Buying an older house can be a rewarding investment, but it can also be a risky one. Many things must be considered ahead of time, like the cost of insurance, a possible mortgage, etc. Older homes cost an average of 75% more to insure than newer ones due to their increased risk factor.
But an independent insurance agent can help you get equipped with the right homeowners insurance and other coverages you need before you can properly buy an old house. They'll make sure you walk away with enough protection against numerous disasters. For now, though, here's a list of 13 essential considerations and things to look out for and keep in mind before purchasing an older house.
#1: Repairs and Replacements
Before buying an older home, you'll want to know whether any of its parts need repairs or replacement right away, or in the near future. Find out when the last time the house's major electrical, plumbing, and physical components were replaced and keep these records handy. Make sure to get information about the status of the house's roof, pipes, water heater, electric system, plumbing, windows, etc.
#2: Structural Issues
Without a solid foundation, a house cannot remain standing for long. Make sure to note if the old house has any cracks or flaws in its foundation. If so, you'll need to get these taken care of ASAP to ensure that you're not buying an unsafe home that's just awaiting disaster.
#3: Past Maintenance
When looking to buy an older home, ask for its past maintenance records first. You're entitled to them as a prospective buyer. Be sure to ask for specific names of contractors and companies that have performed maintenance on all the previously mentioned elements of the home, as well as the dates of service if possible.
#4: Lead and Asbestos Aren't Necessarily Deal Breakers
Many older houses come with lead and asbestos, but home inspectors say that as long as you don't bother them, they won't bother you. As long as you won't be ingesting paint chips, you should be safe from lead. As far as asbestos, it can be safe to live with unless you plan on specific types of remodeling projects.
You'll be provided with information on whether a house has asbestos or lead before you buy. But just because these hazards can be mostly safe to live with in many cases, that doesn't mean you should skip out on educating yourself about them. Ideally, your realtor should provide you with materials on living with and/or taking care of these issues. Although they aren't deal breakers, that doesn't mean they are irrelevant to consider, or that they come with no risks.
#5: Home Warranty Insurance
Home warranty insurance is different from homeowners insurance. Home warranties exist for the purpose of repairing appliances and systems in the house that break. According to insurance expert Jeffery Green, home warranty insurance covers home systems and appliances, like heating and air conditioning, plumbing, and a washer and dryer that aren't covered by homeowners insurance.
#6: Inspections Aren't Final
You're not stuck with just one inspection on your prospective older house purchase. If you're unhappy with the results of the first one you have conducted, you can order another one. You might also just want a second opinion on an area of concern.
#7: Specialists Are Your Friends
While a home inspector can identify a tub that's leaking or locate asbestos in an old house, you'll also want to hire a specialist to go more in-depth with the inspection. Home inspectors are good at finding potential problems in the house, but they're not specialists in any one area. Though your home inspector could point to a leaking appliance, you'd need a specialist to identify and describe how bad the actual problem is.
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#8: Save Room for Personal Upgrades
Before buying an old house, keep room in your budget for its required upgrades, such as for the plumbing system, as well as any of your own personal desired upgrades, such as new flooring, an extra room, etc. While older homes come with character, they may not have the character you're looking for. Not only do you want your new (old) home to be safe, but you likely also want it to be aesthetically appealing to live in, which might require some updating.
#9: Some Realtors Specialize in Older Homes
Working with a realtor that has experience in purchasing older homes is essential. If you've found one that doesn't have prior experience with older houses, you might want to switch before you get too far into the process. A realtor is your ally in the home-buying process, and it's most helpful to have one that you can fully trust.
#10: Maintenance Is a Must
No matter how good of a condition an older home is in at the time of purchase, you’ll need to do maintenance on it sooner or later. You can only avoid certain types of repairs and upgrades for so long before they become necessary. Know that you can expect to do more maintenance than you would with a newer house, and plan for this in your budget.
#11: You May Not Get the Full History
Having an older house's full history is ideal, but you may not necessarily receive it. A house's history can only be provided if someone else is there to pass it along, such as an original owner or an heir. Though your home inspector can point out potential issues and warn you about them to the best of their ability, not having the house's full history can lead to unwanted surprises.
#12: There Will Be Unexpected Expenses
All houses, regardless of age and condition, come with their own unexpected expenses, but older homes tend to have many more of them. These hidden costs can include possibly higher energy bills, fees for removing lead or asbestos, costs of updating the paint job, etc. You'll need to consider all upgrades and other potential hidden costs of the older home in your budget from the beginning.
#13: Insurance Is a Must-Have
Older houses may have been built according to a different safety code and standard than what exists today. That's all the more reason you'll need to get yours covered with the right type of homeowners insurance. Having enough coverage can help you avoid deep trouble in case an accident does happen on your new (old) property.
How to Insure an Older Home
Insuring an older home is similar to insuring a newer home, with some key points to keep in mind. You'll need these coverages when buying an older house:
- Water backup coverage: Usually you'll need to purchase this endorsement separately and add it to your home insurance. It covers you against sewer or drain backups that can lead to water damage to your home and personal property.
- Service line coverage: This endorsement is also typically purchased and added to your home insurance separately. It covers the utility lines that connect from your home to the street and is especially relevant for older homes that come with older lines.
- Extended or guaranteed replacement cost coverage: Selecting a home insurance policy that offers guaranteed or extended replacement cost coverage is also relevant when purchasing an older house. Extended replacement cost coverage increases the protection your dwelling has by an extra 25%-50% if your coverage limits get exhausted. Guaranteed replacement cost coverage, though, can reimburse you for your old house's entire rebuild, regardless of cost if it gets destroyed by a disaster.
- Scheduled personal property coverage: Since homeowners insurance provides a limited amount of coverage for valuable items like antiques, you might want to consider scheduling this type of property on your policy. Scheduled personal property endorsements can increase coverage limits for specifically listed valuable items, which are commonly found in older houses.
- Roof replacement coverage: You'll need to double-check if your home insurance offers roof replacement coverage, and if not, you may need to add it separately. With an older home, you'll want to have coverage for the full replacement of your roof no matter how recently it was updated.
Working together with an independent insurance agent is the best way to ensure that you'll get equipped with all the necessary coverages to protect an older house, whether they're included in home insurance or must be purchased separately.
Also be sure to keep this checklist in mind when considering buying an older home, and bring the objective of finding the right coverage to the forefront of your priorities. A sturdy policy can help protect you and your family, as well as your finances.
Why Choose an Independent Insurance Agent?
Independent insurance agents simplify the process by shopping and comparing insurance quotes for you. Not only that, but they’ll also cut through the jargon and clarify the fine print so you'll know exactly what you’re getting.
Independent insurance agents also have access to multiple insurance companies, ultimately finding you the best homeowners insurance coverage, accessibility, and competitive pricing while working for you.
TrustedChoice.com Article | Reviewed by Jeffrey Green
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