10 Signs That Fixer-Upper Might Be a Money Pit

The first (and most obvious) sign that you might be walking into a money pit is an "as is" clause. The house probably won’t qualify for a conventional mortgage, and if you buy it, you’re agreeing to buy all its problems. Before making an offer, have the house carefully inspected and gather repair estimates. If it’s listed with a broker, ask for a disclosure statement that lists all known material defects so you don't come across unpleasant surprises later.

Related: Find the Right Realtor: 9 Tips from Happy Homeowners

Updating antiquated electrical wiring is a major expense. Tip-offs that the house you’re looking at has substandard wiring include single, fabric-covered wires on white insulator knobs (look in the attic); an old fuse panel instead of a modern breaker panel; or a small breaker panel with only a few breakers.

Related: 8 Warning Signs of Dangerously Outdated Electrical Wiring

When you're buying a fixer-upper, you can probably expect to replace some of the roof shingles. But if the roof in question has multiple layers of shingles, if it sags, or if you find interior evidence of major leaking, you may be looking at replacing not just shingles, but also the sheathing and some of the roof rafters (none of which come cheap).

Related: 7 Signs You Need a New Roof

If the house you’re considering sits lower than its yard and the surrounding properties, and it's in a region that regularly receives rain, it may be subject to drainage problems. If the home is listed with a broker, ask about previous flooding issues. If it’s a for-sale-by-owner listing, visit the local zoning department to find out if the house lies in a floodplain.

Related: 9 Things You Didn't Know About Flood Insurance

They may add character and charm, but old windows with wood sashes and single panes are a major cause of energy loss. This translates into sky-high utility costs, and replacing these money-drainers with energy-efficient models won't be cheap either. To get a clearer picture of what it might cost you to stick with the original windows, inquire with the owner or real estate agent to see if they will provide you with the utility bills for the past 12 months, or at least get you an average, so you can be prepared for the expense. You could also splurge for an energy audit to help plan for the cost of this and other updates you might have to make.

Related: 21 Money-Saving Tricks That Every Homeowner Needs to Know

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