The prospective cost of fixing a leaky sink could be keeping some younger renters away from homeownership.
That’s according to a recent Puronics poll of 1,100 adults, aged 25 to 40. Nearly half, 45%, of millennials said the idea of pricey maintenance deters them from buying.
The website asked respondents about the biggest barriers between them and homeownership, and costly repairs was a big factor. Electrical and drainage issues, like a broken faucet, were especially concerning.
Among those who own and do have money set aside, the average total amount is $2,869. But 76% said they don’t have a budget for maintenance at all.
That can be unsafe, experts say. A solid assessment of the place by a professional can highlight potential problems.
“It’s not uncommon a first-time homebuyer will use up all their cash because they’re trying to buy [quicky and] as much house as possible,” says Mark La Spisa, a certified financial planner and president of Vermillion Financial.
“I could see in some of these hot markets — Florida, Texas, Nevada — where people are moving and in bidding wars, that some people are foregoing the inspection because they won’t get the house.” But, he adds, “that’s a big risk.”
When you take the time for an inspection, adds Robert Erickson, a real estate agent in Los Angeles, “some issues that could arise [will be] brought to your attention during that time. No one wants “something popping up later that they didn’t know about” before closing the deal, especially when what pops up later could require lots of money to address.
Video by Mariam Abdallah
Plus, when you know what needs fixing, you can negotiate with the sellers to address the needed repairs, reduce the sale price, or provide you a credit for the work to get done. If the sellers aren’t willing to come to the table, Erickson says, you may need to walk away.
In general, experts agree, don’t rush a decision this big or buy a home before you’re ready.
Not prepping your finances in advance could cost you down the line: More than four-fifths, 85%, of new homeowners in a separate HomeAdvisor survey had to fix at least one problem with the house they didn’t know about beforehand.
Ultimately they spent an average $7,080 on issues the previous owners left behind, well over the $2,869 average people Puronics polled had saved.
Even if you check off all the boxes before moving, it can’t hurt to save extra money, just in case.
Don’t use all your cash for the down payment and closing costs, says La Spisa. Set aside around 3 to 6 months’ worth of cash reserves for unexpected repairs and maintenance costs.
For would-be homeowners, he says, that helps form “the foundation of their personal finances.”
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