What to do about water damage discovered during home inspection

[James]

I am purchasing a house, and during the inspection today we found a large area of water damage over the dining room area.  It is toward the bottom of a vaulted ceiling, about 2 ft by 4 feet, with the worst of it down by the wall but not extending down the wall. (at least the wall sheetrock appeared solid)  In looking outside it appears there is water leaking between the recently shingled roof and a wall that continues up from the roof for the second story. There does not appear to be proper flashing there, it should extend up under the siding and step down with each shingle. (step flashing)


The water damage has been repaired in the past with texture and paint, but is showing through now and very spongy and heavy, it's my best guess that it is currently being slowly moistened by small amounts of water as the snow and ice melts.  There is also water coming down through the soffit and making dirty icicles, so I know it's coming through the house and not just running back from the edge.


Obviously I've got warning sirens going off in my head and I need to know if I'm taking the right actions.  I called my realtor and said I wanted an explanation from the seller on the leak, and told him I was upset about the fact that it had been covered up (and therefore known about), but hadn't been disclosed in the condition report. I'm not at all sure he will communicate how upset I was with the seller's realtor, and by the time it gets to the seller I'm sure it won't carry a lot of weight, but I assume he will say that the leak was assumed to be fixed when the roof was shingled last year so he didn't think he had to mention it.


So my current plan that I suggested to the realtor is a roofer to come out and determine how to correct the leak, and a sheetrock contractor to come in and discuss how to fix the inside.  If the seller will agree to pay whatever they say it needs, I'm fine.  But I'm assuming he will want to offer money just to be done with the deal, and I wouldn't know how much to ask for because I obviously don't know the extent of the damage yet.


Anyway, we took some pictures and we will send them and the condition report when we get it tomorrow with the damage documented. Just interested in any advice anyone might have on dealing with issues like this during this stage of a home purchase.

[herisff]

Depending on where you live, mold could really be an issue inside the walls. The wall texture being soggy and heavy tells me that the wall is very wet, with a higher likelihood of mold inside the wall. Definitely have a roofer look at the place, and you may want to have a general contractor look at it too. Depending on the extent of the damage, this would make me walk away from the purchase (but then, I have mold allergies).

[No Name Guy]

I sold a house a couple years ago here in Washington:  Its a standard part on the disclosure here that leaks in the last 5 years (if memory serves) must be disclosed.  Inquire of your agent on this for your area (forms are different state to state).  Then ask yourself if the seller is being truthful with their other disclosures.  Question everything with a skeptical eye.  Walk away if you're not 100% satisfied with the response.

[GoCubsGo]

Have a roofer of YOUR choice come out and give you an estimate as well as a drywall replacement estimate.  As long as you are still in the the attorney review/inspection period you can have your attorney ask for the replacement amount (I would rather have a roofer that I vetted rather than the sellers who's only goal is to get the lowest cost estimate).  Improper flashing definitely could be one of the causes.  Definitely get your attorney's opinion.

The only tough thing is the potential for mold under the drywall.  I've been involved in transactions where mold abatement had to be done as part of the sale and it wasn't cheap (that mold was visible in the attic both times).  That said, it can be fixed pretty easily.  Keep in mind that the sellers will DEFINITELY have to disclose from this point forward (and if you walk away from the deal they will most likely make the repairs anyway before re-listing) so it is in their best interest to work with the buyer they already have. 

[James]

Thanks for your replies, I think having my own roofer and sheetrock guys give me an estimate, along with a written agreement from the seller that he will cover all costs, is probably what I will demand.  I don't want him to decide on the work, but I'm worried that is what he will ask for since he is paying for it.


I want to just walk away, but I don't have anyplace else to move at this point, and I'm fairly certain the house is sound otherwise.  The basement is open under this area so the water certainly hasn't gotten at the foundation or past the wall.

[Another Reader]

If you want to walk away, a few more weeks in your in laws' basement might be the best solution.  Much better to be a little uncomfortable now than to have to deal with an unknown water damage issue for years to come.  Especially when your gut tells you that's the correct thing to do.

[GoCubsGo]

OP- It can't hurt to set up another appointment with your realtor and your roofer to inspect the problem and get the quotes (I've done that many times with my clients).  Not sure WI rules, but make sure you keep your attorney in the loop so he can ask for an extension to check out the issues.

If you like the house and the seller will pay for it, I wouldn't give up on it (again, you have some leverage here since the current owners will need to disclose or fix anyway before they re-list).  Inspection issues crop up all the time.  As long as the rest of the house checked out good, I wouldn't walk away unless you've had a change of heart.

[MooreBonds]

Depending on where you live, mold could really be an issue inside the walls. The wall texture being soggy and heavy tells me that the wall is very wet, with a higher likelihood of mold inside the wall. Definitely have a roofer look at the place, and you may want to have a general contractor look at it too.

Based on the OP's description of (parts of) the wall being 'soggy and wet', there's no way I would close without putting a contingency on removing a sheet of drywall from the wall and seeing what is in the stud space (mold, rotting wood, etc.). If the wall is truly spongy, then I'd put quite a bit of money on a bet that there is mold in the studs.

As others have said, mold is everywhere in the world, so not a deal-breaker....but definitely worthy factoring into the price. Also, depending on the amount of moisture, several studs - and even the top layer of plywood subfloor - could be warped or rotted to varying degrees. Again - can be fixed for a reasonable price, if you really like the house/property.

[James]

Still working out a plan, but its looking like we will have some amount ($5,000?) in escrow to pay for any damage and repairs from the leak.  The seller would also specify that any additional expenses from the leak would be covered if the escrow amount was not enough.  I think that is pretty fair, taking off the drywall and repairing any insulation or other issues in the wall, along with repairing the roof leak, shouldn't take more than a couple thousand at most.  I could probably talk him into a couple thousand off the price in order for it to become "my" problem, but I'd rather have him take the very small but possible risk of it becoming some $10,000 disaster of an issue that we can't know about at this time.

We live in a small town of about 8,000 people, and the seller is well known, respected and involved in the community.  I don't think he is going to try and screw me on this, as long as he says he will make it right on paper I don't think it will be a problem.  He isn't leaving town after selling so leaving me in a bad spot would probably cost him a lot more reputation wise than proper repairs.

Again, thanks for the input, it helps to have people seconding what I've been thinking - my damn realtor is being a dick and minimizing the issue, which just makes me want to take away his commission.  He should be the one making a big deal about it.

[Another Reader]

That reputation can work against you, if the seller tells people you are being unreasonable.

In your shoes, I would insist on a complete diagnosis and bids for the repairs before I proceeded with the transaction.  The escrow would have to be for the bids plus 10 percent for unknowns for me to be comfortable.

Why is the seller selling this property?  Is he buying up or down?  Or is he just trying to unload a lemon?  Having bought and sold a lot of properties, I can tell you that (gasp) sellers will lie upon occasion.  Even otherwise reputable people will fail to tell you the whole truth.

[GoCubsGo]

The escrow idea will work great, just make sure you have a large amount  set aside (which it sounds like you do) and it should be fine.  Make sure to get any paperwork stating guarantees by the contractors performing the job and insist on licensed contractors and it shouldn't be a problem going forward.   

Sorry to hear that about your realtor. As a realtor myself, an issue like that that should never be minimized and that idiot probably just lost any referrals you might have given him in the future.  Again, don't be afraid to push for what you want as YOU have the leverage in this situation (something your realtor SHOULD have been stressing to you all along).   Best of Luck!

[James]

That reputation can work against you, if the seller tells people you are being unreasonable.

In your shoes, I would insist on a complete diagnosis and bids for the repairs before I proceeded with the transaction.  The escrow would have to be for the bids plus 10 percent for unknowns for me to be comfortable.

Why is the seller selling this property?  Is he buying up or down?  Or is he just trying to unload a lemon?  Having bought and sold a lot of properties, I can tell you that (gasp) sellers will lie upon occasion.  Even otherwise reputable people will fail to tell you the whole truth.

I agree about the reputation idea, that is true.


Sounds like insurance is going to cover the repairs for the seller, so the actual cost probably won't matter to him a great deal.  I'm making sure I will be at any examination by a contractor and involved in any decision about what to do going forward with the repairs.


The previous seller moved and has been trying to sell the property for about 4 years.  It was sold for $220,000 two years ago, but the sale fell through when the purchaser couldn't sell their own home in town.  I'm purchasing it for $167,000, and it's in a neighborhood of $200-400k houses, so I think it has good potential with some upgrades and a uptick in the market.  The inspection didn't show any other issues and showed a otherwise quality house, and the price is low enough to account for some of the issues like aging appliances and wood siding.

[Nords]

I'm making sure I will be at any examination by a contractor and involved in any decision about what to do going forward with the repairs.

Please post autopsy photos!

[.22guy]

If I was you, I would walk away!

[James]

I'm making sure I will be at any examination by a contractor and involved in any decision about what to do going forward with the repairs.

Please post autopsy photos!

I have the photos of the damage, and either today or tomorrow will be getting into the damage with a contractor to determine the extent.  The seller will be there also, so we can all agree on the resolution or can walk away if needed.  We will remove sheetrock and expose whatever is necessary to see the extent of the problem and plan a solution.  I'll certainly post photos at some point when things settle down.