If you’re thinking of buying a home, then you already have a lot to feel proud of. You’ve saved and are probably eager to open a new chapter in your life. After scouring the listings, you’ve set your sights on what may ultimately be your dream home.

However, there are a few key points to consider before making an offer on any property. That is, you must be aware of “money pits.”

As the name implies, a money pit house is a property that comes with unwanted, and often costly, surprises. A house with excellent photos and convincing staging may be hiding severe damage, the repairs of which could deplete your savings and cause significant stress for years to come.

Owning a home is a commitment. However, you also don’t want to move into a property that greets you with a host of problems that may haunt you long after moving in.

Here are common warning signs that you may be walking into a money pit, along with steps you can take to avoid falling into one.

1) The Home Hasn’t Been Upgraded

According to U.S. News & World Report, one of the standout warning signs of a money pit is whether the property lacks upgrades. A home is more than a structure. It also includes inner workings, such as wiring and home appliances. These components will need replacement since they are prone to aging and mechanical failure.

Common parts of a home that will need upgrades over time include:

• Roofing
• Flooring
• Windows
• Insulation
• HVAC Systems
• Kitchen Appliances
  

Homes that are 20 years old or older should have their major components or systems replaced. Exercise caution if an older property has never undergone replacements for essential components, such as the HVAC system, water heater, roofing, or windows. Getting work done on these things yourself may increase your home maintenance costs.

2) Water Damage

Water damage is more than a cosmetic issue. It could also be a symptom of potentially larger problems, such as foundation damage, a compromised inner structure, faulty plumbing, or mold. Resolving issues related to water infiltration can leave you on the hook for costly repairs.

According to an article from the AARP, water damage can come from both inside and outside a house. They recommend keeping an eye out for the following signs when you’re touring a prospective property:

• Water spots on ceilings
• Bowing or warped walls
• A musty or damp smell in the house
  

These warning signs cannot be ignored. Water damage is a leading cause of foundation damage, and correcting such an issue can take years. Ignoring a bad foundation can lead to a domino effect of repairs, like replacing walls, cabinetry, and flooring. Additionally, mold can lead to significant health issues over time.

3) A Listing That Looks Too Good To Be True

Housing is always a highly sought-after commodity, which also means the housing market is extremely competitive. This holds for both buyers and sellers. People are just as eager to put down roots as they are to get a return on investment—or salvage what’s left of a doomed project.

Be cautious of homes with listings significantly below market pricing. The Penny Hoarder explains that real estate professionals price homes according to “comps,” or comparable properties. Homes tend to be listed according to the average property values in their surrounding area. For-sale-by-owner listings also follow this pattern.

Exercise healthy skepticism if a listing is significantly lower than the prices in the surrounding area. The seller may be eager to finalize a deal. Consequently, they may be concealing serious issues with the property to make a quick exit.

How To Avoid a Money Pit

Buying a home is a long-term investment. You must take reasonable measures to protect yourself to avoid a costly mistake. When evaluating a home for purchase, you have two standout tools that could help you.

First, be curious (and persistent). When visiting a listing, it pays to be nosy. Open and close the windows. Test the doors. Get a feel of the flooring under your feet. Check the cabinets and drawers. Twice. Ask the seller questions, such as the age of the home and whether any major upgrades have been made to the property in recent years. Get familiar with the area and learn if any significant weather events have impacted it.

You want to know everything about the house that you will buy and live in. This doesn’t just include its benefits and amenities but also its shortcomings. Get a “big picture” perspective of the place so you are prepared for any major projects you may have to undertake in the future.

Asking the tough questions now will ensure you have all the information available to make an informed decision.

Next, get a second opinion from a home inspector. A home inspector is a professional who has the knowledge and training to evaluate a property’s livability. Generally speaking, a home inspector can provide reports on a given property’s structural integrity and safety.

Home inspections typically involve evaluating the interior, exterior, and grounds of the property. These inspections include a detailed report and can highlight potential issues, such as water damage, roofing conditions, and even tiny (but still significant) details that a layperson might overlook.

More importantly, they can also identify potential problems with a house that may require the attention of a seller or prospective homeowner. This can provide some leverage when negotiating with a seller.

For instance, a home inspection report can help you raise valid concerns about potential issues and assess the seller’s willingness to address them or adjust the price to offset the costs after closing.

A home inspection can help you make an informed decision. While it may cost extra to get an inspection, the peace of mind it offers may be invaluable.

Please note that home inspection standards, including licensing requirements and professional regulations, vary from state to state. Check your destination’s government resources for more information.

When you know the warning signs of a money pit, you may find it easier to live in the home of your dreams.

First Florida empowers you to buy a home that fits your needs. We recommend visiting our Mortgage Center, which provides resources and tools to support you throughout your home-buying journey.