Avoid the Red Flags

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As I ventured down to my basement on Sunday morning to start a load of laundry, my eyes locked onto the telltale signs of a water heater leak. Thankfully, it was a small leak that had dried between my twice-a-week laundry days. As a now seasoned homeowner, I knew that this “small” leak had big potential. And not in a good way! I easily could have ignored this warning sign and walked downstairs into a flooded basement, instead, I called the plumber. Let’s take a walk down memory lane, shall we?

Over a decade ago when I purchased my first house, I had no idea what to look for to help me make a wise decision. That ignorance cost me money later on when the crawlspace flooded and needed mold remediation. Then, the water heater needed replacing, and don’t even get me started on the time that the AC went kaput in the middle of a historically hot summer just after our daughter was born. “Own a home”, they said. “It’ll be fun”, they said. What they forgot to tell me was what comes with the territory. Homeownership can be fun and rewarding, but you have to be able to go with the flow – sometimes that “flow” occurs in the basement.

In the long run, it all worked out and the home was a smart decision, but I could have saved myself a lot of stress (and money!) by knowing what to look for when touring homes. I could have prepared financially for the inevitable issues that pop up for every homeowner. I am telling you this so that you don’t make those same mistakes! What are the red flags you should look for?

Age Matters

My first house was pushing 30 years old when I bought it. I knew that we would have to deal with upgrades and tear out A TON of wallpaper, but I didn’t educate myself as thoroughly on some of the major components of a home. In my case, the home was a foreclosure, so there were not many answers upfront. The lesson learned here was that I should have done more extensive research on the heating and air systems, septic, electric, and roofing ahead of time.  I may not have done enough, but you can!

Dig into the details of your potential home. Take into consideration:

• When the house was built

• What upgrades were made to every major home system as well as the bathrooms, the kitchen, and the roof

• What will likely need to be replaced or maintained in the immediate future

• What is the average lifespan of the appliances, roof, and essential components that service the home’s functionality

This is the perfect time to create a new savings goal in your household budget! You can research replacement and maintenance costs, divide the total by the average life left, and funnel your extra cash to cover expected costs. Open a special savings account just for this! Whatever it takes to ensure you have money on hand to cover the inevitable costs of home maintenance.

Inspection

Always hire a home inspector, even if you think you won’t need one. Yes, even if your best friend knows a lot about home repairs because this upfront fee can save you thousands of dollars. Speaking of inspectors, hire your own rather than one that the realtor recommends. A trusted realtor is an invaluable asset, but keep an eye out for number one. As my dad would say, hiring your own inspector helps “keep the honest honest.”

Don’t rely on your general home inspector to catch everything. A specialized contractor can perform a thorough search into each area and find hidden issues. From there, you can request that the homeowner address concerns as a condition of the sale or insist on concessions from the seller. Or, if you really want the house you’re going to need to readjust your budget to cover costs, or walk away.

Consider specialized inspections for

• Termites/pests

• Radon

• Foundation

• Sewer/septic

• Plumbing

• Mold

• Electrical

• HVAC

• Roofing

• Chimney

• Pool/spa

• Landscape/grading/soil analysis

• Lead paint

• Asbestos

• Wiring

Note: I know that the current housing market is red hot and many buyers are choosing to skip the inspection (not to mention paying well above the asking price) in an effort to land in their dream home. Please remember that doing so is a huge risk. Be sure that you can keep up with the demands of the home if unexpected issues arise. While it gives me major anxiety to think about buying a home without an inspection, you do what is right for you. Just know what the risks are before you make an offer.

Take Your Time

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The process of buying a home is time-sensitive. Deadlines need to be met, contracts need to be signed, and in a hot market, houses are snatched up in the blink of an eye. But, don’t rush into your decision. There is no need to sign an offer on the spot. Be sure you are comfortable with your decision because once you sign, it can be extremely expensive to get out of the deal.

 On the subject of time…

If a home has been on the market for a long time and has had multiple price drops, you will want to find out why. Conversely, if a home was just purchased and pops back up in the listings, there may be something that is causing the new owner to want to jump ship. Of course, it could simply be a house flip, but know that before you fall in love with the house.

Snoop Around

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When you are considering a home purchase, visit the neighborhood more than once. Drive around at different hours of the day to take stock of what really goes on there. Google the house, street, and neighborhood to check crime logs, registered offenders, and incidents in or near the home. Public records can also be helpful to determine zoning, deed issues, public water/sewer projects, and potential litigation issues. Chat with the neighbors to get a feel for the neighborhood.

Once inside the home, be on the lookout for:

• Rodent traps, evidence of bug infestation, or worst of all snake skins!

• Musty smells that may indicate hidden mold.

• Lots and lots of air fresheners – unless you want to smell the previous owner’s pet smells for the rest of your life.

• Fresh paint on just one wall that could cover a leak or mold.

• If possible, schedule your home visit during a rainy day so you can check for leaks in the foundation or roof or improper drainage in the yard.

Trust Is Key

Use caution if your agent is also the seller’s agent – that is a  prime conflict of interest. Hire a real estate agent that makes you comfortable. Even if you do your research ahead, your agent is there to be your advocate and to have YOUR best interests in mind. Don’t be afraid to ask questions. This is a huge purchase and commitment. The goal is to feel nothing but relief and excitement when you get your new set of keys! Oh, and do yourself a favor…BUY A HOME WARRANTY!

Do you have anything to add? I want to hear from you! Leave a comment below or email me.

Krista Kyte is a personal finance blogger and personal banker with over 18 years of experience in the financial industry. Krista is passionate about helping our members understand their financial situations. She writes tips that will help consumers reach and maintain financial security, and start living the life they’ve always wanted.