Owning a home comes with regular maintenance and repair costs.
Maintaining and repairing a home is part of home ownership. The average homeowner spends 1 to 3 percent of a home's market value annually in maintenance costs and 10 to 20 percent annually in repair costs, according to BlueRibbonHomeWarranty.com. These fees are over and above the cost of a mortgage payment and are expenses all homeowners should consider before signing a real estate contract to purchase a residence. Does this Spark an idea?
Maintenance and Lifespan
The lifespan of fixtures and appliances in a home varies based on how well the items are maintained. When purchasing a home, having a maintenance schedule is crucial, regardless of the age of the home or its appliances. Homeowners can obtain maintenance schedules online for older homes, and new home builders provide maintenance schedules prior to closing. Each month, there are items homeowners must address on the maintenance schedule. This helps to defray maintenance costs while maintaining an allowance for scheduled items that need to be serviced or replaced. Furthermore, not maintaining certain items on a property can invalidate a manufacturer's or builder's warranty. For example, homeowners that do not perform maintenance on air conditioning and heating systems void the warranty as a result of the neglect.
Repairs and Options
Making repairs to a home goes hand in hand with owning it. Due to the escalating costs of replacing items and repair fees, it is essential that a homeowner has a plan in place to make expensive items more affordable. Homeowners can sign up for a home warranty plan for an annual rate of $350 to $600. These programs charge a small deductible to repair and replace broken items in a home covered in the policy. In new homes, the builder offers homeowners a home warranty on most electrical, plumbing and structural systems. Builder warranties last from one to five years, an obvious benefit to buying a new home. In addition to the builder warranty, window and roofing manufacturers offer additional warranties from 10 to 20 years, protecting against manufacturer defects in their materials. However, this does not cover damage due to natural disasters or improper maintenance.
Real Estate Sales
Even if you're selling a home and think you're off the hook for any repairs, think again. Home buyers interested in a property will typically hire a third-party home inspector for a fee. The property inspector provides the buyers with a list of items that need to be repaired or replaced that will, in turn, be presented to the seller as part of the negotiating process. While the repair cost varies from contract to contract, the sellers should have a budget in place for any structural or mechanical damage cited in the inspection. For example, in Texas, the average repair cost is $500 on most items noted by a home inspector. Repair costs are deducted from the price of the home, added onto the contract or taken care of through a one-year home warranty that the seller purchases for the buyer.
Foreclosure Considerations
Home buyers purchasing a foreclosure property often have to contend with higher repair costs related to the property than they would in a traditional home sale. Most foreclosure properties are sold "as is," meaning that the bank, as owner, will not accept or assume responsibilities for repair or replacement of items in the home. Foreclosure buyers should budget for additional repairs or have a home warranty added into the purchase contract to defray replacement costs and expensive repair work.
Tags: home warranty, repair costs, builder warranty, Home buyers, home inspector
