Knowing things about your home that will send potential buyers running is essential as a seller.
These red flags may prevent you from selling your house, leaving your property on the market for far too long and possibly resulting in a substantial loss of money if a sale occurs.
Many of these Real Estate issues can and should be resolved before putting your home on the market.
Home buyers today look for “turn-key” homes so they do not have to involve themselves with additional time, money, and effort.
Most home buyers who will take on your maintenance issues will look for a discount, which can sometimes be substantial when ready to make their offer.
Most smart buyers will take advantage of the due diligence period in real estate to ensure they make a sound purchase decision.
Being well-prepared before your home sale eliminates many of these red flags.
As a buyer, you must be cognizant of anything that could disrupt the desirability, including the home, lot, neighborhood, and community.
From many years of experience as a real estate agent, it is vital for home buyers to research numerous items before making a home buying decision they will regret.
Being in the business, you hear numerous stories discussed over the real estate water cooler. Agents often discuss the problems their clients have encountered.
Some of them find out the hard way after the closing. Either they were not paying attention to the signs of problems, or they did not heed their buyer’s agent’s advice.
Either way, the red flags are now coming back to haunt them. Are there red lights flashing on a home you’re considering?
Let’s examine some issues that should cause you to second guess whether you are making the right choice.
What is a Red Flag in Real Estate?
A red flag is anything negative that could influence your decision to purchase.
When buying a home, there are several red flags that you should look out for.
These warning signs indicate potential issues or problems with the property that may affect the property’s desirability and your long-term happiness.
You may need a wake-up call when you see these signals!
Noteworthy Facts and Statistics to Know Before House Hunting
1. Foundation issues, such as cracks or unevenness, can be red flags when buying a house.
2. Inoperable windows, doors, and uneven flooring could indicate past settling problems.
3. Water damage or signs of mold could indicate underlying issues and should be considered a warning.
4. Electrical problems, such as outdated wiring or faulty outlets, can be potential negative signals during a house purchase.
5. A history of pest infestations, such as termites, rodents, or bed bugs, may raise concerns for potential buyers.
6. Undisclosed property liens or legal disputes associated with the house can be significant warnings that should not be ignored.
7. Approximately 30% of home buyers encounter at least one red flag during the buying process.
8. Homes with more than three previous owners have a 15% higher chance of having red flags.
9. Over 75% of houses with severe structural issues were built before 1980.
10. Properties located within 500 meters of a landfill site have a 10% higher probability of having environmental red flags.
11. Close to 20% of houses with unfinished basements or attics were found to have undisclosed damages or infestations.
Where Are The Building Permits?
Warning! Warning! Danger Will Robinson! Has the home you are considering had a significant renovation? Maybe there is a newly finished basement? When you see a homeowner who has made significant improvements, you should first ask if building permits were issued.
Unfortunately, many owners will do work on their property without doing what’s legally required. Home buyers can learn about this after their purchase. Often, it is much later when they go to sell the property and have to legalize unpermitted work.
What you need to do: You or your buyer’s agent must visit the local town hall and confirm that the seller has completed the necessary permit process. If you discover they haven’t, you should request they do.
The Owner is Unwilling to Fill Out a Seller’s Disclosure Form
A seller’s disclosure form is a document that provides information about the condition of a property being sold. The seller typically completes it in most real estate transactions.
The document includes details about any known issues or defects that could affect the value or desirability of the property.
This form is integral to home-buying as it helps potential buyers make informed decisions.
When a seller fails to fill out a seller’s disclosure form, it raises a red flag. This omission may indicate that the seller is either unaware of any issues or purposely hiding them.
In either case, it can create a sense of uncertainty and distrust for potential buyers. Buyers may be in the dark about the property’s actual condition without a seller’s disclosure form. It could lead to unpleasant surprises or expensive repairs down the line.
Completing a seller's disclosure form demonstrates transparency and honesty. It helps build trust with potential buyers. It shows that they are willing to provide all relevant information about the property, allowing buyers to decide.Click To TweetUltimately, a seller’s disclosure form is a crucial tool that helps protect buyers and sellers during real estate transactions.
Here is some advice on how to fill out the property transfer disclosure.
Signs The Property Could Be Stigmatized
When looking into purchasing or renting a property, it is crucial to consider any possible stigmas attached to it. Stigmatized properties have negative associations due to events or circumstances on or around the premises.
While these stigmas may not affect the property’s physical structure, they can significantly impact its desirability and market value.
Here are a few signs that a property may be stigmatized:
Criminal Activities Around The Property
1. Criminal activities: If the property was previously used for illegal activities such as drug manufacturing, prostitution, or gambling, it might have a stigma attached to it.
Such activities can leave a negative impression on potential buyers or tenants and may deter them from considering the property. I would highly advise steering clear of such properties, as the return on investment is likely to be hindered.
Tragic History
2. Tragic events: Properties associated with tragic events like suicides, murders, or accidents can also be stigmatized. People may feel uncomfortable living where such events occur, leading to decreased demand and possible price depreciation.
Haunted Homes
3. Hauntings or paranormal activities: Beliefs in ghosts or haunted houses can stigmatize property. Stories or rumors of supernatural occurrences can create fear and unease in potential buyers or tenants, complicating selling or renting the property.
Disclosure laws in most states preclude sellers from sharing this information. It will be up to you to discover whether a problem exists.
A Negative Past
4. Controversial history: Properties with a controversial past, such as being a former religious institution or having ties to a notorious historical figure, can also be stigmatized. The associations with these histories may not be universally negative, but they can still impact the property’s marketability.
Some of the best advice I can offer to any home buyer is to research the history of a home. You can quickly uncover red flags by heading to Google and searching for the address of a property.
Environmental Issues
5. Environmental concerns: Properties near hazardous waste sites, landfills, or other polluted areas can also be stigmatized. The potential health risks associated with living near such sites can deter buyers or tenants.
It is important to note that stigmatized properties can vary in their impact on the market, depending on location, cultural beliefs, and individual perspectives. While some buyers or tenants may be willing to overlook a property’s stigma, others may be strongly influenced by it.
Items such as this can bring down the value of property. Look at my handy list of other potential home value red flags.
Water Penetration
One of the top home-buying red flags is water intrusion. Signs of water penetration, including sagging or swollen building materials, dark stains, or noticeable dampness, are often indicators of much bigger problems.
Water can cause wood to break down over time, but it could also lead to issues beyond the immediate area.
If a buyer sees water damage, they will likely suspect mold could be present, possibly behind a wall – a major red flag in today’s market.
Mold infestations can spring upon, behind, and in walls and ceilings and are usually complicated and costly to eliminate. Mold can lead to potential health problems, especially in children and the elderly.
When a buyer suspects mold, he or she has a powerful bargaining chip when attempting to buy. Even worse, buyers will often look elsewhere if the mold problem appears to be challenging to address.
A seller that fails to address water damage and any mold that comes with it risks a lot when putting a house on the market.
Major Exodus From The Neighborhood
When buyers show up to look at a house, they pay attention to more than just the home and the lot it sits on. They also consider the surrounding neighborhood. If this neighborhood is noticeably struggling, they will want to know why and are sure to find it a negative when weighing their options.
A large-scale departure of residents could point to some serious problems.
Environmental issues, crime, or a meager employment rate are all troubling for potential buyers. If so many people are leaving, why bother moving into the neighborhood in the first place?
Researching all these things is part of knowing the history of a home and its surroundings. As I have mentioned, it is vital.
Sellers selling in such a neighborhood better be ready to take a hit on the price of their home.
Homeowners rarely pick up and leave unless problems are unlikely to be resolved – leaving buyers with ample reason to consider other properties in better neighborhoods.
If the exodus is just a coincidence, which is often the case, be prepared to explain why your neighbors are moving.
Is it a transient neighborhood where lots of relocations are usual? Make sure the buyer knows this!
Electrical Issues
A reliable electrical system is more critical in a home than ever. With more and more electronics becoming a necessity, buyers want an electrical system that is up to code and that can hold up to modern demands.
If the wiring is old enough, such as with knob and tube wiring, an outdated electrical standard also makes it difficult to get insurance or even a loan.
Double-tapped circuit breakers and old, potentially faulty wiring might have been sufficient in the old days, but it will send today’s buyers off and running to make a list of repairs they will ask you to make.
The Seller Has Painted One Wall Or Ceiling
Some sellers know they need to eliminate signs of water damage or leaks before showing their homes. Unfortunately, buyers and their agents usually detect the seemingly quick fix of painting over the problem. A quick coat of paint is no solution.
Water damage must be repaired professionally to ensure no mold is present, and when repairs are finished, all walls in the room should get a fresh coat of paint. This will avoid the suspicious single-painted wall and the questions that come with it.
Bad Smells Are Present
Nothing is as unappealing as a bad smell, inside or outside the home. Buyers must be able to imagine themselves living new lives in their new house – an image that quickly turns sour when an unpleasant smell is present.
Whether from garbage, pets, or any other source, sellers must eliminate bad smells before the house goes up for sale.
This is one reason real estate agents recommend a professional carpet cleaning before showing a home. It takes care of unsightly stains and potential smells – well worth the expense to help sell a home.
Don’t ignore this red flag. We all get immune to the smells in our homes. If your Realtor walks through the door and tells you there is a problem, trust them!
Awful smells are one of the top reasons buyers will not purchase a home they would consider otherwise.
The fear is that they will not be able to get rid of the odor after buying the home. This is especially true with pet odors and smoking.
Both of these things can get into flooring and walls. Buyers understand they are tough to eliminate and won’t want to be saddled with that burden.
Structural Wall Removal Evidence
Removing a wall important to the home’s overall structural integrity is never advisable. However, if it has already been done, and your home has not experienced structural issues, then the evidence of removal should be eliminated.
Even if the removal was successful, buyers might not be happy to discover the changes. If this change has created a potential problem, it should be disclosed to a buyer upfront.
The one red flag you never want to have is doing things to conceal prior problems. If you do this, the buyer will have a total lack of trust moving forward. They will examine your home with a fine-tooth comb to ensure you are not hiding any other issues.
Bug Damage
Signs of bug damage, such as termite evidence, make buyers nervous. Everyone knows that where there is one bug, there are many, and no one wants to buy into a major bug problem.
Sellers should permanently repair any bug damage fully before showing their home to avoid scaring off potential buyers.
Almost every home will have some bugs, especially if you are close to the woods.
For example, carpenter ants are prevalent in homes. Preventing an ant problem from becoming something of concern is usually pretty straightforward. Many pest companies can be hired for yearly pest maintenance programs.
Radon Issues
Radon is a potentially deadly gas when you are exposed to it for many years. The gas is found in all homes, but it can become a health concern if the levels are high enough.
If the seller has never checked the levels in the property, it is a tip-off that it could be higher than recommended.
Most of the time, it is possible to eliminate it or at least lower the concentrations to safe levels, but doing so requires the help of a professional. Buyers do not want to purchase a home filled with deadly gas, so any radon issues should be dealt with before the house goes up for sale.
Some sellers, of course, do not take the time or effort to check and do not discover they have been living with unsafe radon levels until a buyer has gone ahead and done an inspection.
What is interesting is that radon is discussed as an issue in Real Estate sales quite a bit from the standpoint of being found in the air, but many do not realize that radon can also be found in well water.
Removing Radon in Water is Expensive
While removing radon from the air is relatively inexpensive, removing radon from water is not. The average cost of removing radon from the air runs around 900-1200 dollars, while a system for removing it from the water can run upwards of $ 5,000!
During a recent Real Estate transaction I was involved with in Upton, Massachusetts, it was discovered that the radon levels in the well were above the requirements. The buyer, of course, wanted the seller to take care of remediation.
The seller was not too happy to find out he would have to take a significant amount of cash out of his pocket for this repair. Reluctantly, the seller agreed to take care of the radon issue, as the buyer would have backed out of the sale otherwise.
There are no federal regulations in place that require a seller to remove radon from a home, but buyers expect to be able to purchase a home that does not pose a health threat to their family.
Failed Septic System
All buyers want a healthy and functional septic system. Few want to get into the details of the septic system if they do not have to, and even fewer want to spend serious money on a home when there is a chance that the septic system will go out on them.
The cost of replacing a septic system is significant.
If you have always been fortunate enough to have municipal sewer at your past homes, you need to understand a septic system requires proper maintenance and care.
If the seller does not properly care for their system, a home buyer could have expensive problems.
When sellers have not been regularly pumping their septic tank, it is a tip-off to potential issues in the future.
Garbage Disposals Create a Problem
One of the biggest disappointments that home buyers discover when purchasing a home with a septic system is that it is not recommended to have a garbage disposal.
This can be a major inconvenience when you have gotten used to having one.
Garbage disposals can take years of life out of a septic system as the food does not break down quickly enough and clogs the leach field.
If you discover the seller has a garbage disposal and took it out before listing for sale, the red lights should be flashing. It could signal that you’ll be forking out the money for a new septic system.
Shoddy Maintenance
While many DIY home repair enthusiasts do good work that meets code requirements and will last for years, many others discover that they are not as talented as they first imagined.
Second-rate repairs are undesirable because buyers know they must fix such problem areas on their dime.
This kind of shoddy homeowner work is often discovered once a buyer does their home inspection. While the above are common home sale issues, other problems do not crop up quite as often but should not be ignored.
A Dysfunctional or Financially Problematic Condo Association
We have covered many of the warnings associated with buying a single-family home. However, condo buying has red flags as well.
When buying a condo, there are certain red flags that potential buyers should be aware of. One major red flag is high HOA fees. Homeowners Association (HOA) fees are a regular expense for condo owners.
If these fees are unusually high, it may indicate financial mismanagement or excessive spending by the HOA. High HOA fees can significantly impact your budget and may be a sign of future financial problems.
Lack of Reserve Funds
Another red flag to watch out for is a lack of reserve funds. The HOA sets aside reserve funds for major repairs and emergencies. If the condo complex does not have sufficient reserve funds, it can lead to unexpected special assessments.
It is vital to research the operating budget to ensure you don’t have future financial problems.
Potential For a Special Assessment
Special assessments are additional fees imposed on condo owners to cover the cost of unexpected repairs or maintenance. These assessments can be a financial burden and may indicate poor financial planning by the HOA.
Is The Condo Non-Warrantable?
Non-warrantable condos are another red flag to be cautious of. Non-warrantable condos typically do not meet Fannie Mae’s or Freddie Mac’s lending guidelines, making it difficult to secure traditional financing.
This can limit your mortgage options and affect the condo’s resale value. It is essential to thoroughly research the warrantability of a condo before making a purchase, as it can impact your ability to finance the property.
Financial Statements Look Shaky
Additionally, it is crucial to thoroughly review the financial statements and documents of the HOA before buying a condo. Look for any signs of financial trouble, such as consistent budget deficits, excessive debt, or a history of missed payments.
These can indicate poor financial management, leading to increased fees or potential legal issues.
In conclusion, buying a condo requires careful consideration and due diligence.
By being aware of these potential issues, you can make a more informed decision and avoid future financial problems.
Consulting with a real estate professional or an attorney experienced in condominium transactions can also provide valuable guidance and ensure you make a wise investment.
MLS Listing Description Tip-Offs
Sometimes, you can pick up on potential red flags in real estate just by reading the Multiple Listing Description. These words could tip you off to the property not meeting your expectations.
- Cozy: This language usually indicates that the house could be much smaller than you think.
- Needs TLC: The translation or signal is that the property could be a dump with substantial work needed. They can also be labeled as fixer-uppers.
- Sold As: Homes sold as-is often have some form of stigma. Often, they are a blatant warning of “buyer beware.”
- Described as unique: This is a signal the home could not be a crowd pleasure. It could have quirks or even functional obsolescence.
- Photos coming soon: Sometimes, you will see agents claiming photos to appear soon, and they never show up. Other times, they are only photos of the exterior. A clear tip-off is that there could be problems waiting to be discovered.
- Back on the market listing status: When agents see homes returning to MLS, it should be a significant signal to do more research. The listing agent needs to be asked why.
- It’s Labeled as a “Short Sale”: From years of experience selling short sales, you must ask many questions to determine if the property will close. You must first find out whether the listing agent has closed them. If not, it is a significant signal to look elsewhere.
Conclusion
Keep these real estate red flags in mind when buying a home. Never discount the value and importance of doing proper research. Investing the time and effort will increase the odds of purchasing a property you’ll love.
About the Author: Bill Gassett, a nationally recognized leader in his field, provided the information on top home-buying red flags. He is an expert in mortgages, financing, moving, home improvement, and general real estate.
Learn more about Bill Gassett and the publications he has been featured in. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of Metrowest towns for the last 38+ years.
Are you thinking of selling your home? I am passionate about real estate and love sharing my marketing expertise!
I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA
