Home Inspection Deal Breakers: When to Walk Away

Every inspection report has findings. The question isn't whether there are problems — it's whether the problems are manageable, negotiable, or a reason to walk.

Your inspection report came back

The real question is whether the problems are cosmetic annoyances, negotiable repairs, or genuine deal breakers that should send you running.

True Deal Breakers: Walk Away

These are structural, safety, or financial issues so severe that no reasonable negotiation can make the deal work.

Active Foundation Failure

Hairline cracks in concrete are normal settling. But if your inspector documents cracks wider than 1/4 inch, horizontal cracks in block foundations, significantly uneven floors (more than 1 inch of slope across a room), or doors and windows that won't close properly throughout the house — you're looking at active structural failure. Repair costs can range from $20,000 to $100,000+, and the problem may not be fully fixable. Unless the price reflects the damage, walk.

Extensive Water Damage or Active Mold

Some water damage is repairable. But widespread mold throughout the structure, evidence of chronic flooding that the seller failed to disclose, or water damage to the framing and structural elements can make a home unlivable and extremely expensive to remediate. If the inspector uses phrases like "significant moisture intrusion," "structural compromise due to water damage," or "extensive mold colonization," get a specialist evaluation before proceeding.

Major Electrical Hazards

A house with knob-and-tube wiring, Federal Pacific or Zinsco panels, aluminum wiring without proper connectors, or evidence of amateur electrical work throughout is a fire hazard. Complete electrical rewiring of a house costs $8,000-$30,000 depending on size. If the seller didn't disclose known electrical issues, this is also a disclosure problem.

Environmental Contamination

Underground oil tanks, soil contamination from industrial use, significant asbestos in deteriorating condition, or lead contamination beyond what's typical for the home's age can create cleanup obligations that exceed the home's value. Environmental remediation costs are unpredictable and can become your legal obligation as the new owner.

Unpermitted Structural Work

If the inspection reveals additions, removed load-bearing walls, or major renovations that were done without permits, you inherit the problem. The city can require you to bring everything up to code, tear out unpermitted work, or face penalties. If the seller's disclosure didn't mention unpermitted work, that's a separate red flag.

Negotiable Issues: Stay and Negotiate

These are significant findings that should affect the price or terms but don't necessarily kill the deal.

• Aging roof nearing end of life (15-20 year old composition roof) — Ask for a credit of $8,000-$18,000 depending on size.
• Outdated but functional electrical panel — Panel upgrade costs $2,000-$4,000. Reasonable credit request.
• Minor foundation cracks with no active movement — Monitor and seal. Cost: $500-$2,000.
• Aging HVAC system — If it works but is 15+ years old, negotiate a credit for eventual replacement ($5,000-$12,000).
• Plumbing issues like galvanized pipes — Replacement costs $4,000-$10,000. Common in pre-1970s California homes.
• Drainage or grading issues — Usually fixable for $2,000-$8,000 with proper grading and French drains.
• Wood-destroying organisms (termites) — Common in California. Treatment costs $1,000-$5,000 for typical infestations.

For each of these, get a repair estimate and use it in your negotiation. See our negotiation guide for strategies.

Cosmetic Issues: Ignore

These commonly appear in inspection reports but are not reasons to walk away or even negotiate hard:

• Peeling paint, worn carpet, dated fixtures
• Minor drywall cracks from normal settling
• Single GFCI outlet not working
• Missing caulk around tubs or windows
• Weatherstripping needs replacement
• Cosmetic damage to decking or fencing

The Disclosure Factor

A problem found on inspection becomes much more serious if the seller said it didn't exist on the disclosure form. A known roof leak that was disclosed and priced into the deal is manageable. The same leak that the seller checked "No" next to "any known roof leaks" is a trust problem — and possibly a legal one.

Always cross-reference your inspection against the disclosure. The combination of what was found and what was hidden tells you everything about whether to proceed.