Wondering what the true cost of homeownership is? In this episode, we discuss all the costs when buying and owning a home that aren't readily apparent. We talk about home maintenance costs and how location not just affects your home's cost but also lifestyle. We also explore the costs associated with new and resale homes.
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What we discussed:
Hi, everyone. I'm Karl. Welcome to another Homebuyer's School video, a channel where you get the latest strategies, tactics, and tips to help you with your home buying journey. Now remember, if this is your first time on this channel and you want to get the latest strategies from the experts, hit the subscription button below. Hit the little notification bell so you don't miss anything.
Today, I've got a special guest. I've got local realtor, Brad McCallum from RE/MAX First. The topic we're going to answer today is:
What are the hidden costs when buying a home?
When you go and you buy a home, people are often sort of laser focused on what's my monthly payment, my cost of my mortgage, right?
Then there's things like your property taxes that are on top of it.
Oftentimes when people move from, say, the renting to home ownership, they're also going up in square footage. In moving to a larger space, there's added costs for your heating, for your water, for your gas, for all those sorts of things.
Those are costs that people don't really kind of understand maybe upfront.
It's good to kind of go into it with an idea of what those costs will be, but then there's some other things that are a little bit less.
Cost of home maintenance
They don't show up quite as apparently on a ledger. That's things like maintenance, right?
There's just home maintenance that you need to do, everything from your gutters to checking your door lock sets, all these little tiny things.
They take time.
It's just part of homeownership that a lot of people don't really account for.
If you're buying a condo, there is a different type of maintenance than you would a duplex than a single family, and then up to a luxury, right?
For sure. That's right.
A lot of times, people have this mistaken idea that a condo or that the condo fees are just a cost that they have to pay each month for the privilege of having these shared uses or these shared spaces, but a big part of those condo fees can oftentimes cover maintenance on your lawn maintenance, on the exterior of the building.
In some cases, it covers your building envelope. These are all things that if you owned a single family home, you'd be responsible for maintaining and paying for anyways.
It's just taking that cost and rather than being, say, $15,000 to do your roof 15 years from now or 10 years from now, it's going to be something that's amortized over those months.
Because of that, condos oftentimes make it easier for you to have something that you can expect each month for your costs.
Every home, there is costs involved with maintenance, whether they're in fees or they're bore by the end user.
If you want to know more about the differences between condos and single family homes, check with this video above and then description below.
I would also imagine that location plays a big part of costs.
The hidden costs might not be in the home itself, but it could be, let's say, your transportation costs.
Cost of location
A lot of times, people think of like living right downtown.
You're saving a lot in your transportation cost, but then you're often paying a lot higher price per square foot for the unit, for the home itself.
Then if you come out to the suburbs, you're generally going to get more square footage, you're going to get a little bit more room around you, and you're going to get a little bit more for your money, but you're going to pay that price then in transportation to your downtown.
Those are some of the costs that people don't account for. It just comes down to each buyer.
They have to really con consider what their own personal needs are and then they'll be able to make that proper adjustment on what they value.
Cost of buying a new vs. resale home
As a realtor, have you found differences when someone's buying new versus a resale home in terms of the additional costs that they would have to pay?
All new homes are going to come with a new home warranty, and that's really going to protect the buyer for that first initial few years from any of the things that might pop up.
Some will be four or five years, some will be as much as 10 years on things like foundation and the building envelope.
But if when you buy a used home, you're now faced with the fact that you have to own all the past owners' maintenance, and did they do it or did they not?
And so as a realtor, one of the things that we need to do is help our clients find a home that not just meets their needs, but also understand whether or not it's been well maintained, understand if that roof needs to be done in a few years, understand what costs might be coming their way in the next, say, three to five years.
That way they understand the full picture of what they're actually purchasing.
That's also one reason why we recommend home inspections, so we can get a professional in there who sees this stuff every day and let get their opinion on what those maintenance costs might be.
Karl Yeh: That would be an additional cost is the home inspection, right?
The home inspection, you're going to be paying anywhere from 450 to $550, but it's like buying insurance on it. It makes so much sense. You know?
Karl Yeh: Yeah.
I own life insurance, but I didn't die last month.
Not a waste. It's what you want to have that peace of mind when you're making a big purchase.
There is more to buying a home than just your mortgage, right?
There's location, the type of home you're buying, new versus used, right?
There's all these different costs that people have to understand that isn't just, "Hey, I got preapproved or I got approved, this is how much I'm paying."
That's why you really want to be working with someone you can trust so you can have that conversation with them and say, "Hey, I'm looking at this property, or this area, or this community. What are the things that I'm not yet considering? What are the hidden costs?"
If you have that conversation, they'll be able to tailor it to exactly whether or not it's an older home, a new home, whether it's downtown, whether it's in the suburbs, just so you get the best information and so you can make a good buying decision.
Question of the day
The question of the day I have for you is:
Did you incur any additional costs when buying your last home?
Let us know in the comment section below.
If you want to know more about the costs of owning the home, check of this playlist here, as well as additional home buying videos here.
Don't forget to subscribe and I'll see you in our next video.
Let us know if you have additional home design or home buying questions that we can answer by submitting them in the comments section below.
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About Brad McCallum:
Brad McCallum is a local Realtor with RE/MAX First in Calgary, Alberta. He's made his name for himself by incorporating his passion for videography and marketing, along with his wife and family into his real estate business. This fresh approach to real estate has allowed Brad to stand out in a market of over 5000 realtors. His knowledge of home design and construction as owner of a renovation firm for 15 years helps him advise his clients on the purchase or sale of their home.