9 Costly Things New Homeowners Don't Prepare For

by Paul Michael on 18 May 2012 (20 comments)

When you’re buying a new home (and that could be a new build or a used home that’s new to you) you are caught up in a whirlwind of things to do, people to see, papers to sign, and plans to make.

Most of all, you’re excited. And rightly so.

Then, moving day comes. Once all the boxes are unloaded, and the furniture is shoved roughly into the right rooms, you grab a coffee and take a breather. And that’s when it dawns on you. This is only just the beginning.

As a new homeowner, there are whole lists of things you need to take care of, and almost all of them cost money. Sometimes, a lot of money.

So, if you’re planning to buy a new home, have just signed the paperwork, or are moving in next week, this list is for you. And if you know someone who's moving in, be a buddy and warn him or her as well.

Note: The figures next to the titles are rough guides based on an average sized U.S. home (2,700 sq. ft.) with a typical yard (1/5th of an acre), but obviously they could be much higher or lower depending on the size of your home, its location, and the condition it’s in.

1. Window Coverings and Treatments – Up to $2,000

“Oh, look at all the windows! It’s so bright, so spacious, the views are lovely!” Well, yes they are. But you don’t want people viewing you at night, or looking in whenever they want, so all those windows need coverings. If it’s a new home, you’re going to be spending hundreds (and probably thousands) of dollars on blinds, curtains, curtain rods, tie backs, valances, and shades (even more if you're not too handy and have to have someone come and fit them for you). If it’s an old home, you may be fine for a year or two, but you’ll need to decide if you want to live with the old owner’s treatments or have your own. To offset the high costs, remember to look for deals on blinds and other window coverings long before you move in.

2. Landscaping and Groundskeeping – Up to $30,000

Walking around new neighborhoods, you see all sorts of beautiful landscapes. And often, on new builds, the landscaping at the front of the house is included in the price. Hurray! Oh, but then there’s the back. And there, almost always, you’re on your own. Depending on the size of the yard and the HOA rules and restrictions, you could be looking at $10,000 - $30,000 worth of landscaping materials and labor. Want a deck or a patio? That’s even more money. And then you may need sprinklers, irrigation, and other services. If you move into an old home, that’s no guarantee of a great yard. Many foreclosed homes may have been left vacant for a long time, and a once attractive yard could be a wreck, if it was even finished in the first place. So, do your homework. See if you can hustle the homebuilder for a finished back yard too, or ask the seller to drop the price to cover landscaping. If it's foreclosed, a short sale, or some other kind of repo, guess what? Yep, you’re on your own. Time to dig into the savings.

3. Major Appliances – Up to $10,000

New home builds usually include a dishwasher, microwave, and stove, with the option of a fridge/freezer, washer, and dryer. They are basic, unless you opt for the upgrades in your contract, but if you do, they could add a chunk to your monthly mortgage payment. If you buy a used home, you may not have any appliances included, especially on a repossession, short sale, or foreclosure. You could always hunt around on Craigslist for used appliances, but they won’t come with a warranty. So figure on spending a nice chunk of change when the time comes to upgrade.

4. HOA Fees – Up to $700 a Month

Many new homes come with a Home Owners Association, and most used homes have HOAs as well. In theory, they’re a sound idea. They are their to keep the neighborhood looking great, and deal with trash collection, playgrounds, community pools, street lighting, common areas, snow removal, and so on. Of course, in practice many people hate the HOA because they extend their reach far beyond what most people consider fair. They can tell you what colors you can and can’t paint your house, what type of blinds and window treatments are allowed, what you can and can’t put in your yard, and the list goes on. Oh, and it costs you. A typical HOA can run $100 a month. Some are just a few hundred a year, while in the higher-end neighborhoods, you may not see much change out of $1,000 every month! Did you see that one coming? Before you buy, make sure you know what the HOA dues are, but remember, they can go up annually and you have little say in the matter.

5. Furniture – Up to $20,000

That’s a very rough estimate. Clearly your particular tastes can range from Ikea to custom-built furniture, but what you need to know is that most homeowners completely underestimate the amount of furniture they’ll need. This is especially true when moving into a bigger home. You may now have two areas for relaxing, a living room and family room. You could also have a den, a library, a nook or study, extra bedrooms, guest rooms, or even a game room. Depending on what you’re moving into, you could have a very empty-looking house that needs to be filled. Get ready to go shopping.

6. Insurance – Up to $2,000 Annually

There are a few different types of insurance you need to have when buying a home. First, you must have homeowners insurance. The average cost of this is around $700 annually, but this again varies by state. If you live in a duplex or other type of connected building, the insurance may be covered in your HOA dues or your monthly escrow. You should also have contents insurance, based on the value of your possessions. You could, of course, skip this payment. But if tragedy does strike, you could lose everything.

7. Property Tax – Up to $10,000  

When it comes to property tax, a lot of people get sticker shock a year after they move into a new construction. The reason for this is simple; the taxes are based on the empty lot the home was built on. But a year later, the assessors come around and put a new valuation on the lot, which now has a beautiful home sitting on it. Many people see their initial tax payment double, or even triple, in just one year. You can also face much higher taxes based on the particular school district you live in. And of course, taxes vary greatly by state. The average property taxes paid in New Jersey are almost $8,000, as opposed to $2,000 in Colorado.

8. Utilities – Up to $400 Monthly

Again, if you live in the Playboy mansion that figure will be greater. And in a new one-bedroom apartment, much less. But on average, when moving into a new home, you will see utility bills in the hundreds of dollars. This can be quite a shock, especially if you were formerly in a small apartment or even living with your parents. And what’s worse, depending on when you move in, you could really get a wake-up call. Bills in the summer months can come with higher rates, so you may budget based on the winter bills, only to be unprepared for summer. The best thing you can do to prepare is ask the utility companies for the history of the property, if it’s used. If it’s new, ask neighbors who have already moved in what they’re paying. If you're first on the block…good luck!

9. Repairs and Maintenance – Who Knows!

I saved the worst till last. One of the biggest unknown expenses of owning a home is the repairs and maintenance costs that can hit you out of nowhere. If you were formerly renting, that was all taken care of. Now it’s all on you. If the boiler blows up, you pay. If the roof leaks, you pay. If strong winds blow your fence down, you pay. If vandals put rocks through your windows, you pay.

Basically, you pay. And these bills can be steep. You’ll soon find out that hourly labor costs for plumbers, electricians, and builders are usually a lot more than the hourly wage you get paid. There are standard call-out charges, which you pay before they even look at the problem. It can be a nightmare. You can, of course, buy insurance to cover appliances, boilers, A/C units, and so on, but there are deductibles to pay. And like any insurance, the small print can really bite you.

Are you a new homeowner? Did a situation or expense recently pop up that you were not planning for? Let us know.

This article was made possible by the support and inspiration of Genworth Financial, a S&P 500 insurance company with more than $100 billion in assets. Check out Genworth's website for more information on their mortgage insurance and reverse mortgages products.

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Guest's picture
Guest

These are good points, but the numbers here are WAY too high. And I live in NJ.

Guest's picture

Really hit the nail on the head. So many first time homebuyers think that its puppy dogs and rainbows after the closing. Thats when the reality of owning a property sinks in. Always a good idea to have an emergency fund set aside for the inevitable unforeseen maintenance a home requires.

Guest's picture
Jen H

I think the worst of the after-closing, surprise costs are the things I didn't think I had to worry about right away, according to my home inspection. Big ticket items like a new roof, a/c, tree removal, water heater, etc. The landscaping was also shockingly expenseive - even doing most of the work myself, I'm estimating $15-20K. But landscaping is a 'want', and comes after my 'needs':)

Guest's picture
Guest

Going off of the first comment posted. The prices listed for those items are more than a little high. I'd say that anyone having expenses in that range probably doesn't think about being frugal.

EX: I live in Atlanta, GA and my property tax is $1400 per year. My insurance is $600, and 30k for landscaping...please lol

Guest's picture
Guest

I live in Port Clinton, OH.

Rent a 2 bedroom apartment for $500 a month.
Property taxes included
$0 insurance
Cable and internet included.
Water and sewage included

Pay about $50 a month for electric. Saving over half my paycheck for retirement.

...please lol

I do know that home purchases are on average 2 1/2 years salary. You end up putting about 5 years salary into the home and are lucky to get the 2 1/2 back when you sell. Not much of a retirement plan.

Guest's picture
Jenn

Every hopeful homeowner should be given this list before they sign on for such a huge purchase. So many people forget about some of these initial costs.
With regard to the household items, like window treatments, appliance and furniture new owners shouldn’t be afraid to shop around or even purchase some of their household items at consignment stores and the like. Buyers need to remember: the goal is to grow into the house of your dreams. Buyers just dropped a fortune on the home purchase; the stuff inside of it can be cheaper to start out with!

Guest's picture
Vicki

Homeownership is still better than giving your money away to the landlord. Don't let this doom and gloom article change your mind. The leaky roof is still YOUR leaky roof and somehow, you will do just fine.

Guest's picture
drthelly

I've been a very happy homeowner in Southern California for 43 years because I moved in when home prices were still under $30,000 (Imagine that!). Yet much of what this article says is true. But time can be on your side as a new homeowner. Our backyard was bare, rocky, and filled with weeds when we moved in. It's now landscaped and lush. But it's taken us 30+ years to get to this point. We were in no rush and we did almost all the work ourselves, learning as we were going.

Also, at first we furnished our home by going to new discount furniture stores. We have now replaced much of our early furniture with well-made, good quality USED FURNITURE that I've found at flea markets, yard sales, thrift stores, estate sales, and Salvation Army Antique Stores. I even have furniture that was thrown away by schools, or found on street curbs. (It's amazing what people get rid of!) Yet our home is elegant and refined, and we get a lot of compliments from guests. The bottom line is: Develop an eye for beauty and quality by reading home magazines and books. As your style develops, you'll know where to find beautiful things for your home that cost very little. My favorite pieces are a solid wood buffet, brand new at Cost Plus that cost me $50 because a door was damaged (fixed it in a few minutes!); an upholstered armchair with wooden arms, $30 at a flea market; a designer end table by Henredon, $25 at an arts charity thrift sale; etc. Start out with furniture you can afford, and over the years, slowly replace it with better things that you can find as described above.

Last of all: be patient. It's OK to have a minimally-furnished, outfitted home at first. A clean, evolving home is fun. Take your time to upgrade and expand your accessories, drapes, and collections. We don't have to impress others; just be happy in your nest. Beauty and comfort don't have to carry high price tags.

Guest's picture
Chris

If someone spends $30,000 on Landscaping, they deserve to go broke.

Kentin Waits's picture

Great points. New homeowners can sometimes get lost in the excitement and forget to prepare. But $20K for furniture -- yikes. Time to hit some auctions and consignment stores. :)

Andrea Karim's picture

I was just reading this with dread, thinking about some hidden costs that I wouldn't have considered, but I think we have all of these covered. Fortunately, most of the work that needs doing on the home that I am trying to buy is fairly reasonable, and things that I can get done with a little elbow grease (and my dad's help - the man has never met a back deck that he didn't want to work on).

I figure I'll skip the window treatments. If my neighbors want to peak in and see me walking around naked, I'm not obliged to pay for their therapy. ;)

As to the estimates on the costs, though - these actually seemed LOW to me! The house I am looking to buy is outside of Seattle, and the homeowner's insurance rates are going to be over $100/month. Utilities are also quite high in the area, and if I were into landscaping, I could easily see being quoted 30K for a good sized yard. Hell, a couple of years ago, I tried to put in a new fence and redo the foundation of my 200 sq foot courtyard and was quoted well over 10K just for that. I decided to skip it.

Guest's picture
Amazonite

Wow. Reading this, I'd wonder if any renters would dare to purchase their first home.

Where to start? First of all, the "average" size house is not 2700 sq ft. And these prices for each category are way out of proportion. For just getting into a house, there is no earthly way anyone needs to spend $2000 to cover windows. Start with miniblinds - add 'window treatments' or whatever later, as you have the money. Same goes for appliances; sometimes the big box stores aren't the best for prices. The mom and pop stores will often give you a sizeable discount if you buy several appliances at once.

The landscaping category has already been covered by others. Of course you may pay a good chunk if you're building a new home yourself; otherwise work with what you have and upgrade as you're able.

Guest's picture
Christie

Our water bill for the year! It was supposed to be about $200, but quickly climbed to over $600 for water that was nasty to drink. Not to mention the HOA bills that quickly were raised as well. We lived out in the country, there was a 70's era clubhouse and a pool. There was also a pond and a playground for our several hundred dollars a year dues, but it was not worth it. SO glad we moved to our own property and now have control over whatever we would like to do within the county's limits.

Guest's picture

Three letters can save you tens of thousands based on this article: D.I.Y.

I have owned a home for the past 3 years, and am spending NOWHERE NEAR the amounts listed above. We are re-landscaping our house, with a new 300ft. fence, 14 x 18ft. pergonal over a brick patio for under $5000. Closer to $4000. We've furnished the house for under $1500 (microfiber couch and chair, crate & barrel table, tons of C&B kitchen stuff and bed, Henredon Couch and chair) but using craigslist and having a decent retail hookup (wife worked at crate & barrel). No HOA dues (definitely avoided those like the plague). Our appliances are old, but we can buy refurb ones at 1/4 cost. The three that we do pay for is taxes, insurance and utilities.

I think it's a great idea to save up and watch out for these expenses, so thank you for listing these for those who haven't done much research on owning a home. But I think a lot of these posts are a scare tactic that validates renting, but really owning a home is not that bad. If you just do a little research and know what you are getting into before buying a home, you shouldn't be surprised with these "unexpected expenses".

Guest's picture
go2mortgagrguy

There is a lot to think about and prepare for when buyng your first home. This article may be a little dramatic. I discuss the basics of buying your first home in my new eBook, Home In 10 Steps. You can see more on my blog - www.go2mortgageguy.com

Happy Reading!

Guest's picture
Guest

The costs indicated above more than likely differ depending on where you live and style preference. I live in California and I am VERY frugal although I will pay more for sophistication and quality (not too much more...but more). My property taxes range from $4,200 - $4,600 per year. Some areas have what are called Mello Roos and Special Assessment taxes that can increase your property taxes significantly. My insurance is roughly $2,800 per year, but that is mortgage and home insurance. My window coverings were $1500 which was the lowest estimate I got (and that is for faux wood blinds...compromised). My appliances and upgrades came to about $12K. I haven't landscaped the backyard yet, and I only had one estimate so far which was $8,600...which I think is a bit high for basic landscaping.
So far I've been paying cash for everything because I have refused to open a new line of credit since paying them off years ago.
I'm shopping around for credit cards now with low APR, no annual fee, and some sort of rewards or cash back on purchases to ease up my cash flow until we get settled. I'm a bit nervous though...I've done so good without a credit card for the past 7 years.

Guest's picture
NovoBlue

I'm in the city limits of Atlanta. My property taxes are $2300 this year. Water is $50 per month; Atlanta residents are paying one of the highest rates in the nation due to the expense of a $1 billion-plus sewer infrastructure project. Repairs on my old house (built in 1955) have been high on some things. Plumbing repairs alone have totaled over $3,000. The roof needs replacing and I am afraid to ask how much that is going to cost for a 1200 sq. ft. house. However, I have been able to economize on a lot of things. I have put in central air and replaced furnace for under $2,000. Completely remodeled bathroom for under $2,000 as well (with nice Kohler tub and toilet) by using a handyman instead of a remodeling company. Had handyman put in new kitchen floor for about $500. I do whatever work I can myself -- all the painting, caulking, small repairs, yardwork -- I would never pay anybody for yard maintenance or landscaping that I am physically capable of doing myself. Window treatments? Forget it! I put up Venetian blinds myself and sewed my own curtains. Sometimes it is a financial strain to pay for these repairs and upgrades, but it's still much better than apartment life. I spent 25 years in apartments -- got stuck with rent increases every year, got forced out of three places by developers who bought the properties for teardowns, had to struggle to get the maintenance departments to make repairs, had noisy neighbors, just a long string of problems. After going through all that, I love my little house and will always be grateful I was able to buy it.

Guest's picture
Guest

I think the comments here just point to how big a range is available in this country. The author gave concrete numbers, which doesn't serve the reader well. Many responders find the author's numbers are too high. I agree with them, although I'm sure some others find them too low. But I think one commenter hit the nail on the head when they said those who find these numbers too low probably don't need to worry about being frugal (or reading this article!).
I live in upstate NY. Our property taxes are through the roof (3rd highest in the nation), but our property cost is relatively low. I believe utility costs are average. I used to live in Ohio, and it was much cheaper (everything). But I do have to take issue with one number: 2700 sq. ft. is AVERAGE?!? How did you figure average? I know, you left out a word: NEW. Average size of NEW homes is 2521 sq ft. For the rest of us, the ones actually reading this blog, it's probably a fair bit smaller (me=1500). And I imagine 2700 a true average, rather than median, which I believe would be a much more useful measurement for the common man.
http://www.huffingtonpost.com/2012/06/06/average-home-size-2011_n_157561...

Guest's picture
Guest

I live in upstate NY too and i feel your pain. I pay about 5k per year (property and school taxes) on a 1200 sq foot house that's worth 125k

Guest's picture
Guest

Although this article gives some good tips on what to watch out for I think the prices they list are like waaaaaay to high. As well when I first clicked the link, I was kind of expecting some tips like on how its important to make sure the taps are all working correctly or a list of things that COULD go wrong in a home and a reasonable way to budget for them. Although it would suck to move into a new home and not have furniture that 'goes' well with the space or fills it fully, they are not necessary purchases and anyone with an eye on a frugal lifestyle isn't going to be like "oh no! this unavoidable furniture expense is going eat up all of our savings!" like doh