I recently helped a really nice couple move from the Pacific Northwest to sunny Long Beach, CA. We spent countless hours sifting, identifying and choosing properties to preview. We went out on Saturday and Sunday for 3 straight weekends, looking at over 30 properties. We identified one property that was "heads and tails" above the rest and quickly made a very generous offer (albeit below asking price). The sellers accepted.
My clients' exhuberance was overwhelming. It was great!
Long before the "real work" of looking for the perfect property began, an important part of my job as their Realtor was to position exactly what is entailed around the transaction. One area that I make sure to cover were hidden costs not normally talked about when trying to sell real estate.
There are several that come to mind that I always make sure are clear:
1. Insurance Costs
I recommend my clients contact their insurance agent to provide them with guidance and estimates on homeowners insurance...AND...Automobile insurance.
The geographic area (flood, tornado and brush fire prone areas), parking situation and surrounding environment may effect the amount of insurance you will end up paying for your two and three most valued assets (Your Home and car...I rate you and your family as a solid #1 valued asset -- above your home and auto). Always shop insurance and look for the best value before you settle on the lowest price.
2. Amenities
The cost of living in New York city will vary greatly from rural Kansas. Long Beach, CA, although it is considered to be much more affordable than other areas of Southern California, costs more than other places in the United States. Gain a solid understanding for what things cost and what is available where you plan to move -- from accessibility to things you like to do to groceries to entertainment. All will have an effect on your lifestyle and quality of life.
If you're unfamiliar with the area your moving too, ask your Realtor and get online. See what the area is like, what there is to do and how things are priced. Knowing this beforehand will make the adjustment much more fluid and enjoyable.
3. Utilities
Utility costs differ from city to city, region to region. And can vary greatly based on the size of the property and efficiency in architecture and systems. See if the current owners wouldn't mind providing you with copies of utility bills (after your offer has been accepted) so you can get a handle on the costs you will incur after close.
4. Taxes (booooo!!) and Assessments
As the ole' saying goes..."There's only two things you can't avoid in life, death and taxes". So, that being true, having a clear understanding of the tax base and expectations will make your planning a lot more effective and easy. In Los Angeles County the property tax is approximately 1.25% of property value at the time of purchase (Note: As property values have decreased over the past few years, I always advise to familiarize themselves with the local tax assessor office and spend a few minutes on the phone to receive direction on how to lower your tax base to the value of the property at the time of sale. Often times, non-committed new home owners will continue paying the inflated tax rate of the property when the property was previous sold (if it was higher).
Other taxes, assessments, bonds and mello roos also play a part in your tax budgeting for the year. Talk with your Realtor about the area that you are interested in and have them investigate any of these additional taxes. You should get this information in the Combined Natural Hazard Report/Tax Disclosure or Preliminary Title report provided during escrow. But doing some legwork beforehand, never hurts.
Also, it's not just property tax that will effect your life style, sales tax, state tax and local income tax can also play a role. Don't be afraid to lean on your realtor to provide you the information or point you in the right direcdtion. Simply "Googling" sales tax in Long Beach will provide you a wealth of information.
5. The Commute
I know plenty of homeowners that moved many miles from work in order to increase the amount of home they could afford. Moving to Southern California from just about anywhere can be deceiving. On a map, going from Corona to Long Beach is only 30 miles. But those 30 miles during peak traffic can be up to 2.5 hours each way.
The cost of time, gas and car maintenance can far outweigh the additional cost to be right down the street from work. Carefully evaluate, prior to moving, where you want to live in relation to your work. It can be a life (and relationship) saver.
Rule of Thumb: For many years, the rule of thumb is to keep housing costs below 33% and combined costs for housing, taxes, utilities and commute to less than 46%. I know, in these economically challenging times, it may be difficult. However, standing as close to these percentages will go a long way to making your body, mind and spirit a much happier place to reside.
