12 Signs That Spell Caution in a Fixer-Upper

Fixer-uppers have long had their fans. Some investors love the idea of making major repairs to a home that increase its value and then resell the property for profit. Others are looking for a low-priced starter home and might not mind making gradual improvements over time.

But anyone who’s seen the 1986 movie “The Money Pit” knows that if due diligence isn’t adequately performed, that theatrical storyline involving a barrage of problems leading to a great expense may become a real-life nightmare. The goal is to help buyers avoid starring in a remake.

Money Crashers, a personal finance resource company based in Los Angeles, recently released a list of major warning signs that would-be buyers should be aware of as they’re shopping listings. While these individual signs might not derail a sale on their own, they might warrant a call to a local expert who can assess the problem, offer solutions, or give repair estimates, says Carly Fauth, one of Money Crashers’ consumer experts.  

1. A listing labeled sold “as is.” This is a euphemism for major work that the sellers won’t undertake, Fauth says. She advises potential buyers to consider if they can handle the challenges. “Find the extent of problems and how expensive and time-consuming they are to fix,” she says.
2. Smell of moisture. From mold to warping, moisture can cause considerable damage to homes, even making them uninhabitable. The first clue is that moisture smells. Besides damage to the house, moisture can adversely affect a homeowner or tenant’s health.  
3. Stuck windows and doors. These can also be a sign of moisture or that a house is settling due to age or structural shifting. Both are problematic.
4. Sloping or sagging floors. Both indicate structural problems beyond just aging. Buyers should find out if framing, joists, or subflooring need replacement.
5. Foundation problems. One small crack can be just the beginning of many, and can signal that a house could eventually crumble.
6. Inward grading, poor drainage, and short downspouts. Improperly installed or clogged gutters and downspouts all may cause water to enter a house.   
7. Bad roof. An old roof may leak but it’s not always the shingles that are the culprit. Sometimes, it’s what’s underneath—sheathing, trusses, beams, and rafters. The sellers should disclose when the roof was installed.
8. Outdated wiring and fuses. Because homeowners rely on so much technology today, outdated wiring may, in worst cases, can start a fire.
9. Outdated plumbing. Toilets that don’t flush properly, sinks and showers that lack adequate pressure or have leaks, and water heaters that don’t provide enough hot water signal that attention is needed.
10. Termite damage. Buyers may spot blisters in wood flooring, hollow sections of wood, and even the bugs themselves. An exterminator can determine the extent of the damage and repair costs.
11. High energy bills. This should alert buyers to the cost of heating the home. Due diligence can tell them whether their furnace, insulation, or doors and windows are inefficient and need to be sealed, repaired, or replaced.  
12. Historic home designation and zoning rules. Municipal guidelines may restrict buyers from making certain improvements to their home and property. Real estate pros should know these in advance in order to advise their clients.