The typical pre-purchase challenges to buying a home are well known. For one, we're making an important decision in a few weeks or months while looking at a subset of housing options that are available at the specific time we happen to be searching. We have to navigate money, emotions, and family issues. On top of that, we have to make this big decision based upon incomplete information. Even the information about ourselves, the stuff we are supposed to have a good grip on, ought to be double-checked.
- Self-knowledge: am I really going to add 20 minutes to my commute? Do I favor this home because the prior dozen we toured didn't appeal to me? Sure, the furnace in the new house is feeble, but we have grandma's handmade blankets to keep us warm at night.
- Partner-knowledge: We're in this together. I might want to scream at you in a pillow in our new basement, but at least we now have a basement. I just wish we didn't have to store all the useless junk your grandma wanted you to have. I also wish you had the #@!% courage to donate it, sweetie.
What could possibly go wrong?
We're glad you asked. The main source of post-closing dissatisfaction arises from renovation expenses. Some of these might be unknown expenses, and others might be poorly understood by the homeowner. How well buyers guard against the prospect of dissatisfaction influences their long-term enjoyment of the property.
Owners dream about making improvements to the layout, kitchen, bathrooms, basement, etc. before they receive the keys. They have spent hours on Houzz, Pintrest, and HGTV programming. They have a report from their home inspector. They are ready start to interviewing contractors and architects. When does demolition start?
- There are months of planning and construction in front of our clients. It's a deliberate process when done right. The surest way to drive yourself and your builder to tears is to rush ahead without careful planning. Everybody wants to finish the work. Patience is key, especially near the end when project fatigue sets in.
- The unglamorous work of improving the structural, electrical, HVAC, plumbing, and insulation values of a home are usually major items. We understand why many people do not want to touch these until they fail. The problem with waiting until failure is that the homeowner is now seeking fast corrective action. This is the difference between fixing a problem today and planning improvement to the home for years of enjoyment.
- Buyers would do well not to place too much reliance on home inspection reports. One risk is that the homeowner is now informed just enough to be dangerous. Another risk is that while some inspectors are more thorough than others, all of them are trained to comply with their own more stringent insurance policies. In fact, inspection reports are now specifically written with eye towards limiting liability to homeowners following the 2008-2009 housing crisis. Describing "cascading effects" or including excessive detail is disfavored. For example, inspectors might dedicate a sentence to galvanized steel pipes without the crucial information about the expected replacement cost; thus it's easy for a buyer to read that note without comprehending the scope of work or money involved in upgrading it. What a surprise when the buyer receives plumbing estimates and timelines! Then there is the drywall repair, painting, and replacement of a corroded tub drain . . . the home inspector shrugs and says "I noted the galvanized steel plumbing lines in paragraph D on page 27." This is an example of the homeowner having some information and simultaneously being woefully uninformed.
What should a prospective home buyer do? The answer to this question depends partly on who you are. If you are the type of person who is not interested in house projects at this stage of your life, then it's best to find a newer home or one that has already been substantially upgraded. The main value of new construction/substantially upgraded homes is peace of mind; that the prospect of major home improvement expenses has been put to rest for the foreseeable future. If you are the type of person who likes the idea of improving an older home, then we recommend purchasing one that is 20% or more below your financial capacity so that you have dry powder to handle planned improvements and urgent repairs.
More project news coming. We hope everybody has a good Labor Day break!