Wednesday, January 18, 2012

We-Design-Day: The Home Evaluation Plan

We-Design-Day's are sponsered by Blue Door Interiors
After living in a condominium for five years, I learned a few valuable lessons. One: I don't want to go back to a poorly run condo, two: neighbours in condo complexes can be busy bodies and three: the value of a Reserve Fund Study.

What is a reserve fund study? For a condo complex, it is a document that outlines the monitory contributions that need to be made to the Reserve Fund in order to meet the need for (ongoing) maintenance and future repairs and replacements. The report encompasses all the items “owned” by the collective and puts together a list of the the current condition and sorts out a schedule of maintenance or replacement and associates the cost. This then allows the association time to find the money (usually by Special Assessment) of the owners.

In my opinion, no house should be without one either. The significant difference between a condo association and a typical homeowner is that in a house, one person is wholly responsible for all the maintenance, replacement and upkeep. In a condo, it becomes a shared expense – that is why, in part, that condominiums have become so popular. Additionally, one typically wouldn’t have a reserve fund however; it is wise to have a special savings account to pay for the ongoing repairs and maintenance or to use for emergency repairs!

We had a home inspection done when we purchased our home – the report we were provided noted the existing condition of some of the key items that should be included in a ten year plan. If you’ve got a report, pull it out and look at it. In most cases the home inspector evaluated the condition of important things like your roof, windows, doors, foundation and grade. This can be your starting point.

If you don’t have one, why did you buy a home without getting a home inspection!? Seriously, I know full well a home inspection can’t catch everything and I also understand that in the height of the housing boom (in North America, anyway), waiting often meant being outbid or disqualified because the seller didn’t want to wait for the time it takes to arrange an inspection. Professionally, I think it’s just silly to not have one. They generally cost a few hundred dollars but can save you thousands!

Case in point – my sister bought a home fifteen years ago and didn’t have a home inspection. After they’d been in the house for a bit, the learned the entire back wall of the home was filled with mould and was rotten. There were tell tales signs of mould but even though her father in law worked in the construction industry and was “handy”, no one saw them until it was too late. A proper home inspection could have given them options – to pass on the house altogether or to go back to the seller and as for a reduction in price. Without it, they were left with thousands of dollars in repair costs. It isn’t fail proof but it can significantly reduce complications! Please note, for some first time mortgage applications, the bank or lender will evaluate the home and call it an inspection but the bank only evaluates if the house is worth the price being paid, they do not inspect any elements of the house.

Whether you build new or purchase an existing home, both require time and money be put in to them in order to maintain their value. How much depends on a few key things. The year of construction, type of build, size, materials used and government rules and regulations all factor in to the equation.

Over the next few weeks, I'm going to share with you the development of my home study and explain some of the factors to be considered when developing your own plan. As always, I welcome your questions and in put - if I don't know the answers, I have the resources to find the answers for you. Check back next We-design-Day as I start rolling out our plan and explain the building envelope and it's importance.

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