Often I believe in not saying, “No I can’t!” but instead prefer to say, “How can I?” - How can I move forward with making an offer on an investment property with evident cracking?Home is in Metro Denver area, an up/down brick duplex with attached one car garage for each unit, decent size yard with mature trees.Really cute home that I immediately fell in love with.What I am not in-love with however, is the potential structural issues that come with this home.Thus I ask, “How can I move forward with making an offer on an investment property with evident cracking?”
This is a decision that gets a lot of different opinions and for some it is a simple, “Hell No!”I must admit, I am struggling a little on this one.We already made an offer on the home and the counter was decent, still keeping us below initial asking price.The offer was with indication that we would be doing an independent home inspection, always a smart idea.At first visit to property, there was concern on the diagonal/zig zagging lines in the walls, the few gaping holes where the stairs meet the home – evidence that the staircases had at one point pulled away/separated from the home.This cracking is by no means just settling, my limited knowledge of home construction was telling me, this here was a structural issue.But wait….. there’s more!For only $ABC dollar amount you get an additional potential mold issues inside walls.How do I know that?The existing tenants have mentioned separately (this is an up/down duplex) of smell of mold.This is not difficult to believe if in fact there are these obvious cracks on the home exterior.There is no doubt water/moisture is getting into the home and creating a condition for mold to grow.We had a structural engineer out to do our buyer’s inspection yesterday, report is due out later this evening (11/04/17).Verbal communication while on site, indicated a mutually shared concern over these cracks.The roof appears fine.A wall in the backyard will need replacing as the soil weight has almost pushed this wall over and it is only a matter of time before this thing comes falling over.Boiler may need replaced, windows as there is some clear cold.These are just concerns at this time but inspection report will lay all this out once received later today.I should have been a little smarter in not agreeing to a change in inspection objection deadline when it was presented by seller.My buyer’s agent and I should really have talked this one over, as I realize now that, it left us with only hours after inspection to come up with our inspection objection response and to be honest I will not have time to get bids for any of the extensive repair items which I do not doubt will be confirmed in the report received later today.Seeking any advice that you can give on the following:
- Would you proceed with purchase of the above detailed home?( I am happy to edit the above details to include any more information that the group needs).
- If you are brave enough to move forward, what would your counter with?i.e. What would be a reasonable discount request on a property looking at structural foundation repairs to include some re-grading to prevent repeat issues, potential mold treatment, window replacement (total 20 windows).I believe in being fair to both seller and myself and I keep hearing and reading (as I went online and started researching this as I wait to get inspection report), I keep hearing that in this market most homes will have some kind of foundation issues and that should not be a deal breaker.
- What other advice would you give.I do like the home, it has great curb appeal, but I believe in the say, “A home without a foundation is not a home”, so I do want to be careful not to be taking on a home that will leave me stuck with a hefty bill.
I plan on continuing to do my research throughout the day as we wait on the inspection report and will eagerly also await any comments that group members can offer to help me make my decision before 12midnight tonight.I hate to lose this home, but I also hate to take a risk that may leave me with a hefty bill down the line.Any comments will be appreciated, good, bad, ugly…… brutal honesty, I will take it all with gratitude.Thanks.
PS.There is a great post right here on Bigger Pockets, the Landlord&Tenant Forum that I was able to also find some great information on, titled, “Foundation Problems 101 -- Buying a Place With a Foundation Problem”.
Updated over 1 year ago
Have since walked away from the referenced deal, not worth the risk. Have since found something with a little less risk to it. Slightly more expensive but to be expected. :)
your asking a lot of questions without knowledge of the situation Ask the agent if they got a repair estimate on the foundation and then make an offer contingent on your inspections
I have since move on and away from this, thank you however for the input. I did get the inspection report and it was too much to take on. Thanks.
@Anna M. I know you have moved beyond this but on the chance that a similar situation comes up in the future I offer a few ideas.
If you are really serious about getting a property then you need to leave time to make an informed decision which it sounds like you have realized.
With regards to the structural issues and really any other noticeable property defects, if something is visible and obvious on the initial viewing then you should not expect additional price reduction after inspection. The cost to fix known issues should be included in the strike price or you should know that it's not a real issue. Either way, in most cases, you are not going to get a significant price reduction for visible issues based upon inspection.
You have probably figured this out now but you really wasted your inspection money and for sure your structural engineer money because you were not able to take that information and get bids from contractors to repair the items. You really have nothing to bargain with and limited additional knowledge to make an informed decision. I think you made the best choice by not moving forward but you really didn't gain much knowledge and spent a good bit of money. Just a little more time and some more legwork and you would have gained quite a bit of valuable information (real world bids on a real world problem). You could then use that information for future deals as well.
In my experience most properties with structural issues are not discounted adequately to cover the cost to correctly remedy the problem(s).
Not all structural issues are the same. Sure the crack in the porch looks terrible but if it has stopped moving and is safe, perhaps you could use the property for 50 years and have no problems with it. Verse a fresh small horizontal crack in a basement wall indicating that the basement wall has started moving which may continue to move until it is stabilized or the wall fails.
@Bill S. Thank you, that is very valuable information that I am definitely going to use as I continue my search. Learning they say comes with making mistakes, some of them expensive ones such as this one from the point of view of money paid to structural engineer to inspect the property. Yet it would have been more costly for me to move forward without that inspection and sometimes inspections reveal no issues, other times they reveal issues that are too costly to fix moving forward. As you indicate, some structural issues may appear to be worse than they are, others, really are worse than they appear, either way an inspection offers valuable information as it did here. The end report indicated a need for fixes, some just based on common knowledge would be a simple home depot run for supplies to re-grade so as to stop future problems, others, possibility of helical piers which just from structural engineers rough estimate as he did do similar work in the past, would have been a significant cost. So looking at my finances I had to make the choice and I decided that while fixable, I just did not have the money because I tend to share the thought on something you brought up that being, that, "In my experience most properties with structural issues are not discounted adequately to cover the cost to correctly remedy the problem(s)." Knowing this it would not make sense to move forward in my situation with limited funds as it is. It was definitely a valuable experience, a little costly but one that unfortunately was needed i.e. the inspection) to then decide what to do. What I should have done as you rightfully point out is to seek sufficient time to be able to get all necessary bids. Seems that in this market some sellers are looking for a quick sale and so may be a little unrealistic with deadlines, yet I cannot blame them for they may fear not being able to sale and prefer a buyer that will come in and be able to make a fairly quick decision. Overall, great input and certainly well taken. Thank you.
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