THE cost of owning a home can extend well beyond the purchase price or monthly mortgage payment as unexpected construction and renovation bills could easily add millions of dollars to the overall investment, experienced realtor Roger Allen has said.

Speaking at a Scotia Live webinar on Thursday, Allen, who serves as second vice-president of the Realtors Association of Jamaica (RAJ), urged prospective homeowners to look beyond the price tag and plan for additional costs that can emerge before, during and after a transaction when buying, building or renovating a property.

Allen noted that one of the first hidden costs is failing to properly assess what a property will require after the keys are handed over.

He said prospective buyers can become so attracted to a property’s appearance that they overlook issues that could result in significant expenditure later.

ALLEN….fuel, vehicle maintenance, tolls and commuting time should form part of the affordability calculation when evaluating where to live

“It is not just the house,” Allen said, pointing to location, drainage, construction quality, boundaries, repairs, transportation and maintenance as costs that should be factored into the decision.

“The mortgage has a term, but maintenance is for life,” he added.

The realtor also urged buyers to distinguish between needs and wants as they consider how their housing requirements may change over time.

He said a large, multi-storey home, for example, may become less practical as owners age, while a large family home may become unnecessarily costly to maintain after children leave to pursue their own ambitions.

Pointing to location as another hidden cost that is often overlooked, Allen said this can also create significant hidden costs, which are often not as obvious on first observation.

“Fuel, vehicle maintenance, tolls and commuting time should form part of the affordability calculation when evaluating where to live,” he said.

“A property farther from work or school may have a lower purchase price but the additional transportation costs can also erode those savings over time,” he added.

The seasoned realtor, in stressing the importance of engaging the appropriate professionals to examine a property before closing a purchase, said this these personnel could include civil and structural engineers, surveyors, and valuers, where necessary.

He said the RAJ’s network includes professionals who can help prospective homeowners to identify the specialists needed to properly assess a property.

Highlighting legal and boundary issues among other costs to be factored, Allen said this should be done before a transaction is completed as a breach of a property’s boundaries could in the future create additional legal and rectification costs for the new owner.

To this end, he also warned against rushing into fixer-upper purchases simply because the property offers desirable land or is located in an attractive area.

He cited the example of an older Mona property dating back to the 1960s that appeared to require about $5 million in renovations for which actual costs more than doubled after some checks. “Once the plumbing, electrical system, bathrooms, kitchen, roof, windows and termite problems were assessed, the estimated cost rose to approximately $11 million-$12 million.”

On the issue of building a home from scratch, Allen said that while building one’s own home may offer greater flexibility, it should not automatically be viewed as the cheaper option.

“Unlike purchasing a completed house, construction requires the homeowner to coordinate a range of professionals and manage a project in which costs can change as work progresses,” he said, while noting that prospective builders may need architects, contractors, quantity surveyors and engineers, while also budgeting for materials, labour and supervision.

Head of the Sales Support Unit at Scotiabank Avil Leonce further underscored the need for prospective buyers to avoid viewing a mortage as the only cost of homeownership. She urged owners to start with a plan that takes into account income, expenses, existing obligations, and lifestyle before they begin to seriously shop for a property.

“These include legal fees, mortgage-related fees, valuation costs, surveyor’s identification reports, stamp duty and registration costs, and other closing expenses. Property insurance associated with the mortgage may also emerge as additional recurring costs,” she said.

In stressing the need for prospective homeowners to approach the purchase as a long-term financial commitment, both experts cited this as an important part of the process rather than simply a transaction.

“For many Jamaicans, homeownership represents stability, pride, accomplishment, and an opportunity to build wealth. For members of the Diaspora, it can also form part of a generational legacy,” Allen said.