Buyers often make mistakes when they buy based purely on emotion. They fall in love with the view or charm of the home, but fail to take into account the ongoing maintenance that will be required to keep the French doors operating properly, the garden looking pretty and the skylights free of leaks.
Home maintenance is generally more expensive on older houses than it is on new homes. However, a poorly built newer home can develop problems in the early years of ownership.
This is not to say that you shouldn’t buy a home that catches your heart. Just make sure that maintenance costs are included in your housing budget. If you can’t afford the maintenance and you let the home fall into disrepair, its appeal will diminish, as will its value.
Buyers who walk into a listing and know they want to live there are fortunate. Most buyers never have this experience. Usually compromises are made when buying a home. You should make a wish list of everything you’d like to have in a home and then prioritize it. You probably won’t find everything you want in one home.
There are a couple of issues that complicate homebuying decisions in the current market. One is how to deal with deferred maintenance. Another is: How do you evaluate improvements you want to make to the property for your own enjoyment? When home prices are moving up quickly, buyers don’t give much thought to these matters.
HOUSE HUNTING TIP: You have several options when the house you’re buying has been neglected by the seller. Let’s say there’s $10,000 of termite work recommended in an inspection report. One option is to ask the sellers to have the corrective work completed before closing.
Sometimes there isn’t time to have the work done before closing. Or perhaps you want to incorporate improvements into correcting the deferred maintenance, in which case you might not want the sellers to do the work.
For example, if the bathroom floor needs to be replaced because of water damage to the floor joists and the shower pan leaks, you could redo the entire bathroom to your taste, if you could afford to. Even if you just want to replace the floor and redo the shower, you might prefer to use finishes that you select.
In cases where you don’t want the sellers to do the work, reduce the offer price by $10,000 and buy the property "as is" regarding the termite work.
Buyers who don’t have extra cash for repairs could offer a price that doesn’t reflect a reduction and ask the sellers to credit them $10,000 in escrow to be applied to their nonrecurring closing costs. Even though the buyers pay a higher price, they bring $10,000 less to closing — money that can be applied toward deferred maintenance.
Almost any home you buy will need modifications so that it will satisfy your taste and intended use of the property. Perhaps the house lacks a developed backyard or deck. You might not like the color scheme. It may look too plain; you envision spending money to improve the curb appeal.
Most people feel they should recoup investments they make on improvements when they sell. However, studies have shown that most remodel projects don’t pay back 100 percent of the amount invested. For this reason, you should select your projects carefully and keep resale value in mind.
Making changes to a home to make it reflect your taste improves the quality of your lifestyle while living there. It’s hard to quantify this. The longer you live in the home, the more valuable the enhancements will be to you.
THE CLOSING: Before improving your new home, make sure you won’t be over improving for the neighborhood.