First-time home buyers: be cautious - tips on spotting defects - Brief Article

USA Today (Society for the Advancement of Education), July, 1997

If you have been considering the purchase of a home, the deal of a lifetime -- or at least of the decade -- literally might be around the corner. Reasonable mortgage rates and stable home prices in most parts of the U.S. are combining to make the present an ideal time to take a shot at the American dream -- home ownership. According to the National Association of Realtors, half the families in the nation have at least 122% of the income needed to qualify for the purchase of a home with a median price of $118,900. First-time buyers especially are being targeted by realtors and sellers to draw them into the market.

"Todays real estate market is indeed wide open to first-time buyers in many parts of the country," notes Kenneth Austin, chairman of HouseMaster, a national home inspection company. "But they need to be aware of some of the lesser-known, hidden factors often involved in a first home purchase."

A home's condition, he points out, is one area of potential concern that many who are new to the homebuying process are unaware of. "For example, the condition of a house is not taken into consideration by the mortgage lender, so it isn't factored in with fixed expenses." This can become a problem, considering the fact that 40% of homes for sale have at least one serious defect when they go on the market. Repairing these conditions can cost anywhere from $500 on up, depending on the particular situation. For instance, common defects found in resale homes and what they typically cost to repair or replace include an air-conditioning compressor, $800-1,200; asphalt shingle roof, $1,500-2,200; electrical service upgrade, $600-1,200; shower pan, $900-1,600; warm air furnace, $1,500-1,800; and inadequate attic insulation, $800- 1,100.

Condition is becoming a major factor in determining how good a deal a particular home actually is. Austin indicates. "It becomes even more important for first-time buyers who are often stretched to the max financially after puffing up the down payment." Many young couples who buy their first home often are unaware of what to look for with regard to the mechanical systems, structure, and foundation in a house. "And unless they've availed themselves of a pre-purchase inspection, their first inkling of a problem comes during a rain storm or cold snap....

"In today's economy, most families have little room in their household budgets for surprises, particularly costly ones, which home repairs often are. The old expression that the three most important factors involved in buying a home [are] `location, location, location' has been changed to meet today's realities to `location, location, condition.'"