Author Topic: Evaluating nightmare inspection on dream house  (Read 6428 times)

Psychstache

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Evaluating nightmare inspection on dream house
« on: March 08, 2013, 05:26:25 PM »
Hey Community,

My fiancee and I put in an offer on a house and after a little negotiation, we came to an agreement.

Even though the property had an inspection done in December and again at the end of January, we went ahead and scheduled our own. The team came out yesterday and the news was not great.

Highlights:

-There was some standing water from water leaking out of a pipe under the kitchen that was not fully connected. This impromptu pond has brought about fun things like mold and rats (dropping everywhere, no sightings yet).

-A vent for the heater is not fully sealed and is leaking CO into the attic.

-A main gas line outside the property is completely rusted and is leaking gas to the point you can smell it in the air.

-A whole row of beams is rotted and will need to be replaced fairly soon.


None of these problems were adequetly noted in the other inspections (the water was reported and recommended it be drained, but they just fixed one of the leaks and called it a day).

We are in our option period and a bit squeamish as first time homebuyers. With a 45-50 year old home, we expected some problems here and there, but we were not expecting to hear about multiple serious (and likely expensive) repairs that are a threat to our safety.

Are we overreacting? Anyone have any experience with mold under their house? Ideas on the cost of replacing a gas line? The current agreed price is just barely under our max budget (we fell in love with the layout and modern renos, which may have been foolish) and we can't afford to get a 5,000 price credit and end up having to spend 30,000 in repairs in the first year.

Any advice would be appreciated. Let me know if any other details are needed.

Thanks!


DreamingofFreedom

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Re: Evaluating nightmare inspection on dream house
« Reply #1 on: March 08, 2013, 05:40:01 PM »
Is there a reason you wouldn't make an addendum lowering the purchase price significantly?  You can attach the inspection and tell your agent how you would like him/her to approach the conversation with the listing agent.

arebelspy

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Re: Evaluating nightmare inspection on dream house
« Reply #2 on: March 08, 2013, 05:50:47 PM »
+1 on dreaming's idea.

Ask them to repair or lower the purchase price.

(Obvusly in many scenarios the sellers can't, or won't, and it's fairly common these days with short sales to hit issues like that, which means the properties end up selling to cash only offers.)
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Psychstache

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Re: Evaluating nightmare inspection on dream house
« Reply #3 on: March 08, 2013, 06:08:41 PM »
That is the plan right now. The agent is gonna send in an addendum in the morning. I am not sure they have much wiggle room, but they gotta move out of the state in about 6 weeks so they may not have much choice.

I guess my other concern is what to do about paying for all of that. Getting a price discount for the amount of repairs means i will have to pay more upfront right? I have to pay the people for the work, but the loan going down by that much doesn't change my downpayment enough to make up for that?


marty998

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Re: Evaluating nightmare inspection on dream house
« Reply #4 on: March 08, 2013, 06:46:34 PM »
Sounds like a knockdown-rebuild job.

Leaking CO is the deal breaker. Long term exposure will literally shut down your brain. SHort term high doses will kill you.

Leaking gas line....can you imagine if a smoker dropped a ciggie butt in the wrong spot?

c

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Re: Evaluating nightmare inspection on dream house
« Reply #5 on: March 08, 2013, 07:09:56 PM »
I bought a fixer-upper for various reasons. Most of the issues were cosmetic, there were one or two that were more serious, but nothing that was a safety issue (honestly, yours sound a bit scary).

I LOVE my apartment and have been very happy here, but I grossly underestimated the stress and cost of fixing things up. People warned me - including my broker - people told me their horror stories. While I understood the work that would be involved, I didn't actually know what doing it would would involve and what an upheaval it would be. It's totally different when you are in the thick of things. There are a few things I've paid a contractor to do and a few things I've done myself. I honestly can't say which is more stressful or harder work.

A tiny example - I am currently mildly drunk on gin because the electrician fucked up the wiring in the bathroom, which turned out to be attached to the same wiring my stove is, so I couldn't heat up leftovers. For dinner I had to have dry muesli and taco chips as I couldn't heat up the last of the celery soup I made. It tastes awful cold, there's no food in the house that doesn't require heat, and I refuse to get take out.  While technically I didn't have to pour strong cocktails, I can't cook tonight because of bathroom renovations. It's like this almost every time any project is attempted.

Dynasty

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Re: Evaluating nightmare inspection on dream house
« Reply #6 on: March 08, 2013, 09:45:10 PM »
Where are the rotted beams that need to be replaced? Under the kitchen?

Fixing the carbon monoxide leak should be fairly straight forward if it is just a venting issue. Unless there is a reason it is not...

Wouldn't the natural gas supplier be responsible for replacing their gas lines if leaking?

Its really hard to estimate what the repair costs would be without being able to see anything. 

I think you need to trust your gut on what to do. If you have any thing but warm and fuzzy feelings about the house when first waking up in the morning, run like the wind.


giwo

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Re: Evaluating nightmare inspection on dream house
« Reply #7 on: March 08, 2013, 10:37:13 PM »
We bought our first house in 2010 knowing it was built in the 50s and needed "some work" (rats, chimney, fence, trees, etc) Since then its been one project after another, generally costing much more and taking more time than I would imagine (and we do most of the work ourselves). Given that, I wish I had taken off the rose-colored glasses when making our decision to purchase and found something with not quite such a long to do list.

Of course my anecdote won't apply to everyone, but I like to advise caution to first time buyers when I can. On the bright side if you are the DIY type you may learn quite a few new skills. ;)

Nords

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Re: Evaluating nightmare inspection on dream house
« Reply #8 on: March 08, 2013, 10:54:17 PM »
Are we overreacting? Anyone have any experience with mold under their house? Ideas on the cost of replacing a gas line? The current agreed price is just barely under our max budget (we fell in love with the layout and modern renos, which may have been foolish) and we can't afford to get a 5,000 price credit and end up having to spend 30,000 in repairs in the first year.
This is where you tell the seller that they can either pay for the repairs (you choose the contractor and you have the issues re-inspected afterward) or they drop the price by $1x,000 dollars.  Or maybe that should be "$2x,000".

Mold outside the house?  Usually easily repaired, especially if none of the inspections found mold inside the house.  The vent and the gas line are also relatively inexpensive to repair. 

The biggest issue is the beams, especially if the contractor is going to have to replace them (instead of treating the rotting parts and then nailing fresh wood alongside).  Jacking up the area, ripping out beams, and replacing them (probably including some subflooring too) can get expensive.  But that's part of the negotiations with the seller.

One negotiating tactic is for you and the seller to each get a contractor's written estimate and then split the difference.  The realtors are going to try to hustle the two of you through the process as rapidly as possible, so try to ignore their nudging and take your time to get a good compromise price.   Hopefully you haven't fallen in love with the place, because part of the process is being able to shrug your shoulders with indifference and walk away.  Whether it's a bluff or the truth, it needs to be believable.

Psychstache

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Re: Evaluating nightmare inspection on dream house
« Reply #9 on: March 09, 2013, 10:03:42 AM »
Thanks guys! I am just anxious because I have no experience in any part of this process (but learning quickly).

I think the house is in good condition, and we do love it. That said we are only in for about $1000 so walking away is not a problem if it is the right decision. I hear these house things are on every corner and we have no timetable.

I spoke with the realtor and we decided to come back with asking for an extension of the option period to figure some of this out. We asked them to get rid of the water under the property (which they were told to do in their preinspection and ignored) which will hopefully clear up the mold and pest issue. We also put on them to get an HVAC guy to fix the attic leak and a plumber to close the leaking pipe and give an estimate on replacing the gas pipes in the backyard that are leaking.

We are still waiting on the engineer's report to get exact info on the foundation. his oral report was that the house is in realy good shape. It is level, all of the piers are in great condition, and there has been some preventative maintenance done. His guesstimate on the beams was a couple grand.

Since they are on a crunched schedule (they have to move out of state at the beginning of May), can we push to make them pay for all of this? I mean, they have to get these fixed if they want to sell the house to anyone else right?

Thanks for all the insight and advice!

Another Reader

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Re: Evaluating nightmare inspection on dream house
« Reply #10 on: March 09, 2013, 10:16:14 AM »
You are too emotionally involved with this house.  To motivate the sellers, start looking at other properties, and have your agent tell the seller's agent that you are doing so.  Either you will find a better property or they will improve their counteroffer.  If they do not want to extend the inspection period, take the opportunity to cancel and get your deposit back. 

Personally, I would avoid any house with unexplained standing water, especially if the sellers did not remediate after being told of it in the pre-inspection.  Even if they drain the water, you may have the same problem the next time it rains.

Psychstache

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Re: Evaluating nightmare inspection on dream house
« Reply #11 on: March 09, 2013, 10:30:38 AM »
You are right we are emotional, but honestly this is a very busy time for us so if we exercise the option then we are just gonna take a break until the summer.

The water is not unexplained, it was from a disconnected pipe under the kitchen that they repaired. They just didn't get the water out.

No Name Guy

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Re: Evaluating nightmare inspection on dream house
« Reply #12 on: March 09, 2013, 10:52:31 AM »
Business is business.  Detach emotions.  This is a business transaction - if you let emotion run it, you'll willingly be a lamb to slaughter.....then you get to experience a different emotion (or three) later (regret, possibly some self directed anger and a few others).

If the seller won't fix the issues to your and your inspectors satisfaction before you sign, walk away...no, not walk, RUN away. 

Heck, that gas line issues alone is enough.  BOOM! and a big roaring jet of flame coming out of the ground sound like  possibility?  Do you REALLY want that, because you "love" the layout?  HELLOOOOOO!  Major safety issue...smelling gas?  It should be shut off NOW.

And rotting beams?  What the heck - that's potentially a major structural deficiency (depending on exact location and the loads they're carrying), yet another reason to RUN away.  Not only that, but WHY are the beams rotting?  Wood that stays dry doesn't just rot - there are other issues.  Get to the root cause.


kudy

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Re: Evaluating nightmare inspection on dream house
« Reply #13 on: March 09, 2013, 10:56:28 AM »
I learned my lesson with asking the seller to fix something... in my case the seller was a bank. I foolishly trusted they would install a new shower (as per our agreement), but on the day I closed on the house, the shower was "repaired" and no new shower had been installed. The repair was laughably bad, and I still haven't had a chance to fully remedy the problem a few years later. I probably shouldn't have closed and played hard ball with them, but I did, so lesson learned.

I would highly suggest asking for a lowered price, or an "allowance" to put toward fixes - if left to the seller, things are likely to be done cheaply/quickly/sloppily for the sake of spending less money.

KimAB

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Re: Evaluating nightmare inspection on dream house
« Reply #14 on: March 09, 2013, 02:10:30 PM »
We are still waiting on the engineer's report to get exact info on the foundation. his oral report was that the house is in realy good shape.

It's in really good shape except it has gas leaking in the back yard, carbon monoxide in the attic and standing water that has been there long enough to mold and attract rats... and the beam is rotting...  Is the realtor paying this guy?  Or maybe you are buying somewhere that this really is considered a gem?

I wouldn't touch this house with a ten foot pole because if these issues were cheaply and easily fixed they would have been before they put it on the market!  Who lives with those kinds of problems and does nothing about it?  No one that I trust enough to buy a house from.  :-/

The realtor might be crushed but, trust me, they are more resilient than they look.

AlexK

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Re: Evaluating nightmare inspection on dream house
« Reply #15 on: March 09, 2013, 02:47:12 PM »
The fact that the sellers are moving soon is a good thing, they want to get rid of it fast. If it were me I would negotiate a lower price based on the contractor estimates and do the work myself after closing. The only thing that makes me nervous is the rotten beams, but the contractor should be able to accurately estimate that.

I have had this same tactic used on me and it worked. I was the seller and a roof contractor said the roof needed to be replaced (it had never leaked and looked fine), $6k was quoted as the cost. I agreed to a $2500 price reduction to get it sold. The "first time homebuyer credit" program was about to expire and that meant all houses would be worth $8k less in two weeks so I was over a barrel. It has been 4 years and the roof still hasn't been replaced (the house is a block away and I see it every day when walking the dog).

Rural

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Re: Evaluating nightmare inspection on dream house
« Reply #16 on: March 09, 2013, 06:17:00 PM »
I'd definitely run away from this one and be grateful for that inspection. You have not only three major safety issues (the mold is a safety issue, believe me, and it may never be eradicated) but you have the unknown underlying causes of those safety issues. There are other houses.

Nords

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Re: Evaluating nightmare inspection on dream house
« Reply #17 on: March 09, 2013, 10:33:40 PM »
Since they are on a crunched schedule (they have to move out of state at the beginning of May), can we push to make them pay for all of this? I mean, they have to get these fixed if they want to sell the house to anyone else right?
You need to consider what you're asking them to do.

1.  "Push to make them pay for all of this":  they'll hire the cheapest contractor they can find to make it look as good as possible.  It won't be done with quality materials, and it won't be done by craftsmen who care.

2.  "Reduce the price of the house":  You have to come up with an estimate of how much you want the price to be reduced.  Part of that is the cost of the repairs, part of it is compensation for your assumption of the inconvenience.  Then you have to hope that your repairs actually come in under your self-imposed "budget".

3.  "Negotiate the repairs":  Usually done by getting several estimates, you get to choose the contractor, they get to pay some average of the estimates.  That way everyone's equally less than happy.  Again it puts a lot of pressure on the contractor to finish the work before the seller moves, so you may not get a quality job. 

4.  The seller's other option is to wait for either a) a foolish buyer who won't do their diligence like you're doing, or b) a buyer who knows exactly how they want to tackle those repairs and will cut a deal more quickly than you will.  Of course you got there first, so your offer has priority until someone figures out a way to wiggle out of the deal.

Despite all the scary words about carbon monoxide and gas-fueled fireballs, mechanically the repairs are fairly straightforward.  I wouldn't personally tackle the rotting beams because it's a job for a contractor with experience & quality tools, but I suspect that you'll find the beam rot was caused by the standing water under the house.  If there's a bathroom near any of the rot then you should do an additional inspection there for leaky pipes or leaky drains, but the repair itself sounds like it'll be under $10K. 

When your inspector delivers his report, you could ask him and the realtor for referrals to contractors to handle the repairs.  You should accompany the contractors as they make their inspections (so that you'll understand the job scope and learn about their work quality) and get written repair estimates.  Then you should ask the seller to reduce the price by the amount of your estimates.  You want to handle the repairs on your own time and your own schedule, when nobody has any pressure to finish the job too quickly.

Your instincts are correct:  falling in love with real estate is foolish because it almost never reciprocates.  If you're not happy with your choices then just walk away from the deal.  You either exercise one of the contract's contingencies or consider it $1000 tuition at the Real Estate School of Experience.
« Last Edit: March 09, 2013, 10:35:25 PM by Nords »

Psychstache

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Re: Evaluating nightmare inspection on dream house
« Reply #18 on: March 11, 2013, 03:39:39 PM »
Thanks for the advice everyone!

I agree that asking the seller to find someone to do repairs is like trusting my dog with guarding my breakfast. While we could have fought back and forth and got a price reduction to cover some repairs, I think that there was just too much to tackle and that you guys are right. We went ahead and used our option to get out from under the contract and will start looking again.

Thanks!