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Summary: The biggest red flags when buying a house fall into four groups: structural problems (foundation issues, mould), environmental risks (flood exposure, invasive plants), location and value concerns (the neighbourhood, nearby developments, limited room to add value, weak rental demand), and paperwork issues (unpermitted renovations, hard-to-insure materials). Spot them before you sign, ideally with a home inspection and your real estate lawyer's review.
Buying a home is exciting, and it is easy to overlook warning signs once you have fallen for a place. Knowing what to watch for keeps you from buying a money-pit. Here are ten red flags to keep top of mind as you tour homes in Ontario.
What are the red flags to watch for when buying a house?
Keep an eye out for these ten, across the structure, the location, and the paperwork:
Foundation problems and settling. Unstable foundations can cause a home to settle or shift, sometimes after basement work or water damage. Watch for diagonal cracks in brickwork, typically wider than about 3 mm and often near doors and windows.
Invasive plants like Japanese knotweed. Aggressive plants can damage foundations and structures and are costly to remove. Knotweed shows red asparagus-like shoots, shovel-shaped leaves, and cream flowers.
Flood risk. Consider how close the property is to lakes, rivers, or streams. Proximity to water can raise your home insurance premiums and your risk of flood damage.
Black mould. Mould signals past water damage or poor ventilation, and more can hide behind plaster and wallpaper. If you are sensitive to mould, it is reason to walk away.
The neighbourhood. A good location holds its value, so a fixable home in a strong neighbourhood usually beats a larger home in a weak one. Location is the one thing you cannot renovate.
Limited room to add value. Look for opportunities to improve or expand, such as a large lot or layout that allows an addition. A home with no upside is harder to profit from when you sell.
Nearby developments. New builds going up around an older home can pull its value down by flooding the local market with modern, move-in-ready options.
Unpermitted renovations or additions. Ask for the permits and paperwork on any past work. Unpermitted changes can devalue the home, and in a worst case the municipality can require you to remove a non-compliant addition, shed, or garage.
Expensive or rare building materials. Features like oak beams or imported materials add character but can be costly and difficult to repair, restore, or insure. A standard build is usually cheaper to maintain.
Weak rental demand. Even if you do not plan to rent it out, knowing what the home could rent for is a useful gauge of its value and your flexibility down the road.
For a related decision earlier in the search, see our guide on condo versus house.
How do you check for these red flags before you buy?
The best time to catch these is before you sign, while you still have room to walk away or renegotiate. A professional home inspection will surface most structural, mould, and systems issues; your own research covers the neighbourhood, nearby developments, and rental demand; and asking for permits flags unpermitted work. Your real estate lawyer can help address title and paperwork issues once an offer is in, but the most important diligence happens before you commit. It is also worth reading up on common real estate scams so you stay protected throughout the search.
Frequently asked questions
What are the biggest red flags when buying a house?
Structural problems (foundation cracks, mould), environmental risks (flood exposure), location and value issues (a weak neighbourhood, nearby developments, no room to add value), and paperwork problems such as unpermitted renovations.
What is the most serious red flag?
Structural and foundation problems tend to be the most expensive and hardest to fix. Diagonal cracks in brickwork, signs of settling, and widespread mould all warrant a closer look from a professional before you proceed.
Will a home inspection catch these red flags?
A home inspection catches most structural, mould, and systems issues, but not everything. You still need to research the neighbourhood and nearby developments yourself, and confirm permits for past renovations.
How do I protect myself before signing?
Do your due diligence before the offer is firm: get a home inspection, research the area, ask for renovation permits, and loop in your real estate lawyer. It is far easier to walk away or renegotiate before you are committed.
Are unpermitted renovations a deal-breaker?
Not always, but they are a real risk. Unpermitted work can devalue the home and, in a worst case, the municipality can require its removal. Always ask for the paperwork and have your lawyer review it.
About the author
Joel Fox is a co-founder and COO at Ownright. He helps run the firm's day-to-day work on Ontario residential closings, refinances, and sales, and writes regularly to demystify the parts of a transaction that most homeowners only encounter once or twice in their lives.
At Ownright, we focus entirely on Ontario residential real estate law. We can work with you and the other side's lawyer to address red flags once an agreement is signed, but the best time to weigh them is before you commit. You can start your closing online or get in touch with any questions.
Important note: This article is not legal advice. No one should act, or refrain from acting, based solely on the information in this post or any linked materials without first seeking appropriate legal or professional advice.
