Dream home purchase issues- walk away?

[StarBright]

We weren't in the market for a house but then found our dream house.

Finances on it all work out just fine.  Did a second walk through yesterday and realtor disclosed that there had been a fire a few years ago and there had been approx 35k in repairs done to chimney and roof.

DH and I decide to put an offer on it. I call this morning to get an insurance estimate on the house and the insurance broker says there have been two fires in the last few years, the first had almost $160k worth of damages and the second claim, a year later, was for 10k. Insurance guy also told us that they would still insure us and the house because DH and I have never filed a claim but if a prospective buyer had made a claim on a previous residence they would not be able to get insured on this particular house.

So it looks like some stuff is not adding up, or was at least omitted - for instance no mention of the second fire, and on the 1st fire, what did the other 125k go to - did they have the most expensive furniture in the world? Were the necessary repairs even made? This is an almost 200 year old house so I don't want wiring exploding in a year or two - you know?

So this would only be our second home purchase and I am inclined to walk away, dream home be damned.

But I would like an opinion from you experienced real estate people out there - is this small potatoes in the grand scheme of things? Do I keep doing research and digging and looking for satisfactory explanations?  Do I assume that the seller did not disclose this to the real estate agent? and she doesn't know she is selling a potentially uninsurable house?

We haven't even put an offer on it yet so we are free and clear.

[catccc]

Can you find out the cause of the fires?  Does the home have knob and tube wiring?  Has it been replaced with updated electric systems?  Maybe that was part of the high cost of the 1st fire?  I think it is pretty pricey to update the electric from knob and tube to whatever you call the modern stuff.


I'm no expert, just handing out unqualified thoughts here...

[former player]

I would try to determine whether the issue was the house or the occupants.  Would your local fire department have records that they could show you?  It's a safety issue if there is a problem with the house, rather than the occupants, so they might be willing to divulge.  Also try the local newspaper for reports on what happened - a fire as big as the first one should be reported somewhere.

The previous claims will be a red flag on any future insurance claim you make, so be aware that any future insurance claim for anything based from that address might raise red flags and be checked more carefully than would otherwise be the case.

Is it possible for you to check whether there are any other financial issues relating to that address?  Bankruptcies, unpaid debts, etc.?

You also need to check whether the repairs have been done properly - would there be permits you can inspect?  I'd want to be particularly sure that all the paperwork on the house was in apple pie order, not just for your own wellbeing in the house but also for any future purchaser, as you would need to ensure that you would not have problems selling the house on at any point.

[earlycheckout]

I would walk the other way. There is always- always!- another dream home. Fish in the sea. Trust me this is true.

We too walked away from a dream home. But discovered some very important work had been done without permit (not minor things but very substantial things that involved important safety issues). More importantly, they had lied about it and the realtor had withheld this info (we only learned of it by sheer accident). 

It made us question the entire property disclosure form, and what else were we not told of. We had to hire a lawyer but well worth it to get our escrow deposit back.

Everyone is different but for us, we like having peace of mind. It isn't a dream home for us if we are going in with this in the background.

As an aside, we do not use a traditional home inspector- we've found that unless they are truly independent (and identify themselves as such), and therefore paid a lot more (we pay them 4x the typical cost), they are really just working for realtors and not a good use of our time as they have a serious conflict of interest.

 

[StarBright]

So we found out the second fire was in their RV but it was on their homeowner's policy so that explanation made me feel better.

I flat out asked about the price discrepancy on what insurance paid out vs. what the sellers told us they spent on repairs. I asked what the insurance was supposed to be paying for and asked if there were any repairs that were not made that were supposed to be made.

If their explanation makes any sense we'll move forward with a lowball offer but will definitely hire a structural engineer for the inspection.

It is a very old house and the master bedroom floor has a definite tilt, so we were going to hire an engineer anyway but now we'll also make sure they thoroughly look over the fireplace area as well.

[earlycheckout]

Oh that's more reassuring. I love your idea of a structural engineer for an inspection (that is who found the problem we had in the dream house I described). By fluke we hired him for one thing and he happen to reveal things he knew about the property from someone else who had hired him to view it awhile back. Things that later we were able to confirm with the city.

[StarBright]

The sellers answer was very satisfactory - apparently the 35k they put in was on top of what the insurance paid. They also gave their insurance permission to give me the CLUE report for the house and confirm that insurance paid the contractors directly.

I am feeling a million percent better and very glad I kept asking questions.

We put in an offer today - still a lowball (the very lowest price per square foot on a wide range of comps - comps ran from 108 to 132 a sq foot ont he same street!) because it is a quirky house and might not be an easy resell if we had to move. We'll also still get a structural engineer to give it a look-see.

But all in all - I'm pretty excited!

[Roots&Wings]

Good for you to investigate fully and do your due diligence! Buying a house can be so emotional and decisions often occur on a rushed time frame.

Sounds like you are taking a rational approach towards this quirky historic home (which does sound amazing!), and sticking to your financial guns in the offer too, so if it works out that's great, and if not, there will be other opportunities.

Keep us posted how it goes!

[Dicey]

This is just a gentle reminder not to let your laser-sharp focus on the fire damage/repairs keep you from missing something else. Eyes wide open. Proceed with caution. Not saying don't do it, just asking you to use your peripheral vision.

[StarBright]

ahh well - it was a nice dream :)

Someone looked at the house a few hours after we put in our offer and they put in an offer at asking price. We were definitely not willing to pay that much for the house so it was not meant to be :/

On the up side - At least I don't have to figure out how to pack up and move my whole family in 30 days.

[human]

I'm happy for you that somoen else got it. That place sounded like a money pit with wonky floors and a fire. Unless they had completely rebuilt the place with the 195k . .  .

[Roots&Wings]

ahh well - it was a nice dream :)

Someone looked at the house a few hours after we put in our offer and they put in an offer at asking price. We were definitely not willing to pay that much for the house so it was not meant to be :/

On the up side - At least I don't have to figure out how to pack up and move my whole family in 30 days.

That's the spirit! It definitely stinks to lose out on a place, and there will be other opportunities.