If you are looking to purchase a home, don’t focus on only the list price – think about the long term cost of owning a home.
The various components of a home have life expectancies and the longer you own a home, the more money you will have to spend on replacing those items.
Consider a typical 2,800 square foot colonial:
· A roof lasts 20 years and the cost to replace a roof could run $7,500
· A two-zone HVAC system could last 15 years and the cost to replace could run $10,000
· A hot water heater may only last 10 years and to replace could cost $750
· Household appliances should be replaced every 10 years at a cost of $1500
· To completely repaint a home could run $4,500
· New carpet for just the upstairs could run $3,500
· Older wood windows could cost $250 each to replace – easily $4,000 for the entire house
· Does the home have hardboard siding? Repainting and repairing is $7,000 or more every 7 years.
· Convert a hardboard sided house to Vinyl - $10,000 or more
We haven’t even talked about updating kitchen cabinets, countertops, bathrooms and we’ve already spend over $40,000!
If you purchase a 15-year old home that had not been updated and your plan was to live there 7 years, you could expect to spend $30,000 - $40,000 on updating the home. If you don’t do that, you will have resale issues because very few buyers will purchase a 22-year-old home that has not been updated.
When you buy a home, you have to factor in the cost to maintain and update it. This is why many buyers prefer new construction. They will pay more upfront, but won’t have to come out of pocket later to update their home. Most buyers can afford a larger monthly mortgage, but could never come up with the necessary funds to update their home down the road.
So buy smart – and use this simply formulation: list price + 7-year cost of ownership = true purchase cost.