Cost of Deferred Maintenance
Real estate Is generally the largest investment an individual or family makes financially. As with any investment, it is important to stay on top of how environmental conditions and other circumstances affect your investment. Deferred maintenance is when the needed attention is not given to the investment. When basic maintenance and repairs are put off too long or not attended to at all, the cost can add up to get back to working order.
There are a number of ways that deferred maintenance can affect your sales price.
The condition is a consideration in the value of the house in how the real estate agent will price it and the appraiser will value it. Examples of this would be lack of pressure washing siding over the years, cracked outlets, holes in sheetrock, compromised window seals, and failing to keep up caulking where needed. These are only a few of many ways the costs can add up. As the repair list grows, the value decreases. Eventually, with a lack of proper maintenance, the repairs can reach a cost so high that the house has no value and can only be sold for land value.
Buyers typically will get a home inspection to get a general overview of the condition of the property.
Once the report is completed, they can bring a request for repairs to present to the seller. Where there has been deferred maintenance, it usually results in an extensive list of repairs. Sellers do not have to repair everything on the list, however, sellers should be prepared to get a request for a lump sum credit towards closing costs or to renegotiate the sales price.
It is important to do monthly or yearly maintenance, as well as reactive maintenance.
Reactive maintenance is taking care of the necessary items only as they arise. For example, when there is a water leak, it needs to be addressed fairly soon after discovered. Monthly/Yearly maintenance would include items such as pressure washing the siding, changing air filters, servicing the heating and air unit, carpet cleaning, etc. To get a head start on the buyer’s inspection, it is recommended to sellers to get a sellers inspection before going on the market and address items of concern. The idea of saving money by not doing the repairs when needed Is a false idea. The neglected repairs create a bigger expense as it goes unattended and defeats the idea of money saved. The savings come from attentive maintenance to create a longer life in the mechanics and structure of the property.
For homeowners that want a peace of mind in maintenance, a home warranty is one option to consider.
When purchasing a property, a home warranty can be negotiated as part of the contract if both parties agree. When listing a property, if a seller has concerns or wants the buyer to have a piece of mind, most home warranty companies will apply a warranty to a newly listed property.
Basic maintenance, which also includes the monthly/yearly maintenance have a protective purpose.
Painting inside and outside where necessary will seal the sheetrock and siding, but also provides a fresh, clean look to the house. Carpets and other flooring are also necessary for the home but has a cosmetic aspect to it as well. Sealing tile/grout, cleaning the chimney, changing air filters, etc. are important to the basic mechanics of the home.
Upgrades are not maintenance, so this is not addressing homes that have not been updated. Updates are nice, but not always necessary. Maintenance has more to do with how well the home has been cared for.
To get top dollar for your home, do a little as you go to keep it up along the way. This helps add value and keep the repairs from piling up all at once when it's time to sell.