Saturday, January 21, 2006

Home Buying Basics Part 4

In the last blog, I covered some more ground on the home buying basics associated with selection process of buyers' agents, open home visits, and locality preferences. In this blog, I present some points that will help you determine your home preferences.

Some of the things that may drive your preference for a particular home should include (some points assuming this is not a new house):
  1. Price (obviously the most important factor).
  2. Amount of further work required to make the house contemporary in the interiors. Remember that on an estimate, an average kitchen upgrade can be in the range of $12000-$20000, and an average bathroom upgrade without significant plumbing work can be in the range of $4000-$6000. Interior painting costs can be in the range of $1500-$2500 assuming a 1500-1800 sqft home without multiple levels.Add to these, electrical upgrade such as recessed lighting, etc. can set you back by another 3 grand or so.
  3. Left over life of the roof. An oft neglected area of work is the roof. If the roof's leftover life is less than two years, chances are that in another two-three years, you will need to re-roof with a 10-20 year roof and the prices, depending on material used for roofing, range from $7K to $25K. Pretty telling in the initial years of mortgage. Look for a roof inspection report to find out left over life and for any possible water damage from roof leaks.
  4. Plumbing is another oft neglected area. Old cast iron pipes or lead pipes can cause frequent heartache through lingering leaks just when you need more time for other priorities. Check if the house has upgraded copper plumbing all the way to the faucets/outlets. Also check the flow of water in every tap in the house while you are there. There is no point floating from room to room without actually checking some things out.
  5. Appliances that are being left behind by the seller. A Washer, Dryer, Dishwasher, Cooktop, Hood, Oven, Microwave, and Refrigerator can totally cost around 6K-10K depending on your tastes. So be sure to find out their age and actually check if they are working while you are there. Also check the home inspection report on the working state of these appliances. If energy saving is on your priority, then newer Energy Star rated appliances may save you some money over the years with an upfront cost for the new appliance.
  6. Landscaping needs. If the front and back yard are already landscaped to your liking then that is an expense worth saved. Fresh landscaping costs can go all the way from 5K to 15K. Check if there is a lawn on the yards and if there is a sprinkler system. Check in the home inspection report if the system is working.
  7. Other money suckers are the heater, and water boiler. Look for the running state and age of these appliances in the home inspection report. The older the appliance, the poorer the performance in terms of energy consumtion and retention of heat.
  8. Exterior painting requirements. If a new coat of paint is required, that's another couple of thousands.
  9. Quality of windows and doors. Drafty, old, aluminum framed windows and patio doors lead to increased heating and cooling costs. If near a busy road, there is the noise factor as well. Its worth saving the expense of having to upgrade to new double paned windows if the seller has already done it for you. Typically these cost around $3K-$5K.
The above should help you factor in the added cost to you in your home purchase. Often, one could get desensitized by the hundreds of thousands of dollars shelled out for a home, in that, the creeping expenses like appliance costs, etc. that range in the few thousands, appear small. But, these do add up to a lot on your monthly cash outflow once you are tied to the mortgage and are trying to adjust to the new higher payout, lesser cashflow life. So be wise about these expenses and repairs and select you home carefully. Dont fall for quick glib talking agents' superficial smooth talk. Make an informed decision.

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