7 Dealbreakers when buying a home

One of the biggest steps between finding the perfect home and moving into it is the home inspection. It can also be one of the most nerve-wracking steps for an eager buyer. A home inspection could reveal hidden issues with your dream home. What shows up on the inspection report could give you second thoughts and leave you house hunting once again.

Here are some home inspection deal-breakers to watch for, what you can do about them and when you should consider walking away from the deal.

1. Cracked, sagging or uneven foundations

A home's foundation is vital. It's the core of the structure, and if there are major problems in the foundation, it's more likely that there are other issues looming in the home. Signs of potential foundation issues may include:

• Uneven floors
• Doors and windows that stick
• Dampness in lower levels

Expect some cracks in the foundation, though. Every property will settle a little over time. A good builder will engineer the foundation to withstand the settling without creating issues for the rest of the home. If you can catch foundation issues early, they may be easy to fix. If there are concerns about the foundation, though, you'll want to get an expert to give you an estimate on the repair costs.

When is it a deal-breaker?

Major foundation repairs can cost tens of thousands of dollars. Make sure your contract includes contingencies that will provide you some protections.  Discuss possible solutions with the seller such as having them correct the problem. Even if you renegotiate the sales price, you may still have problems with your lender accepting the property with incomplete repairs prior to closing. If the seller refuses, you may want to walk away.

2. Major roof repairs or replacement

A good roof should last a long time. It provides protection from the elements and helps maintain the structural integrity of your home. Inspectors will look for issues including missing shingles and signs of water damage. They should be able to give you a rough estimate of how much longer you can expect the roof to last. Remember that even the best roof will need some attention once in a while. If there’s been a big storm recently, there may be a few missing shingles.

When is it a deal-breaker?

If the home will need a new roof within the next year or two, you might want to change your offer, request the seller complete the repairs or walk away. New roofs can be expensive depending on the size, material and your location. While it's an investment that will last decades, it's probably not one you want to make immediately after purchasing the property.

3. Property experiences flooding or water intrusion

Some properties might sit near a body of water like a lake or river and experience water intrusion when the water levels rise. Others may have underground water that occasionally makes an appearance in the basement or cellar. Signs will include visible water damage, smells of dampness or mold growth.

There are ways to deal with water intrusion. They might include putting in new drainage systems or waterproofing foundations. These can be expensive solutions, though. You'll want to get an estimate before you move forward with your purchase.

When is it a deal-breaker?

Flooding issues can plague a property for a lifetime. Not only are the repairs expensive, but if the home has a history of water damage, obtaining adequate flood insurance coverage may be difficult and may be expensive, too. Carefully consider whether you want to deal with dampness before you move forward.

4. Old electrical systems

Pay close attention to the electrical systems of a home, especially if it's an older property. Old electrical systems can be a fire hazard or may not supply sufficient service for your needs. Updating an electrical system is expensive, but it's important for your family's safety.

You'll want to have the old electrical systems removed and rewire the property. Depending on the size of the home and how much work there is this could cost several thousand dollars. The upside of doing this is you'll know the new system is safer and more energy-efficient than the old one.

When is it a deal-breaker?

If you can't afford to rewire the property, consider changing your offer, asking the seller to complete the repairs or walking away. The risk to your safety isn't worth it. Keep in mind, too, that many insurance companies will refuse coverage on homes with electrical systems that may be old and not up to code.

5. Bad plumbing or slow sewer lines

Bad plumbing can cause rotting floors and water damage in ceilings and walls. Old pipes can rupture and create extensive damage inside and outside the home. Low water pressure can be a sign of looming issues, too.

Experienced plumbers can take on and correct these issues, but how much those repairs cost will vary. Some repairs, like fixing a leaking sink, are easily done or you can hire a plumber. If the inspection turns up issues like old pipes or a faulty sewer line, you could be looking at a hefty repair bill.

When is it a deal-breaker?

If issues with the plumbing turn up, get a repair quote from a licensed plumber in your area. Once you know the cost of the repair, consider how it will work into your budget. If you can afford to move forward with the work, great. If not, look for a home with newer plumbing systems or see if the homeowner is willing to pay for the repairs.

6. Poor remodeling work

A lot of homeowners love to take on a DIY project, and a lot of them are very good at it. Sometimes, though, a poorly done project or remodel can end up being a major headache for the new homeowner.

Cosmetic remodeling issues can be corrected with a little elbow grease. You can paint over poorly painted walls, chip off bad tile work and even replace poorly installed countertops in a weekend. But bigger remodeling projects should be carefully inspected. That's true whether the homeowners did them or if there was a contractor involved. Issues with extensions, unauthorized additions or false walls could result in expensive demolition and repairs.

When is it a deal-breaker?

Cosmetic issues probably aren't worth walking away from an otherwise ideal home. If the remodeling work involves electrical, plumbing or impacts the structural integrity of the home, though, be careful. Poorly done work may be hiding bigger issues, or it could end up being an expensive repair down the road. If the work isn't up to code or wasn’t properly permitted, your lender may not allow you to close until the work is done, which will take time and money.

7. Low appraisal values

A lot of factors go into the appraisal of a home's value. These include the condition of the home itself as well as its curb appeal and recent sale prices of comparable homes nearby. Your appraisal should come back in the ballpark of what you've offered for the property, but don't worry if it's a little lower or higher. Appraisals can be highly subjective depending on who is doing it. But an appraisal that's a long way off from your offered price should raise a red flag.

When is it a deal-breaker?

If the appraisal comes back a lot lower than expected, you'll want to find out why. Compare the asking price with other recently sold properties in the area. Don't walk away yet, though. A low appraisal can give you a bargaining chip for a lower offer and the current homeowners may accept the new offer.

However, consider a low appraisal a deal breaker if they won't budge on the price or do any repairs. You may find it difficult to get a mortgage for a home that appraises at a lower value than your purchase price.

What to do when it's a deal breaker

If you've decided that you want to walk away from the purchase of the home, do it sooner rather than later. In some cases, walking away from an offer could end up costing you the earnest money you put down on the home.

To determine whether you'll get your money back or not, look over the purchase agreement you signed when you made an offer on the house. It's a good idea to include clauses in the purchase agreement that allow you to back out of the deal. These clauses are usually due to a bad home inspection report or a low appraisal. Make sure you know the timeline and the terms for walking away.

Your real estate agent and real estate attorney will help you withdraw the offer and arrange for you to get your earnest money back. At that point, you'll be free to make an offer on a more suitable home. Let your experience with the previous house help you be a savvier home buyer with the next one, and work with your Home Lending Advisor to get the right loan for your next home.