Buying Home in a New City
Q. We’re moving to Las Vegas in August and want to buy our first home there. What would you suggest on finding a real estate agent, shopping for a home, and going about the process? Suzanne R., Austin, TX.
A. I’d suggest you rent a house there for at least six months before thinking about buying a home. If you don’t know the city very well, you might buy a property and then figure out that another area is much more suitable for you. So you need to get settled into Vegas and take 3-6 months to learn the area, neighborhoods, prices, amenities and figure out what locations in town would make sense for you to buy a home. Also, make sure anything you buy you’re going to own at least five years; that’s the average breakeven point on ownership.
If you take the approach of not wanting to rent for a while, you’ll probably rush the process and you may not be happy with your purchase. For many reasons -- primarily the major cost of a home and costs of buying and selling -- I would advise you to rent for a while as you search for a great location and a house to call home. Good luck.
Earthquake Insurance Coverage
Q. We live in San Diego and have a 1960’s 1,200-square foot house and are wondering about earthquake insurance. What's your opinion on it? Mike L., San Diego, CA
A. No one can predict when an earthquake will occur. Insurance is provided to help you financially if a covered peril, like an earthquake, causes you financial damage. Like all insurance, it’s a cost vs. benefit decision.
We know the risk, which is your house could be destroyed, and we know that California is an earthquake-prone area. You also know, or can find out, about the construction quality and techniques to determine if your house is more likely to survive a quake. New houses are pretty darn tough and 1960’s houses, like mine, might just topple if a big shaker hits!
I actually just received my regular homeowner’s policy which always includes information about earthquake coverage. It’s $106 per year for $214,000 worth of coverage – with a 15 percent, or $30,000 deductible. I have yet to make my choice, but you can get a quote from your agent and decide if it’s worth the money.
We’re lucky here in San Diego, but policies get much more expensive as you head north.
This story was written by Leonard Baron, MBA, who is America’s Real Estate Professor® His unbiased, neutral and inexpensive “Real Estate Ownership, Investment and Due Diligence 101” textbook teaches real estate owners how to make smart and safe purchase decisions. He is a San Diego State University Lecturer, blogs at Zillow.com, and loves kicking the tires of a good piece of dirt! Email Your Questions to: Leonard@ProfessorBaron.com