Real Estate Horror Stories to Learn from

You’ve seen frightening stories like this on TV. Perhaps you’ve heard about them from neighbors or co-workers, but you still haven’t witnessed anything like them yourself. Be warned. The first time is one time too many.

Now that you’re in the market for your first home, or maybe a second or third, congratulations! Buying a new home is one of the biggest achievements for many people. Unfortunately, home buyers—especially first-time buyers—can be the victims of real estate horror stories. Absolute horror, from the buyer’s perspective. Here are a few examples.

Alex was excited about making her first home purchase. Being in the Washington, D.C., area, she was limited with pricing options, with many of the lower-cost homes around $250,000.

She went to several banks and got preapproved for different amounts at various lower interest rates. She found her dream condo, and, after some deliberating, she decided to go with the lowest rate of 7% offered by her lender.

She completed her paperwork and submitted it with her 10% deposit. The rate wasn’t her only deciding factor. Personnel had been friendly and great at communication, making her feel very comfortable about the process.

Until now. Suddenly, it seemed as though all of the bank's cooperation dropped off the map. A closing process that should have taken 30 days or less turned into several months of waiting and a larger deposit of an additional $20,000.

They ran her in circles, until the seller told her, through the real estate agent, that the deal was over if she didn’t find another solution. Luckily, the seller’s real estate agent referred her to another lender and was able to help her to obtain another loan (although at higher interest) much more quickly. It turned out the first lender was a scammer.\

In another case, Ron and Jenna were planning on upgrading to a new home. After a long search, they found it—or so they thought. A bright and colorful kitchen, open living and dining areas, three bathrooms, high ceilings, a fireplace, and even a covered porch made the home seem perfect.

They were especially thrilled that the price was only $235,000. That was a steal. They signed the contract and were in the house a little more than a month later.

Less than six months later, the horror story began to unfold. Jenna was cleaning one of the bathrooms when she noticed tiny little ants with wings.

Following Ron’s advice, she called the exterminator. When he arrived, he delivered the first blow—these winged ants were termites. The exterminator went under the house to assess the damage. He found that not only was the floor under the bathroom completely infested, but also the other two bathrooms, and the infestation was spreading to more of the house.

The grand total to repair this problem came to over $12,000! That’s an unbelievable amount of money to unexpectedly invest in a house you’ve only lived in for less than six months.

The key lesson here is to really know the house that you’re buying. You should always hire an exterminator on your own to investigate the house, particularly for termites.

If you’re going to make such a huge investment in a new home, the small price of precaution is worth it.

The stories continue endlessly. I recently met a woman at a café with an incredible first-time buyer story. I happened to overhear her conversation, so I decided to step in and ask about it. Sue and her fiancé were searching for their first home with the intention of buying one before their wedding. They had been told about a great real estate agent in the city where they wanted to call home, and so they looked him up to ask his help in finding the right home.

The problem was that the only praise they heard about him was from clients who had hired him to sell homes, not from home buyers.

The agent met up with Sue and her fiancé to go over different homes he had on his list, and then it was time to take a trip around town to see them. There was one home that he talked profusely about, and so they went in person to take a look.

Sue and her fiancé knew what good quality was, and so they were able to see right away that there were problems. The basement doorway was weak. The upstairs bathroom floor bounced, and the light switches in the hallway seemed to pop and flicker. Although very nicely painted, this house didn’t fool them.

When confronted with these concerns, the agent replied that they could always fix those problems later.

Although their gut told them not to move forward with making a purchase, they agreed to a $10,000 price reduction and took the house.

Big mistake! The problems they had noticed went much deeper. The weak basement doorway translated into unfortified walls leading downstairs. The bouncy bathroom floor had been wet under the linoleum and about three inches up two of the walls.

The flickering light switches were warning them of the outdated wiring which had to be replaced. In the end, their $10,000 savings only helped to give them a bit of consolation when they paid $27,000 for all of the remodeling!

The five-bedroom house sat on pastoral acreage in the American countryside. At less than $180,000, it seemed a steal. But it wasn’t a bargain.

Ben and Amber soon realized the dream home they had purchased for their growing family was infested with hundreds of garter snakes.

Throngs of reptiles crawled beneath the outer walls. At night, the young couple said they would lie awake and listen to slithering inside the walls. It was like living in a horror movie.

The home was most likely built on a winter snake den, or hibernaculum, where the reptiles gather in large numbers to hibernate. In the spring and summer, the snakes fan out across southeast Idaho, but as the days get shorter and cooler, they return to the den.

At the height of the infestation, the home buyer said he killed 42 snakes in one day before he decided he couldn’t do it anymore. He waged war against the snakes and “they won.”

Buyers had little recourse when they decided to flee the home. They had signed a document, noting the snake infestation. They said they had been assured by their agent that the snakes were just a story “invented” by the previous owners to leave their mortgage behind.

The buyers filed for bankruptcy and the house was repossessed. They left the home the day after their daughter was born, just three months after moving in.

The house briefly went back on the market. Now owned by the bank, it was listed at $114,900 a year later. The property has since been taken off the market, while the bank decides what to do with it.

The moral of the story is to have a good inspection. These buyers were attracted by a price. They didn’t have a proper inspection of the home before purchasing. It seems the real issue was the agent who cared more about selling the home than his clients.

HOME-BUYER PLAGUES

Although a home inspector passed on Justin’s and Kate’s home, he missed some problems. For instance, the previous homeowner supposedly installed and tested the sump pump in the basement, and it failed shortly after moving in, flooding the basement.

Then, the sunroom was filled with termites, costing the couple $2,000 in repairs. After the termites were eradicated, they discovered the sunroom was entirely covered in mold, and there was no caulking around the windows to keep the moisture out.

A better home inspector would have been able to see the signs of termites and mold. The sump pump should have also been checked by the inspector, but it could have failed after the inspection.

Sump pumps can burn out, lose power, become clogged or misaligned, or malfunction in a variety of other ways. It’s valuable to have a warning device installed that will signal water buildup. These alarms can alert homeowners or neighbors of flooding, so that it can be resolved before water damage occurs.

Be careful. Be smart. These horror stories are real and happen every day. Do your homework before signing paperwork or jumping into a new home. Too many people spend more time shopping for a car than they do on a home—a much larger and more permanent investment.

You have time to educate yourself, and I hope that this has helped you move forward in the right direction.