POST WRITTEN BY
Forbes Real Estate Council
Successful executives in the real estate industry from Forbes Real Estate Council share firsthand tips & insights.
Buying a home is an exciting time. It is hard not to get caught up in the hype and fall in love with every property you see. While your homebuyer may have found what they believe is a hidden gem of a property, there are some particular red flags that you, as their real estate agent, need to warn them about.
Whether it is the location of the property or the internal structure of the home that is cause for concern, if a red flag reveals itself to you, it’s a good idea to let your client down easy and warn them of the potential problems they may be getting themselves into.
Below, 11 members of Forbes Real Estate Council share the small or lesser-known red flags that they encourage homebuyers to pay attention to when searching for a property.
1. Psychological Stigmas
When searching for a property, you want to do your research to see if there are any stigmas associated with the area or the home you are buying. Buying a home associated with psychological stigma such as death or a violent act in the home can have huge implications on the future value of the house because it affects the demand for it. – Allan Rankin, Re/Max Royal Properties Realty Ltd. Brokerage
2. Price Drop
A lot of times people drop their price $5,000-$10,000 a month or once a quarter. But every now and then you will see a crazy drop of $20,000-$30,000 and that is a instant red flag. They may love the property, but I will be digging my feet in this one and find out why. Was it motivation or a contractor fail, was it the crawl space, or maybe the structure? I will do my due diligence to find out why. – Kevin Taylor, Sand to City Real EstateTeam
3. Litigation Issues
Check for any previous or pending lawsuits on a property as a way to gain leverage in negotiation, or avoid the property altogether. Start by contacting the county office where the property is located. For any pending litigation, the moving party’s attorney will record a Lis Pendens (Pending Litigation). You can also check online court databases and contact the homeowner association or neighbors. – Chuck Hattemer, Onerent
4. Lack Of Home Inspections
I would never allow a client to buy a property without a professional home inspection. Unless you are going to crawl under the house yourself, you only see the cosmetics. The home inspection fee will pay for itself in peace of mind or by asking the seller to fix something that you wouldn’t otherwise find out about until after the close of escrow. – Eileen Lacerte, Hawaii Beach and Golf Properties
5. Deed Types
Titles to properties have become a mess in the wake of 2008. As a homebuyer you really need to know what you’re getting. What type of deed is being signed over to you? What rights does it really give you to the property? What liens, “clouds” on title, or questions about ownership might still be there after you buy? Can you actually get title insurance to protect your investment? – Kent Clothier, Real Estate Worldwide
6. Property Being Offered As Is
Today’s technology is very useful for a buyer in determining true days on market, previous price paid and impediments to purchase, such as liens. Go beyond these large flags and dig deeper. Is the property offered “as is”? If so, find out why. Getting to the bottom of this before making an offer can save you money, time and effort. – Beverly Serral, Beverly Serral Signatures
7. Structural and Zoning Issues
Properties that require zoning changes, structural repairs or environmental clean-ups can be problematic. Changing zoning is a complex legal process. You’ll need to pay an attorney and there’s no guarantee you’ll be successful. An investor who lacks construction estimating or project management skills and buys a property with structural or environmental issues may face delays, cost overruns and even losses. – Bobby Montagne, Walnut Street Finance
8. Missing Photography Or None At All
When you see a real estate listing that contains no photographs or missing photographs for a kitchen or master bedroom, there’s probably a reason for the omission. Another red flag is when there are a lot of homes for sale in the same area. Buyers should check local headlines about whether a commercial development is planned nearby, or a new highway is about to be built. – Brian Balduf, VHT Studios
9. Neighboring Properties
The way the properties surrounding a home are maintained can affect the resale value. When you go to tour the home, check if the next-door neighbors have a dog that’s constantly barking, and is that something that bothers you? There are many things about the neighborhood that you won’t be able to change, so be sure to observe the area as a whole. – Will Featherstone, Featherstone & Co.
10. School Ranking, Crime Rates
When a buyer is considering their geographic area it is prudent to check out the ranking of the school districts by the state education association. The prudent buyer will also go to a local sheriff’s office or constable’s office and examine the report of crimes in that area. All of these take a bit of time, but in the long run will make you more satisfied with your decision. – Rita Santamaria, Champions School of Real Estate