7 Red Flags to Watch Out for When Buying a Home

Before you make an offer on a home, it’s a good idea to take a peek around the neighborhood. After all, you can change your house, but you can’t change the location.

If your new neighborhood is on the decline, you might have a difficult time when you decide to sell. And because a bad community isn’t always obvious, you’ll need to do a little digging to know if it’s worth buying into. Here, realtor.com identifies seven red flags to consider before signing on the dotted line.

1. Too many houses are on the market

Two or three listed houses on the same street usually isn’t a bad sign, but if you see an array of for-sale signs you might want to consider looking elsewhere. This signifies illiquidity in the market and pricing pressure, which is a risk for buyers. Of course, this cautionary advice depends on the reason those homes are on the market.

The neighborhood could be rapidly gentrifying and longtime residents have decided to cash in, or maybe many older residents are downsizing. Increasing crime rates, however, could be another reason. Be sure to assess the situation before making any big moves.

2. The schools are enrolling fewer students

Shrinking class sizes are a red flag. Schools in healthy communities should be steadily increasing their enrollment—or at least keeping the population steady if there’s no physical room to grow. Among the reasons enrollment could decrease: Your local school might have a reputation for poor management, sending parents to seek charter or private options.

Residents also might be staying put as their kid’s age, leading to older neighbors and fewer nearby friends for your kids. It’s certainly something to consider.

3. The area leans industrial

A nearby strip of boutique stores might be a nice selling point, but reconsider the purchase if the closest commercial influences are more industrial. You’ll want to be aware of any type of commercial influence on the block, such as close gas stations or anything that could be undesirable health-wise.

Any nearby industrial plants should automatically nix a neighborhood, and think long and hard before buying across from a car dealership or auto body shop, which attract a lot of car traffic.

4. There are lots of empty storefronts

Also examine whether nearby stores actually are thriving, or whether there is lots of retail space for rent. Empty storefronts can tell you that residents have less disposable income than they previously did. That matters because decreased disposable income indicates a neighborhood on the decline.

If homeowners don’t have money to have dinner out, they probably don’t have cash for upkeep. Shabby homes drag down property values. Minimal cash flow also can lead to future foreclosures.

5. The Stepford style is in full force

You might love the homogenous, well-groomed suburban look, but take some time to examine it more closely. Are there any unique decorative doodads like aluminum chickens or wind chimes in each garden, or is the front porch furniture identical? If all the neighborhood’s homes and landscaping look suspiciously similar, a restrictive homeowner’s association could be the issue.

6. There’s no parking

Although your property may have a one-car garage, where will your friends’ park and where can you keep your spouse’s car? If the streets have lots of traffic, think twice about buying in the neighborhood—especially if the home lacks a garage or carport. Unless you commute primarily by foot or bike—or you’re alright spending your weekends circling the block—the neighborhood may not be a good fit.

7. Surrounding homes aren’t well-maintained

A street full of run-down homes with overgrown yards and broken fences should set off warning signals. Neighbors who exhibit no pride in their home’s appearance and upkeep decrease property values for everyone. Problems with the homes next door also can indicate that the house you want might have bigger issues than meet the eye.

Look at every house on the block for issues such as water pooling in the yards or flickering porch lights. Fixing these major problems could be a major expense, hassle or detriment to your value down the road. 

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