I’ve compiled the following 10 reasons homebuyers choose to walk away from purchase contracts based on my observations and first-hand experiences. The list is arbitrary and
the numbered reasons aren’t necessarily provided in order.
I started working on this list years ago after
being unfairly portrayed as a home inspector that kills deals.
Subsequently, as far as I know, every terminated contract I've been involved with was the result, wholly or in part, to one or more of the reasons listed below, not the result of an
overzealous home inspector planting seeds of fear into the minds of
apprehensive homebuyers as some might have others believe.
Reason # 10: Blinded by Love
Sometimes folks fall in love with a house because it has character, is in a
desirable neighborhood, has a lot of "potential", and/or has
appealing features such as a modern kitchen, large master suite or gorgeous
view. But falling in love with a house
can be like falling in love with the wrong person. When we fall in love on impulse we have a tendency to ignore or
minimize problems, which affects our ability to make rational decisions.
Reality starts to set in when folks pull their heads out of the clouds to notice the wiring is
outdated, siding or roof is bad, the cars won't fit in the garage, the neighbors have 4
dogs that bark at all hours, the laundry room is two steep flights of stairs
away from the bedrooms, there are landscaping / drainage issues, the heating /
cooling costs are outrageous, the foundation is bad, etc., etc. I often hear homebuyers say, "What was
I thinking?" after they recognize all the obvious problems they
ignored when signing a purchase contract.
Most purchase agreement contracts don't allow a home buyer to terminate the
contract based on merely coming to one’s senses, but the contract does have an
exit clause or contingency if the home inspection reveals unsatisfactory conditions, thus buyers
often claim the home inspection is the reason for killing the deal when in truth there are other factors at play.
Unfortunately it reflects poorly on good home inspectors when buyers initially choose to
buy a bad home on impulse but use the inspection report as the excuse to get
out of the deal.
When looking for a home a buyer should have a list of priorities (or a list of
things to avoid) to follow before offering to purchase a home. This might help save all parties involved
time, money and excuses.
Reason # 9: Termites
Sellers must disclose termite problems at a property if they are aware of any,
but homeowners / sellers often have termite problems they aren't aware of, or
sometimes sellers don't disclose the full extent of known problems to
homebuyers.
Termites are white, ant-like critters that are very common
across much of the country but we usually don't see them because they typically
live underground and can't survive when exposed to light or air for long
periods.
In my region I discover evidence of past or present termite
problems at probably 1/3 or more of the properties I inspect.
Termites prefer living in wet soil and consume wood or cellulose for
nourishment. They build hollow mud
tubes along foundations, walls and other structures for concealment and
protection when navigating between soil and the wood they are consuming. Their ability to exist without light or
fresh air is what makes them capable of doing so much damage without being
observed.
Termites are often discovered before they do too much damage, but not
always. When I inspect a home with termite
problems the damage I find through the course of the home inspection is usually
more extensive than what can be seen on first glance.
The challenge with termites from a home inspector's perspective is the
full extent of damage can't be known unless walls, floors and/or ceilings are
removed where the evidence of termites exists, and neither home sellers nor
homebuyers want to start tearing the house apart days before closing. Repairs to structural framing damaged by
termites can be expensive, and trying to estimate or predict the costs of
repairs without removing the finishes is impossible.
Understandably, termite problems create much anxiety for homebuyers and can
postpone a closing, or cause the buyer to terminate their purchase agreement
altogether.
Reason #8:
Dishonesty or Non-disclosure by Sellers
Many times home sellers try to hide problems by covering or obstructing
them. Sometimes they use rugs,
furnishings, shelves, boxes or close off areas to crawlspaces, attics or nooks
under stairs to make them inaccessible.
Often I observe patches or touchup paint on ceilings and walls where
there have been leaks or cracks, though no problems related to leaks or cracks
were disclosed to the buyers. Problems
related to water leaks or cracking / settlement are supposed to be disclosed to
a homebuyer even if they've been repaired.
Homebuyers get scared when they discover attempts to conceal problems
that should have been described in the "disclosure statement" by home
sellers.
Deception is common.
As a home inspector I’m impressed by the memories and details shared by
sellers when they describe the work that has been done in their home, but when
I ask for information related to past problems, the memory suddenly gets very
clouded.
Years ago while climbing into an attic a home seller told me
I was the first person to go up there since the home was built. Once in the attic I followed a path through
the insulation to a 5-quart ice cream bucket filled with fresh water collected
from recent rains leaking through his roof.
There are many ways for home inspectors to determine if
there have been past problems or existing conditions that home sellers are
trying to conceal. On one occasion I
discovered water stains on a bathroom ceiling after using a bright light to
check for such flaws. The stains were
not visible to the naked eye in natural lighting, but with a camera flash or
bright light it was obvious there were moisture problems that had been covered
and not disclosed. After my discovery
the listing agent told the buyer she knew about the problem and minimized it as
insignificant, but the buyers were infuriated the listing agent knew about the
problem and only shared that knowledge after it was brought to their attention
by the home inspector.
Homebuyers are prone to walking away from deals once deception has been
discovered because betrayal causes fear and anger, and also leads one to
conclude that there might be more problems that haven’t been disclosed.
Reason #7: Sewer Problems
Probably one of the most dreaded problems facing any
homeowner is a clogged sewer or sewer backup.
Sellers of homes with sewer problems always say, "We just have
the drain snaked every year or two."
What sellers don’t disclose is the whole story: "Last Christmas we had the whole
family staying here when the basement flooded from a sewer backup. Roto-Rooter came right away, but it cost
$300 to clear the line, we had to stay in a motel for days, the house smelled
terrible for two weeks, and it wasn't covered by insurance."
Any sewer problem that needs to be snaked every year should
be fixed, not ignored, because they problems will get worse. Tree roots growing into sewer lines are the
usual cause of sewer backups. Any tree
can have roots that grow into sewer lines, but silver maples are notorious for
the invasiveness of their roots. Things to watch for when house shopping are: 1) replacement cleanout caps on
sewer pipes / waste stacks or caps with teeth marks from wrenches, and; 2) silver maple trees in the front yard.
Other types of long-term sewer problems besides tree roots
include: 1) deterioration of pipes; 2) collapsing pipes, or; 3) pipes that
don't slope properly due to either improper placement / installation or soil
movement. Soil shifting, settlement or
heaving can cause buried sewer lines to shift, sag or lift, which can trap
water, solids, grease and other waste in the line, leading to clogs.
Not all sewer problems are due to bad pipes.
Many sewer problems are caused by putting
the wrong products through drains, garbage disposals or toilets such as grease,
starchy foods (rice, pasta, potatoes), non-flushable wipes, or feminine hygiene
products.
Sewer lines can be scoped with a camera prior to purchase to
determine the condition of the pipe, see if tree roots are a problem, and/or
observe any sections of the pipe that don't flow properly. The cost of scoping is somewhere around
$200. Considering the replacement of a
sewer line can be in the multiple thousands of dollars it is often a good idea
to scope the sewer if there are clues there have been prior problems so you
don't get stuck with the problem.
Reason #6: Shoddy
Workmanship / The Do-It-Yourselfer House
Does a "new bathroom", "newly finished
basement" or an "updated kitchen" really add any value to a home
if the work wasn’t done properly? The
answer is “no” and in fact often it costs more to correct faulty work than if
no updates had been done in the first place.
Sometimes when I point out the flaws of poor workmanship is scares
homebuyers because they usually assume the work was done properly in the first
place. The flaws that can be seen are
often indicative of the condition of the hidden systems, and this creates fear,
especially considering the most important components of a home are usually
hidden (wiring, plumbing, and framing).
When buying a home that's been renovated a buyer can often check with the local
building and safety department to determine if there were permits / inspections
for modifications. Buyers should ask
homeowner for copies of contractor bids, invoices, warranties and other
documentation such as photos taken during the renovations to help authenticate
the work was done properly.
Some clues of unprofessional or poor workmanship to look for
in a remodeled or renovated home include but are not limited to:
1) lack of proper ducting and air venting in
newly finished spaces; 2) uneven finishes at walls and ceilings; 3) doors that
are out-of-square or don't latch; 4) bathrooms without exhaust fans or air
supply vents; 5) enclosed utility rooms without combustion air venting; 6) too
many lights or outlets on a single circuit; 7) gaps at miter joints of trim and
casing; 8) uneven stain / finish at trim and doors; 9) non-treated wood in
contact with concrete; 10) improperly vented or trapped drain plumbing under sinks;
11) loose or exposed wiring; 12) lack of GFCI protection at outlets near sinks,
and 13) duck / duct tape.
Don't be the one that puts an offer on someone else's DIY
project unless you are prepared to make it your own project.
Reason #5: Cold Feet
Usually when folks decide to walk away from a purchase agreement it’s because
the house isn't right for them, but there are occasions homebuyers realize
their own situations or other problems prevent them from being able to
comfortably move forward with the home purchase. Here are some examples of circumstances that might lead to a
buyer getting "cold feet" after signing a purchase agreement:
a. fear of the
responsibility or commitment of ownership
b. fell in love with
a different property
c. can't afford
insurance, mortgage interest, utilities, etc.
d. job loss
e. breakup
f. health problems
Most purchase contracts don’t allow a person to just walk
away from a deal and the circumstances listed here typically aren’t part of a
contract’s exit clauses or contingencies, so buyers might have to forfeit their
earnest money or be responsible for the costs related to the delayed sale of
the home should they choose to walk away from the purchase agreement for
reasons not specified in the contractual contingencies.
It is imperative a homebuyer be cognizant of all the potential life situations
that might arise when signing a purchase agreement contract, and be prepared to
lose some money in the event the contract must be terminated for any reason not
specifically included in the contract’s terms and conditions.
Reason #4:
Electrical Problems
Undersized or outdated fuse panels, improper modifications, antiquated wiring
and other electrical problems can affect the function, value and insurability
of a home. Specifically, the following
electrical system components should be considered red flags for
homebuyers: 1) fuse panels with 60-amp
capacity or less; 2) improperly modified electrical panels; 3) “knob and tube”
style wiring; 4) aluminum wiring; 5) certain Federal Pacific breaker panels
manufactured in the 1960s and 1970s because they are more susceptible to malfunction, causing electrical arcing or fires.
Older homes were not designed to handle the number of electrical fixtures or
amperage loads that are required today.
Subsequently old electrical panels have often been modified to support
the need for extra outlets, lights and appliances, and often those
modifications have been done incorrectly.
In the early days of residential electricity, the hot and
neutral electrical wires were run separately and attached to framing with
ceramic "knobs" and routed through framing in ceramic
"tubes", thus the name "knob and tube" wiring was given
this type of system. Knob and tube
wiring is common in homes built prior to the 1940s. Knob and tube wiring is actually a safe mechanism for conducting electricity,
but because it lacks a ground conductor and is often either improperly altered
or overloaded with too many fixtures, it can be hazardous. Another problem with old electrical systems
is electricians don't like to work on them because they don't conform to
present-day codes, which creates a dilemma as to the degree or extent of
correction or upgrading necessary when electrical repairs are performed.
I've learned of home transactions that have been affected
either by insurers not willing to provide coverage for homes with antiquated
wiring or because the challenges of correcting bad wiring were more difficult
and costly than the buyer believed they would be when putting in an offer.
If you are buying and older home make sure the wiring is suitable for your
needs.
Also, check with your insurer to
determine if they will provide coverage for the property if there is old wiring
or an outdated panel, otherwise you might either be shopping for a new house or
different insurance company.
Reason #3:
Groundwater / Flooding / Drainage / Foundation Issues
Water is a home’s biggest enemy. Problems related to drainage and groundwater can be nagging and
virtually impossible to correct entirely.
Most home sellers don’t disclose the full extent of groundwater problems
to buyers. Conversely, many buyers are
seeking a new home because of water problems at their existing residence, thus
when groundwater problems or flooding are discovered it can affect the sale negatively.
Lack of sufficient drainage and groundwater can affect a home’s
foundation. A majority of foundation
problems are the direct result of drainage problems because saturated soil
creates hydraulic pressure on foundation walls and causes them to bow. Also, fluctuations in subsurface soil
moisture affects the expansion / contraction of soil, which can lead to
settlement or heaving at footings and foundations.
In addition to soaking basements and damaging foundations,
groundwater problems are a primary source of deal killer #2 - mold.
Reason #2: Mold
One of the problems most likely to hinder or delay a sale of a home is mold
and/or conditions that have led to the growth of mold such as groundwater
issues, inadequate ventilation, or long term plumbing leaks.
All homes have some mold-related fungi
present, but the cause and quantity of fungal growth are factors that affect
the severity of the problem.
Finding a
bit of mold on a foundation wall or behind a bathtub isn't a serious problem,
but having large areas of fungal growth in attics or basements covered in mold
is serious.
Mold can be difficult to deal with because it indicates
there are probably other problems related to moisture and ventilation, so it
creates two issues that must be dealt with:
1) How do we remove the mold? 2)
How do we prevent the mold from coming back?
Mold removal should be done by a professional to ensure the
spores are contained and removed rather than being dispersed, hidden or
missed. The most serious mold problems
I've discovered have been at properties being sold by foreclosure specialists
who don't disclose mold problems and who've tried to hide mold and moisture
problems rather than correcting them.
No contractor can guarantee mold won't return once removed,
and correcting the moisture and/or ventilation problems that led to the mold
can be costly. The fear of mold is
something that scares a lot of people, and if a homebuyer has some pre-existing
concerns about a house or has a family member with allergy problems, mold
problems will often kill the deal.
Reason #1: The
Antagonistic Seller
Butting heads will ruin a deal. If you
are selling a house or are an agent representing a house that's for sale you
shouldn't make excuses or minimize problems.
While all the people involved might be friendly folks, the process of
negotiating a purchase often puts the parties in adversarial roles. Hostility and stubbornness on the part of
agents or sellers will scare a buyer.
In my experience, buyers are most turned off by sellers or real estate
professionals that minimize or invalidate their concerns and feelings.
The most common mistakes made by agents and homeowners are
excuses, misleading or incomplete explanations, and minimizing of
problems. Another common mistake is not
negotiating earnestly – delayed responses, playing good-cop / bad cop, or
manipulating the terms of the agreement.
Defensive or hostile sellers will cause buyers to hesitate and
reconsider. I frequently hear agents
and sellers tell buyers things like: "It's always been that way;” “Never been a problem;" "That's
not a big deal;" or "Show me a house that doesn't have a
problem." While those things might
be true but they are nonetheless words and phrases used as a distraction or
excuse that avoids dealing with the issue at hand comprehensively, and that
scares homebuyers.
Numerous homebuyers have walked away from good properties
because they were turned off by the parties selling the house and couldn't
stand the idea of buying a home with a stigma or negative "vibes."
Contrary to what would seem to be common sense, it has been
my experience that home buyers are more likely to buy a home from someone that
lied to them than someone that’s being hostile. I suspect it’s because we know most home sellers have something
to hide and thus we are better prepared for a bit of deception than hostility
or stubbornness.
If homebuyers perceive the process of negotiation and
problem solving with seller or listing agent as fighting and butting heads, the
probability of a buyer walking away from a purchase agreement increases because
they’ll fall out of love with the property – and once that happens it becomes
almost impossible to close the deal.
Home buying is an emotional process. Most homes have problems and usually buyers
and sellers will come to terms so they can proceed with the transaction, but if
a buyer has a bad experience with antagonistic seller or listing agent the
chances of resolution and transacting the deal are greatly diminished.
