Your own nightmare on Elm Street

A hot housing market has the uncanny ability of cooling people’s common sense.  The excitement of bidding on a house, competing with others for a home, and gambling against time, can become addictive.  Losing the bid can make some people so desperate they are willing to do anything to win the next home, especially as they watch housing prices rise.

A few smart people sit back and take their time, waiting to see if there is a housing crash, focusing on landing a deal, or just taking time to weigh the enormity of the purchase against the house cost.

It is amazing that people will spend more time choosing a dress, or a vacation, than they will spend on their house purchase.  Reports state that people are making their decision to buy in less than fifteen seconds.  Many people are making their choice on a home’s curb appeal, instead of the houses’ true value, structure, needed renovation, or prior improvements.

In fact, many people go from ‘decision to buy’ to ‘owner’ in less than two hours. This has left more than 12 million people feeling that they are living the movie ‘Nightmare on Elm Street’ instead of relaxing after a hard day’s work in their dream home.

A few smart homeowners are using the services of a house finding agent, but this is not a guarantee against shoddy workmanship, bad neighbours, or municipal problems.  

At first glance, people think of mortgage rates and bad support beams when they think of making a bad choice when buying their home.  But the reality is, some people are living quite nicely on a 40 year mortgage and will continue to do so even if the interest rate rises this year, again.

There are other factors to consider when purchasing a home.

Heating

The first question to ask is, ‘how much did this house cost to heat last year?’  There can be a several thousand pound difference between similar houses in the same area.  Several factors can drive the heating cost up. 

The age of the furnace can have a dramatic effect on the cost of heating a home. Some homes cost so much to heat that the cost of renovations can be repaid in a couple of years, even if the homeowner takes out a secured loan.  Not that today’s mortgages are leaving us any spare cash or credit to make major repairs.

Taxes

No one should buy a home without taking a good long look at the taxes.  Of course, there is the ‘value’ that you see.  But, ask the municipality what the council taxes are in the general area.  If this house is taxed on the low side, then expect a hefty hike in the near future.

Many homes in the UK have not been assessed in 50 years. Even small renovations that don’t increase the house’s value can drive the taxes up substantially, especially if the house hasn’t been assessed in a few decades.  This is for the Do-It-Yourself who buy ‘fix-it-up’ homes.  Expect to see the taxes double.

Neighbours

These terrors swoop down on you before you unpack and tell you everything they have petitioned the municipality to change regarding your house. Of course, they are sure that you are not a deadbeat like the last homeowner, and know that you’ll have the problems fixed within the month.

The problems could be anything from a simple hedge that has been left to grow out of control, to a demand that you make your home look as nice as the houses surrounding it.  A house that repeatedly hits the market usually has structural or neighbour problems.

Don’t think this is a financial problem? Think again. This type of neighbour can force you into court, cause endless problems with council, and if they win, it will cost thousands of pounds to make these people happy.  If you do make them happy then sell, before they find something else to complain about. 

Development

You found a dream home. You bid high, but this time you won the property.  You dream of sitting out back on warm summer nights and overlooking the green belt.  Spring gives way to summer, and you’ve already outfitted your patio.  Nothing is amiss for another week, when the sound of bulldozers wake you just after dawn.

Three weeks later an entire housing complex has gone up.  Of course, you can’t sell your home now, because it is in the ‘old’ section of town.  In effect, you haven’t moved.  You haven’t lost your job. You haven’t done anything socially wrong – that you remember.  But you now officially live on the ‘wrong side of the town.’

All you can do is build a privacy fence, and hope it doesn’t annoy the neighbours.

Cost?

Eliminating the negative equity situation, any of these problems can cost thousands of dollars to repair.  However, the cost of living in a nightmare for a decade can reach far beyond anything measured in monetary terms.