There are real estate red flags to take into account when buying a house Buying a home is a very important decision, and you need to make sure that you are aware of the 7 important real estate flags to watch for when buying a home. By being aware of these real estate red flags, you can avoid making a mistake that could ruin your finances and your home. There are real estate red flags that are important to look at when looking at homes to consider.7 Important Real Estate Red Flags To Look For When BuyingClick To Tweet
What are the 7 Real Estate Red Flags To Watch For When Buying A Home?
Buying a home is an exciting time and you want to ensure that you consider all facts when making a large investment. Buying a home can also be emotional, and buyers imagine themselves living in the home before going through all the proper steps and performing all their due diligence.
The following list of real estate red flags will help you to make a good decision about the property to ensure it is right for you.
Important real estate red flags to consider are below.
How to Determine if I can Afford the Home?
One of the very first steps a buyer needs to take is to meet with a mortgage lender to determine what a buyer can afford. A lender will consider your current financial position including any expenses such as car payments and more. A lender will also look at your assets to determine your debt-to-income ratio.
Lenders will also consider the cost of homeowners insurance. As a buyer, you want to ensure that you are able to obtain insurance on the home. The property may be in a fire area or in a flood zone and that can impact the insurability.
A lender will ask about your down payment and funds in the bank to ensure you have sufficient closing costs.
One way to determine if the home is too expensive for your budget is to compare the sale price of the home to your monthly income. If the sale price is significantly higher than your monthly income, then it may be too expensive for you to purchase the home. The expense of a home is an important real estate red flag. There are costs of home ownership including repairs and maintenance that is important to be aware so you can budget.
How Do I Know If The Home Is Over-Sized For My Needs?
One way to determine if the home is oversized for your needs is to compare the size of the home to your current living space. If the size of the home is much larger than your current living space, then it may be too large for you to live in. If buying a home is a stretch financially, then considering the size of a home is important. You don’t want your monthly expenses to exceed what you can afford.
Keep in mind the cost of utilities will be higher in a larger home. The more square footage the home house has the higher the cost to either heat or cool the room. A wifi signal may not easily reach every room of the house. There are tips for calculating square footage.
How Do I Know If The Home Has Hidden Problems?
One way to determine if the home has hidden problems is to review the seller’s disclosures. If there is something on the disclosures that are of concern, then you can inquire. Seller disclosures are important real estate red flags. Of course, it is essential to have a home inspection. The home inspection will uncover any real estate red flags the home may have. You may be buying a house with issues.
The home inspection may trigger other inspections such as a roof inspection, pool inspection, and sewer line inspection. Be sure to complete these inspections prior to the end of your due diligence period. Typically the contract calls for 17 days to perform your due diligence, however, this is negotiable. During the very busy buyers market in 2021, many buyers were waiving an inspection contingency altogether which is a huge risk to a buyer.
Waiving a home inspection is a very risky thing to do as the home may have many issues.
How to Determine if The Home is in a Good Neighborhood
A very important factor in real estate is to purchase a home in a desirable neighborhood. You most likely have heard – location, location, location.
A good idea is to check the schools that the children attend. Even if you do not have children, you may sell the home to someone in the future who does have children.
There are websites to check criminal activity, and you can view calls for service on each city’s police or law enforcement website.
Do the Proper Permits Exist For The Home?
Another real estate red flag is to ensure the home has proper permits. One way to determine if the seller has the proper permits for the home is to ask the seller to show you any of the permits that the home may have. If the seller refuses to show you the permits, then it may be because the house does not have the proper permits.
Buyers can check the permit history on a city’s website. Most contractors will obtain permits for electrical work or revisions, replacing a roof, and installing an air conditioner when remodeling a home.
If a seller had some work done on the home without permits, it is their obligation to disclose it to the buyer. It is not uncommon for a homeowner to have work done on the home without permits.7 Important Real Estate Red Flags To Look For When BuyingClick To Tweet
Signs of Deferred Maintenance
When a buyer sees deferred maintenance in a home, they may be more likely to have suspicions and consider it a real estate red flag. Deferred maintenance can include items such as cracks in the foundation, peeling paint, sagging rooflines, and water damage.
Another way to determine if there is deferred maintenance is to ask the seller questions about the home’s history. For example, did the home undergo any major renovations or construction projects in the past? If so, what were they, and who was responsible for them? If the property is a fixer-upper, then the buyer needs to be aware of the cost to make the improvements.
If you are thinking of buying a home that has serious defects, it is important to do your research. Serious defects can include structural problems with the house such as rotting framing or foundation damage.
The Home May Be in an Undesirable Location
When you are looking for a house to buy, it is important to take into account the location. Sometimes, a house that is in an undesirable location may be worth more than one that is in a desirable location.
For example, if a home is located next to a busy road or near a hazardous waste site, the value of the home may be lower than if it was located in a quieter neighborhood. Keep in mind if a home backs up to a city park that has sports courts with lighting that stays on till 10 pm.
Besides considering the location of the home, you should also consider what kind of lifestyle you would like to live. For example, if you are planning on having children in the future, you might want to avoid buying a home that is too close to schools or playgrounds.
When you are looking to buy a home, it is important to be aware of the real estate red flags that may indicate a problem with the property. By taking these steps, you can make sure you are getting the best deal on a house that is perfect for your needs. Consider these items that are real estate red flags.
About the Author
The article “7 Important Real Estate Red Flags To Look For When Buying” was written by Sharon Paxson, a top Newport Beach Real Estate Agent. With experience beginning in 2005, representing buyers, sellers, and landlords, we welcome the opportunity to share our expertise with you and guide you through your real estate transaction.
1 thought on “7 Important Real Estate Red Flags To Look For When Buying”
Great tips for all buyers. I hope they are reading and following your advice.