Are New California Homeowners Prepared for Home Maintenance Costs?

According to a recent survey discussed in the Scotsman Guide, 70% of a poll of 1600 recent homebuyers  had one major regret in their buying experience: reasons tied to "cost-based remorse".  Buyer, or seller, remorse is not unusual, nor has it ever been no matter in what market a transaction occurs--much of it, I believe, is due to unexpected aspects of the experience.  It's impossible to predict all events, but the more preparation, planning, and advance knowledge a party has, the faster the remorse will subside. 

1920s Spanish bungalow

In today's market of fast moving market of competitive bids, advance preparation about costs and the subsequent homeowning experience is essential--because often in a fast-paced bidding war, time to think things out slowly doesn't exist.

Costs of owning your new home should be considered before you begin your househunt:

1. Age of home

2.  Location (nearer the ocean means salt air can affect paint and old foundation concrete)

3. Pest control (inspections every 2 years, please--termite and dry rot issues)

4.  Plumbing (replace sink and toilet valves before they break down or become impossible to turn; water heater may need replacement after a few years; waste lines; sewer lines)

5. HVAC system (vents need cleaning, furnace filters need replacing)

6. Gutter cleaning (clogged gutters cause water issues)

7. Fences (wooden ones degrade)

8. Landscaping maintenance 

9. Roof (Composition roofs with one layer may last 20-25 years--less if more layers)

10.  Home insurance (may go up due to rise in claims, climate issues, location)

How to budget for these costs on a general basis?  

Try the 1% rule: If the selling price was $700,000, reserve $7000 annually; or using the square footage rule, a 1200 square foot house will mean saving $1200 per year.  This may also depend on whether you own a single family home or a condominium (but monthly dues are also a homeowner cost). These are only initial estimates, but will also help a homeowner prepare.  More guidelines are at this site by State Farm (I'm not endorsing this company, only providing a link as a guideline). The buyer should search several sources, including their own insurance company, to gain estimates.  And see this real-life home-buying example of a couple in Gardena California and their cost/budget experience

Julia Huntsman, REALTOR, Broker | http://www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

Avoiding Buyer's Remorse--Is That Possible?

Sometimes no matter how much research is done in advance, buyers may still suffer the pangs of remorse after a purchase, and buying a home is no different.  There are seemingly endless disclosures made in a California real estate transaction for buying a residence, but with so much going on after escrow is opened, a buyer should have "eyes open" as much as possible during the home search period.  Searching for homes on the internet, which is performed by almost all buyers in the initial stages, is one part of the home search. 

But in order to avoid the awful feeling that something is wrong after you've closed escrow, try to focus on what are the most important things to you from the very beginning.  For many people, having the right neighborhood, schools, as well as the features of the home itself, are key to their happiness.

Feelings of happiness/regret vary by age, region, demographics and income level.  According to a 2014 study of 2000 adults by Redfin (a large brokerage), if you lived in the West, were over 65,  male, and had an income over $100,000, you were more likely to have less buyer remorse.  For example, 85% of people over 65 said they would buy their home again.  Women with children under the age of 18 (27%) were more likely to express regret. 

How to avoid feeling regret?  Know your local market, i.e., shopping, schools, neighbors and neighborhood, commuting time, as well as loan types and interest rates, buyer competition (or months of inventory) and local list-to-sell percentages.  These are all basic factors about buying a home.  Determine your top priorities - and I do like to remind people that priorities can change as they become familiar with their actual buyer environment.  Knowing the neighborhood may mean knocking on doors to see the people to ask their opinions--a Realtor can go with you for introductions, but your Realtor cannot tell you information that you need to discover personally, if this is important to you. Taking time to order and review property reports, and review transaction documents are essential to homeowner happiness.


There will probably not be a perfect home, but the list of dissatisfactory items will be much shorter the more conscious the buyer is, and the more thought put into, about the home choice.  Not only does this extra work reduce later buyer remorse, but it reduces anxiety.  Prior education, in my opinion, reduces unrealistic expectations and produces more long-term satisfaction.  Going over the buyer/seller contract may seem very dry in the beginning before the home search, but there may be much later reward in owner satisfaction! Taking the time to discuss your opinions of homes you've viewed with the Realtor helps your agent help you.  Realtors know what size bathrooms and closets you can probably expect with a certain age of house, in a given area--most Cerritos homes are more contemporary in style than the majority of Long Beach neighborhoods which date from earlier eras.  This kind of discussion can help you judge if you should change a priority or not. 

Buying a home is a significant purchase, it should be accompanied by a corresponding understanding.

Buying or Renting--What's Best for You?

What should buyers be considering BEFORE they buy?  Looking on the internet gets people into the initial stage of exposure, before they even call a REALTOR.   Most people think the property viewing stage is fun, both on the internet and in person, and it should be enjoyable.  But what about the advance homework?  Internet photos and marketing can get you hooked, but it can also be a nervous, even fearful time, coming to the decision to submit an offer when you're new to the process. Even if you're a repeat buyer, buyer's remorse or indecision will have far less impact if you think over some things in advance, and consider now what your fears may be (it's not unusual to have a few).

Sticker Shock:  Renting might be cheaper than owning -- do you have a mortgage pre-approval with estimated costs before you go out and look?

Home Maintenance: Are you prepared to spend time on painting, fixing leaks (or hiring someone), mowing a lawn, saving up for a new roof? Do you know how much it will cost to heat that pool every month--or just keep it clean? And then there's annual insurance premiums.  Just some of the things to think about.

Have you checked out all utility bill costs for a house vs. your one-bedroom apartment? It would be a smart thing to do now. 

Top 10 Mistakes Buyers Make

 

California Association of Realtors has made a very nice graphic about their list of buyers' top 10 mistakes in a transaction.  Since they have the experience of hearing from many agents all over the state, they would be in a position to hear the most common complaints.

Personally, I haven't had equal experience with every single one of these items when working with a buyer, but when I think about, I can come close.
Item 1:  In every market, there seems to be a certain buyer who makes a below market offer (possibly known as "lowball") and wonders why the seller didn't respond with a counteroffer, or at least hear from the listing agent. Buyers, if you are this type of offeree, please know the seller is not ever required to respond (although it's nice of them to do so) if they don't like your offer.  Even if you are totally right about the price, and sometimes you are, it doesn't matter. Because the seller has a different perception, and does not agree with yours, even if you are right. Which leads to an important point: a good contract agreement reflects a meeting of the minds. Buyers, sometimes you have to either move on, or wait and see.  

And then there's the frustration of Item 2, where the seller accepts another buyer's offer. That other

Seller Top 10 Legal Mistakes, Part IV

Not providing the buyer with legally required disclosures.

There is an important form used by REALTORS in California transaction named the Transfer Disclosure Statement (TDS) for residential sellers to make certain written disclosures about their property. This form is required by the California Civil Code, since 1987.

Sellers often forget how important it was to them as a buyer to find out what their seller could tell them about their new home. Buyers still want to know, so what is a checkbox and a few blank lines to fill in to a seller on the TDS is a world of important information to the buyer(s).

The TDS is meant for the seller to tell the buyer what is within their ordinary knowledge about their property, i.e., repairs, how recently painted, permitted and non-permitted modifications or additions, how old the roof is, new flooring, is there a sump pump under the subflooring--in other words, things that the mentally present person is not likely to have forgotten about.  There is even an additional multi-page Property Questionnaire covering numerous topics to prompt the seller's memory, a document which is not legally required but is often requested by the buyer's agent. Buyers sometimes think that sellers purposely didn't tell them certain things, like that rot that was found after the brick facing was removed from the front of the house. But things can happen that the seller may have no knowledge of, especially if they lived there for many years without spending money on maintenance. But then there's the case of the freshly painted bathroom that may have been covering over the water stains from a roof leak, which the buyer found out about on physical inspection, but where there was no disclosure about it on the TDS.  Sellers, it only upsets buyers when you're not totally forthcoming--it may be painful to negotiate during escrow and walk away with less money, but it could be saving you from an angry buyer (that did not discover a problem during escrow) and a lawsuit later on.

It's important to give this TDS document to the buyer, in the time period stated in the contract, since the buyer has the right to cancel the contract otherwise. If the seller thinks he/she doesn't have to provide this form and refuses to do so, the seller will be liable for any resulting damages (that means . . . attorneys, and more money spent).  If they seller accidentally includes wrong information, and then realizes it later, they may amend the TDS and give it to the buyer. There are certain sellers exempt from this form, such as in probate cases, and trust, plus a few other types.

And there are other required disclosures, including those about natural hazards, lead paint, special districts, and others, such as death on the property.  If someone died on the property more than 3 years prior to the buyer's offer to purchase, or if they died from AIDs, the seller is not required to disclose that fact, unless the buyer asks. If someone did die before that time, then the seller must disclose it--because if you the seller thinks the buyer won't be talking to the neighbors later on, you should think again.  Buyers should know what they are concerned about before and during their buyer investigation period, so that they are not unpleasantly surprised after they move in.

This is a more complex and lengthy subject than in this post, if you have questions please feel free to contact me.
An observation:  It's so very difficult to absorb all that is conveyed in the tiny print in these transactions, so my advice is:  turn off your TV, do not check your phone, your iPad, your computer, just sit and focus in as quiet a place as possible when completing your documents.  It is not a time for multi-tasking.

Homebuyer's Remorse and Does It Go Away?

I'll get straight to the answer: Yes, if you work at it, in about 6 months (for many people). It starts going away after you begin to get used to your new monthly payment, fall out of love with the property and see it through normal clear lenses, and realize that in fact you did look at other houses, but you chose the one you're in. The operatives words here are: "you chose the one you're in", because after all, in California in particular, there are many contingencies, many opportunities to review disclosures and reports and ask questions, review the seller's disclosures and approve or disapprove them, plus have a full contingent 17-day period in which to cancel without losing more than the cost of your physical inspection. (You did get one, right?)

Yet people like to play a little game, and somehow minimize, or even erase, their part in the decision-making, or worse yet, lie to themselves: "The self-interested devil made me do it." Well, we all do a little of that at one time or another, it takes the pain away, but if you're really grown up about yourself, you finally and quickly wake up and stop kidding yourself.

Webster's dictionary defines remorse as: "A gnawing distress arising from a sense of guilt for past wrongs." So how can you minimize this period (because it's bound to happen to one degree or another)?

• Did you buy this property after you thoughtfully considered your needs and desires, or did you buy it to please someone else?
• Did you take the time during escrow to really review your documents and ask questions.
• Did you drive the neighborhood or talk to neighbors?
• Did you try to get married, throw a debutante party, go abroad for at least two weeks and then come back and work 100 hours a week?
• At the close of escrow, did you still feel this was the right property for you?
• Did you review your loan documents and ask your lender questions?
• Have you ever handled a monthly payment in your current amount, and did you review that amount carefully prior to close?
• Did you feel that you did enough homework about your purchase, or could you have done more?
• Did you work out a budget for yourself taking into account your new purchase, i.e., property taxes, homeowner insurance, monthly maintenance and bills.
• Did you consult with your tax accountant so that you can realize the full benefit of all your federal and state tax deductions, including mortgage interest and property taxes?
  

So you bought this for yourself, you knew what your monthly payments would be and you believe you did all your homework? One more important thing: It's important to be emotionally ready to own a home, because there is a responsibility that you don't have as a renter. Otherwise, what you have is the common phenomenon known as buyer's remorse--refer back to Webster's definition and the involvement of guilt.

This remorse goes away, usually after you get through your first year and learn about the financial plusses of having bought a property where you may build equity over time, having numerous tax advantages, and knowing you cannot be evicted by a landlord. For a little more perspective, read this New York Times article on homebuyer's remorse.