Two Red Flags Your Dream Home May Turn Out To Be A Nightmare

Oftentimes, homebuyers choose homes for sale with their hearts rather than their heads. Unfortunately, this can lead to them giving a pass to warning signs the home they want may have serious problems that'll cost them thousands of dollars to fix. Although finding a home you love is a great feeling, it's essential you come down from cloud nine for a moment and look for these two red flags that could indicate deeper issues with the house or may result in big problems down the line.

"No Representation" or "Unknown" on Disclosure Form

In most states, sellers are required to disclose known problems with the property. Homeowners who fail to tell buyers about issues with the house can be held legally liable for damages and injuries those buyers sustain as a result of the omission.

However, in some states (e.g., South Carolina), sellers can skirt this requirement by checking a box labeled "no representation" or writing "unknown." This essentially lets the seller remain silent about problems with the home, and the buyer has no recourse for recovering damages because the seller made "no representation" about the condition of the item or area.

Be very wary if the seller refuses to answer or dances around questions about areas marked "no representation" or "unknown." If you're still set on buying the house, make sure it's thoroughly inspected by the appropriate professional (e.g., professional roofer for the roof) who can clue you in on major problems before you sign the sale contract.

Easements and Encroaching

Another thing you should be wary of is stuff that restricts your use of the surrounding land. For instance, it's not unusual for neighbors to take up a few inches of another person's land when installing a fence, especially if the land was poorly surveyed. The problem with this is the person can legally claim that land after a period of time using adverse possession laws. Not only do you lose the land, but your property value will drop as a result.

Easements can also present a legal problem for you. If there's an area on the land the public is allowed to access, you could be held liable for injuries caused by hazards that may be present on that section of the property. You may have to invest thousands of dollars in erecting a fence to stop the trespassing, or you may not be able to do anything at all if the easement is used by the city (e.g., access utility lines).

Do your due diligence and have the property surveyed by a qualified professional. Additionally, you should obtain a title report that lists any easements or land-use restrictions that may restrict the use of the property or reduce the value of the home.

For more information about other red flags you should look for when home shopping, contact a real estate agent.