Tag: red flags

Invest with Confidence: Red Flags to Watch Out for in Real Estate

Investing in real estate comes with its own set of advantages and disadvantages that must be carefully considered before making a decision. It is crucial to thoroughly evaluate both the situation and the property you are interested in purchasing to determine if it is a wise investment. So, how can you identify signs of a potentially bad real estate investment?

While it is common for realtors to be enthusiastic about selling a property, it is important to be cautious if they appear overly eager or pushy. This could indicate that there are underlying issues with the property that are making it difficult to sell, prompting the realtor to be more aggressive in their approach. Trust your instincts in such situations and conduct thorough investigations to ensure you are making a sound investment. Always insist on a comprehensive property inspection before committing to any agreements. A reputable Realtor will provide transparent and honest guidance, even if it may not align with your initial expectations.

The location of a property is a critical factor in determining its investment potential. Even if a property is in excellent condition, a poor location can lead to financial losses. Consider factors such as local economic health, crime rates, school districts, and other amenities before finalizing your decision. Opt for areas with strong schools, recreational opportunities, reliable transportation options, walkability, and thriving retail establishments. Proceed with caution, regardless of how promising the financial projections may appear.

If a property has been on the market for an extended period, it is essential to investigate the reasons behind its prolonged listing. Other investors have likely evaluated the property, and its lack of sale could indicate underlying issues such as a problematic neighborhood or extensive repair requirements. A property that remains unsold for months may not be worth the trouble it presents. Have your realtor help you conduct a thorough analysis to understand why the property has not sold and proceed with caution before making a decision.

The Bottom Line: By being aware of these red flags and conducting thorough due diligence before making an investment, investors can mitigate risks and increase their chances of success in real estate investing.

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We Buy Home For Cash Scam

Homeowners who are facing foreclosure, can’t afford home repairs or need to sell their home quickly and “as is” can get easily tempted by the “We Buy Home for Cash” offers. While some accredited companies will come in and buy a home quickly for cash, there are more scammers out there taking advantage of homeowners in destitute situations. It’s important to keep an eye out for common scams so as not to fall victim to extortion.

Some Red Flags

Unsolicited Offers: Legitimate cash homebuyer companies will advertise their business and enable you to contact them directly rather than send a postcard, an email, or a call making an unsolicited offer on your home. You should expect to talk to a real person, meet them, and walk through the home together. When the conversations are only over the phone or digitally, it’s easier for the scammer’s identity to be hidden and take advantage of you.

Strange Company: The common thread of these scam homebuyer companies is that they don’t want to be tracked down. Their website is commonly cheap looking and often has typos, and grammatical errors and comes with a phone number that traces back to nothing / no physical address. Real companies are transparent about their process and in their communication. They will likely have a social media profile and other presence online. There will be a digital footprint.

Proof of Funds: These cash-buying companies should be able to provide proof that they have the funds before any signatures on the dotted lines. If they can’t verify the funds by providing you with said verification, it’s probably a scam. Successful cash buyers will show you all you need to know to ensure there is no risk of the deal falling through.

Money Wiring: A big sign that you are doing business with a scammer is if they want you to wire money to them. Be very skeptical if the company is unwilling to use a standard and secure payment method.

Personal Information: If the cash-buying company asks for personal information such as your social security number, bank account, or other financial information, it’s likely a scam.

Behavior: Reputable cash-buying companies are professional at all times. They won’t seem overeager or not respond to reasonable requests you might have. If the person you are speaking with seems to be rushing you, please know that they can’t possibly have had enough time to collect the proper amount of information to even make a legitimate cash offer. Especially if they have not even inspected the property to see the condition. If they are slow to give you any documentation such as proof of funds it’s a good bet they are trying to scam you.

The Bottom Line: There are established, reliable, trusted companies with a good history. Unfortunately, some criminals will take advantage of home sellers by using the cash offer scheme. The best way to prevent becoming a victim is to know the signs of a scammer, know the correct way the process should work, and do your due diligence. If it seems too good to be true, it probably is.

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Home Problems Easily Hidden to Look For as a Buyer

Looking at older homes to buy? There could be plenty of issues with the home that the seller tries to hide and while legal action can be taken after the fact, it’s inconvenient and can be expensive. A few examples of what you should look for that are easily concealed are:

Pests: Look for any signs of carpenter ants, rodents, termites, roaches, or other pests that can end up causing thousands of dollars worth of damage. They often leave signs like small holes in the drywall, dry mud tubes along the foundation, small piles of shredded paper, sagging floors, peeling paint, or even floorboards that sound hollow. Look for droppings, odd smells, pest control products, and holes. Damaged plants outside can also signify pest breeding.

Mold and Mildew: One of the easiest to hide with bleach spray or paint and one of the biggest warning signs of dampness issues. In many states, it is a requirement for sellers to disclose any known defects of the home to the buyers in paperwork. Including the history of mold and whether or not it has been professionally handled. Another good reason to have an experienced Realtor as he/she will be able to guide you around your state’s requirements as well as the ability to recognize potential mold/mildew problems. Your Realtor should also know to ask the seller the right questions whether or not disclosure is required.

Aluminum Wiring: Many sellers are not even aware of what electrical hardware is installed in their homes. Common in homes built between 1965 and 1973, aluminum wiring is more likely to cause a fire than copper wiring. If the seller doesn’t know, it won’t be listed on the disclosures. This is when a home inspection is most important. But, if you are not even at the home inspection point, you can safely look at the electrical panel and see the cables that run into the attic and basement have an AL, ALUM, or ALUMINUM on the cable jacket.

Leaks: Sellers can temporarily plug the leak to show the home. When you are looking at the home, be on the lookout for significant cracks in the foundation, moldy odors, or any water damage on the ceilings, walls, or windows that may have fresh paint hiding the flaw. Lift rugs and move potted plants to see if they are covering water issues. Can you spot new tiling randomly placed in the bathroom and kitchen? Open the windows and the doors and see if there is any separation or soft spots that may indicate window leaks. A small separation could lead to humidity in your house, which may lead to mold. 

Foundation Problems: While walking through the home try to notice any window or door frame gaps or cracks in the wall that might be from a faulty or unstable foundation. Sellers will try to hide the cracks or separation with more caulking and paint. Look to see if the paint is a bit uneven around windows and doors. Foundation issues can cause doors and cabinets to not shut properly and can cause beams to stress and break – don’t be afraid to open and close cabinets.

The Bottom Line: Even though you may have found these and other problems but still want the home, a good Realtor will help you negotiate the price and/or have the sellers pay for the repairs. Of course, before you buy, it’s always in your best interest to have a home inspector check it out. You can let them know of any concerns that you have about the house, but an experienced inspector knows what to look for.

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Red Flags in Real Estate Investing

Investing in real estate isn’t flawless. There are some pros and cons to consider before, but it’s especially important to evaluate the situation and the property you’re about to buy. Is it worth it? Let’s look at how to identify signs of a bad real estate investment.

It is normal for a Realtor to seem excited to sell you a property, it is literally their job to do so. However, if they seem overly avid or even pushy, there might be some details about the property that could make it hard to sell which is making the Realtor extra aggressive to sell it. If this happens, make sure to listen to your instincts and, if necessary, investigate as much as you need to ensure you are making a good investment. And, have the property fully inspected before agreeing to sign anything. The very best Realtors will be transparent and forthright, offering their professional guidance on the best course of action, even if it’s not what you were expecting or hoping to hear.

One of the most important factors that determine if a property is worth investing in is the location. Even if the property is in a perfect state, if it’s poorly located, chances are you will be losing money. Some of the factors that determine if a location is the local economic health, the levels of vandalism and crime, the school district, etc. Before coming to a final decision, make sure you do a thorough investigation of the location. Choose areas, for instance, that have great schools, fun attractions, quality transportation options, high walkability, and great retail spots. Proceed with caution—no matter how the numbers look on paper.

If a property has been on the market for six months or longer, other investors have probably checked it out. There’s a reason it’s not selling. It could be a bad neighborhood, too many issues to fix, whatever the reason…a property that has been for sale for months and hasn’t sold might be too much trouble than it’s worth. Dig deep into why it has been for sale for far too long to find out why exactly. While it’s possible for a property to simply evade the attention of other prospective buyers and investors, this isn’t the most likely explanation of a listing that’s been up for a long time. If it seems like there’s no interest in a given property, it’s a red flag there isn’t sufficient market demand for that type of investment.

The Bottom Line: Nobody wants to deal with the fallout after a bad real estate investment, so you must do everything you can to minimize your risk and do a lot of investigating on each property.

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Red Flag Warnings

Is it time for you to walk away from your dream home ? Red flags can appear anytime during a house-hunting process and depending on the size of the problem, it may just mean you have to keep searching the MLS. Some slight problems or minor defects can be fixed, but some issues can seriously detract from your investment, and even endanger your health and safety.

Foundation Issues: If your home inspection report lists concerns with the integrity of your home’s foundation, don’t ignore them.  While all poured concrete foundations will crack at one time or another, hairline cracks are not an indication of a problem. If a crack is wider than 1/2 inch, however, it’s a good idea to have a foundation contractor examine the area. This also holds true for cracks that appear to have been recently patched. Large cracks can indicate an unstable foundation. Not all foundation issues are expensive to fix. However, major structural problems that require stabilization using hydraulic piers can cost a lot of money.

Electrical Issues: If a light switch does not work when you flip it, it’s probably just a minor electrical issue that can be fixed later. But, Outdated wiring or too little voltage is cause for concern. Not only will you not be able to hook up all your electronics and appliances, but problems with your electrical setup can also increase your risk for a home fire. Major electrical issues can end up being costly projects that require permits, professionals, and inspections to bring up to code. 

Roofing Issues: A complete roof teardown is a substantial investment, so it’s important to know how old the roof is, particularly important in areas of the country where there is a lot of snowfall since that can shorten the life span of a roof.  Besides the costs of replacement or repairs, leaky roofs can lead to other problems like mold, rot, and water damage. 

Mold: If water damage or mold is found in the home, consider it a red flag. In truth, most homes will have some mold in crawl spaces and attics, and not all mold is bad for your health. But, important: mold can mean there are other problems, like water leaks from the roof or major appliances, that could be costly to correct. It’s imperative that the source of the mold is found. Otherwise, the problem could worsen, and you could end up with a health hazard.

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Neighborhood Red Flags to Be Aware of When Buying a Home

When a home buying budget is tight, there’s always the temptation to buy a fantastic, big house in a less costly area. However, buying a home in an undesirable neighborhood might be a huge mistake, especially when it’s time to resell in the future. Occasionally, there are some qualities you can’t discover about a neighborhood until after you’ve moved in. But there are ways to scout out red flags ahead of time.

When you see homes that are rundown throughout the community, it could be a sign that the residents have given up and the neighborhood is in rapid decline. A street that is full of homes with broken/cracked windows, overgrown, unkempt yards, home vacancies, gutters filled with leaves and vines, sagging rooflines, pooling water in yards, homes with obvious chipping paint & broken fences should sound off an alarm. It’s a clue that the neighbors don’t take pride in their homes and with no upkeep, they can end up decreasing the property values for the entire street.

Are there too many houses that are for sale in the neighborhood? When driving through notice if there is an abundance of “for sale” or “for rent” signs. It everyone is trying to sell, it’s probably not a coincidence. There are plenty of reasons this could be going on, but it’s important to have your Realtor dig in and find out the details. Also, check with the local police department and find out about the crime – a real reason people would be making a mass exodus from the neighborhood.

How is the local school system? Are there fewer students enrolling? A sure sign of a healthy community is a blossoming school. Another reason to have a good, knowledgable Realtor with you – he/she should know all these details or at least where you can find the information about the schools.

Most streets have some cracks and bumps but are you noticing big potholes in the neighborhood? This could mean that this is an area of neglect in the city. Is the local park a mess? If you can see that there is no organization to take care of the streets, the parks and any public spaces in the neighborhood it is a sure sign that the property values are headed down.

Drive through the neighborhood on a beautiful day. Do you see people out and about? Kids playing ball in yards? Bike riding? Anyone sitting on front porches? A big red flag if you don’t see people. This could signal that residents stay inside and don’t allow their children to play outdoors because they don’t feel safe outside. Again, check with the local police department.

The Bottom Line: Attention to the surroundings of any neighborhood is important. Often, the focus is on the home and how perfect it is for you, but a huge part of the way you live is where you live. You’re purchasing a home AND the neighborhood. A good Realtor will remind you that the overall area the home is in can/will impact the resale value of the home. Buying a home in an area that is decreasing will create problems in the future.

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Red Flags When House Hunting

Red flags can appear anytime during a house-hunting process and depending on the size of the problem, it could signal that it’s time to walk away. Some slight problems or minor defects can be fixed, but some issues can seriously detract from your investment, and even endanger your health and safety.

Foundation Issues: If your home inspection report lists concerns with the integrity of your home’s foundation, don’t ignore them.  While all poured concrete foundations will crack at one time or another, hairline cracks are not an indication of a problem. If a crack is wider than 1/2 inch, however, it’s a good idea to have a foundation contractor examine the area. This also holds true for cracks that appear to have been recently patched. Large cracks can indicate an unstable foundation. Not all foundation issues are expensive to fix. However, major structural problems that require stabilization using hydraulic piers can cost a lot of money.

Electrical Issues: If a light switch does not work when you flip it, it’s probably just a minor electrical issue that can be fixed later. But, Outdated wiring or too little voltage is cause for concern. Not only will you not be able to hook up all your electronics and appliances, but problems with your electrical setup can also increase your risk for a home fire. Major electrical issues can end up being costly projects that require permits, professionals, and inspections to bring up to code. 

Roofing Issues: A complete roof teardown is a substantial investment, so it’s important to know how old the roof is, particularly important in areas of the country where there is a lot of snowfall since that can shorten the life span of a roof.  Besides the costs of replacement or repairs, leaky roofs can lead to other problems like mold, rot, and water damage. 

Mold: If water damage or mold is found in the home, consider it a red flag. In truth, most homes will have some mold in crawl spaces and attics, and not all mold is bad for your health. But, important: mold can mean there are other problems, like water leaks from the roof or major appliances, that could be costly to correct. It’s imperative that the source of the mold is found. Otherwise, the problem could worsen, and you could end up with a health hazard.

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Red Flags to Watch For When Buying a Home

Avoid buying a home that comes with extra work and expensive repairs. With all the emotion that goes into searching for the perfect home, it’s easy to overlook some very important issues while house hunting that could end up costing you big-time in the end.

Foundation & Structural: A home with problems in this area can end up costing thousands of dollars. The home depends on the sturdiness of the foundation. A few things to be on the lookout for:

  • Uneven floors – do you see any sloping or even separation form a wall?
  • Broken foundation blocks – any cracks in exterior brick mean that there could be water pressure build-up.
  • Hard to open or close doors and windows – a sign that there might be damage from water

Mold: Sometimes this issue results from neglect and other times it is a simple fix. Look where the problem is and if the mold is mostly in small areas it can be resolved. But, it can be a huge red flag and indicate issues with the home, such as major and expensive leaks.

Fresh paint: While it is not uncommon for homeowners to paint their homes to look their very best to sell, it’s important to look for the “patches’ of paint inside and outside the home. The damage that a “patch” is covering could be many different issues that could end up costing a lot of money.

Stains on ceilings: No paint “patches” can show you this red flag and it’s important to find out what is causing these stains. It could be a leak in the roof, ice damming, plumbing issues, etc. These need to be investigated as the repairs could cost thousands.

The neighborhood: Big red flag if there are many homes in the neighborhood on the market. It’s usually not a coincidence when everyone wants to sell their home at the same time. Look around for foreclosures or abandoned lots which indicate a stagnant growth. Look online where you will easily be able to find the crime frequency and sex offender lists. Are there a lot of rentals? Is the street a cut-through during commuting hours? All negative feedback is important as it will affect your ability to sell the home later.

The Bottom Line: Buying a home is a huge deal. It’s of utmost importance to find the top Realtor in the area in which you are looking as they will be able to point out many of these and more red flags. A home inspector can detect problems missed and then with an experienced Realtor you will know if its worth spending money to fix an issue or if you should negotiate a compromise.

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Finding The Best Neighborhood

Location. Location. Location. The best neighborhood will sell a home, Most Realtors will tell you. It also helps your home hold its value and makes it easy to sell when the time comes. If you have found the home of your dreams but don’t know much about the area it is in – how do you make the decision that the neighborhood that the home is the “right” neighborhood?

  • Research the Neighborhood Values Online: Because of the world wide web, anyone can find out any detail about anything and anyone. Become a private investigator! Discover all the information about a neighborhood using your internet skills. Use the MLS, Zillow, Redfin, and Trulia to name just a few to research the sales and rentals over the last few years. Learn the turnaround time of homes that have sold. Have your Realtor get the comparables. Fast home sales indicate a desirable neighborhood.
  • Research Crime Rates Online: Find the crime map that many cities use to display the types of crimes and the density in different areas.
  • Meet the Neighbors: If there is an area of town that you love, become its expert. Go to the local shops, restaurants, open houses, coffee shops and introduce yourself to people. People love to talk about where they live and the people who work in these establishments can give you all sorts of information.
  • Grab a Fancy Coffee: When you see coffee shops and upscale retail chains, it’s a sure sign that the neighborhood is on the up and up, if not already arrived. These establishments have done the research and open where the investment is worth.
  • Research the School District: Find the test scores of the neighborhood’s school system online or stop into the local high school. Home prices are usually higher where the test scores are hearty.
  • Home Values Hold: Again, hit the world wide web and find the historical sale prices in the county’s property tax records. If the neighborhood you love isn’t online, ask your Realtor for the sales trends.
  • Watch for the Red Flags: It’s not as hard as you think to discover a neighborhood on the decline. Look online for the number of short sales, foreclosures and drive around to see the number of vacant properties. Is there a highway being built too close to the neighborhood? A sure sign of decline.

The Bottom Line: Do you think you might move again within five to seven years? If you believe you may, you want to make sure your home will be marketable then. A good Realtor coupled with your private investigator online skills will be able to help you feel confident in the future of the area. Before even looking at homes, narrow down the neighborhoods. Find the community that meets all your needs AND will have homes that will hold their value.

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