It may look like your dream home, but always approach home buying with a level head and a certain amount of skepticism. You don’t want to discover after-the-fact that you’ve committed yourself to a much bigger financial burden than you assumed.

Here a few signs that you may want to walk away from a potential home purchase.

1. Your appraisal is for much less than you agreed to pay

A low appraisal may indicate there is something wrong with the home or that the neighborhood is no longer as highly valued as it once was. You will need to find out why your appraisal is lower than expected.

The appraisal will determine what your mortgage will cover. Unless you can and are willing to cover the difference, you need to negotiate a lower price.

2. Your inspection reveals significant problems

In most cases, sellers work to be upfront about any issues and target those who are looking for a project. However, additional issues can be revealed in the inspection. Even if you are looking for a fixer-upper, a major problem could cost tens of thousands to fix or small problems could add up to astronomic costs.

In particular, be wary of the following, and at least negotiate their repair before the purchase is made.

• Roof: Replacement is expensive and will leave your home uninhabitable until it is completed. Your insurance provider may even refuse to insure the home until the roof is replaced, which will impact your ability to secure a mortgage.
• Plumbing: Putting in new pipes is costly and can also force you to stay elsewhere until the job is done. The biggest concern is the sewer lines or septic tank. A problem here is a big red flag.
• Electricity: If the wiring in the home is very old or damaged, it may be a fire hazard.

3. Zoning that is too restrictive for your plans

Adding on to your home can be a problem in areas with restrictive zoning. You might be prohibited from increasing the structure beyond a certain percentage of the lot size, or past a certain height. Do your homework on adding on to your home early.