Originally published on Inman, our agents put together a comprehensive list of situations they’ve seen that beg the question: when should I tell my client to walk away?
Buying a home can be one of the most exciting moments for homebuyers. The ability to grow equity in your home, customize and renovate, and build a future with your family are all great reasons for wanting to own a home. The current real estate market is seeing homes being scooped up in mere hours after being listed on the MLS. This has pressured many homebuyers to buy homes sight unseen or through virtual tours. Even so, it’s easy for homebuyers to get attached to a home. However, one aspect of the home-buying process that many clients don’t consider is when they might have to walk away. As a perspective homebuyer, here are six reasons you should walk away from buying a house.
1. Home Inspection Comes Back with Major Problems
We always recommend homebuyers complete an inspection before moving forward. Your real estate agent should be able to provide you with a list of reputable inspectors in your area. The inspection report can provide invaluable information. Once completed, sit down with your agent to go over the findings. Filter down the major repair issues from the simple fixes so you know what to ask for when countering. The five biggest concerns we’ve seen are: foundation, water intrusion, electrical, plumbing, and roofing issues. Even if these issues come up on the report, doesn’t mean you need to immediately walk-away. It’s the inspectors job to write-up anything they come across. The exact wording for each issue will determine the severity of the problem. If in doubt, you should be able to work with your inspector and realtor to provide clarity and recommend next steps.
2. Home Quality is Questionable
Coming right off the coattails of home inspections is the build quality of a home. While some newer homes come with home warranties or guarantees from the contractor, there can be tradeoffs. Newer construction can mean cut-corners . Misaligned trimwork, unlevel surfaces, and sloppy painting can all be red flags. When considering a newly constructed home, protect yourself by asking for a home warranty. Older homes have amazing charm and character but can also be susceptible to costly repairs. Sellers who have recently remodeled a bathroom or kitchen may have done it themselves instead of involving a licensed professional. In this case, the inspection report should call out anything of concern. You will also want to be aware of any added construction that may have been completed without a permit. You could be on the hook for removing the work or be forced to bring it up to code – which can cost thousands.
3. The Neighborhood isn’t a Good Fit
The average homeowner will live in their home for 13 years. When buying a home, you’re not just buying a property. You’re also buying into the neighborhood and your future neighbors. Once you’ve found your dream home, take a walk around the neighborhood. It may seem strange, but this can help determine if the neighborhood is a good fit for you and your family. While they’re out and about, introduce yourself to neighbors. This will give you a pulse on who is living next door, and gives you an opportunity to ask questions. If something doesn’t feel right or if you’re the only family with children, it might be a good idea to think about the long-term implications of moving in.
4. Price is Too Good to be True
If a home is priced well below market value or other comparable homes in the neighborhood, it might be for good reason. Recently, the real estate market has seen a huge uptick in home sales and average sales prices. An unscrupulous seller might try to price their home below market or appraised value to cause a bidding war that ultimately drives prices higher than they otherwise would be – causing you to pay more. They also might use this time to push a deal through without a proper inspection. As we mentioned before, a home inspection is crucial to evaluating the accurate price of a home. Don’t feel pressured to continue negotiations if the seller is trying to persuade you to move forward without an inspection. There could be significant damages or repairs that a lower sales price won’t be able to recoup.
5. Sellers Become Disinterested or Aggressive
Since you won’t be communicating with the homeowners or the seller’s agent directly, you’ll need to make sure your agent is keeping you in the loop. Your realtor should be able to tell if the sellers are serious about selling their home during initial talks. However, if the sellers become hostile or unwilling to compromise, it might be a sign to look elsewhere. Negotiations are meant to find middle ground. However, if they keep going back and forth, it may be time for your client to move on. Furthermore, if communication from the seller or the seller’s agent stops or becomes vague, you’ll want to work with your agent on how they would like to proceed.
6. Things Fall Apart Before Closing
Most real estate transactions go smoothly, but there are tons of moving pieces that can cause closing to be delayed or halted entirely. These issues are rarely the fault of the buyer, and tend to be simple fixes, but there are situations that could run the closing process afoul. The first is with the title itself. Title companies are responsible for researching and ensuring a title is clear and ready to be transferred into your name. During this process, they may find an illegal title or heirs to the property that would prohibit a title from being issued. Most reputable title companies will require title insurance to be purchased to protect them and you from fraud. If you are dealing with a title company that is hesitant to provide title insurance, beware. No legitimate title company will ever tell a client they do not offer title insurance.
You may also want to check with your insurance company. Some older homes with outdated electrical or plumbing components may be too risky for the insurer. Prior claim history and the location of a property can also have an effect on the insurability of a home. Even if an insurance company will cover a home, it might come at a cost: higher premiums. These are all things to consider before you sign on the dotted line.
In a perfect world, you will never have to worry about walking away from a deal. An experienced and knowledgeable REALTOR®, who can guide you through the entire process will make all the difference.