Guest Post by Alexis Hall
You fell in love the second you saw the photos. And when you walked in the front door for the first time, you knew you were home. You even conferred with your real estate agent on what to expect when you toured the home. But now that you have the inspection report in hand, you’re realizing that your dream home may not be so perfect after all.
When the home you plan to buy turns out to have major problems, what should you do? This guide will help you decide what’s fixable and when it’s best to walk away.
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What to Look Out For in a Home Inspection
Your home inspector is your first line of defense in unearthing any warning signs that point to bigger problems with a property. If your home inspection turns up one of the following red flags, hire a specialist to dig deeper before moving forward with the purchase:
- Mold: Mold itself is hazardous, but it’s also a sign of widespread water damage, and can be a more significant issue for homes that suffered through a natural disaster. If the home has sustained water damage from a flood, burst pipe, or leaking roof, there could be structural damage in addition to mold. Mold remediation typically costs anywhere from $500 to $6,000.
- Roof damage: All roofs need to be replaced eventually, so an aging roof isn’t necessarily a reason to walk away from a home. However, when roof damage isn’t resolved in a timely manner, it can lead to water damage throughout the home.
- Foundation problems: Some foundation problems are minor, but don’t assume a crack is nothing to worry about. Foundation problems caused by flooding or earth movement can be serious — and cost serious money to fix. Expect to spend $10,000 or more repairing major foundation problems.
Of course, not everything a home inspection turns up is cause for concern. Minor cosmetic problems are common, and even things that look like major problems may turn out not to be a big deal. That’s why it’s so important to get a second inspection when your dream home turns up red flags.
When to Request Seller Repairs
If a problem is more than a minor cosmetic issue but not enough to scare you away, consider asking the sellers if they’ll make repairs or issue a credit. Keep in mind that seller repairs are less common in a seller’s market. If sellers won’t pay for repairs, you’ll need to decide if you still want to buy after factoring the cost of repairs. If so, look into an FHA 203(k) or Fannie Mae HomeStyle mortgage to combine repair and purchase costs into a single loan.
When to Walk Away
Unfortunately, some repairs are just too onerous and expensive to take on. That’s especially true when a house has been affected by a major catastrophe like a flood, fire, or earthquake. If you’re wondering whether to walk away from a house, these are three signs that you should:
- It’s a mess structurally: When a home has major structural damage, other problems tend to follow close behind. It’s not uncommon for buyers to purchase a home that needs $10K in foundation repairs only to discover $20K in other structural damage throughout the home.
- You can’t get financing: Some types of damage affect a buyer’s ability to get approved for a mortgage, including major roof and foundation problems that affect a home’s habitability.
- You can’t afford it: No matter how much you love a home, it’s not worth taking on expenses you can’t afford. If the cost of repairs pushes a home’s total price outside of your budget, it’s time to go back to the drawing board.
Walking away from your dream home is always disappointing, but not as much as ending up knee-deep in debt because your new home needs a ton of work. Instead of letting your heart lead the way, look at the dollars and cents when deciding if a home is the right purchase for you. While it’s amazing to find a house that feels like home, it’s even better to do it at a price you can afford.
Image via Unsplash
