Be Smart When Buying a Home Secondhand
When it comes to high cost, big ticket items, buying secondhand can save you thousands of pounds, so long as you do your homework and know what you are buying, who you are buying from, and what you can and cannot expect. Since homes represent the largest investments most consumers will ever make, we will concentrate on some of the things to be aware of when buying a previously owned house.
The appeal of purchasing a brand new home is obvious, and is a primary driving force to the majority of home buyers. It has never been lived in, and it will be wholly yours, rather than a collection of other people’s history. Everything about it will be brand new, and hopefully immune to failure, at least for a few years. Freedom from maintenance headaches is another major incentive for purchasing a house that nobody has ever lived in. Like everything else, these incentives come at a price not always measurable in pounds. Conversely, there are benefits you might not have considered to buying a “used” home.
The benefits of buying a previously-owned home...
Lower cost – All other elements, such as size, location, and features being equal, new houses cost, on average, 20% more than those that have been previously occupied. (Young, first-time home buyers might be able to realise similar savings on a new home by way of the government’s "starter home" programme.)
Established, stable property values – The value of a house built in an established location is more likely to be stabilised than a similar house that has been built in a newer development that may or may not succeed as planned.
Location – Previously occupied houses are more likely to be located in established neighbourhoods, and are often closer in to desired amenities than houses located in new developments that are constructed on less expensive properties and often far removed from urban centres.
Quality of construction – It is no secret that the housing booms of the last half century have been responsible for a loosening of some construction standards. Older, individually designed and constructed houses tended to be built more solidly and with greater attention to durability than do houses that are rapidly built on speculation in new neighborhoods intended for a more mobile younger generation.
Uniqueness – Most newer neighbourhoods consist of homes built to just a few basic floor plans, with minor modifications to make them appear different from each other. Most older houses, on the other hand, were individually designed and built, and do not exhibit the kind of cookie-cutter appearance so prevalent in modern neighbourhoods.
Things to watch out for...
Structural integrity – Unless you are a professional builder, you will need to rely upon the advice of someone who is when evaluating the soundness of the house. Damage from water leaks, flooding, fire, termite infestation, mold, and simple age-related deterioration might not be obvious to most buyers, and could severely impact the value and livability of the house.
Utilities up to current standards – All too frequently, people purchase and move into quaint older homes, only to discover that the plumbing is in poor condition, the electrical wiring won’t handle the load of modern appliances, or that the heating system is antiquated to the point where it will be overly expensive and potentially hazardous to operate. Buying an existing home even at a bargain price is certainly no bargain if you end up having to spend thousands of pounds in unexpected costs just to make it livable.
More difficult to customise than a newer home – While there are always changes that can be made to any structure, it will likely be more complicated to customise an older, previously occupied home than one that is still in the process of being built.
Financing can be more difficult – Many builders and developers have established relationships with lending institutions, and can simplify the process of getting a loan to purchase one of their houses. This is especially true when the mortgage company is also an investor in the development and construction. Many other lenders also prefer to lend for new construction than for previously occupied homes. Shop around to find the lender whose terms are best for you, and who seems most likely to work with you to get the loan approved and processed.
Of course, some of the same factors that apply to major purchases also apply to the smaller purchases we make. Knowing when and what to buy secondhand is a valuable skill that can be applied in many if not most of your purchases.