Home Inspection Dilemma - 24 Hours to Decide (pics included)

Buying & Selling Real Estate
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Home Inspection Dilemma - 24 Hours to Decide (pics included)

Jesse Petrillo
Lender · Plantsville, CT · Member since 2017 · 15 posts · 6 votes

Hello all,

I'm in the process of purchasing my first single family rental property as a long-term buy and hold. I'm located in CT and purchasing in the Atlanta area, so I can't see the subject property in person. I received the inspection report today and everything was good, except for a structural concern pointed out by the inspector on the right side of the property. My inspection contingency date expires tomorrow, so I want to make a decision on this quickly.

I'm not familiar with concrete block foundations. Therefore, I wanted to share photos from the inspection report and ask for your opinion. The inspection recommends grading the land next to the property and installing a gutter extension to prevent further washout and settling. I'm okay with all that, but unsure how concerned I should be with any damage that has already been done.

The inspection report also recommended a structural engineer inspection due to the foundation recently settling from extensive rain. I've asked the realtor to ask the seller to order a structural engineer inspection at their expense and extend my inspection contingency, but I'm preparing myself if the seller doesn't agree and I need to make a 'take it or leave it' decision tomorrow.

I also want to mention the full appraisal was completed last week and there was no indication of any foundation issues/concerns within the appraisal report. There was also an older inspection that was completed about 7 months ago, and no mention of any foundation issues/concerns within that report either. So maybe this isn't as big a deal as I'm making it out to be in my head, but nonetheless I wanted to share these photos and hear your thoughts.

Thank you in advance for your feedback! It's much appreciated.

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
9y

It's pretty typical for any structural potential issues for a home inspector to day get the opinion of a structural engineer when they know there is likely no problem. It's a way to limit liability.

If you buy site unseen....you are going to run into this same issue over and over and over again. Inspectors are going to point out potential problems that they know are likely not an issue and refer you to structural engineers, electricians, plumbers, etc. 

And I'm not saying this is ok or bad on this house, but just that this will be similar to what happens on subsequent properties. So you will really have 2 choices....take a leap of faith at some point or start seeing the properties in person.

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  • Kevin Coleman
    Investor · Chicago, IL · Member since 2014 · 143 posts · 37 votes
    9y

    I doubt the seller will pay for the inspection, I wouldn't.  However they may grant you an extension so you can order an inspection. 

    1Reply
  • Jack Clough
    Flipper/Rehabber · Wilmington, DE · Member since 2016 · 80 posts · 75 votes
    9y

    If the seller doesn't agree then I'd walk. If they want the deal then they'll come back to you. I think they'll agree because the report is out there now and they are required to disclose the issue so they are going to have to deal with this with the next buyer anyway.

    BTW why was there an inspection 7 months ago? Was it under contract w someone else and the deal went south? And if so then I'd want to find out why.

    0Reply
  • Jonathan Jewell
    Investor · Bensalem, PA · Member since 2011 · 146 posts · 93 votes
    9y

    So many obvious questions are popping into my mind, too many to even list here.  

    This looks to be a mobile or modular home on a cinder block foundation.  Thats not bad thing, but if the inspection report is noting its sinking, then yeah it has either settled or shifted, and grading is one fix.  Grading can be very expensive though.

     You are also out of state, this is your first deal, and you have for whatever reason 24 hours to decide.  IMO you should walk from the deal, otherwise you'll be on BP in a few short weeks asking people how do you get yourself out from under this nightmare.

    Why not buy something closer to home, that you can keep an eye on if something were to happen?  

    0Reply
  • Andrew Johnson
    Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
    9y

    @Jesse Petrillo So this isn't a really detailed answer but:

    First Purchase + Structural Concern + Never Seen In-Person + 24 Hour Deadline = YIKES!

    Pretty simple equation.  The gutter extension piece of it is easy.  You can get those at Home Depot that funnel water a few feet away from the property.  Grading is another matter entirely.  Is it your land that's next to the property?  If not, are you going to have to dig/build some sort of french drain?  

    If this is a mobile/modular home as @Jonathan Jewell noted I'm going to go out on a limb and say it's not very expensive.  Putting money into fixing whatever might have happened with the settling already and adding the cost of grading/drainage might have you tick over past your comfort price on the property.

    On a side note, who gave you the inspection from 7 months ago?  Why was it inspected?  Owners don't usually do that randomly for fun.  I'm almost forced to ask:  If another sale fell through 7 months ago, a.) what's it still doing on the market, b.) what did they learn (if not this aspect) that you don't know about the property.  If the owner had an inspection because they thought the home had settlement issues (and the inspector found nothing) why did they think there was an issue to start with?

    These side note questions are more idle paranoia on my end but unknowns like that just keep increasing the risk quotient little by little...    

    2Reply
  • Jesse Petrillo
    OP
    Lender · Plantsville, CT · Member since 2017 · 15 posts · 6 votes
    9y

    @Jack Clough, thanks for your feedback. I'm leaning towards walking away from the deal if the seller doesn't cooperate. That would be unfortunate, especially considering I already spent $675 on the appraisal which is obviously nonrefundable.

    @Jonathan Jewell, it's not a mobile home and I don't believe it's a modular home either, but maybe. It was built in 1999 as part of the Brookfield Village HOA subdivision in Douglasville, GA.

    The reason I have 24 hours to decide is because I locked into a 20-day inspection contingency when the P&S was fully executed on 5/31 which gives me until tomorrow, 6/20. The inspection was originally scheduled for last Saturday 6/10, but had to be rescheduled to this Saturday 6/17 due to a conflict. I received the completed inspection report today.

    The reason I don't want to buy here in CT is because everything is so expensive and it's difficult to find positive cash flow. Plus, CT has it's issues right now (declining population for example) whereas Atlanta is a great market with a lot more potential in my opinion.

    @Andrew Johnson, I studied the land plot map on the town's website; there is a decent amount of land on all 4 sides of the home. It's a 1,072 sq. ft. home on a 0.30 acre lot. Unfortunately, I don't have the details on what happened in November when the first inspection was completed. The home is owned by Tricon American Homes. They probably tried to sell it in November and had an inspection done at that time. They probably didn't know about the settling since they probably haven't been at the property themselves, and it didn't come up in that inspection. But if they did the November inspection because they wanted to sell, then I don't know why it didn't end up selling. I can try to find out.

    1Reply
  • Jonathan Jewell
    Investor · Bensalem, PA · Member since 2011 · 146 posts · 93 votes
    9y

    @Jesse Petrillo  If the inspection report was delayed I would ask for an extension, its only reasonable.  Looks like your doing all your homework, your going where the money is but time isn't on your side. 

    Ask for an extension and be firm about it, if they balk...WALK, especially if its under 30 days.  If its meant to be it is, if it falls through the Universe is doing you in a favor, look at it from that perspective. 

    The only thing I wish to add, if at all possible go look at the home in person.  Maybe there is a horrendous mold smell thats not on the report, or the rabid dog that's barking 24/7 across the street.  I once walked into a home with a bad gas smell.  The stove pilot was out, but the inspector I had with me couldn't even smell it!!!  You just never know.  

    Honestly, God bless all you guys that buy these out of state places and not actually set foot inside the property.  I don't know how any of you do it.  I have to see and smell everything just for my own piece of mind. 

    Also again just an FYI to Jesse, Tricon American homes, doesnt have very good reviews,  actually they are in the toilet, lots and lots of 1 star reviews in all their locations.   Just be careful man, hate to see you get jammed up.

    1Reply
  • Jesse Petrillo
    OP
    Lender · Plantsville, CT · Member since 2017 · 15 posts · 6 votes
    9y

    @Jonathan Jewell, thanks for your reply. I browsed through some of the reviews on Tricon, and I agree, the reviews are not so great. However, the reviews I read were all related to the property management aspect. I won't be using Tricon for my property management; I already have a different company lined up for that.

    I'll see how tomorrow plays out. Ideally, I hope the seller will agree to pay for an engineer and extend the inspection contingency. And I hope the engineer's report indicates normal settling with no major concerns other than installing a gutter extension and some land grading as noted in the inspection report. If that's how this plays out, then I'll continue with the purchase.

    If however, the seller isn't willing to cooperate, then I'll probably back out, cut my loss at the $675 appraisal fee, get my EMD returned and move on. I'm not going to pay another $500+ out of my own pocket for an engineer, only to then find out there is a significant issue that requires a repair larger than I'm comfortable with!

    1Reply
  • Account Closed
    Johnson City, TN · Member since 2014 · 586 posts · 705 votes
    9y

    I would NEVER, NEVER, NEVER buy a property I have not seen in person. Of course I guess people still get mail order brides. 

    5Reply
  • Bob B.
    Investor · Jasper GA · Member since 2015 · 1k+ posts · 1k+ votes
    9y

    @Jesse Petrillo

    What's the purchase price?

    How much rent are you going to charge?

    Do you have a management company yet?

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    9y

    It's pretty typical for any structural potential issues for a home inspector to day get the opinion of a structural engineer when they know there is likely no problem. It's a way to limit liability.

    If you buy site unseen....you are going to run into this same issue over and over and over again. Inspectors are going to point out potential problems that they know are likely not an issue and refer you to structural engineers, electricians, plumbers, etc. 

    And I'm not saying this is ok or bad on this house, but just that this will be similar to what happens on subsequent properties. So you will really have 2 choices....take a leap of faith at some point or start seeing the properties in person.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
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    6Reply
  • Jesse Petrillo
    OP
    Lender · Plantsville, CT · Member since 2017 · 15 posts · 6 votes
    9y

    @Bob B., it's under contract for $89K and the current tenant is paying $884/mo. I'll be using Excalibur for property management. Are you familiar with them? Do you have any recommendations? Thanks!

    0Reply
  • Andrew Johnson
    Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
    9y

    @Jesse Petrillo For what it's worth you're giving a lot of "benefit of the doubt" to a company with a lot of 1-star reviews!  The real challenge is that if you're agent asks, they're asking a representative of a company with 1-star reviews, that had a sale fall through, that hasn't had another buyer in 7 months, in a real estate market that has been on the rise for about a decade.  I don't want to be overly negative but are you sure this isn't a property that 100% of the locals (that have see it in person) have yawned at for 7 months?  That the one buyer (you) they have is out of state and hasn't seen the property face-to-face?  

    So play the story back and pretend you're the local.  I'm sure you can think of a property that's been on the market for 6-7 months.  I know there are a few saved on my Trulia Boards that age and age and age.  So let's take that hypothetical property that you know about, have seen on the market for 7 months, that you (and all of the other locals) have passed on, and it sells to some guy in California (like me) who has never seen it face-to-face.  Would you think I'm a savvy out-of-state investor seeking better cash-flow than San Diego or that I was a sucker?

    Now all of this assumes it was marketed for the last 7 months (you haven't said how you found the deal) that people have passed on it for 100 reasons, etc.  So there are a lot of "negative" assumptions that I'm making.  Maybe it's fair, maybe it's not, but play the story back as I've suggested and see how you would categorize the buyer.

    5Reply
  • Bob B.
    Investor · Jasper GA · Member since 2015 · 1k+ posts · 1k+ votes
    9y

    @Jesse Petrillo

    It looks to me that you are paying retail for a property that might not be a retail property.

    Having a drainage issue is one thing, a foundation problem is a whole new ballgame.

    Has your PM looked at the property?

    If so, what do they say about it?

    1Reply
  • Jesse Petrillo
    OP
    Lender · Plantsville, CT · Member since 2017 · 15 posts · 6 votes
    9y

    @Andrew Johnson, if the property was listed, then I would agree with you 1,000% and would have passed on it completely. I meant to say this earlier and forgot to, but this is an off-market sale so the vast majority of people don't know it's for sale. The last time it was listed on MLS was back in 2010.

    @Bob B., I agree with that and it's a good point. I doubt I'll move forward with this property if the seller won't pay for an engineer. If they do, and the repair cost is going to be significant, at that point I still wouldn't move forward with this property unless we renegotiated the purchase price to offset the cost of the repair.

    Thanks for your recommendation of asking the property manager to check it out for me. I hadn't thought about that yet, only because this is my 1st property and I technically don't have a relationship with them yet. But I would assume they would still be willing to make a trip to the property for me, if they really want my business.

    0Reply
  • Bob B.
    Investor · Jasper GA · Member since 2015 · 1k+ posts · 1k+ votes
    9y

    @Jesse Petrillo

    There are a lot of posting from out of state investors having their first deal not being a "good deal"

    I would have a hard time investing without seeing the area and the property.  

    Good luck and if this one doesn't close, you've gained some knowledge.

    0Reply
  • Christopher Meis
    Vendor · Norwood, MN · Member since 2016 · 55 posts · 27 votes
    9y

    Is this property slab-on-grade? It looks to me like there is a parging coat over the block that has cracked along the mortar lines, and a long horizontal crack between the block and the slab. It is that top horizontal crack that concerns me, the slab should not separate from the block like that. I am less familiar with construction methods in Atlanta, does anyone know how deep the footings go down? In MN they go down four feet for frost footings in slab-on-grade, that is a lot of support to buffer movement caused by water at the foundation. If your footings are shallow, there is a much greater chance of movement. You might try calling your home inspector back and grill him for a stronger opinion of what happened and how serious it is, you could also try calling a structural engineer and see if they will give you an unofficial opinion over the phone. Good luck!

    1Reply
  • Jesse Petrillo
    OP
    Lender · Plantsville, CT · Member since 2017 · 15 posts · 6 votes
    9y

    @Christopher Meis, those are some really great suggestions. Thanks! I don't know how deep the footings go down. This is a crawlspace foundation. 

    0Reply
  • Kevin Coggins
    Spring, TX · Member since 2016 · 243 posts · 203 votes
    9y

    seems like an awful not of risk and based on the numbers you've posted it doesn't seem like an amazing deal

    0Reply
  • Christopher Meis
    Vendor · Norwood, MN · Member since 2016 · 55 posts · 27 votes
    9y

    @Jesse Petrillo So crawlspace foundation, did your inspector enter the crawlspace? Was it wet? That horizontal crack at the top of the block could be a sill plate covered by the parging coat, that would be pretty much guaranteed to crack when the wood swells and contracts. The visible cracks through the parging coat are where the block mortar joints have cracked, that is an indication that water is present at the foundation (Which you knew). Looks like heavy tree cover, the gutters are probably clogged and overflowing. If the crawlspace was dry and the blocks have not shifted their actual position, i.e. settled, then you might be able to just have the block re-tucked by a tuck pointer. I would offer one more suggestion if you can fit it into your time widow, google "foundation repair contractor" in that area and see if you can get one to drive by and call you. Most contractors will give free estimates if they think they are going to get the work.

    5Reply
  • Jesse Petrillo
    OP
    Lender · Plantsville, CT · Member since 2017 · 15 posts · 6 votes
    9y

    @Christopher Meis, thanks a lot. All good feedback! I'll know more tomorrow and will update this thread. 

    0Reply
  • Amy Webber
    Investor · Simpsonville, SC · Member since 2016 · 135 posts · 73 votes
    9y

    We live in Greenville, SC about the same as Atlanta (no guarantee though).  Frost line here is 12 inches.  The slap 'em in builders don't go much deeper than that around here.  

    The husband finished repairs on 15 feet of rotted sill plate, two bad piers and a cracked support beam today.  Not fun.  Not cheap.

    1Reply
  • Cody L.
    Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
    9y

    Lot of risk for a $90k house that rents for under $900/month.  You can find tons of homes in Houston for under $100k that rent for over $1k/month and they don't seem like they're going to break in half.

    I'd pass on the deal.  Not becaues of the issues (everything can be fixed), but because you're paying a price:rent ratio that would suggest the property is ready to go.

    What I would do?  Tell them you need another 30 days on your EM, and you want to drop the price by $11k.  yes, $11k.  See what they say.  If they say "no" and you really want the deal, just keep the deal.  My guess is they'll counter.  You'll save at least $5k.  Take the wife on a nice trip and drink one for me. 

    2Reply
  • Andrew Emery
    Rental Property Investor · Colorado Springs, CO · Member since 2014 · 60 posts · 30 votes
    9y

    Just my two cents. I am by no means a seasoned investor. I have however walked away from two deals, they would have each potentially been my "1st" deal. The 1st of the two the chimney was separating from the house, SFR, and who know how much that would have cost to fix, found during inspection at a cost of $350. Second deal was a duplex that bad sewer line out to the main city sewer. The seller tried to lie about it and my realtor at the time who is no longer my realtor got mad at the plumber who told me the truth and called him and gave him an earful because he had informed me. This cost me about $600 in inspection fees. So total I invested almost $1000.00 and had no deals, however, now I also don't have any headaches that may have come with either of those two deals.

    I took about 8 months off from looking then I ended up finding a little gem in the rough.

    The thing I have learned here from BP, and life, is to go with your gut. If you don't trust it walk. No harm in this. The money you are out for the appraisal and inspection are just part of doing business. This money spent could possibly be saving you thousands upon thousands of dollars in potential headaches later on. One suggestion is to partner up with a local in the area who might be on BP and try to sort something out on a future deal. People on here are beyond willing to assist, especially if it means maybe partnering on a deal. Remember half a deal is better than the whole of a no deal. Also don't rush it. There will always be more deals.

    Good luck friend. Keep us posted. 

    4Reply
  • Dave Charlton
    Investor · Highlands Ny · Member since 2017 · 24 posts · 1 vote
    9y

    I would have to skip it take the lose. For you to be investing so far away and to only get a 1% deal on that the risk is to high for so little reward. It is pretty easy to find 1% or better deal in Greenville or Spartanburg sc

    0Reply
  • Christopher Meis
    Vendor · Norwood, MN · Member since 2016 · 55 posts · 27 votes
    9y
    @Amy Webber Thank you for your input, that really changes the perspective of the findings. A one foot deep foundation will not stand up well when the surrounding area is saturated.
    0Reply
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