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What You Should Know Before Buying an Older Home (2024 Guide)

Author Image Written by Jessica Wimmer Updated 06/05/2024

The Federal Reserve raised interest rates for the 10th consecutive meeting on May 3, 2023. High interest rates are typically not a good sign for potential homebuyers, as they often affect mortgage rates and lead to bigger monthly payments. Freddie Mac is still reporting mortgage rates in the mid-6% range, which has potential buyers looking for the best possible deal on a home.

One way to get that deal is to buy an older home, allowing you to take advantage of a prime location for less money than you’d spend on a modern, updated home. According to the National Association of Realtors (NAR) 2023 Home Buyers and Sellers Generation Trend Report, 1986 was the average year of construction for homes purchased in 2022.

Buying an older home or a “fixer-upper” can be a smart investment. But potential issues hiding within those aging walls may end up costing you more than buying a newer build. Determining the cost-effectiveness when purchasing an older home is essential to making a smart choice. This guide will discuss what you should consider before buying an older home.


Most Concerning Issues in Older Homes

You likely already know that buying an older home will require some work, but all the necessary repairs might not be obvious. A professional inspection can reveal age-related issues, such as outdated and deteriorating materials, previous sloppy repairs, poorly done DIYs, and overdue maintenance.

Any of these problems will need to be repaired sooner than later to preserve the safety and security of your home. The following are some of the most common areas of concern.

Foundation

The foundation’s condition can affect your whole house, so promptly addressing issues is important. We recommend skipping the DIY approach and hiring a professional for foundation repair.

Signs of foundational issues include these problems:

  • Cracked drywall
  • Hard-to-close or “sticky” doors and windows
  • Uneven floors
  • Water damage

Foundation repair costs depend on several factors, including square footage, soil stability, materials, permits, and the extent of the damage. Small hairline cracks can be filled with epoxy for a few hundred dollars, while severe foundation issues could cost between $15,000 and $25,000. The national average cost of foundation repairs is $4,500.

Roof

Part of the charm of an older home is often a unique roof style reflective of when it was built. But preserving historic roofing can be a big ticket repair. According to the 2022 Remodeling Impact Report, the average cost of new roofing materials was $12,000. However, the report also determined that roofing improvements recovered 100% of their cost, making it a financially wise remodeling decision.

Signs of potential roof damage include these problems:

  • Broken or missing flashing
  • Leaking
  • Missing tiles or shingles
  • Rot or mold
  • Sagging

Some problems, such as roof sagging or missing shingles, are easy to identify. Harder-to-see issues, like moisture damage, can become major structural problems if left unchecked. If you suspect signs of roof damage, call a professional to assess the extent. They can also patch the damage to buy you some time and prevent further deterioration while you plan for a repair.

Plumbing

Plumbing materials have come a long way in the last century, so an older home will likely have outdated hardware that needs to be replaced. Older pipe materials consisted of lead, galvanized steel, or polybutylene, each with its own downsides. The proactive approach to avoid costly repairs down the line is to hire a plumber to do a thorough inspection and replace your pipes if necessary.

Signs of plumbing problems include these issues:

  • Discolored water or pipes
  • Drainage issues
  • High water bill
  • Inconsistent water pressure
  • Leaking
  • Poor water quality

Installing new rough-in plumbing costs about $4.50 per square foot. To replace the plumbing in a 2,000-square-foot home, plus the added cost of fixtures and labor, you can expect to pay between $10,000 and $12,000.

Sewer

Modern appliances and updated fixtures often increase water output, so your sewer lines must be updated to handle it. If left unchecked, you’re at risk for a sewer backup, which could lead to a stinky situation. Nearby trees could also be an issue, as their roots can invade and damage pipes in search of water.

Signs of sewer problems include these issues:

  • An egg-like smell 
  • Common clogs
  • Foul-smelling, discolored backup
  • Multiple slow drains
  • Soft spots and puddles in your yard from sewage

The average cost for a full sewer line replacement can fall between $3,000 and $6,000. Other factors can ramp up the price, such as location, length of damage, and repair method.

For example, you might have to factor in yard or wall repair if the issue isn’t easily accessible. You should also compare the total associated costs of both traditional and trenchless repair.

Electrical

An outdated electrical system in an old home isn’t just inconvenient; it’s dangerous. Unchecked electrical issues could result in a fire or electrocution, so you should always hire a professional to update your electrical system.

Signs of electrical problems include these issues:

  • Burning smell
  • Flickering lights
  • Frequent breaker trips
  • Switch that tingles or vibrates
  • Warm outlet plates

Completely replacing the electrical wiring due to missing or deteriorated insulation can cost upward of $15,000. However, if the wiring is in good shape, the problems may be caused by your electrical load (the electricity needed to operate appliances). In this case, you may need to upgrade to a higher-capacity electrical panel, which could cost anywhere from $1,300 to $3,000.

Hazardous Materials

Asbestos and lead are two of the most common hazardous materials to look out for in houses built before 1980. A professional home inspection can reveal the presence of either material.

Due to its durability and low cost, asbestos was used to create building materials, such as insulation, floor and ceiling tiles, adhesives, and shingles. The good news is that it isn’t a health hazard as long as the material remains intact. If you notice tears, cracks, or crumbling, you will need an inspection to confirm the presence of asbestos. Then you’ll have to decide if a professional should seal, cover, or remove the area.

Lead was another hazardous material commonly used in mid-century builds, mostly in paint. Like asbestos, lead paint is best left alone if still in good condition rather than being removed. The U.S. Environmental Protection Agency approves sealing the toxin by encapsulating the lead paint with special primers, some of which even have a bad taste to deter children from ingesting it. Primer isn’t a permanent solution but a cheaper, time-buying option since lead paint removal can cost $500 to $2,000 per room.

HVAC

Properly maintained HVAC systems typically last between 12 and 15 years, so odds are you’ll need to replace the one in your home eventually. However, replacing your entire system without a home warranty will require substantial time and money. Before replacing an HVAC system, have a licensed technician assess the equipment and ducts to see if there are any modifications or repairs to extend your HVAC system’s life for less up-front cost.

Signs of HVAC issues include these:

  • Frequent need for repair
  • High energy bills
  • Inadequate heating and cooling
  • Poor air quality

You can expect to spend $2,500 to $8,000 to install an air conditioner, $1,500 to $9,000 to install a furnace, and $2,000 to $30,000 to install a heat pump. While HVAC installation costs are high, the benefits of long-term energy savings and increased home value are notable.

Windows and Doors

Aging windows and doors cause concern regarding temperature regulation, pests such as termites, and potential security issues.

Signs of window and door issues include these:

  • Condensation or foggy glass
  • Dead insects or wings
  • Difficult to open or close
  • Drafts
  • Warped or wrinkled wood

If you discover any of the above problems, the issue may be bigger than a simple window or door replacement. You may need to repair the frame or jamb (especially if it’s an exterior door), which could fall beyond your scope of DIY capabilities. If so, expect to pay around $2,000 to $4,000 for a full door replacement.

Replacing a window costs $300 on average, but as with most elements of home renovation, the style and material you choose will affect the price. You can install a single-hung vinyl window for around $200, but replacing quality wood windows can go well into the thousands. If you’re replacing multiple windows simultaneously, you can likely get a bulk deal with your contractor and pay less per window.

Another way to save when replacing your windows and doors is to see if you qualify for an energy-efficiency home credit courtesy of the Inflation Reduction Act of 2022. By installing qualified energy-efficient windows and doors, you can claim up to a 30% tax credit, with annual limits of $600 for windows and $250 per door ($500 total).


Other Considerations When Buying and Updating an Older Home

Buying any home is a big task, but buying an older home comes with extra considerations for remodeling and updating. Any major repairs listed above can be timely and expensive, especially when multiple issues add up. 

Here are a few factors to think about:

Budget Limitations

Be realistic about your budget and know when you can or can’t afford to take on the additional costs of repairing an older home. Build an emergency fund for unforeseen problems while making repairs. It’s also important to consider that you might have to prioritize necessary renovations and skip or delay optional, cosmetic renovations.

Research and Build a Qualified Team

Take time to vet professionals familiar with older houses throughout your home search, purchase, and repair process. Real estate agents, contractors, and inspectors with specific knowledge of older structures can provide valuable knowledge during each step. Remember that reviews and recommendations can be as important as the price when getting quotes.

Understand What Homeowners Insurance Will Cover

Check that your homeowners’ insurance covers older homes. If not, you may need to adjust your policy or purchase a new one. Insuring older homes is generally more expensive than insuring a brand-new build because of older materials, possible decay, and even historic restrictions.

You might be required to take out an HO-8 policy if the current home value is less than it will cost to repair. An HO-8 policy protects older homes on an actual cash value (ACV) basis, which means your home is protected based on its depreciated value, not its new value.


Considerations When Purchasing a Historic Home

If pocket doors and craftsman-style bungalows make your heart swoon, you might consider buying a historic home. What makes a home certified historic, rather than just old, comes down to regulations set by the National Register of Historic Places.

For a property to qualify as a historic home, it must be at least 50 years old and also meet one of the following criteria:

  • Associated with a significant historical event
  • Connected to a significant historical figure
  • Embodies distinct characteristics of a time period or master builder
  • Is a past or potential source of historical information

Designation

By buying an officially designated historic home, or a home part of a designated historic district, you agree to preserve the home’s history. It comes with challenges and expenses, so it’s important to be committed and financially able to uphold the home’s character and architecture.

Regulation

Historic homes can be heavily monitored, especially if they’re located in a tourist area. This means permits can be required before making any exterior changes. Also, repairs are often more costly due to the materials and craftsmanship skill level.

Tax Implications

Unfortunately, the 20% Federal Historic Preservation Tax credit doesn’t apply to historic residential homes. However, it can be applied toward preserving a historic building to serve as affordable housing, including mixed-use developments combining commercial and residential space in one property.

Financing

You might qualify for a grant or loan to cover part of the renovation costs of a historic home. There are downpayment and closing cost assistance programs available to first-time homebuyers. Also, check your State Historic Preservation Office for any state-specific incentives.


Our Conclusion

Central location, architectural character, and low purchase price are benefits of buying an older home. However, while older homes can be charming havens of historical architecture, they can also be a drain on your wallet.

Having an older home inspected by a professional before you purchase is important. That may include paying for additional niche inspections, but it’s a crucial step to protect inhabitants from danger or illness. If you can get an inspection done before buying, any findings could affect the purchase price and help recuperate costs for renovation.

Prepare yourself by vetting anyone you hire, building your emergency fund, and selecting the right homeowners insurance policy. Also, research and apply for grants or loans to help finance your purchase.

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