Maintaining your home: What is it going to cost?

A recent letter from a client regarding the estate property pictured above prompted this article. It's important to budget for upkeep and regular maintenance even though the bank does not take this figure into account when figuring your debt load for a mortgage.


One key figure is hard to project with exact accuracy, and is often overlooked: If you buy a home, how much will you shell out every year for maintenance and repairs? A careful look at these potential costs might discourage you from buying a more expensive property, or might make renting look more appealing than it would seem otherwise.

Obviously, there’s no way to forecast these costs for sure. But mortgage-data firm HSH Associates suggests homeowners assume they will come to about 1% of the property’s value — every year. My own experience is that in upper level priced homes, that's a bit high, although .75% would seem about right.

That’s $3,000 on a $300,000 home. To be on the safe side, you should probably use that as a minimum. So let’s say $4,000, and assume you’d also need a healthy cash reserve for any big expense that’s not covered by homeowner’s insurance, like a new furnace or roof. A $4,000 annual maintenance and repair budget is $333 per month. If you bought a $300,000 home with 20% down and a 30-year fixed-rate loan at 3.75%, your $240,000 mortgage would cost $1,112 a month, according to the Mortgage Loan Calculator. A $333 monthly maintenance and repair budget would equal nearly 27% of your principal and interest payment. That hurts! But , that's the cold number. You can defer these maintenance projects, and many often do. But it's not going to be any cheaper in 3 or 4 years.


uj7 Back to the estate in question. .75% of the 1.999m value is about $15,000 yearly. or $1250 per month in various things. Tree trimming, pool maintenance, brush clearing, trim paint, marble floor maintenance, it adds up. The point is, there’s a lot of money involved. It’s too much to be shrugged off as an incidental when you’re deciding which home to buy.

I have lots of experience with large gated estates. Call me anytime for information about Oak Creek Estates, Hidden Hills West, The Ridge, Hidden Hills, or Bell Canyon

Things to Think About Before Going FSBO

Sell your home without a broker? Good idea or bad idea? It depends on whom you ask. For realtors, it makes little sense for a seller to go it alone, without the help of a broker and his or her existing customer base. For sellers who wish to save the realtors’ standard commission fee of six percent and are willing to put in the work involved in marketing their homes, it makes perfect sense. However, few sellers in this position realize what they are letting themselves in for.

Sales statistics can be misleading. Many of these properties were not placed on the open market – 42 percent were “closely held” between parties who knew each other in advance, such as family or acquaintances. Factoring out properties that were not placed on the open market, the actual number of homes sold without professional assistance was a record low six percent – the rest were unrepresented sellers in private transactions. The market share of open-market FSBOs is nearly half of what it was five years ago – 10 percent were sold on the open market in 2004.

There is also the pricing issue. John Vitteri, a Realtor who teaches Real Estate says "Most buyers expect a house that is for-sale-by-owner to be cheaper than a house being sold by realtors"
But here's the main issue: “According to the NAR, those sales that are negotiated through a real estate broker sell for 16 percent more than if the owner sells themselves. So, even when you consider you’re saving the six percent broker’s fee you’re still losing 10 percent,” he said.

Sites like forsalebyowner.com and www.owners.com offer step-by-step guides for selling your house on your own. For example, www.owners.com provides information on the following topics:

• Deciding to sell “FSBO”

• Pricing Your Home

• Preparing your home for sale

• Marketing your home to buyers

• Holding an open house

• Closing the sale
Remember , I do this for a living. I know about the legal aspects you haven't even considered. For example, you must agree between you and your buyer on the following :



Advisability of Title Insurance An escrow transaction for the purchase or simultaneous exchange of real property where a policy of title insurance will not be issued to the buyer. The buyer must receive the statutory notice. The law does not specify who is responsible for providing this notice. Typically handled by escrow agent. Cal. Civ. Code § 1057.6



There's 23 pages more, here is the link the CAR's website disclosure guide.

So, just like with the law, where you may represent yourself in court, you may represent yourself in a sale, but there are myriad legalities and liabilities to this procedure that professional Realtors understand and can explain to you.

Thinking about selling? Give me a call for an honest appraisal of your home and todays market in your area.