First time buyer, are we crazy to consider 20 year old houses.

Asked by Pan Ra, Alpharetta, GA Sat May 26, 2012

We are a family with 2 kids (5&1yr) and currently rent in the 30005 area and are considering buying in the near future. We like the 30005 area and started looking there and found most of the house are about 15-20 years old.

All our friends have been advising us against older houses as this would be our first time. Also to add, we are immigrants so housing system here is totally new for us, so self handy man is
(mostly) out of question.

Questions I have are (assuming a 4 beedroom, in the 300k range):
1. how much should I budget annually for maintenance and fixing of the house
2. do home owners typically sign annual maintenance contracts for the heating/cooling system and other systems in the house?
3. are home warranties offered on old houses and are recommended?
4. what should I expect 5-8 years down the line in, when these house will be nearing 30 years of age? Do the houses have a max usable age?

Appreciate your input.
Regards.

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Answers

10
Roland Vinya…, Agent, Sprakers, NY
Sat May 26, 2012
In our area, a 15-20 year old home is still considered "new". I have sold very few that new; most are 100 or more. I think that when someone does the math, the older home will always be cheaper, even considering repairs and maintenance. If you have specific things you want in a home, that may be a good reason to build. Don't be fooled; there are things that go wrong with new homes, too, though in most cases the moment when they do is deferred some years.

Older homes have more mature landscaping. If you like shade trees, you'll appreciate that. Old homes are taxed lower in our area, no matter what their value. What is the quality of construction of the older homes? There are periods and areas to avoid and ones to look for. For instance, I don't like the quality of materials that was available during the Iraqi War, especially at the onset. I like homes built during the Depression. Much quality construction and materials were used then, though energy efficiency was not a consideration. And so on.

If you elect to get the older one, set aside a certain sum in a special account, monthly or yearly, and use that for taking care of the things that go wrong. How much? A hard question - $2000? In our area, virtually no one offers or gets warranties and maintenance contracts, but it may be different where you are. You may elect to go that way for peace of mind.

The lifespan of a home depends upon the care which is taken of it. There are 1000 year old homes in Europe, 200 year old ones in my area. They may show some sags and other "character", but are sound and going no where, remaining perfectly useable. If you are going to live there for 30 years, I'd take a well-built older home that has been cared-for over a cheaper build new one any day. And if I had special things I wanted in a home, find a builder that I like and trust, then I'd go for the new one, provided I could afford it.
1 vote
Hank Miller, Agent, Alpharetta, GA
Tue May 29, 2012
Home warranties are an option (we always put them on for buyers) but with any type of warranty they can be filled with loopholes. While they provide a degree of security, I wouldn't make the assumption that they will cover every aspect of the home and everything that could go wrong. To me they are certainly worth the purchase price - just keep them in perspective.

In my experience, structural warranties on existing homes from independent companies are rare. While they're available, I would expect the cost and limitations on existing structures to be significant. In a sense, they will need to warrant something that they have virtually no knowledge of. I would expect any policy to either require a comprehensive engineering inspection ahead of coverage or a cursory inspection with limitations on what they will cover.

Architectural facets can be a concern on existing homes. The market is cyclical as are tastes; designs and materials come and go (think cedar contemporaries, splits, heavy european designs) and buyers will avoid certain designs and building materials (synthetic stucco, PB pipe, LP siding...).

There are clear differences between new and existing homes - clearly the most obvious is the warranty aspect. You will likely have structural warranties as well as warranties on all mechanicals with new homes. Most new homes are good to go for 8-10 years, most existing homes will require "updates" during that same period.

I would reiterate what I said the first time - I always counsel buyers to research the trends in areas first; find those with solid track records as location is paramount. Existing or new, if you have a desirable area and a home with features that the market recognizes as "valuable" then either existing or new will work. Both have positives and negatives and it'll boil down to what works best for you.

Hank
0 votes
Scott Hulen, , 64068
Tue May 29, 2012
Generally speaking new homes are usually built to the most recent IRC. (International residential building code) from 1976 to about 2004 very little in the code changed from an energy saving or even a construction standpoint. But in the last 8 years we have seen significant changes to the code in terms of quality of construction with a huge focus on safety and energy efficiency. I am a new home builder and have seen the changes; energy savings alone on a new energy star rated home vs. one built in 1990 is over 50% better. This means if your electric bill is 300 per month it would drop to 150 per month. In addition the newer materials available on the market add reduced maintenance, even more energy efficiency and an updated look which will not require extensive remodeling for 20-30 years. Great question! Learn more at enerystar.gov or ranshomebuilders.com
0 votes
Pan Ra, Home Buyer, Alpharetta, GA
Mon May 28, 2012
Thank you for the detailed replies, you guys & gals are terrific. I have a follow up question.

I see two parts to the maintenance expense:
~ appliances [I found some appliance home warranties for about $500/year for this]
~ architectural / structural

Are there structural home warranties? and what price range do these fall under?

Regards.
0 votes
Pam Santoro, Agent, Alpharetta, GA
Sat May 26, 2012
No, you are not crazy. Resale is a good value. You want to negotiate a home warranty when purchasing a resale home. Maintenance will depend on the condition of the house. How old is your roof? When was the exterior of the house last painted? How old are the appliances and HVAC systems?

Your budget will depend on the house you choose. Probably around $2,000 per year. Think about the cosmetic issues too like new carpet and interior paint. If a house is maintained properly, the age should not be an issue.
0 votes
Chuck Green, Agent, Norcross, GA
Sat May 26, 2012
Pan Ra,

No you are not crazy to consider an older home as they offer great space and design that you don't always see in today's current construction.

In regard to saving for maintenance alot will depend on each home... the age and life expectancy of the roof, hot water heater, and HVAC system will depend on whether it is original or has been replacedwithin the last few years. This question will become much clearer upon a inspection of the home...if everything is in good condition expect $1500 plus per year as a set aside.

Not a handy man then definitely get estimates on maintenance plans for your peace of mind and reduction of annual costs....

Negotiate a warranty for any home you purchase new or old...

5-8 years down the road the home should be fine provided you have maintained it correctly and in a timely fashion....remember paint,appliances, and carpet need mantenance too...
Web Reference:  http://chuckgreen.com
0 votes
Hank Miller, Agent, Alpharetta, GA
Sat May 26, 2012
You're not crazy but you have several things to consider. This area of Alpharetta is one of a few North Fulton/South Forsyth areas that is experiencing a resurgence of new construction; this is evidence of stability as you definitely won't see a lender fronting money on anything risky, especially to builders. Right now I have six clients building new homes in and around this zip - from 200K to 780K.

The answer to the general question will come from an agent asking more specific and pointed questions – a few of my new home clients didn’t expect to even consider that option until we really dug deep into what their situation was, what they expected, looked at budget and looked at what the best return on investment is likely to be. There is no best answer without a detailed meeting.

I could list all of the “standard” points but each client has their own set of requirements. I will tell you that I have no reservations about new construction in this area – however, that is said provided thorough research is completed on the project, area trends, the builder, the warranty and of course on whether or not this is a fit for you personally. I look at everything from a sales as well as appraisal standpoint. Every cleint of mine sees appraisal data exactly as I do and has it all explained, there are no surprises.

I could argue both sides of this effectively – from monetary to selection to appeal to resale to future expectations. Which option fits you depends on how experienced your agent is at establishing what is best for you. Success for you depends much on your agent selection – http://hounddogrealestate.com/about-hound-dog/how-do-you-fin…

I’m working this weekend, if you would like more info, run scenarios or review developments let me know. You might find this link useful for current market trends in 30005 - http://hounddogrealestate.com/atlanta-real-estate-conditions…

Hank
0 votes
Lee Taylor, Agent, Decatur, GA
Sat May 26, 2012
Pan Ra - great question. Roxie has a good answer but I see a few things differently.

That area pretty much developed 20 years ago, so if you like the schools, lifestyle and amenities, and see great value in eastern Alpharetta, that's great - just deal with the drawbacks of the quality lapse in building materials and in some cases construction and in some cases, neighborhood development that occurred during that era.

Once you settle on a choice, hire a great inspector and test, inspect and survey the entire property.

1. On a typical house up that way - budget $1500-2500 per year, or more if the landscape and grounds are high level - I bought a 1991 built Pulte home at Riverbrook in Duluth back in 1994, so that's about what I spent 4 years in a row until I got outta town and moved to L5P.

2. contrary to Roxie, I think that many owners sign maintenance agreements - termite service, landcape, and heating and cooling service contracts are all quite common and I recommend them if there is not a tremendous desire for hands on, owner level maintenance - these are also a good check off at resale

3. depending on the newness of the water heating, HVAC and appliances, and things like bath fixtures, and the siding, roof, garage door, etc. - you or may not want a home warranty - call up the service providers and get them to piutch you - if you don't like the math, then don't buy a warranty - try to get a seller to buy one of these for you, regardless

4. never buy a house in a hole - those have a time limit...everything else , just about, could conceivably live forever with today's array of plastics, coatings, and other nifty household gadgetry that make a a house in a great neighborhood something that should be there in the 22d century.

Will that Pulte home I bought in 1991 in Duluth still be there in 2112? I'll give it a maybe. I don't know Riverbooke nowadays, but it's a swim/tennis 'hood and folks pretty much like that...so, yes, maybe.

Will the 2 story house on a basement, the 1907 Victorian with asbestos siding, the one that has not been painted in nearly 30 years but still looks stellar, the house in Inman Park, will that house that I bought after I left Duluth in 1998 still be there in 2112?

Yeah, it's in a great neighborhood.
0 votes
Bill Eckler, Agent, Venice, FL
Sat May 26, 2012
Pan Ra,

You are not crazy....there are pros and cons for purchasing both older and new homes. One of the pros for seeking older homes is that in many cases their locations are better than those that are new. This often overlooked feature can make a difference in your quality of life.

On the other hand, buying an older home should be done with your eyes "wide open." A twenty year old home is likely at of very near to some major renovations that should not be overlooked...especially, the big ticket items. The condition of the roof, HVAC, kitchen and baths, etc. cannot be overlooked.

If you are considering an older home, our recommendation, is to seriously consider these factors and in the event they have not been updated, factor the replacement costs into your offer.

Eliminating a large number of homes based upon their age could essentially be removing the perfect home for you. Base your search on your personal search criteria not the age of the home. There are many well maintained older homes out there that are better options than a brand new home.

Best wishes,

Bill
0 votes
Roxie Cioanta, Agent, Atlanta, GA
Sat May 26, 2012
I would love to help you find your new home.
When your friend advised you on finding a 20 years old house, (s)he probably thought abput quality of construction. Probably (s)he didn't consider that floor plans and mostly finishes get obsolete after 10 years. Unless the property has been intensely maintained, it could be a source of constant expense and frustration.
To answer your questions...
1. Budgeting is important in this decision, and depends on the state of the house, some expenses may be covered by insurance (roof repair if damage occurs after a storm), each home is different; a service plan could help on appliances, you need to consider benefits and expenses from three providers prior to making a decision.
2. owners typically don't sign annual maintanence contracts for the heating/cooling system and other systems in the house, under one "umbrella". It is a personal choice. Sellers may offer a 12-months coverege for such a plan, as part of sale and purchase agreement.
3. if home warranties means structural warranty, typically this warranty if offered by the builder through an insurance company for the first 10 years from the first sale of the home (to first owners and transferrable to the following owners).
4. expect EXPENSES, bluntly. Although, some properties that were well-kept won't be money-pits.
No house have maximum usage, yet it comes a time when due changes are imperative.

Remeber each house is unique, and you have to find yours that you will call it home.
If I can help you find it, please let me know, I will gladly do it.
Regards.
0 votes
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