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How to Mitigate the Hidden Costs of Home Ownership

morris park house

It’s not a good week when you wind up with a bill for $18,400 to replace an entire main sewer line. Had I known the condition of the line when we purchased this rental home back in 2013, I might’ve backed out of the purchase agreement.

The silver lining is that this mega-expense can be treated as a business write-off. But still… Ouch.

Other big “gotchas” can sneak up on new homeowners within a few months or a few years of taking possession. This post explores some of the hidden costs of buying a home. These are some of the big ticket expenses that might have been avoided with help from a strong buyer’s agent.


The Home Inspector’s Role

There are many aspects of a property that a dependable home inspector can uncover within 2-3 hours of intense inspection:

  1. Condition and code violations of visible electrical wiring in unfinished basements or attics, panels, outlets, and outlet locations.
  2. Roofing shingles or tiles, flashing, ventilation, and masonry condition
  3. Foundation and grading (water mitigation)
  4. Furnace, water heater, and other mechanicals’ age and operating order
  5. Drafts and insulation gaps (using infrared cameras and visual inspection)
  6. Presence of mold and pests, structural defects
  7. And much more

A rock-star home inspector will provide a detailed report of the observable interior and exterior defects. But even the best inspectors are limited by contracts and an ever-shrinking purchase agreement contingency window in real estate transactions (7 days or less).

Unless a seller agrees to invasive inspections (and the buyer agrees to pay for such a deeper-level inspection), mold, bad wiring behind finished surfaces, or water damage from ice dams may go undetected.

The only protection a buyer has in these cases is if the seller and seller’s agent had knowledge of these material defects and did not disclose them. In that event, a legal counsel should be kept on speed dial.


How a (Knowledgeable) Buyer’s Agent Can Help

In just about any residential real estate transaction, a strong buyer’s agent earns his or her keep. Even before making an offer on a home, the best agents should steer buyers away from obvious defects that make for a poor investment. And a house is the biggest investment a homebuyer will ever make!

When I first got into the rental property scene, my buyer’s agent steered me clear of plenty of disaster houses. There was the house with a caving-in foundation (I didn’t need too much convincing on that one), several houses with ceilings too low to qualify for rental bedrooms, the dead squirrel in the basement, etc.

Taking these learnings and others from over 20 years of homeownership and 10 plus years of rental property management, I come prepared (“Paratus” is Latin for “prepared”, by the way…) with a built-in checklist of “house as a system” characteristics to be mindful of.

(Wallpaper and stainless steel appliances are small potatoes in the world of real estate, my friends.)


The Hidden Costs of Buying a Home: What Often Gets Missed

Sewer Lines

I mentioned at the outset of this article how expensive sewer line repairs can be. To get one cleared of roots and clogs can run up to $500, especially if Roto-Rooter gets the call on a Vikings game day.

If the line has an offset (old Minneapolis homes typically have 2-foot clay pipe sections “connected”, so this is a common issue), the excavation and replacement of failed segments can run anywhere from $6,000 to $10,000.

sewer line repair
A section of the old line shows the clay pipe (bottom) fused to the failed cast iron section repair (top part)

Sometimes you can get lucky and avoid excavation with the new CIPP liner technology. CIPP creates a new, durable waste line within the cavity of the original line.

If you’re incredibly unlucky like me, the line is in such a state of deterioration that the city street needs to be dug up for a new connection at the city sewer main.

That’s where costs can run up to $20,000.

My advice to home buyers: ALWAYS get a sewer line scope performed as part of the inspection. This adds $200-$300 to the inspection cost.

But this expense is well worth it. If a material problem is found, you’ll have video evidence to compel the seller to negotiate on repairs. Or you can simply walk away with earnest money intact.


Big Old Trees

Any number of problems can exist with large and mature trees. They are wonderful for a home when healthy – providing shade and natural beauty to the landscape. However, they can also become a huge financial sink if problems emerge.

Diseases have sadly done a number on the city canopy over the years. Dutch Elm disease and the Emerald Ash Borer are the most well-known diseases. But sheer neglect (e.g., not watering, not pruning, or over-pruning, etc.) can often spell the end of a beautiful tall tree.

When a property has one or more large trees with even the slightest hint of an issue, removal may be the only remedy. Have a trusted arborist inspect the trees to assess their vitality.

A silver maple, for example, may appear to be healthy and leaf out each year, even though it’s actually in decline – evidenced by dropping limbs in strong winds. These dropped limbs can put dents in gutters or the top posts of chain link fences underneath.

Why is this such a big deal? The cost of removing a tree can be astronomical. Trees that grow well over 50′ can often require a crane. Tack on the cost of stump grinding, and tree removal costs can surge up to $10,000 or more.

tree removal crane
This mighty ash was five feet in diameter and required a crane $$$$ to remove it.

Water, Moisture, and Radon

Radon testing is not required in Minnesota real estate transactions, but I will always recommend it. It’s dirt cheap to test, and the cost to health can be devastating which makes it a no-brainer IMHO. Lung cancer from radon gas is the second leading cause after smoking. 

Why bring up radon in this particular section about water and moisture? In many cases, radon levels are contained until the basement slab is busted into for plumbing or drain tile excavation. Houses operate as a system. If one dynamic is changed, it often requires another change to offset.

Just know that if you buy a home with the potential for water intrusion, a drain tile system ($5,000 – $10,000) can often require a radon mitigation system to be installed too ($2,000+).

To add insult to injury, if the radon fan creates too much negative pressure, any natural venting gas appliance (water heater) could backdraft CO into your home. That issue is fixed with the installation of an HRV or swapping out with an electric water heater (both good ideas).

Finally, get a deep look at the exterior windows. If the casings (the outer trim) are wrapped in aluminum or have evidence of rot, it may be worth getting a moisture test performed.

These services specialize in detecting hidden, inner moisture issues in walls that could be sources of mold and even structural failure points. The sills under our aluminum wraps are concealing rotted wood that requires nearly $10,000 in carpentry repairs. DING.

I would never advise a homeowner to cover wood casings with aluminum wraps. Instead of preserving the wood, most times you are simply trapping moisture inside and promoting wood rot.

I hope these few anecdotes prepare you for your next home purchase. If you want to work with an agent who knows how houses work so you can avoid unexpected costs, reach out today.


Happy Thanksgiving!!

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