Underestimated Costs of Owning a Home
Purchasing a home is an enormous accomplishment, but making the leap from renter to owner also carries plenty of financial challenges – including the responsibility of paying for numerous upfront and ongoing expenses.
To help shed some light on some of the unforeseen costs of maintaining a home, American Home Shield, the nation’s largest provider of home warranties and a business unit of ServiceMaster, has collaborated with Lynnette Khalfani-Cox, The Money Coach®.
“As a homeowner and personal finance expert, I’ve had firsthand experience with the initial and ongoing hurdles of owning a home,” says Khalfani-Cox, former finance reporter and co-founder of AskTheMoneyCoach.com. “To help homeowners and homebuyers plan for these often overlooked expenses, I’ve teamed up with the leading home warranty company, American Home Shield, to provide successful money-saving tips that any homeowner can practice.”
Here are four hidden costs Khalfani-Cox has identified that ultimately help maintain home value and allow homeowners to enjoy their investment:
Hidden Cost 1: Home Maintenance
- More than half of homeowners and prospective homeowners say they’re unprepared to address (58%) and not very knowledgeable about (54%) home maintenance needs, and all homeowners can expect to regularly shell out money for routine maintenance, according to the 2016 ServiceMaster Consumer Experience Survey. The good news is these expenditures are typically well worth it, as they will help keep the property in tip-top shape, preserve its value and prevent small issues from turning into major problems. For example, homeowners may need chimney cleaning, HVAC servicing, snow plowing, pool maintenance and other services throughout the course of the year.
Hidden Cost 2: Home Repairs
- It’s inevitable that items in the home will break, malfunction or simply wear out. Homeowners can certainly try their hands at minor repairs, but a smart strategy is to purchase a home warranty that can be customized to their unique needs and budgets. Unlike homeowners insurance, which provides protection for things you hope never happen, like fire, theft, water or wind damage, home warranties are service contracts that offer repair and replacement coverage for major appliances like a refrigerator, washer and dryer, as well as major components of your air conditioning, heating, electrical and plumbing systems. Not only will the job be handled by a professional service contractor, but a home warranty can help save time and frustration associated with failed homeowner repair efforts. In fact, a 2016 American Home Shield National Contractor Survey found that nearly 60 percent of service contractors say they are often called to fix homeowners’ do-it-yourself attempts to repair major systems or appliances.
Hidden Cost 3: Home Utilities
- A number of factors will affect utility costs, including region of the country, size of the home and how energy efficient it is. Larger homes will cost more to heat or cool than smaller ones, although proper insulation and other energy efficiency investments can make a big difference. Homeowners in warm weather states should expect to pay more for air conditioning, while those in cold climates will face higher heating bills in the winter – not to mention the potential expense of fixing frozen pipes when temperatures plunge.
Hidden Cost 4: Home Upgrades
- Homeowners should keep their property updated, replacing faulty windows, painting the interior or exterior of the home when needed or perhaps getting rid of outdated items, like old carpeting or tattered wallpaper. Appliances should also receive regular maintenance so everything is in good working order, and should have the features that are comparable for similar homes in their neighborhood.
“As the nation’s largest home warranty company, nearly 2 million customers rely on us to help them maintain their homes,” says Tim Haynes, president of American Home Shield. “Owning a home is a big investment, and by shedding light on some of these hidden costs, we hope to help homeowners sustain the value of their homes and plan for the unexpected.”
The 2016 ServiceMaster Experience Consumer Survey presents findings of an online survey conducted by Toluna from March 15-17, 2016 among a sample of 1,959 American homeowners and prospective homeowners (next 12 months) 18 years of age and older.
The 2016 AHS National Contractor Survey presents the findings of an online survey conducted from November 29-December 31, 2016 among a sample of 902 contractors in the American Home Shield network.