Top 10 Deal Killers - Ten Reasons Homebuyers Cancel Purchase Agreements

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Reality starts to set in when folks pull their heads out of the clouds to notice the wiring is outdated, siding or roof is bad, the cars won't fit in the garage, the neighbors have 4 dogs that bark at all hours, the laundry room is two steep flights of stairs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.