Forum
« fair rent increase Start renovation paperwork after signed contracts but before closing? »
January 9, 2008
Walk away of work it out?
Advice needed, and I’ll try to make this brief as possible: My husband and I just had a very thorough (2+ hours) inspection done on a 2-family house we had hoped to purchase in Bay Ridge. The price is right and it has everything we’d been looking for including the fact that the owner had everything renovated just a few years ago (and included zoned heating, central a/c, soundproofed floor, finished basement, etc.). He did the work for himself and family to live in, although recently had to take in some elderly relatives so needed more room and now lives in the house right next door. Unfortunately yesterday the inspector gave us the sobering news that a lot of the renovation work that was done to the place was sloppy and would need fixing, including some (if not all, couldn’t see) of the pipes were not laid/secured well, electrical upgrades (possibly not enough voltage running to house) and a lot of other smaller stuff. Even the owner seemed surprised/disappointed in the results. We are so glad we did the inspection early on as it was a sobering experience! We were going to just walk away since we don’t have the money for these kind of repairs right now, but the owner really wants us to be his neighbor and is offering to get the new work done himself (at no expense to us) or even pay for us to get our own estimates from electricians and plumbers, etc. and then give us a price reduction on the house according to the costs (I’d consider this option first). Does any of this seem reasonable? I have no idea how much money or time any of this would involve or if we’re just crazy for even still considering this house. Opinions welcome!
Comments
That seems like an uncommonly good seller! Go for it!
Posted by: guest at January 9, 2008 3:48 PM
I would get the estimates, then discuss price reduction. I would go the price reduction route rather than get entangled with the seller on paying for the reno job. Finance the reno with the equity you would have borrowed for the purchase price, or save up if the work can wait. Figure out what has to be done now and what can be done later, how intrusive, etc. Sounds like seller is being straight with you so I would play through so long as you are satisfied with how it is going. Keep things on a good keel and be straighforward with the seller, becasue if you go through with it you will be neighbors.
I had to do this, but under very different circumstances.
Good luck.
Posted by: slopefarm at January 9, 2008 4:21 PM
Sounds like a very agreeable seller who is going to be your neighbor. I would give him the benefit, but negotiate the reduction. Don't leave the repairs in his hands or that could get messy. Best to make aclean break on agreed terms.
Posted by: cornetor at January 9, 2008 5:27 PM
We went through the same process when buying our place. The inspection uncovered several issues. Our logic was to itemize and propose a price reduction. This reduction will hopefully be sufficient to give you funds to complete the work. While I wouldn't disparage the seller you dont want to put yourself in a position where he agrees to do the work and for various reasons you close on the deal and it's not done to the standard you require. Who's to say the problems noted previously wontbe replicated ? Dont put yourself in a position where that could happen no matter how much you like the house.
Posted by: 10thStreetReno at January 9, 2008 6:47 PM
definitely have your estimated done and take a reduction in the purchase price if the seller is willing - don't have him do it even if he is willing... I think he sounds like an extremely nice guy - sometimes things like that are meant to be - i wouldn't be totally scared but i would research the expenses and ask for a reduction
Posted by: guest at January 9, 2008 10:00 PM
Just be careful, as you said in your post, inspector told you only what he could see, there may be more that no one can see until walls are opened, etc. Often, sloppy work begets sloppy work. How long has the place been on the market? If it's been awhile or you are the only interested party, seller may be a bit desperate to get the place sold.
Posted by: guest at January 9, 2008 10:56 PM
agreed. guy is a motivated seller. work with him.
Posted by: guest at January 9, 2008 10:56 PM
If I was you, as you say not having the money to do, and weren't planning to do, extensive renovation, I'd walk away. If what you can see is shoddy, what you can't see is also likely shoddy. (I have a real bias against houses maintained by shoddy do-it-yourselfers, especially when it is the systems like electrical and plumbing we are talking about.) You will likely find much more extensive stuff you need to do once walls are opened than you can see now when your work estimators give you their estimates. Many people on this board are renovators - this house is for one of them - someone who has the money and was looking for a house to do a lot of work on. Getting a price reduction based on estimates on what you can see won't cover your total costs. And, if you are going to approach house-hunting for a house to renovate, which it doesn't apprear you were doing before, then ask yourself (1) is that really what you want to get into, and (2) if so, is this the best house for you if that is your aim?
Posted by: guest at January 10, 2008 12:18 AM
Unless perhaps you're buying real estate at the very highest end, EVERY house comes with some hidden surprise that that may not have been revealed in the inspection. At least in this situation you know most of the warts, and you may find a few more. It's not going to be anything catastrophic at this point, since it sounds like you had a thorough inspection.
As others have said, the owner seems like a nice guy--and a nice future neighbor! Get the price reduction based on necessary fixes by licensed tradespeople. When the repairs are made, you will have the satisfaction of knowing the big stuff--plumbing and electrical--is safe and up to code.
Posted by: tinarina at January 10, 2008 9:59 AM
If you like the seller then take the price reduction and do the repairs yourself. Trust me when I say that you cannot put a price tag on having neighbors you like. I absolutely love my neighbors and it has made my house, which has had its share of problems, more than tolerable. In the same way, a bad neighbor can make a great house miserable. Good neighbors are priceless.
Posted by: guest at January 10, 2008 10:32 AM
Tinarina's got it right. 12:18, I am not sure what alternative you recommend regarding an old house. Is a flipper's renovation more trustworthy than a DIY homeowner's? DIY homeowner has a greater incentive to fix problems. I can't imagine a DIYer who plans to live in a house for a while encountering a rotten joist or a leaky roof and just covering up the evidence with a bit of paint or sheetrock and leaving it to the next guy to find. I am not saying all flippers do this, but there is no reason to assume a house with DIY renovations is less trustworthy. Each case is different.
Posted by: slopefarm at January 10, 2008 10:39 AM
12:18 here -
Well, yeah, I might not want to go with a flipper, either, unless the inspector raved about the work quality, but rather a home owned by someone who maintained it well (unless I was doing a gut reno and didn't care.)
But, since the inspection showed SHODDY do-it-yourself-work, I wouldn't trust it. There are do-it-yourselfers who do it right, or get enought help to do it right - and if this was the case, the inspection would show have shown that that was quality of the work.
I'm not sure I'd be happy with my "friendly" next-door neighbors when I found out later just how much shoddy work there was that my inspectors & work estimaters didn't see, and how much that was going to cost me. I'd feel like I'd been ripped off by their shoddy work, even if it was just from ignorance, thriftiness and/or carelessness, rather than intentional. (Though it is hard to see what the real difference would be to me financially anyway, whatever their intentions were in making the repairs the way they did.)
Also, it is different if you have a bunch of cash to throw at repairs right away. But, if like the original poster, I didn't, then I don't really see how getting the cost of substantial repairs taken off the purchase price helps much. I'd still have to come up with the cash to make the repairs. And taking a slightly smaller mortgage (due to the reduced price) doesn't put that amount of cash in my pocket to do repairs with, as the cost of the mortgage amount is minimal per month, when spread out over 30 years. But I'd have to pay for the repairs NOW.
I was in the cash-strapped position (little money left for repairs after purchase, being a first-time buyer) when I bought my place, so I kept looking until I found one that DIDN'T need substantial repairs and an immediate kitchen and bath renovation. The lower purchase price on those needing renovation did not give me the cash in hand I'd need to do the needed renovations and repairs. I never regretted that decision, and I'd do the same when I buy again, unless I have a bunch of cash left over after closing to do what needs to be done right away sooner rather than later. In OP's shoes, I'd keep looking for a house that didn't scream "needs immediate repair."
I've known too many people who bought and just ran out of money long before the work they needed done was done. If you have family with deep pockets who will help out, or are confident that you can substantially increase your income, then it's worth the risk. If you don't, to me, anyway, it isn't. Sure, you can hope home prices go up fast (not a great bet this year) so you can take out a home equity loan to do the repairs, but you still have to have the income to be able to make the payments on the additional loan.
Perhaps I'm more conservative financially than others, and to each their own, but I thought it was worth laying out the on-the-other-hand view for the OP. Anyway, they'll do what their gut tells 'em.
Posted by: guest at January 10, 2008 2:38 PM
keep in mind that it is an inspector's job to tell you the absolute WORST thing possible (mainly so you can't sue them).
our inspector told us the boilers were at the end of their life. my boiler came and looked after we moved in to say that they were fine and couldn't recommend anything to improve them.
our inspector told us all the building's windows needed to be replaced. park slope glass came and did $500 worth of fixes and they're fine.
same goes for basement underpinning, replacement joists, electrical and plumbing systems, roof, etc. the inspector is trying to make you worried, and then you really have to get a professional's opinion on replace cost and hassle.
good luck!
Posted by: chuck at January 10, 2008 3:46 PM
3:46 is right - inspectors make things sound MUCH MUCH worse than they are usually. None of the problems he pointed out sound that bad, and none sound like they need to be addressed immediately or even soon. Definitely don't walk away - just get estimates from trusted plumber and electriican and have reduced from price.
Posted by: guest at January 10, 2008 3:50 PM
While it is true that inspectors do point out the worst, I have found that you can't rely on them to give you a realistic idea of how much it will cost to do a given fix. They generally tend to tell you it will cost less than it will, as they know, from experience, who they can get to do something reasonably well and cheaply (and they will tell you this). Definitely get estimates from recommended electricians and plumbers on how much the costs will be - that should help you in making your decision.
Posted by: guest at January 10, 2008 4:38 PM
Someone told me that sometimes inspectors greatly exaggerate what what problems are and then recommend not buying a house. The buyers think this guys a hero "oh he saved us from wasting our money", etc. This guy then gets tapped again for another inpection with a new bill.
Posted by: guest at January 10, 2008 10:47 PM
I would get a good contractor to come back and take a look, I agree Inspectors can kill deals all the time. See what the contractors says and if you really love the house then make it work...
Posted by: guest at January 11, 2008 7:34 AM
OP here. Thanks to everyone for the advice! The owner is willing to pay for the electrical issues and a few other things, but not the plumbing issue, but we're willing to pay for a plumber to give us an estimate anyway. The plumbing concern is that the pipes seen underneath the basment drop ceiling are not well aligned/secured (sloppy work). The drop ceiling was installed as part of the ceiling to have easy access to these pipes and the owner claims that this particular plumbing work was done by a different person and that the pipes in the rest of the house are secured (I won't go into his details as to why he claims he knows this). Not sure what to believe now. And if the basement didnt have a drop ceiling we wouldn't even know about the pipes in the first place. He did live there for years with his family, but are we taking a huge chance here? Any further advice greatly appreciated!
Posted by: mdmh at January 11, 2008 10:31 AM
I'm disagreeing with so much of what is being said by the gung-ho people here. FYI, this house you're talking about was the topic of a heated defense by Bay Ridge boosters a week or two ago on Forum. Some of whom knew the seller. So maybe take some of the too-positive comments with a grain of salt.
In my experience, our inspector didn't tell us ENOUGH of what was wrong. He was not too negative, as some claim. Inspectors are not allowed to open up walls. So they can't see everything. So how on earth do inspectors generally always say more negative things than are actually present? It's not logical. In reality, homeowners always find more wrong than they thought once they start digging around or living somewhere, not less.
I would never agree to the guy fixing the problems for the very reason you want good relations with your seemingly nice neighbor! Jeepers, what horribly bad advice for people to say to go for that. If he does the work slowly or doesn't do it correctly, you end up in a fight or lawsuit with your next door neighbor. Af for him being nice, you met the guy once. Sorry, but anyone can seem to be nice for a few hours.
What's happening is you are excited and feeling very ready to own a house. But your enthusiasm is taking over a bit too much. I know this because that happened to us. I'm recognizing it in your tone. In the end, after fixing many things we took too lightly at the time of closing, we're happy. But it was sure costly and stressful.
Posted by: guest at January 11, 2008 1:47 PM
Walk away and say if your conditions aren't met you can't buy the place. You can do it nicely. It doesn't have to be nasty. But protect yourself; it's totally your right to look after yourself, please. Realtors always put a lot of pressure on buyers, but if there are no other offers on this house then you have the better negotiating position, not the seller.
Also fyi, NY State is a caveat emptor state, but the seller does have to inform other future buyers of these issues your inspector found, if future buyers ask questions of him about the state of the plumbing or electric. Now that he's been informed of it by an engineer. That puts him in a worse position to get competing offers.
Posted by: guest at January 11, 2008 1:53 PM
1:47 -- Your comments are well taken. But I don't see that anyone recommended letting the seller fix the house.
What the "gung ho" people were recommending was to negotiate a lower price sufficient to fund any needed repairs and renovations. I recommended exploring this -- get some estimates of both cost and how much work woudl truly be involved, and then negotiate a price reduction. If OP has $100k of work and seller won't take mroe than $20k off the price, then it is time to walk away. If seller will eat the whole cost in a price concession, it may be worth doing, depending upon OP's stomach for it. OP would, of course, be bearing the risk of finding more stuff that required repairs, but that is true with any renovation. This is all about getting a fair price for the house. It wasn't really clear, one way or the other, that the problems with the work were that dire. If the appraisal will support a mortgage at the original price, then OP can finance the work as part of a mortgage or HELOC. We did that, but that was before the subprime mess exploded, which has banks and appraisers a bit more cautious on LTV even for prime borrowers these days.
I agree with many of the posters that inspectors can both over and understate problems. They miss stuff behind the walls or through plain error, and they overstate things they see to make sure they are covered on liability.
I thought it was worth OP pursuing further to satisfy himself one way or the other whether to go ahead or not.
Posted by: slopefarm at January 11, 2008 2:10 PM
OP again. I do appreciate the comments both pro and con. This was not the house discussed on forum a few weeks ago. We have had several meetings with the owner (we looked at house twice, he was present for inspection, plus several phone calls). He is offering to reimburse for the costs of the electrical fixes (we'd use our own electrician) and there are other things that we agreed would be fair for either us or himself to take care of. The inspection was very through, but of course we still don't know what's behind the walls. We are going to pay for a plumber estimate ourselves. We totally understand that owning a house will require a certain amount of repairs, especially over the years, and we do hope to have a decent amount set aside to cover these costs. We just don't want to get in over our heads so if things turns out to be too costly or too extensive, we will have to walk away.
Posted by: mdmh at January 11, 2008 2:34 PM
Run Away Quickly.... Hurry.
Posted by: guest at January 12, 2008 4:13 PM
But inspectors have no liability, Slopeform. Sad but true! My friend tried to sue an inspector for missing what were blatant signs of a sinking foundation out on Long Island, and she lost even though she had what her lawyer thought was the best case he'd seen. NY State protects the buggers, and the inspectors contracts we sign actually say they are not responsible for their work.
Posted by: guest at January 14, 2008 11:22 AM
OP here. If anyone is curious, we had a plumber and electrician look at the house (plumber Timothy Myers highly recommended from this site) and were told the work was not really that bad (a little sloppy yes, but not in any danger of not working for the next 50 years). So although we appreciate the inspector's point of view, we're glad we went ahead and got the specialists opinions as well.
Posted by: mdmh at January 14, 2008 1:35 PM
Post a comment
Please be patient while your comment is published. It may take a moment.