When buying a home, it’s easy to get carried away. On that first date, you’re smitten, but by the sixth date, some cracks are starting to show. Such is the case when buying a home. Sometimes you’re simply too enamored of your potential new abode, so you overlook some major red flags during the process. The good news is that these “red flags” are sometimes spelled out for you in the seller’s disclosure statement. By law, a seller must disclose all pertinent information about the property, albeit negative or positive. It’s up to the buyer to keep a watchful eye for those items that could potentially derail the sale. Protect yourself by being aware of those red flags that might signal the need to just walk away and not look back. Below are some red flags in a seller disclosure statement that you shouldn’t turn a blind eye to when buying a home…
Details (Or lack thereof) About the Roof
The roofing system is one of the most important, and expensive, components of the home. If there is any indication of leaking, or broken, cracked or missing roof tiles, then it might be a good idea to delve deeper and possibly seek the help of a licensed roofer to do another inspection before signing on the dotted line. It might not be mandatory, but it could save you a world of pain and money to take a closer look. Sometimes where there’s smoke, there’s fire.
Any Structure-Related Items
If the problems are structural in nature, especially if they are unable to be repaired, it may be best to just walk away. Even if the seller calls them out on the disclosure, it’s best to seek guidance from your real estate agent to help you rethink the purchase of the home. If you find yourself faced with things like exterior wall cracks, sagging rooflines, or foundation issues, you might want to slow down and reevaluate what this really means to your bottom line and the long term feasibility of the home.
The Dreaded “No Representation” or “Unknown”
Sellers can opt to put “no representation” on an area of the home in their statement to avoid disclosing the conditions or characteristics of that area of the property. This applies even if they are aware of issues. This designation can protect the seller from future potential litigation from the buyer. Though not necessarily a sign to run away from a home, it is a sign that you should definitely have a home inspector look particularly close to that area/system of the home.
Previous Flood Damage
We all know that any flood damage can wreak havoc on a home’s foundation and greatly increases the chance for mold along with other structural and cosmetic issues. If a seller discloses that the home has had prior flood damage, no matter how small, be wary. Enough said.
Liens on the Property
A lien means that a creditor or some other party besides the seller has a legal right to the property. Be extra leery if a seller discloses one in their statement., as it could potentially stop the sale of the property in its’ tracks. Consult your title company, real estate attorney, and the agent representing the other side to get clarity around the issue. Liens can be removed, but it is a time consuming process and could cause a delay in the closing.
Any Easements or Land-Use Restrictions
If you purchase a home with the intent to build an addition or make major renovations, you may discover, after the fact, that existing easements prohibit adding permanent structures to the property. Both easements and land restrictions can affect the value of a property. You may want to request a title report which will contain a detailed description of the easement. A survey can identify any landmarks and how it may affect the property/value.
Failure to Get Proper Permits
Be forewarned – failure to get permits is a huge red flag – as the buyer will have no idea as to whether or not the work was completed by inexperienced homeowners or a true craftsman. This is another reason to have a thorough home inspection performed by a licensed home inspector. In addition, closely review the seller’s disclosure to better understand the scope of the work completed. Better yet, request a copy of invoices from any work performed. This should confirm whether the work was done by a professional or whether it was a DIY-project.
Lead Paint or Asbestos
Don’t automatically rule out a potential home because a seller discloses that the home has (or had) asbestos or lead-based paint. Talk to your local home inspector about evaluating and testing the property and reviewing your local health department requirements. It’s wise to be cautious and do your homework before correcting/removing or remodeling these types of homes, though. Once you know the safe measurements in your area, you can do the proper testing and learn how to properly dispose of these items safely. You can also factor in any remediation costs into your negotiation process.
Having a heads-up on these potential pitfalls, can make your home buying process go smoother and be less stressful. Knowing what to watch out for when reading the disclosure statement, can ensure that the home you choose is the right home for the long haul. Listen to what the seller is, or isn’t, telling you in their disclosure.
Tom Reese has 20+ years experience in helping his clients sell their homes for a price that sells and makes them a profit. Tom has helped his clients buy and sell property in every neighborhood in Northern Kentucky and Cincinnati.
About Tom Reese
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