Home Heartbreak

Congratulations. You have made the decision to purchase your first home. You have a decent sized down payment saved and are ready to buy. Not so fast. At our first meeting I sit down with the buyers to advise them that it isn’t only the down payment they will need.

Before we get to the closing table, buyers have paid for home inspections and appraisals, typically considered out-of-pocket expenses. Home inspections can run from $600 - $1500 and up, depending on the square footage of the building and what specific tests are warranted above the general building inspection. If a home has a private well and septic system, you can expect to have multiple water tests to look for hazardous elements like arsenic and radon and the septic tank will be opened and examined along with the leach field.

I would like to take a moment to note that in this roller-coaster-of-a-ride real estate market, oftentimes buyers have asked if waiving their rights for a home inspection will help their offer stand out in a multiple offer situation. The main purpose of a home inspection is to give the buyer(s) information needed to make an informed decision on the purchase of a home. The inspection report should highlight potentially major defects that will cost the buyer a lot of money in repairs after the closed purchase. To protect the buyer(s), I advise that inspections are still obtained but the results are to be used for informational purposes only and that buyer will not look to the seller to monetarily address. This contingency will allow the buyer to terminate the purchase if unsatisfactory.

Other costs we discuss include closing costs and post-closing costs like: home maintenance, property taxes, utilities, and homeowners insurance. Although some mortgages include property tax and homeowners insurance in escrow accounts which are part of the monthly payment. Oftentimes, buyers are not realistically looking at what these expenses can add up to. According to a 2017 Zillow report, U.S. homeowners can spend more than $9,000 per year on these hidden homeownership and maintenance costs.

So before you make a purchase, make sure you know what you’re getting into. Know the total cost and your budget. And it’s never a bad idea to leave a little wiggle room because some costs may continue to increase (looking at you, property taxes).