Thursday, July 07, 2011
Things to Find Out Before Buying a Home
Baruch Hashem, home ownership has worked in our favor, but the more times I do it and the more times I field questions, the more I realize that in a certain sense, I've went in blind and thankfully everything has worked out well.
I've written a lot about hidden costs on this blog and I thought I'd address five areas of hidden costs on a home and what questions to ask:
1. Utilities? It is a good practice to get an accounting of utilities used in the past year. But utility bills aren't the entire story. Do the current owners blast the heat or bundle up? Do the current owners shvitz in the summer, or is the home nice and cool? Are people home using utilities during the year or is everyone out of the house? Knowing how many residents is helpful also. If an elderly couple is living in the home, e.g., the water bill estimate will need to be increased if you are moving 2 adults and 4 very active children into the home.
To get a good handle on what utilities should run, speak to other people in the neighborhood to compare costs and try to come to a good estimate regarding the cost of utilities.
2. Property Tax? Knowing what the current owners are paying in property tax is not enough. It is a good practice to get copies of 3 years of bills to see the assessment and credits. Many counties offer credits which might be applicable to the current owner but won't necessarily be applicable to you. If there are credits for energy saving improvements, find out if that credit is applicable. Do the current owners qualify for a property tax credit based on income for which you would be ineligible? Even if you are currently eligible, what type of jump will you experience should your income increase?
3. Insurance? Insurance costs can vary widely. Rather that inquiring about the current owners current insurance policy, which might have a different deductible or different coverage amounts than you would like, call your insurance broker directly and get a solid estimate regarding insurance. It is very likely the current owner qualifies for a lower price based on military service, for example. To date, I have been unable to match the insurance price of the previous owners of this home, although we've been able to shave off cost by working with a great broker.
4. Maintenance and Upkeep Bills? If I'd only asked for maintenance bills on the first home, I might have either opted for a different home or asked for a sizable discount. A home inspection can detect a lot, but if an owner is a bit, uh, desperate, you might find yourself in for more than you bargained for. Are there regular repairs to any systems, like plumbing? Will you need to bring out a pest control service regularly for bees or other vermin?
If you are buying a home with a bonus, like a pool or fancy landscaping or even a deck/gazebo or a fireplace, find out what that costs are to maintain the extras (or alternatively, hauled away). Don't forget to find out what it costs to have the lawn mowed, the gutters cleaned, or the leaves raked if you don't plan to take care of it yourself. Even if you do plan on taking care of it yourself, it still might be good to work the extra into your budget. Neighbors don't like seeing your lawn turn into the jungle because you've been traveling for work.
This list just touches the surface. Feel free to share your surprises.