Purchasing a property is one of the most significant milestones in our lives, and it is essential to be well-informed before making any commitments. It is essential to do your due diligence and thoroughly research the property and its location before making a decision. Ignoring these could result in significant financial and practical problems down the line.
Here are some red flags to look out for when purchasing a property:
1. The price seems too good to be true
If the price of a property seems significantly lower than comparable properties in the area, there could be a good reason for this, and you should investigate why. It could indicate that there are major issues with the property. These issues could for example include structural damage, a high risk of natural disasters, or problems that could be costly to repair.
2. The seller is in a hurry to sell
Sometimes there are legitimate reasons to sell quickly. In the example of a divorce, both parties would want to get all their assets resolved as fast as possible. If the property has been inherited or if it has been repossessed, then these are also legitimate reasons. However, if the seller is pressing you to make a decision quickly, it could be a sign that there are problems with the property and you would want to investigate further.
3. Unusual ownership history
Check if the property has changed hands multiple times in a short period of time, or if the ownership history is not disclosed. This could indicate that there are issues with the property that previous owners were unable to resolve. Without checking its history, you may find yourself selling the property soon after the purchase.
4. History of natural disasters
Research if the property is located in an area prone to natural disasters, such as flooding or earthquakes. Properties that have pre-existing vulnerabilities may require additional insurance coverage and may also be at risk of damage in the future.
5. Foundation issues
If the property has a history of foundation issues, it could be a disaster waiting to happen. Large cracks in the walls are classic warning sign. Foundation issues can be expensive and time-consuming to repair, and can also affect the overall stability and value of the property. The structural engineer can be used to examine the structure of the property.
6. Outdated or faulty systems
If the property has electrical, plumbing, or heating and cooling system issues, they would need to be investigated further. For example water stains could be the result of a plumbing problem. These types of issues can be a safety hazard and costly to repair
7. Located in a declining neighborhood
You need to be aware if a property is located in a neighbourhood that is experiencing a decline in property values or an increase in crime. Property research of that area is key. There may be boarded up properties or significant number of vacant homes in the area. Depending on the circumstance, this may mean that the value of the property may not increase over time.
8. History of litigation or legal disputes
It may be the case that legal issues may not have resolved and mediation may not have helped. An unresolved legal case could potentially resurface in the future. Examples include disputes around land divisions, damage to property and contractual disputes. If you discover an unresolved legal concern, you may need to consult a property lawyer.
9. Illegal additions or modifications
The property may not have been built in adherence to local government codes and could potentially pose safety hazards. They may also violate zoning laws or other local regulations, which could result in fines or legal action. Additionally, illegal additions or modifications may not be recognized by insurance companies and could potentially impact the property’s insurability.
10. Pest infestations
This affects the overall health and safety of the property. Pests such as termites can cause structural damage to a property, which can be expensive to repair. A professional pest inspection would be helpful to understand the extent of the problem. Properties that are prone to infestations may require treatment on an ongoing basis.
It may be a good idea to obtain a professional appraisal to get a better understanding of the property’s true value and any potential issues. You may wish to consider using a buyers advocate, who are experts when it comes to evaluating properties and can adapt the buying strategy to your own specific requirements and goals.
It is essential to do your due diligence and thoroughly research the property before making a decision. This could include obtaining a professional inspection, reviewing the property’s history and ownership records, and speaking with neighbours and local authorities. These steps can help you identify any potential issues with the property that could affect its value or usability.