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Buying a home? Don’t forget to budget for repair costs.
Most homeowners (77%) have dealt with an unexpected issue that required paying for a repair in their first year of owning their house, according to a survey from insurance firm Hippo. Two-thirds of them spent more than $1,000 to fix the problem.
“Many homebuyers are vastly unprepared for what’s waiting for them as homeowners,” said Courtney Klosterman, home insights expert at Hippo.
The median price for a house reached $357,300 in February, according to the National Association of Realtors. While climbing interest rates have cooled the market, more than 6 million existing homes sold in 2021, the highest number since 2006.
Some buyers ended up in bidding wars, and 68% of homeowners in the Hippo survey said they paid above asking price. It also has become more common to bypass a home inspection or to make the purchase not contingent upon that process, said Steve Wilson, senior underwriting manager at Hippo.
“You should get it done, even if it wasn’t part of the purchase,” Wilson said. “It will highlight some of the things that you may need to pay attention to.”
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About a third (34%) of respondents in Hippo’s survey said the surprise repair cost was less than $1,000. Another 30% said it was $1,000 to $2,499, and 23% said they paid $2,500 to $4,999. For 13%, they spent more than that.
While it’s wise to have money set aside for home repairs, you can also take steps to help avoid costly fixes. For instance, be sure to know where the main shutoff is for water. If you discover a leaking line from your refrigerator or washing machine, turning off that valve can prevent worse damage.
“Having a plumbing-related loss can be $10,000 to $15,000,” Wilson said.
You also should schedule to have your main systems, such as your heating and cooling, serviced on a regular basis. And, if something was omitted in a home inspection report — e.g., the cooling system wasn’t checked because the inspection was done in the middle of winter — it’s key to have it evaluated so it works when you need it, Wilson said.
Additionally, keep track of how long major appliances in your home will last.
For example, furnaces generally last 15 years to 20 years if well-maintained, according to home appliances maker Carrier. If yours is closing in on that age, you’ll know to be ready to replace or repair it instead of being surprised by its failure.
Other major appliances include an air conditioner, clothes dryer, clothes washer, dishwasher, freezer, microwave oven, oven, refrigerator, stove, water heater, humidifier, dehumidifier, garbage disposal and trash compactor.
It’s also important to make sure your homeowners insurance is adequate and that you would be prepared to pay your deductible in the event of a claim.
Of the 1,000 homeowners surveyed by Hippo, 51% said they felt very prepared for homeownership ahead of their purchase. However, another 26% said they were much less prepared than they initially thought.
If you’re unsure where to start when it comes to key home maintenance, Hippo offers a maintenance checklist for each season.