Some words in a listing ad may send red flags to potential buyers and make them want to run. CBS’ MoneyWatch recently asked five real estate professionals to weigh in on some of the scariest words they see in real estate listings. Here are the words they say buyers should watch out for:
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1. “As is.” Sellers will list a home “as is” when they don’t want to do any of the repairs needed. “They feel they’re putting their best price out there, and they don’t want to get stuck with a buyer nickel-and-diming them for every repair,” says Deb Tomaro, a real estate professional in Bloomington, Ind. Buyers may have a tougher time getting a bank to agree to a mortgage with an “as is” home. Also, seemingly small fixes – like an unfinished floor or broken window – may become deal-breakers for the bank. Buyers would still be wise to have a property inspection and try to negotiate with the sellers on some repairs, even for an “as is” home, Tomaro says.
2. “All work has been done for you.” “That generally means it’s a flipper,” says Elizabeth Weintraub, a real estate professional in Sacramento, Calif., who added buyers may also want to be leery of phrases like “total remodel” and “completely rehabbed.” Investors may purchase a home at a bargain price below market value and then remodel and try to resell it for a profit. “They make cosmetic changes as quickly and cheaply as possible,” Weintraub says. “All they have to do is put in stainless steel appliances and granite countertops, and someone is going to want to buy it.” Buyers should make sure the shiny facades aren’t hiding any serious defects, such as mold, water damage, or an unstable foundation.
3. “Cash transactions only.” A listing may specify that a sale will be cash only, which could signal there could be something majorly wrong with the home. “That’s one of the most useful real estate lingo things [to watch for],” says Jon Boyd, an Ann Arbor, Mich., real estate professional. “This means there could be an issue with the house that may make it difficult to qualify for a traditional mortgage.”
4. “Vacant.” You might not see this written in the property description, but an unfurnished home in the property photos online likely means the home is vacant, which could also send a warning signal to buyers. Buyers may be wise to find out how long the home has stood vacant. Homes that have been unoccupied for a long time may develop severe maintenance problems, such as burst water pipes or mold. Boyd recommends buyers get a thorough inspection done and have the utilities turned on to check for any issues before buying a vacant property.
5. “TLC.” “I think ‘TLC’ is probably the most commonly used description for when [sellers] don’t want to say it’s a fixer,” says Weintraub. “When they say it just needs a little TLC to make the home shine, that means it needs a complete remodel.”
6. “Land lease buildings.” In larger cities – such as New York – this may be an item a buyer will see, which indicates that the building is built on leased land. That means when a building’s lease expires, the owner will have to negotiate a new one and that could mean higher prices for everyone involved. Monthly assessments – maintenance fees that apartment owners pay the building – could escalate. “Everyone’s monthly payments skyrocket, and they have to reduce the purchase price so buyers can afford those payments,” says Brad Malow, a New York area real estate professional and founder of BuyingNYC.com. That could make the place tougher to sell later on.
7. “Bring your own toolbox.” A listing that uses this phrase may sound like just a few cosmetic fixes are needed, but it could signify much larger projects. “There was one house in my market that said to bring your own toolbox, and it had $15,000 in basement repair projects,” Boyd says. “Those kinds of tools are not normally in anybody’s toolbox.”
Source: “10 Signs of a Scary Real Estate Listing,” CBS MoneyWatch (Oct. 27, 2015)