75% Of Homebuyers Are Unprepared For These Unexpected Expenses In First Year Of Owning A Home
The Wealth Gang team writes about financial information, passive income ideas, apps, programs, cash management tools and other wealth gadgets that we think you might want to use or learn more about. Sometimes, we write about products, services or items that might be associated with affiliate partnerships. In these instances, we will earn a small percentage of the revenue from sales. There is, of course, no cost to you.
Thank you for all your support! Without you, we could not keep this site running. Gang Gang!
Buying a home can wipe out your hard-earned savings. The lack of emergency funds can be a major issue if your new home needs unexpected repairs that the seller didn’t inform you of. A new study revealed the potential pitfalls that homebuyers need to be prepared to encounter.
A survey from Home Advisor explored the pricey surprises that homebuyers encounter in the first year of owning a house.
The poll unveiled that a whopping 85% of new homeowners had to fix at least one problem that they were not aware of before they purchased the house. The unexpected issues are often purposely hidden by the seller. Nearly 3 in 4 home sellers admit to intentionally hiding a known problem from a buyer.
The poll found that new homeowners spent an average of $7,080 fixing issues left behind by the previous owners. There were over 30% who said the home issue was so severe and costly that they wouldn’t have bought the house if they had known about the problem beforehand. The issues were so involved that 44% of homeowners had to call a contractor to fix the problem.
Sue Riley – a real estate agent in New Jersey – cautioned, “You never want to forgo an inspection. Ever.” She added, “There’s a lot of hidden things that can come up, and you don’t want to be on the losing end of that.”
There were 44% of homeowners who had at least one regret about purchasing their new home – the number one regret was not taking maintenance and repair costs into consideration.
The most common repair issues for new homeowners involved electrical (40%), drainage (39%), roofing (37%), flooring (27%), and ventilation (27%).
The rooms that needed the most repairs are the bathroom (53%), kitchen (46%), bedroom (38%), living room (34%), and dining room (29%).
There was 75% of homeowners who admitted that they weren’t prepared for unexpected issues.
The poll of nearly 2,000 new homeowners found that the most common unexpected home issues are general maintenance or repair (46%), updates or improvements (37%), roofing (33%), plumbing (33%), and electrical (32%).
On average, homeowners spent $7,168 in repairs in the first year of owning their new home.
Nearly 1 in 5 homeowners don’t have an emergency fund to pay for unexpected home repairs.
Mark La Spisa – a certified financial planner and president of Vermillion Financial – told Grow that homeowners should have an emergency fund with “3 to 6 months of cash reserves.”
“There’s a lot of little hidden costs that most people kind of forget about” when buying a home, he adds.
Leigh Marcus – a real estate agent in Chicago – informs his clients to budget about 1% of the purchase price per year for home maintenance. Then if the homeowner doesn’t spend that money, it can be saved for a major repair such as a new roof.
John Bodrozic – the co-founder of digital home management firm Home Zada – believes homebuyers should save between 1% and 4% for unexpected costs.
“If the home is less than five years old, then one percent is the better number because the home’s equipment, appliance, and building materials are still relatively new,” Bodrozic told MarketWatch. “But if a home is 20 years or older, then the four percent number is more realistic because many of the home’s equipment, appliance and building materials have reached the end of the their useful life, and you will need to replace them.”