interactive illustrates the problems to be wary of.)

Serious construction defects often present themselves in telltale ways, such as the deep cracks in a floor and an exterior brick wall shown here. (The owners of that home in Edmond, Oklahoma, ended up spending $60,000 to repair their new home.) If you see one or more of the following problems when you’re looking for a home or after you move in, hire a structural engineer to investigate.

Deep cracks in the foundation or basement walls can be signs that the foundation was laid on a poorly compacted base or improperly graded soil.

Sagging floors or leaning walls might be caused by a shifting foundation or structural problems with support beams. Sometimes problems can be associated with a poorly done renovation or addition that compromised key structural members.

Windows and doors that don’t sit well in frames or close properly could be the result of house-framing problems or even trace back to uneven settling of the foundation. If the beams, studs, and joists weren’t correctly sized or assembled, the whole house might not hang together well.

Wide cracks in interior walls could signal a foundation problem. Generally, though, fine cracks are cosmetic, the result of normal wood shrinkage when drying or even minor settling.

Water damage warning signs include mold, rot, and insect infestation in exterior walls; staining, swelling and discoloration on interior walls; and a musty odor. There are a number of possible causes, including improperly installed roofing; missing flashing around penetrations and joints; no moisture barrier in a climate that requires it; lack of a drainage space behind brick or siding; poorly installed windows and doors; holes in siding; plumbing leaks and trapped water-vapor condensation from moist air contacting cold surfaces.

Flooding and sewer and drain backups might result from poorly graded land or faulty sewer and water-main connections.

Switched hot and cold spigots could signal improperly installed plumbing.

Excessive heating or cooling bills might be a sign that air ducts are leaky or improperly connected. Be on the lookout if rooms don’t get cool enough or warm enough.

Electrical shorts that cause blown fuses or tripped breakers could point to an incorrectly installed electrical system. Other signs of electrical problems are outlets and switches that don’t work or are unexpectedly controlled or affected by electrical devices in other parts of the home.

Missing required permits indicates that building authorities have not performed the required inspections.

Take these steps if you think you have a serious problem with substandard home construction.

1. Hire a licensed engineer. The National Academy of Building Inspection Engineers can make a referral for a visual inspection. For a structural analysis, expect to pay $100 to $150 an hour.

2. Give the company a chance to fix the problem. You may have no choice anyway in states with “right to cure” laws. But don’t let warranties or statutes expire while you wait. Document your complaints with photographs, copies of written agreements and warranties, and a home inspection.

3. File complaints. Send your complaints to building and regulatory authorities in your state, such as a contractor-licensing board; your state and local consumer-affairs departments; and, if you suspect fraud or corruption, your state attorney general. Also contact the Federal Trade Commission.

4. Network. Contact Homeowners Against Deficient Dwellings or Homeowners for Better Building to contact other aggrieved homeowners.

5. Get legal help. As a last resort, contact a lawyer who specializes in construction-defect lawsuits. Your local bar association can help you find one.

Protect Your Investment: Furnace

In this new weekly feature, we'll help you protect your investment by keeping your home—and all its many systems and components—in good condition. Stay tuned for future installments.

Should your gas furnace falters or fails this winter, you might be able to fix it yourself without the cost and hassle of hiring a pro:

• If your forced-air heating system is delivering a low airflow, check the air filter on the furnace. A clogged filter could cut airflow to a trickle. Change the filter with the proper size and type.

• If the furnace has stopped working altogether, ensure that a circuit breaker or fuse has not cut power to the heating system. Also verify that any emergency-power switches, which often have a red-colored wall plate, are switched on.

• Determine whether the thermostat is malfunctioning. If you have an electronic thermostat that runs on batteries, try changing them. Learn more about thermostats and how they can cut your heating bills by up to 20 percent.

• If those steps don't work, call a heating contractor. Even with the higher efficiency of most new furnaces, it's generally more cost-effective to repair a furnace than to replace it. However, if a key component, such as the heat exchanger or control module, fails, you're probably better off replacing the furnace, especially if the unit is more than about 15 years old—furnaces typically last an average of 15 to 18 years.

Essential information: Read “Heating: Stay Warm Without Getting Fleeced” for expert advice on lowering your heating bills this winter, and keep your heating system in tiptop shape. Finally, be sure your carbon-monoxide and smoke alarms are working properly.

How to hire a contractor

While most home contractors out there are legit and do quality work, the rogues gallery of bogus builders, careless carpenters, pitiful plumbers, and the like is a vast one.

Some of your friends and neighbors likely can relate cautionary tales of purloining pros, and perhaps you’ve even been the victim of a contractor whose work you cursed.

I’m sure you don’t want to revisit the miserable days when your project got derailed by an incompetent contractor, but “The Pros and Cons,” in the January 2008 issue of Angie’s List magazine, is a worthwhile read. The article (scroll to pages 12-21) features a nationwide who’s who of the top contractors and their sketchy counterparts.

The story won’t make up for any nightmares you’ve endured, but it might reassure you that genuine pros are out there. (Thousands of people use Angie’s List each month to report their customer experience in 250 categories, including home improvement and handymen. A membership fee gets you access to first-hand accounts from members and A to F ratings in several areas, including price, quality, punctuality and professionalism.)

To avoid hiring the contractor from hell, follow our advice:

Plan for success. Get three bids to gauge the going rate for work. But don't jump at the lowest bid; our surveys have shown that people who hired the lowest bidder generally got poorer work.

Get an estimate. It should list product, material, and labor costs and a timetable. Material and product allowances should give prices and quantities. Compare services and prices before making a final decision.

Choose pros you know. Our surveys have indicated that people who hire contractors they had worked with before were happier and had fewer time and cost overruns than those who hired someone new. While readers who hired pros recommended by a friend or neighbor were more satisfied than those who hired strangers, they faced as many delays and extra costs.

Get references from recent and older jobs. Reputable contractors will be happy to provide names and contact information for satisfied customers. Then check the work to see how it’s holding up.

Look for proper licensing and insurance. Make sure the contractor is licensed to do business in your state and that he has proper general liability and workers-compensation insurance. Check with your local government for permit requirements and confirm with the contractor who is responsible for paying for permits. Also visit the Contractor's License Reference Site to learn about licensing requirements in your state and to find out if a contractor is licensed.

Check the Better Business Bureau for filed complaints. Also contact your state's attorney general's office. Look for contact information in your state here. (Should you encounter a problem or fraud later on, report problems or fraud to your state attorney general.)

Do the hiring yourself. Your project is more likely to stay within budget and on time if you hire pros yourself than leaving the hiring and supervising to a general contractor.

Obtain a contract. A written contract will specify what will be done to complete the job, associated costs, and the payment schedule. Never sign a blank contract or one with blank spaces.

Stick with the plans. Making changes to plans after work begins could lead to cost overruns and delays.

Pay by check. Write out the check to the contracting company rather than to an individual. A reasonable down payment is 30 percent of the total project cost to be paid upon initial delivery of materials.

Make final payments only when the work is completed to your satisfaction. A reputable contractor will not threaten you or pressure you to sign documents if the job is not finished properly.—Steven H. Saltzman

This audit might actually save you money

My colleague Steven has been nagging me for months to replace the halogen floor lamp in my office. It’s not that he finds it unattractive—this nice-looking modern fixture does add ambience to an otherwise drab room. Rather, Mr. Know-It-All tells me, this fixture is an energy hog and chows down far more electricity than a lamp that uses compact fluorescent lightbulbs and even incandescents. Indeed, this fixture can cost up to $100 to run each year.

Thank goodness Steven hasn’t seen my aquarium at home. Sure, it’s kind of dirty since I dread cleaning it, but I’m more concerned he’s going to howl about how much electricity the equipment uses since some aquarium gear can consume as much juice as a refrigerator.

How’d I find this energy-consumption information? I ran an energy audit with the Home Energy Saver (shown). This calculator from the U.S. Department of Energy estimates home energy use and carbon-dioxide emissions and provides you with advice on how to reduce both.

It’s a pretty neat tool. I plugged in my ZIP code and within seconds found out that the average house in my New York City suburb spends $2,267 annually on energy—nationwide the average is about $1,300—while an energy-efficient home there spends $1,451.

Entering a bit more information got me a more-accurate estimate of my energy use—I actually spend about $3,000 a year—and a laundry list of changes to consider, such as replacing halogen and incandescent bulbs with CFLs where possible in high-use fixtures (there you go, Steven), insulating boiler pipes, installing an Energy Star–qualified programmable thermostat, and upgrading my refrigerator, dishwasher, and heating system to new, more-efficient models.

By making all of these changes, according to the calculator, I could save almost $1,500 a year. Since I’m not planning on moving anytime soon, I really need to boost the energy efficiency of my old house . . . and stop wasting money.—Kimberly Janeway

Essential information: Read our expert advice for 10 easy ways to save hundreds of dollars on household energy costs.

Avoid these money mistakes

In “12 Money Mistakes That Could Cost You $1,000,000,” from our February 2008 issue, the Consumer Reports Money Lab examined several common financial blunders and explained how to avoid them. The Money Lab revealed these two home-related blunders:

UNDERINSURING YOUR HOME
Even with the recent retreat in home prices, if you’ve lived in the same house for 10 years, it’s likely to be worth 54 to 104 percent more than you paid for it, depending on where you live. But if you haven’t updated your homeowners insurance and disaster strikes, you could lose those gains.

All told, 55 percent of residential property in the U.S. is undervalued for insurance purposes, according to Castle Inspection Service, which conducts valuations for insurance companies. The average shortfall: 28 percent.

Using metropolitan-area home prices as tracked by the National Association of Realtors, we picked a $71,700, median-priced home in Elmira, New York., and an $865,000 house in the San Jose, California, area. We subtracted the value of the land, which is theoretically indestructible, and multiplied the remainder by that 28 percent shortfall. The Money Lab estimates insufficient insurance could cost $16,000 to $194,000.

Ask your insurer to reassess the replacement cost of your home and adjust coverage accordingly. Buy an inflation-guard endorsement. Make sure your policy would pay to rebuild to the current housing code where you live.

Also follow our expert cost-shaving advice to cut your insurance premiums:

Shop around. Prices vary from one company to another. Call insurers to compare prices, or check their Web sites. Your state insurance department may also list prices offered by major insurers.

Ask for discounts. Many companies will cut your rate by as much as 10 to 15 percent if you are over age 55. Some companies will also grant you discounts for smoke detectors, burglar alarms, or dead-bolt locks.

Reap rewards for loyalty. Some insurers cut premiums by 5 percent if you’ve been with them for three to five years. If you’ve stuck with the company for more than six years, you may be able to land a 10 percent discount.

Raise your deductible. Increasing your deductible from $500 to $1,000 should cut your premium by 25 percent.

Bundle your plans. If you use the same insurer for your homeowners and your auto insurance, you should be able to qualify for a discount of 5 to 15 percent on each policy.

OVERPAYING FOR YOUR MORTGAGE
The annual percentage rates on mortgages in a given area can vary by close to a percentage point. That might not seem like much, but over a 30-year term, it adds up to a bundle.

HSH Associates, which publishes mortgage data, told us the range on 30-year fixed-rate mortgages in New Jersey in November 2007 was 5.875 to 6.625 percent. We applied that to a purchase of a $299,000 home, assuming a 20 percent down payment and the resulting $239,000 mortgage. Over 30 years, the higher-priced mortgage would cost $360,000, while the lower-priced one cost only $333,000 in 2008 dollars.

Shop for the best mortgage rate by checking local banks, your credit union, big-lender Web sites, mortgage brokers, and mortgage-related Web sites.

Read “Remodeling: Best ways to pay for it now” for detailed information on how to pay for home-improvement projects.

Illustration by Carl Wiens

Home-improvement spending takes a dip

The bad news keeps on coming for the nation’s beleaguered housing industry—just check out the latest housing figures from the National Association of Home Builders and the National Association of Realtors.

With fewer homes being sold and loans harder to come by, the remodeling sector in the United States is now taking it on the chin.

Home-improvement spending in 2007 is projected to decline for the first time since 2003, according to the Leading Indicator for Remodeling Activity (LIRA), published by Harvard’s Joint Center for Housing Studies (JCHS). In the third quarter of 2007, Americans spent $2 billion dollars less than the previous quarter, and U.S. homeowners are expected to spend about 2.3 percent less this year than last on remodeling, says the JCHS. By comparison, from 2004 to 2006, quarterly spending shot up by as much as $10 billion. (Click on the chart above.)

The LIRA is based on nine separate data sets, including retail sales and shipments of building materials. But the two driving forces behind the latest downward trend are the struggling housing market and the credit crunch. Home sellers and home buyers do much of the country’s remodeling, either to get a property ready to sell or to spruce it up after they move in. The other big spenders are homeowners who refinance their mortgage or take out a home-equity loan to make improvements.

“These numbers aren’t terribly surprising,” says Abbe Will, the JCHS researcher who crunched the data. “It will be interesting to see what happens over the next few quarters,” says Will. “But we don’t expect a turn around to happen any time soon.”—Daniel DiClerico

Essential information: If you’re planning a remodel at your home, you’ll want to get the most bang for your buck. Our kitchen-planning guide, for instance, is loaded with expert advice on getting the best deals without compromising quality. Must-reads include “Dream kitchens for less,” five common design problems to avoid, a rundown of the 10 products that get the most hype but aren’t worth it, and tips on how to pay for the work. Also use our exclusive design interactive and the QuickCost Kitchen Remodeling Estimator, powered by RSMeans (the CustomCost Estimator is available to subscribers), as you map out your project.

Tip of the day: How to sell your home

A look around your neighborhood will provide you with all the proof you need: Houses are taking a long time to sell. Indeed, according to the National Association of Realtors, sales of existing homes plunged 8 percent in September from August and have declined 19.1 percent from the September 2006 level. The NAR also reports that 4.40 million existing homes are on the market, a 10.5-month supply at the current sales pace.

Not only have sales slumped but prices are dipping, too. The national median sales price for existing homes of all types was $211,700 last month, down 4.2 percent from $220,900 12 months earlier.

if you're trying to sell your home in today's depressed market, read these expert tips from the Consumer Reports Money Blog.

U.S. electricity prices surged in 2006

Whether you’re a believer in or a naysayer of the theory that greenhouse gases are the main cause of global warming, you probably wouldn’t dispute that energy conservation is a good thing. What’s that? You don’t care about saving energy? Then maybe the financial angle will convince you to consume less power:

Electricity prices in 2006 made the largest one-year jump since 1981, according to the Energy Information Administration (EIA). Retail prices climbed 9.3 percent to a nationwide average 8.9 cents per kilowatt-hour, with homeowners in the East hit hardest by the hikes. For a breakdown of the numbers, see this EIA page.

The EIA’s recent announcement won’t come as a surprise to Maryland residents, some of who have watched their bills increase a whopping 65 percent since the beginning of 2006, a surge that played a  role in that state’s 2006 gubernatorial election. Thirteen other states and the District of Columbia shouldered increases of 10 percent or more from 2005 to 2006.

A major factor in the 2006 increase was the rising cost of fuel (the delivered cost of coal, which is used to generate nearly half the country’s electricity, went up 9.7 percent, while production of natural-gas-fired electricity, the priciest to generate, rose 7.3 percent). But deregulation also proved a key component.

In the mid- to late 1990s, many states deregulated their electric industries in an effort to lower prices through free-market competition. The competition didn’t come yet prices held steady even as actual energy costs increased. But in 2006, the caps that states had placed on retail prices to maintain market stability expired and electricity prices shot up.

It could be argued that consumers are simply feeling a decade’s worth of incremental increases in one fell swoop. Still, it’s clear that free-market competition hasn’t yet lived up to expectations—electricity costs are climbing—and as caps are lifted in other regions of the country, price hikes will hit more households.

If you live in a deregulated state, you can shop around for the cheapest electricity. (The map here shows how the country looked in 2003, though note some states, including Virginia, are in the process of reregulating.) Look on your utility bill, which might include the “price to beat” for electricity in your market. Or you can look to your state’s public-service commission. The Maryland commission’s Web site, for example,  has a feature on its Web site that provides customers with information on competitive companies in the region and advice about choosing among them.

Our recent article on buying green electricity also offers additional insights into switching power suppliers.

You can also curb your own energy consumption—a good idea whatever the going rate of electricity. Read our expert advice for 10 easy ways to save hundreds of dollars on energy costs at your house. Also check out our recent reports on windows and thermostats, two home products that can help you lower your utility bills.—Daniel DiClerico

No-fee mortgage: Can you really save?

Stop worrying and start celebrating,” read the newspaper ad for Bank of America’s No Fee Mortgage Plus, a loan that claims to do away with all application and closing fees. In mid-October, the bank’s Web site was touting a “Best Value Guarantee” and a “No fees. No worries. No, really.” process.

But how much the No Fee Mortgage Plus might save you depends on several factors, including where you live, the interest rate on the mortgage, and how long you expect to keep the loan.
 
The loan, available to customers who have at least one Bank of America account, offers some perks. The bank pledges to close the loan on a selected date or within 25 calendar days of a completed application, whichever is later. If it misses the mark, the bank will cover the principal and interest payment for the first month. Bank of America will also send you $250 if it approves your loan but you close your mortgage with another lender.

The loan’s main selling points, though, are the elimination of closing fees and private mortgage insurance.

Closing costs, which include origination and underwriting expenses, credit scores, third-party title insurance, appraisals, and application fees, can eat up a substantial amount of your cash at closing or add to the amount you borrow. They also vary widely by region. On a $200,000 loan, a New York City resident would pay an average of $3,830 in origination, closing, and title costs, while a resident of Indianapolis would pay $2,339, according to a survey by Bankrate.com. By eliminating those costs, No Fee Mortgage Plus can save you thousands at the close.

The loan also proves its worth over time if you put down less than 20 percent. Lenders generally charge a monthly insurance premium to protect against default, called private mortgage insurance, or PMI. No Fee Mortgage Plus doesn’t, and that could save as much as $20,000 on a $200,000 30-year loan with 10 percent down.

But Bank of America compensates for assuming those costs by charging higher rates on the mortgage, which over time will more than offset up-front savings. The rates in mid-August on its no-fee loans were as much as 0.375 percent above the national average, according to Keith Gumbinger, vice president of HSH Associates, a publisher of mortgage-loan information.

The Bottom Line
We put the loan to the test with a hypothetical purchase of a $250,000 home in our home base of Yonkers, N.Y. A Bankrate.com search provided us with 22 lenders willing to finance $200,000 in a points-free, 30-year, fixed-rate mortgage. Of those, Bank of America’s 7.0 percent rate tied for the highest. We compared it with one loan at 6.5 percent and estimated closing costs of $6,241. Bank of America’s loan would save us $2,040 if we were to keep the house for 5 years. But if we were to stay for 15 years, the competitor’s loan would save us $8,083. And if we were to hold the mortgage for 30 years, the no-fee loan would cost $24,427 more.

While the No Fee Mortgage Plus loan might not live up to its billing, it warrants a look if you are in the market for a short- term property or plan to put down less than 20 percent.—Greg Brown

This article first appeared in the October 2007 issue of Consumer Reports Money Adviser.

U.S. housing outlook remains bleak

"The ongoing housing correction is not ending as quickly as it might have appeared late last year.

"And it now looks like it will continue to adversely impact our economy, our capital markets, and many homeowners for some time yet. Even so, I believe we have a healthy, diversified economy that will continue to grow . . . .

"But let me be clear, despite strong economic fundamentals, the housing decline is still unfolding and I view it as the most significant current risk to our economy. The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth."

That grim assessment came from U.S. Treasury Secretary Henry M. Paulson Jr. during remarks he made today at  Georgetown University Law Center. (Read Secretary Paulson's entire remarks here.)

Paulson's comments about the slumping American housing market came the same day that RealtyTrac released its latest figures. Almost 244,000 foreclosure filings were reported in August 2007, a 36 percent climb from July 2007 and a 115 percent surge from a year earlier, reports RealtyTrac, the online foreclosure- property marketplace based in Irvine, California. (Foreclosure filings include default notices, auction-sale notices, and bank repossessions.) For detailed foreclosure information, click here.

Pending home sales decline

The National Association of Realtors’ Pending Home Sales Index sank to its lowest level since it debuted in 2001, falling 6.5 percent in August to 85.5, according to the real-estate-industry trade group. The index has dropped 21.5 percent from the August 2006 index of 108.9.

“Fewer contracts were being written because of mortgage availability issues, and a separate internal survey of our members shows more than 10 percent of sales contracts fell through at the last moment in August, primarily the result of canceled loan commitments,” said Lawrence Yun, senior economist for the NAR. “The volume of activity we’re seeing today is below sustainable market fundamentals because some creditworthy people are trying to buy homes but can’t because of the credit crunch.”

According to the NAR, the index is a leading indicator of the health of the housing sector; it measures the number of signed sales contracts for existing homes. An index of 100 is equal to the average level of contract activity during 2001.

Read the NAR’s release on the index here.

Get tax credits for energy-efficient projects

If you’re planning to replace your doors, water heater, or windows with more-efficient products, you can still qualify for federal tax credits for these and other home improvements, courtesy of the Energy Policy Act of 2005. What’s more, the act’s original expiration date of December 31, 2007, has been extended to the end of 2008 for certain projects, including installing solar-power equipment. Most of the federal credits top off at $500 total.

Even after the federal credits have expired, you might still be able to enjoy some other energy perks from your state or from your electric utility. You’ll find contact information for the energy office in your state here. Also check out the Database of State Incentives for Renewables & Efficiency, an ongoing project of the North Carolina Solar Center and the Interstate Renewable Energy Council funded by the U.S. Department of Energy.

As of the end of September, some of the available incentives include:
• Vermont’s Efficiency Vermont program, which offers rebates for Energy Star-qualified products; the rebates range from $1.50 per compact fluorescent lightbulb to $100 for a central-air system.
• Paulding-Putnam Electric Cooperative’s rebates of $850 or $1,200 to customers in Indiana and Ohio who purchase a new heat pump.
• California’s and New York’s low-interest loans or tax deductions on loan interest for making specific green improvements, such as adding windows, insulation, or heating/cooling equipment.

Whichever improvements you’re considering, read the fine print on whether a product or project qualifies and that your purchase and installation time frames satisfy the terms of a given offer.—Ed Perratore

Essential information: Read our money-saving advice on appliances and home improvements.

FTC warns against deceptive mortgage ads

In the wake of ongoing troubles in the subprime-mortgage industry, the Federal Trade Commission in June undertook a nationwide review of mortgage ads, focusing on promises of exceptionally low interest rates or small monthly payments. (For details on the FTC’s findings, click here.)

Following that review, the FTC on September 11 issued a warning to mortgage brokers and lenders that their ads might be deceptive or in violation of the Truth in Lending Act. The FTC was also addressing the many Web sites, newspapers, magazines, direct mailers, and unsolicited e-mail and fax companies that run or send out the ads for the mortgages.

“Many mortgage advertisers are making potentially deceptive claims about incredibly low rates and payments, without telling consumers the whole story—for example that these low rates and payments apply for a short period only and can go up substantially after the loan’s introductory period,” said Lydia Parnes, director of the FTC’s Bureau of Consumer Protection, in a statement. “Home ownership is the American dream, but it can become a nightmare for consumers who don’t have the information they need to understand the terms of their mortgage.”

The FTC is advising advertisers to review their ads and is informing companies running them about their potentially deceptive nature and providing guidance on identifying questionable claims.

For more information on misleading mortgage promotions, read the FTC’s “Deceptive Mortgage Ads: What They Say; What They Leave Out.”—Steven H. Saltzman

With DirectBuy, it will cost you a lot to save

Your town or city might have been blanketed recently with newspaper ads and TV commercials for DirectBuy. The nationwide buying club, with headquarters in Merrillville, Indiana, promises members access to 700 brand-name manufacturers of home goods and the opportunity to buy merchandise with no “hidden store markups and middlemen costs.” Ads invite you to an open house, where you’ll see “confidential” wholesale prices. “We can’t show you the brand names and we certainly can’t show you the prices,” read one ad. What it also doesn’t show you is DirectBuy’s steep membership cost.

The Real Deal
To evaluate the pitch, we went undercover at two DirectBuy franchises in New York. Both gave us the same hard sell and offers of up to 70 percent off retail prices if we were to join. Only after an hour and a half of sales pitches and video testimonials from members did we learn the membership fee: $4,900 to $4,990 (plus tax) for three years and then $190 a year for seven more. Financing is available at 17.75 percent.

After the fee disclosure, we discovered that we had to sign up on the spot or never come back. We couldn’t bring DirectBuy’s “confidential” prices elsewhere to comparison shop, the representatives said, because this would likely anger retailers who might then retaliate against the manufacturers by refusing to sell their merchandise.

The fine print in the DirectBuy contract says you cannot return items, cancel orders, or terminate your membership. When we asked if, after plunking down $5,000, we could cancel and get a refund, a salesperson said, “You’ll have to check state law.” A review of New York state law revealed that the three-day cooling-off period for canceling contracts wouldn’t apply in this case.

Tacked onto the cost of merchandise—which you select from catalogs since DirectBuy has limited showrooms—are a 6 percent handling fee, shipping fees, and tax. Goods are typically shipped only to your local center, so you might pay additional fees to actually get your new stuff home.

Just how good are the prices? We compared them against those of other retailers. Prices for electronics and appliances were often only slightly better than those at online retailers and in some instances higher. For example, a 46-inch JVC flat-screen TV selling for $2,586 on DirectBuy’s site cost $2,095 elsewhere. We did find deep discounts on flooring and high-end furniture. In fact, one member we interviewed estimated that she saved about $50,000 over several years on furniture and a kitchen rem