6 Homebuyer Horror Stories And How to Avoid Them, As Told by a Realtor

From personal experience with my clients, I can tell you that there are huge risks of skipping due diligence on a home. From hidden structural issues to surprise financial burdens, plenty can pop up if you go in unprepared.

That’s why due diligence is crucial. Don’t let excitement rush you into a decision.

Using real life examples, let’s discuss what you should do when buying a home and what might happen if you don’t.

1. Get Specialized Inspections

A general home inspection is just the starting point. Additional specialized inspections may be necessary to uncover issues.

For example, for older homes (especially built before 1980), I strongly recommend a comprehensive plumbing inspection. Older homes often have cast iron, galvanized steel, or even lead pipes, which can pose significant problems. Even if the seller claims the plumbing has been updated, the work may not be comprehensive. A specialized plumbing inspection involves using a camera to inspect the pipes for cracks, root intrusions, improper slopes, and blockages, that could lead to costly repairs.

A client of mine chose to skip the plumbing inspection to save money. The house was built in the 1960s but had been cosmetically renovated and the general inspection didn’t reveal any major issues. However, a week after moving in, sewage started backing up into the shower whenever they flushed the toilet. It turned out that during the renovation, rags and construction materials had accidentally fallen into the plumbing lines, causing a major blockage. The repair costs exceeded $10,000. The plumbing inspection would have been $500.

Other specialized inspections to consider include:

• Mold

• Roof

• HVAC

• Radon gas

• Water quality

• Air quality

• Well & septic

• Pool/spa

• Chimney/fireplace

• Structural integrity

• Wood-destroying organisms (WDO).

Each of these inspections addresses specific aspects of a home that could lead to significant problems if overlooked.

2. Get a Survey

Imagine moving into your dream home, only to discover that a portion of your house encroaches on your neighbor's property. That almost happened to a client of mine.

They were purchasing a home built in the 1920s in a historic area. The lots had been subdivided decades earlier, and the home they were buying had been partially constructed on the neighbor’s lot.

The seller had relied on an erroneous survey that incorrectly showed the house entirely within its own boundaries. If my clients had not ordered a new survey, they could have faced costly legal disputes or even the need to tear down the home.

Fortunately, the updated survey revealed the error and they were able to resolve the issue before closing. However, relying on an old survey could have left them unprotected, with their title insurance potentially voided. Even small errors, like a misplaced fence, can cause significant headaches if not addressed upfront.

A new survey is essential for clearly defining property boundaries and preventing boundary disputes. The cost is minimal compared to the potential financial and emotional toll of discovering that part of your property isn’t actually yours.

3. Request a Pre-Approval Before Home Shopping

I always advise my clients to get fully pre-approved – not just pre-qualified – before they start house shopping. I’ve seen buyers find the perfect house, only to lose out because they weren’t ready to submit a pre-approval letter to the seller along with their offer.

Sellers won’t consider an offer unless the buyer is pre-approved, so don’t risk missing out because you can’t prove you have the ability to secure financing.

You might think you have time to get pre-approved after finding the right home, but that’s often not the case. Desirable homes can go under contract quickly. You could miss the opportunity to submit an offer.

Additionally, a pre-approval gives you a clear idea of your budget and also helps you understand how much money you will need to buy. Many online calculators can be surprisingly inaccurate or misleading, and a professional mortgage loan officer can give you a much more accurate estimate.

4. Avoid the Dreaded Appraisal Gap

In the heat of a bidding war, it’s easy to offer more than the asking price to secure a home. However, this can backfire if the property doesn’t appraise for the amount you’ve offered. If the appraisal comes in lower, the lender won’t cover the difference, leaving you to either pay the gap in cash or back out of the deal.

Base your offer on solid market data and be prepared for potential financial risks. Sometimes, staying within a more conservative budget, even if it means your offer might not be accepted, is the wiser choice.

I often have clients ask me if I think the seller will reduce their price if the home doesn't appraise. That’s a hard question to answer. While I can ask the seller’s Realtor what they think the seller will do, ultimately the homeowner gets to make that decision when the time comes. I advise my clients to hope for the best but prepare for the worst.

5. Anticipate Insurance Requirements

Anticipate the different types of insurance you may need. For instance, if you’re buying in a floodplain, standard homeowner’s insurance won’t cover flood damage.

Flood insurance, often required by lenders in flood-prone areas, can be expensive. If you haven’t budgeted for it, this added cost could push your monthly expenses beyond what you anticipated, making the home unaffordable.

Even with a comprehensive homeowner’s insurance policy, it’s essential to understand what is covered. Some policies may cover specific disasters like earthquakes or sinkholes but with conditions that must be met for the coverage to apply. Additionally, in hurricane-prone areas, policies may have increased deductibles for storm-related damage, which can significantly affect your out-of-pocket costs.

Some insurance policies will cover water or sewer damage but with a cap to how much they’ll spend, and often that cap is far too low to complete all the repairs.

6. Assume Your Surroundings and View Will Change

One common mistake buyers make is assuming that a beautiful view, greenbelt, or access will remain unchanged.

For instance, I had a client purchase a home for the stunning view, only to find out later that the neighboring landowner decided to construct a huge RV storage garage and put up unsightly metal sheds. In another case, a neighborhood with homes overlooking a golf range thought the land could never be developed, but a builder bought it and constructed townhomes just 100 feet away from some backyards.

Even areas listed as conservation or protected greenbelts can be reclassified and developed. In some cases, controlled deforestation can change the landscape dramatically. One of my clients was even told by a builder’s representative that the area behind the home they were looking at was protected, only to have a four-lane road built there a year later.

There are also instances where people bought waterfront property expecting the area between their home and the water to be for their private use, only to have local laws change and the public be able to access what was previously their backyard.

The lesson is clear: unless you own the view, there’s no way to guarantee it will stay the same. Always consider the potential for change when evaluating a home’s location.

Be Prepared, Be Successful

In the journey to homeownership, excitement and emotions can sometimes overshadow critical decisions. However, as we've explored, failing to conduct thorough research and due diligence can lead to significant financial and emotional setbacks. Each step in the home-buying process requires careful consideration.

By learning from the mistakes others have made, you can avoid common pitfalls and make informed, strategic decisions. Ultimately, taking the time to do your homework will ensure that your investment is not only a dream come true but also a secure and wise one for the long term.