Although the down payment may be the biggest expense when buying a home, it certainly isn’t the only one. This is a case where ignorance isn’t bliss, at least as far as your wallet will be concerned — which is why it’s invaluable to work with a qualified realtor who can help open your eyes to costs during the home buying process and beyond.
“You try to give them as much information as you can,” says Woods Bros. Realtor Mark Tvrdy, explaining years of experience has helped him become aware of potentially pricey hazards specific to different homes.
Before getting in over your head as fees arise during the home buying process and after closing, here are a few things you can be on the look-out for with your realtor’s help…
Are you in a floodplain?
As we’ve recently seen, Nebraska is not immune to flood risks. In fact, floods are the most expensive natural disasters for homeowners in the United States — and insurance companies are well-aware of this, too. As a result, if the house you are considering is in a floodplain, expect to pay more in insurance coverage.
“It can come to be a great cost,” says Tvrdy. “Even if it’s in a 500-year flood plain, you can have this extra costs on top of it. It’s a bigger issue in Nebraska right now than people realize.”
Will you need radon mitigation?
There will likely be — and should be — a radon test completed during the process of inspecting a house when it is under contract. Although it’s hard to guess the results of this in advance unless there is already a radon mitigation system in place, older homes are especially susceptible to radon, which the EPA estimates causes thousands of cancer deaths annually.
In other words, radon is not something to mess with. If the home you are under contract for has a radon level of 4 picocuries per liter (pCi/L) or higher, you will either need to ask the seller to install a mitigation system or carry the cost yourself. Depending on the size and construction of the house, this costs approximately $1,000.
Is it a 3-tab roof?
As Tvrdy explains, many insurance companies are no longer covering 3-tab roofs because the thinner shingles offer limited protection. So although 3-tab roofs cost less to install, you may soon find yourself in need of a replacement. If you discover the home has a 3-tab roof before the sale, you may have some leeway with getting the seller to contribute money for a new roof. Otherwise, this might be an expense that will come out of your own pocket.
Is there knob and tube wiring?
Another red flag is extensive knob and tube wiring throughout the house, says Tvrdy. Commonly installed in homes during the first half of the 20th century, insurance companies now consider this system hazardous.
“You’re going to pay a greater cost if you have knob and tube wiring,” he says. “Underwriters are going to start looking at this and there are only going to be a handful of companies that take these.”
The expense to upgrade a knob and tube system is $8,000 on the low-end and can cost upwards of $20,000.
Will water flow toward the house?
Another issue Tvrdy says he helps home buyers consider is the landscaping grading — and specifically whether there are areas where water will likely flow toward the house and pool. Depending on the severity of the grating, this can be an issue for the foundation and flooding.
Some cases are relatively easy fixes, but others can put you at risk for major expenses in the years to come.