How to Budget for Home Maintenance

Every Realtor knows it's important to remind home buyers that all homes - old and new - will need ongoing maintenance and repairs and that it's important to budget for them.

This means that buyers will need to understand the 1% rule. The theory is that normal maintenance on a home is about 1% of the value of the home per year. For example, a $450,000 home would require $4,500 per year to maintain, and maybe a bit more in Fairfield County. Looked at as accumulated savings, this would eventually be enough to replace the roof ...and then, a few years later, to replace a failed water heater...and then a few years more until a new central air system is required.

You may have also heard about the 3% rule. Some experts say that home buyers should plan on spending 3% of the value of the home in the first year of ownership. This is because many new homeowners will likely have to buy drapes, blinds, a washer and dryer, a stove, re-finish hardwood floors, paint the walls and so on. Also, new homeowners often customize the environment to their taste, so they need to budget for repairs, replacements and maintenance.

The best way to understand the extent of the maintenance needed and the costs to repair and/or replace items is to have a home inspection conducted. Home inspectors are required to let the buyer know if a component is significantly deficient, or if it is near the end of its life cycle (service life). At Pillar To Post, we provide up-to-date repair cost guides and a website, www.LivingWithMyHome.com to help clients with their planning. You should definitely check it out!

We work with Realtors and buyers to help them understand the issues that are found in the home, regardless of age, offering the right perspective and objective information. A good home inspection determines the current condition of the house, offering a report of all the systems and components in need of maintenance, service, repair or replacement. Home buyers need to understand in advance of their inspection that it's normal for items in a home to wear out. This should be regarded as normal "wear and tear" and not necessarily a deal-killing defect.

For example, consider a home inspection that uncovers that the heating system is old and will soon require replacement. A home buyer may (and often does) see this as a huge problem! However, this problem may be one of the only items in the home that requires near term attention. If a buyer were to look at this situation in perspective, as counseled by their savvy Realtor, this home could be well above average - a home merely requiring a new furnace.

A Pillar To Post home inspection provides objective information to help the buyer make an informed decision. Knowing what items need to be budgeted for repair or replacement will help home buyers plan (and negotiate) better and not be stuck with unexpected costs of hundreds, or even thousands of dollars in the long run. Also, fixing these items will make a marked improvement on the performance of a home and minimize issues that could affect its future integrity...and value. That will make it an easier and faster sale when it's time to list it again too!