Expert: liznarr - 8/10/2009

Question
Hi, we would love to buy a home but being our first time we're not as informed as we'd like to be.
I came across this older home (built in 1987) which is really nice, spacious and at an affordable price for us. Do homes this old get a good resale value or do they end up being sold at less than what they were bought for?
We don't really know what the pros or cons of purchasing an older home would be. Any direction in this matter would be really helpful.
Thank you :)

Answer
Hi Heidi,

Older homes maintained and kept in good condition have good resale values.  I don’t know the statistics, but I would guess that the vast majority of homes in the US could be classified as “older” – at least those built in the 1987 and post-era and many prior to that date.  

The single fact that a home is older does not necessarily negatively affect resale value.  Resale value is determined by price, condition and location, although not necessarily in the order given.

Some of the pros of purchasing an older home could be landscaped yards; any structural deficiencies normally have manifested within the first ten years and should have been corrected (as opposed to NOT knowing what might occur in a new home); and sometimes having more spacious rooms, as you mentioned.

Some of the cons of purchasing older homes could be less energy efficiency (such as older HVAC systems, water heaters, refrigerators, single-pane windows; and the need to update insulation, both in the attic and crawl space); aged electrical systems and very old plumbing (generally a problem in homes, say, 30-40 years old); aged roofs that could be near the end of a useful life; and outdated kitchens and baths.

Again, if a home has been maintained and kept in good condition, that should be a major consideration for you – unless you and your husband are willing to make repairs and updates.

I would suggest that you never purchase ANY home without having a good, licensed home inspector do a thorough inspection for you.  They are trained to look for deficiencies the average buyer may not even know about, such as polybutylene plumbing (see http://www.polybutylene.com/poly.html and http://www.repipenews.com ); and also unsafe electrical panels  (see http://www.ismypanelsafe.com ).  Purchasing a homeowner’s warranty is also a good idea when purchasing an older home.  Here is one of many sites you can check out for homeowner warranty information:  http://www.ahswarranty.com

Be sure to also have HVAC, termite and water damage inspections performed.  Require that any inspection reports be clear, or free of any defects.  If any defects are found, your Contract of Sale should have language in it that requires the Seller to make and pay for any corrections required.

One of the biggest problems I encounter with new construction homes is water issues.  If the site was not properly graded and the grade maintained properly, water can flow to and enter the crawl space area; and this can create major problems.

I hope the above suggestions are helpful.  Good luck to you, and feel free to write again if you have additional questions.

Regards,
Elizabeth