Hidden Costs That Could Hurt Your Wallet
It’s tempting to purchase a house with great bones and a bargain price, confident that you can transform it into your dream home, just like they do on TV. But a fixer upper can require way more than cosmetic improvements—and after a down payment, legal fees, a new mortgage, and taxes, the cost of addressing serious structural or systems problems could easily add up to big bucks (hence the term money pit!).
To avoid a major financial misstep, hire a professional home inspector to give the property a thorough going over (find one through National Association of Home Inspectors), a measure well worth the $200 to $400 you’ll shell out. If you or your inspector catch problems, you may be able to arrange a lower price or have the current owner make repairs prior to purchase. (An inspection is permitted for a home in foreclosure being sold directly by a bank, but a property purchased through a foreclosure auction is not afforded this opportunity.) Before you get carried away and make an offer on an abject abode, click through to see what issues might be in store and to get an idea of the true renovation costs. Caveat emptor!
One of the most expensive yet easily overlooked repairs home buyers encounter is damage to the foundation—the concrete base of the structure. Cracks and breaks quickly lead to structural shifts, water damage, and biological hazards like mold or insect infestations. When house-hunting, look for cracks and chips in the concrete wall outside; damage inside would look much the same, but may be difficult to spot if the interior wall was covered during a renovation. Foundation damage can cost between $450 for a small repair to more than $10,000.
From faulty pigtails in the wiring system to an outdated fuse box, making electrical improvements are often beyond the purview of the average DIYer. And if a house was wired with sub-par materials, you could find yourself saddled with higher insurance premiums—not to mention fire risks. Identifying electrical issues is best left to the expertise of a home inspector, but a wise would-be buyer can estimate the age of the electrical system by looking at the electrical panel: Older systems will still have a fuse box, whereas newer systems will have a breaker panel. Other troubling indications include buzzing sounds from outlets/switches, flickering lights, or signs of a rodent infestation, such as droppings (the critters love chewing on wires!). Quick repairs to an electrical system run around $300, but larger renovations can cost up to $15,000 if the entire house needs to be rewired.
No matter what upgrades you make to the interior, it can all be for naught if you can’t protect you home from the elements. A few small leaks might possibly be fixed for about $650, but holes here and there are a pretty big sign that the entire roof needs replacement. Signs of worn roofing include torn, bent, or missing tiles or shingles. However, this is one of the main areas that home inspectors cover. Costs can start at $1,700 for an asphalt roof and go far steeper if opting for premium grade materials, such as slate.
Related: 7 Signs You Need a New Roof
Some bugs are merely creepy, others—the dreaded destructive termite, for instance—can cause serious structural damage. Hiring a professional exterminator to bust a minor infestation will cost about $200, while repairing termite-ravaged walls, wires, foundation, or insulation can run around $8,000 or more. And some termite damage can be irreparable, causing a building to be condemned. If you spot holes in any walls, gatherings of what appears to be sawdust on the floor, discolored or drooping drywall, or peeling paint that looks like water damage during your initial walk through, you might want to keep on walking!
Related: 10 Reasons Bugs Love Your Home
No matter what repair, renovation, or remodeling plans you might have for a fixer upper, expect to pay between $450 to $2,000 (depending on your city and state) per permit before you can start the work. While some contractors may bear the cost of pulling permits, you’re fooling yourself if you think those fees won’t come out of your wallet in one way or another.
Dreaming about a high-end kitchen or luxurious master bath can be fun, but before you leap into your fantasy, consider applying for a renovation loan. The average price for a kitchen renovation is around $20,000, while a simple bathroom redo is around $8,000. Price out your plans (including appliances, materials, and contractors), then add 10 to 20 percent to cover any miscellaneous or unexpected costs that are apt to arise.
A stain on the ceiling or a water mark on the basement wall may not sound alarms at first, but lurking behind the discoloration may be leaking pipes and severe water damage. Repairing your pipes can range from $150 for a simple leak, to $1,500 if a new water line needs to be installed. Once the plumbing problem is addressed, repairing water damage can range from $50 for a can of paint to well over $10,000 to remedy a range of problems including removing mold, replacing insulation, and fixing damage to the foundation, walls, floors, and ceilings.
Faulty Heating and Cooling
An antiquated washer-dryer or fridge may be obvious to the untrained eye, but faulty heating and cooling components may not be easy to spot. Repairs to a faulty water heater can come in at around $500, while a replacement can run from $750 to $1,800. A simple HVAC maintenance call can cost $200, but if you’ve got to replace the furnace, you’ll be paying a hefty $8,000 or so. Also often overlooked is the septic system, which can cost around $1,500 to repair while a new system will cost $5,500 on average.
More important than money is your family’s health—and some fixer uppers can hide hazards to your wellbeing. Mold and asbestos, lurking in places you may never think to look, can lead to respiratory problems and even cancer. Banishing hazardous materials is specialized and pricy: Mold removal is generally quoted at around $2,000, while asbestos removal can range between $2,000 to $30,000 depending on the type and amount of the material.
Your home is most likely your largest investment. Home insurance is a valuable way to protect the investment, but could you save money on your home insurance policy? Read our top tips for how to safeguard your property while saving money.