2017 saw 6.1 million homes sold in the U.S. according to the National Association of Realtors, with only 10% of that represented by new construction. As such, the resale home market makes up the largest chunk of most real estate firms’ business – and preowned homes can come with a host of challenges that can’t always be foreseen.
Even with meticulous home inspections and open and honest sellers, unwelcome surprises may still appear later on. Exploring the hidden costs of a re-sold house is always necessary, especially with older homes that date back decades, long before modern building and safety codes were implemented. But even a house that’s barely 20 years old may come with unwelcome surprises, since building codes and materials safety are constantly evolving.
- This Ole’ House
Many buyers appreciate the lived-in feel and unique character of a pre-owned home. However, the older the house, the more dark secrets it could contain – and no, we’re not thinking ghosts. To avoid any nasty surprises, the entire history of an existing house needs to be explored, especially as we’re constantly discovering pollutants and other hazards in our collective building past.
Lead, asbestos and arsenic are just the tip of the toxic building materials iceberg. The Living Future Institute classified more than 800 harmful materials previously used in construction, as explained in its ominously titled Red List. Most commonly found in older piping or paint, lead is one of the main contaminants, as it can not only leach into drinking water, but also become airborne. The dangers of this heavy metal may be well known today, but according to the EPA, homes built up until 1986 may still contain lead.
The health hazard and high costs of asbestos have caused enough of a stir that most buyers are aware of its dangers. But the threat of this mineral cannot be overstated: inhalation or ingestion can lead to mesothelioma, a rare cancer that inflames the lining of internal organs. Arsenic, the preferred poison of royal courts of days gone by, was used to prevent wood rot up until 2003, so it may still be present in homes older than 15 years.
- Closing Time
Real estate agents are all too familiar with closing costs, but first-time home buyers are usually much less informed. It’s imperative that real estate agents ensure that buyers understand what to expect from appraisal, title and escrow fees, not only to avoid surprise costs, but also to develop a positive professional relationship with potential repeat customers. Successful real estate agents that shepherd their clients through the peculirities of closing costs in a straightforward manner are playing the long game by building on their reputation as advocates and guides.
- Mo’ money, mo’ problems
Buyers should consider far more than just the sticker price of a home. Property taxes, utilities, insurance and various other expenses also need to be factored in, and the more house one buys, the higher these costs will run. A buyer might qualify for a high enough mortgage to purchase their dream home, but the increased costs of day-to-day living in a large house may come with burdensome financial pressure. Utilities expenses and property taxes can often be surprisingly high. Although the average American pays $2,216 in property taxes each year according to USA Today, the average in a high-tax state like New York can be upwards of $7,000.
- Banker, can you spare a dime?
Although essential for most consumers to buy property, mortgages still come with plenty of negative baggage, especially in the post-bubble market. While consumers as a whole have become warier of unaffordable mortgage rates, some lenders have also set up extra safety measures. Escrow accounts are among the more common extra steps required from buyers when taking out a mortgage. Intended to ensure that homeowner’s and mortgage insurance are covered along with mortgage payments, escrow account agreements typically require homeowners to pay a little more every month for the lender’s peace of mind.
- Work from Home or Homework?
Although most people don’t work from home, all buyers need to make sure their home works for them. Maintenance, renovations and repair can easily cost thousands of dollars, and that cost is now up to the homeowner to cover, with no landlord to foot the bill. Housing inspections can reveal a lot about major issues with any potential home, but it often takes living in the house to uncover little quirks that need to be fixed. Therefore, it’s smart for buyers not to max out their budgets and leave some financial wiggle room for improvements. Whether it’s a dripping faucet, creaky floorboards or trendy wallpaper that will become annoying just a few months in, small fixes and improvements can quickly add up.