Failed sewer scope, should we walk?

29 Replies

Hi folks, we are into our second potential deal that might blow up.

My question is should we walk away from this deal? We have had the sewer scoped twice and found an offset both times, and we are asking the seller to repair prior to closing but they have declined fixing it, saying they've never had an issue with it. The property is in an older part of Colorado Srpings with mature trees and the roots have breached the pipe creating a hole. The estimated cost is between $3,500-$5,000. Everything else on the property is in good repair. We have until tomorrow to decide. What are your thoughts.

Thanks

Is it still  a deal if you pay for the repairs?  Whether they've had an issue or not its going to need to be fixed.  And if they won't budge you either have to fix it yourself or walk.

If you do decide to move forward I can point you to a company I've used twice for this sort of repair.

Is this a flip, or buy and hold? How do the numbers shake out, if you incur the cost? You might ask seller to split the cost.

Why not negotiate a discount - for part or all of the the repair. The seller will now have to disclose - or should. Even if you split the difference it shouldn't be enough to kill the deal. 

Is there and opportunity for a spot repair? rather than the whole line?

I had to do this repair on my old home in an older neighborhood in Denver.  They replaced the main line from the foundation to the sidewalk.  Total cost came out to $5500 for a 30' run with 2 cleanouts.  If you're planning on holding it and the numbers still work then it is worth the fix.  If you are flipping it then a smart buyer would run the scope too and you would run into the same issue you're currently having, but you'd be coming at it from the other side.

I apologize I should have mentioned this will be a buy and hold. Great ideas so far folks.  

Thanks I'll run the numbers right now.  Also I'll contact my realtor to see if we can ask for a discount or a split on the cost of repairs. I'll keep you posted. Thanks

You must run the numbers to see if the deal makes sense, but from a negotiation perspective, you can send the listing agent & seller photographs of the sewer line breaks, and inform them, that if they decide not to move forward with your offer, that in principle, they are required to disclose that defect to any future prospective buyers.  

In effect, you are saying to them that they can address/negotiate it with you, or, they can address/negotiate it with another prospective buyer, but the problem does not go away by not dealing with you.  

We had this situation come up, and by doing the aforementioned, we were able to get a $4,000 repair credit from the seller, as both the seller and the listing agent realized that if they walked away from our offer & they relisted it, they would need to disclose it and it would likely reoccur during any future inspections.

@Andrew Emery be careful about estimated costs. How deep is the line? IMO $3-5K is the  low end (shallow <6ft deep outside of the street) of the cost to repair a line. If you have to go into the street then it will be more than that in most cases. Don't ask me how I know. 

Also why did you have the sewer scoped twice? Isn't one picture enough?

For me one question is do you have the money to do the repair? Does the seller have the money to do the repair? If they don't then that is why they said no. If it really only costs $3-5K to repair and it's a deal to begin with then no problem, move forward. If the purchase is so thin that $5K makes it a "no deal" then I would inclined to keep looking anyway.

It's my experience that the sewer could last in the current state for years or you could be digging it up next month. Hopefully it has a floor drain that you could set a water alarm by and wait for the failure. You could then be having this discussion with a buyer in 40 years. I wouldn't repair until absolutely necessary.

Here is a long shot but it is worth mentioning. Call the county public utilities and ask them to check it out. Doesn't cost you anything. It may be that the break is on the county side. If so they'll take care of it at no charge. I had to pay $4K for my rental and insurance does not cover it.

@Andrew Emery

 Sewer lines are generally good negotiating tools during a purchase.  Asking the seller to repair prior to close is better for you because you avoid potential cost overruns. But it is usually far more successful to negotiate a price drop or credit at closing.  once they know about the issue they're required to disclose so it's going to come up with every buyer, and most will be hesitant about a hole in the line. If you're willing to close it's in their best interest to get the deal done.  As Bill said, depth of the line will affect cost, and whether they'll replace one section or have to upgrade the whole line.  But I've done taps and whole lines in denver for $3-6k so your quote may be accurate.

I've done three of these.

1) About 70' from house to edge of street. $4000

2) About 80' from house to city tap in alley $4000

3) About 70' from house to city tap in alley $4800 - This one was quite deep

Last two with the same company:  

http://copipes.com/

@Andrew Emery I prefer properties that need work and are priced accordingly. That way I get to decide the quality, which I gear for long term value. I bought one property knowing that I will need to replace two sewer lines in the coming years, but I get to decide the details and it will give me the opportunity to add access to another building that has none for far less than if the previous owner had done the work.

@Jon Holdman Thanks for the contact!

Seriously - you guys pay $4-6k for a new sewer line to be run? Holy mother of God.

Back in January I had close to 150' of sewer line replaced to the city sewer and it only cost $2500!

Thank all of you for your input. 

Here is an update of where we are at on this:

Last night I was informed by my realtor that the seller did not want to give any more concessions. Once we heard this my wife and I decided it would be best to walk, as the cost of the project would have outweighed the benefit. Just to be sure that we made the right decision we slept on it. So fast forward to this morning I called our realtor and told her we wanted to terminate. She then says that minutes prior to my calling, the seller had come back and said that they would be willing to split the cost of the repair. I told her ok. We are now waiting to see what they come back with on estimates. I guess real estate investing is a lot like aviation, things can change in an instant.

The nice thing about this duplex is that it has been completely gone through. Everything is about 2 years old, appliances, furnace, water heater, so it should be relatively maintenance free for a while. It is essentially turnkey, to include the tenants. We just to get over this hurdle. 

@Jon Holdman I'll forward the info to the seller, so they can see what they can offer.

Also @Nuhan Demirkan in my research on this issue, here in Colorado the sewer line form the house to the main city sewer service line is the home owners responsibility, regardless of whether or not it's under the street or any right of ways. Thanks though. 

@Bill S. the line was scoped once by me and then the seller had it jetted and scoped to get a clearer picture of the problem. When I had it scoped my guy had a tool that was able to determine the depth of the line and it was at about 2 feet. Also the crappy thing is, no pun intended, is that it is under the street where the curb meets the asphalt.

@Travis Sperr thanks for the idea of splitting the cost. Not thinking outside of the box I was in the mind set of all or nothing. It never occurred to me to split it. This might be the bridge to the other side. 

Again thank all of you for your ideas, input, and most of all your time!

I'll keep you posted

Originally posted by @James DeRoest :

Seriously - you guys pay $4-6k for a new sewer line to be run? Holy mother of God.

Back in January I had close to 150' of sewer line replaced to the city sewer and it only cost $2500!

 Yes, but if you're talking about Century, FL - that's a small town on the border with Georgia and I had to scale my googlemaps back quite a bit before I found a town of any significant size.  @Jon Holdman is in the Denver Metro area and the cost of living there is likely a heckuva lot more than Century, or even Pensacola.  Rents and housing prices follow suit.  You'd likely choke if you saw what we're paying for 1000 square foot, 2 bedroom condos out here.

Prices for property as well as services vary widely region by region, which makes branching out of your geographic area a challenge.

@Andrew Emery   Unless you would like to be MORE out-of-pocket at the end of the negotiations, I don't know why you would share the name of the company which @Jon Holdman has provided you.  John has provided you some very valuable information & you are now going to freely pass it along to your negotiating counterparty?  To use a poker analogy, why would you show the others at the table your cards?

Let me explain.

We had a similar issue at one of our properties in Aurora, and when we got an estimate for the repair, a very reputable sewer company quoted us $8,000.  That was a market price quotation.  We asked the seller to split it with us, and so he gave us a repair credit of $4,000.

From that simple example, you can see that you actually benefit from having a higher estimate for the work during the negotiation, as you will get a higher repair credit, and if Jon's reference can do it for $4-5k, you have it almost completely paid for.

So, you might reconsider showing your "ace in the hole"!

Actually the middle of those three jobs was a property we too back after a hard money borrower defaulted.  @Travis Sperr   was the listing agent on that and we did split the cost with the buyer.

Originally posted by @Linda Weygant :
Originally posted by @James DeRoest:

Seriously - you guys pay $4-6k for a new sewer line to be run? Holy mother of God.

Back in January I had close to 150' of sewer line replaced to the city sewer and it only cost $2500!

 Yes, but if you're talking about Century, FL - that's a small town on the border with Georgia and I had to scale my googlemaps back quite a bit before I found a town of any significant size.  @Jon Holdman is in the Denver Metro area and the cost of living there is likely a heckuva lot more than Century, or even Pensacola.  Rents and housing prices follow suit.  You'd likely choke if you saw what we're paying for 1000 square foot, 2 bedroom condos out here.

Prices for property as well as services vary widely region by region, which makes branching out of your geographic area a challenge.

I don't live in Century. I just value my privacy on the internet.

I could easily ring around and get the same BS quotes you lot get. However, the key to this game is to have contractors that don't bend you over at every opportunity.

The expensive home-owner oriented contractors will typically charge more like $6-10K for similar jobs around here.  This is big business here.  Many houses built in the 40's and 50's have clay sewer lines and they're all failing.  Almost every house in my area has cuts in the street where these lines have been replaced.  All the jobs I mentioned had multiple bids and these were the lowest.  

Most lines here are pretty deep.  Basements are common, so mains have to be deep enough to accommodate those, even if the property in question doesn't have a basement.  6-8' deep trenches are pretty typical.

Here is the final update on this potential deal: We walked! Here's what happened:

Our realtor called this afternoon and said we have an offer from the seller to credit us $2,500.00. I said great, this is a step in the right direction. So I told her let us get an accurate quote prior to signing the agreement. After having read the posts on this thread I realized this could get expensive quickly. I called the plumber that the seller has been working with because I figured he would be most familiar with the situation and therefore get us a quote fairly quickly. What he told me when I called was a real eye opener. He said that he had been trying to get ahold of the seller to let her know of what they found since last Wednesday. He was finally able to get ahold of her this morning. He said that when they spoke she asked him to rewrite the invoice to reword it in such a way that it would essentially state that there wasn't anything wrong with the sewer line. 

Side note: The copy I had already received of the invoice from this same plumber said there is an offset in the line and it needs to be repaired. Also I have a DVD copy of the sewer scope from my guy showing the offset with standing water. 

Needless to say I was very disappointed in hearing this, but the plumber said he would do no such thing and that there was a problem that needed to be fixed. He proceeded to explain to her the potential problems that could arise from not addressing this. After his lengthy explanation to her about this I guess this was when she saw the light. This led us to her change of heart this morning.  

Once I heard this entire explanation I was completely turned off by her attempt to fleece us, and I decided to terminate. Plus his quote was at minimum of $6,000.00 due to the location of the hole being under the street and curb. 

I understand ones attempt to make money, but to ask a contractor to flat out lie is really underhanded. I was pretty upset about this, because it would never cross my mind to treat anyone in such a fashion. My nature is complete honesty no matter the consequences. My profession requires the same, I'm an aircraft mechanic and I have people's lives in my hands. I know that this is far from a life or death situation so I shouldn't take it so hard, but as we are trying to complete our first deal this is a real turnoff.  

Thank you for allowing me to vent.

Also again thanks for all of your time. This has been a real learning experience for us.  

@Andrew Emery

I would have done the same thing.  At this point, she could come back and say she'll pay to fix it and even lower the price as well and I'd still walk.  What else could she be lying about?  

I don't believe in rewarding dishonest people and I'm glad to see that you are not doing so.  Good for you!

@Andrew Emery

 Congratulations on sticking with your principles. If the seller tried to hide this, who knows what else they are hiding. Good luck finding your next deal!

Originally posted by @Andrew Emery :

Here is the final update on this potential deal: We walked! Here's what happened:

Our realtor called this afternoon and said we have an offer from the seller to credit us $2,500.00. I said great, this is a step in the right direction. So I told her let us get an accurate quote prior to signing the agreement. After having read the posts on this thread I realized this could get expensive quickly. I called the plumber that the seller has been working with because I figured he would be most familiar with the situation and therefore get us a quote fairly quickly. What he told me when I called was a real eye opener. He said that he had been trying to get ahold of the seller to let her know of what they found since last Wednesday. He was finally able to get ahold of her this morning. He said that when they spoke she asked him to rewrite the invoice to reword it in such a way that it would essentially state that there wasn't anything wrong with the sewer line. 

Side note: The copy I had already received of the invoice from this same plumber said there is an offset in the line and it needs to be repaired. Also I have a DVD copy of the sewer scope from my guy showing the offset with standing water. 

Needless to say I was very disappointed in hearing this, but the plumber said he would do no such thing and that there was a problem that needed to be fixed. He proceeded to explain to her the potential problems that could arise from not addressing this. After his lengthy explanation to her about this I guess this was when she saw the light. This led us to her change of heart this morning.  

Once I heard this entire explanation I was completely turned off by her attempt to fleece us, and I decided to terminate. Plus his quote was at minimum of $6,000.00 due to the location of the hole being under the street and curb. 

I understand ones attempt to make money, but to ask a contractor to flat out lie is really underhanded. I was pretty upset about this, because it would never cross my mind to treat anyone in such a fashion. My nature is complete honesty no matter the consequences. My profession requires the same, I'm an aircraft mechanic and I have people's lives in my hands. I know that this is far from a life or death situation so I shouldn't take it so hard, but as we are trying to complete our first deal this is a real turnoff.  

Thank you for allowing me to vent.

Also again thanks for all of your time. This has been a real learning experience for us.  

As part of your REI education, be sure to follow what happens to this property. What's the final selling price?

I see a lot of buyers really get hung up on the principal of this that and the other thing.  $5K-10K for sewer repair in a hot appreciating areas is a no brainer.  You buy it, fix it, and it's worth more and more easily sell-able next month.  Or you can hold out and cancel your offer, knowing you're not getting screwed.  Yay.  :)

What kind of percentage are we talking here when it comes to sewer?  What's the purchase price?

Yep, in most of Florida we deal with sand...a lot easier to excavate/backfill/compact than the Colorado rock.  Then again, when it's more than 4-5' deep, we're working in the water, in south Fl.

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