10 day inspection period; seller refuses to make repairs

Rental Property Investor · Palm Bay, FL · Member since 2019 · 75 posts · 53 votes

Would like some advise here I’m under contract for a quadraplex, during the inspection period I had a property inspector find a few issues, damage to the ceiling from a prior leak , safety issue with the stability of a staircase , and mold in the laundry area. These were the major issues in my opinion. A contractor quoted $3500 to fix these issues which may be a bit high , but the seller came back and said he would contribute $500 to repairs. Is this something I should just deal with and fix myself or back out?

Backing out would cost me $900 for the appraisal I already paid for plus $525 for the inspection.

On a side note the roof was replaced at a cost of $6500 2 days ago at the sellers expense.

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Frank Wong

Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes

What's the cost of the deal? $3,000 does not sound bad at all. How about split the difference $1750? Besides all the costs you paid you to need to factor in your "time". How long did it take you to find this deal? Time working on it? For me, I'm never canceling a deal over $3,000.

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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
7y
If $3k makes it a bad deal, walk away. Otherwise it sounds like the seller agrees the quote is high (sounds very high to me) and they didn’t tell you to get lost.
If the $6500 roof was repaired after you were under contract of course I would still buy. Your offered price was with a used roof, not a new one that it now has. That’s worth at least $3k.
4 Reply
Kenneth GarrettPro Member
Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
7y
@Michael Henry
The seller is not required to make any repairs unless required by a state or local law. If the deal works with you absorbing the repair cost then it is your choice. If I thought the numbers worked then I would proceed. Of course, this is your opportunity to get out of the deal if you wanted to.
Good Luck.
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Michael Henry
OP
Rental Property Investor · Palm Bay, FL · Member since 2019 · 75 posts · 53 votes
7y
Originally posted by @Bill B.:

If $3k makes it a bad deal, walk away. Otherwise it sounds like the seller agrees the quote is high (sounds very high to me) and they didn’t tell you to get lost.
If the $6500 roof was repaired after you were under contract of course I would still buy. Your offered price was with a used roof, not a new one that it now has. That’s worth at least $3k.
I put an offer in with the expectation the roof would be done prior to closing. This was stated in the original listing.
$3k doesn’t necessarily make it a bad deal the tenants have not had a rent increase for 3yrs so there is plenty of meat on the bone, I would just prefer not to go into a property having to make major repairs.
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Matt CrusinberryPro Member
Hollidaysburg, PA · Member since 2015 · 327 posts · 350 votes
7y
@Michael Henry, You still have the option to lower your price/offer to meet the needs of these expenses. Also, if you have already run your numbers, the property still makes sense with these added expenses, then this should not be a hold up for you to continue to close. It comes down to whether this is an acceptable loss; either through what you've already paid or through what you're about to pay via fixes. I hope this helps, and good luck as you continue building wealth.
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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y
$3k does not make or break a deal.
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Frank Wong
Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
7y
What's the cost of the deal? $3,000 does not sound bad at all. How about split the difference $1750? Besides all the costs you paid you to need to factor in your "time". How long did it take you to find this deal? Time working on it? For me, I'm never canceling a deal over $3,000.
8 Reply
Matthew Paul
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
7y
It all depends on what the contract says .
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Mark H.
Richmond, VA · Member since 2016 · 215 posts · 129 votes
7y
@Michael Henry
Ask yourself this. Would you prefer to make the repairs yourself and have them be up to your standards or have the seller do it who just wants the do the minimum necessary to get past closing?
5 Reply
Michael Bissanti
Rental Property Investor · Providence, RI · Member since 2019 · 4 posts · 5 votes
7y
@Michael Henry
I’d think about it this way, it’s not worth walking away for such short money. In 10 years are you really going to care about this expense? Also, if you can raise the rents you will see this come back to you quickly.
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Anthony Wick
Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
7y
@Michael Henry
You didn’t state purchase price, but I imagine $3k difference on a 4 plex is not a big deal. Would you buy the place at $3k higher if the repairs were done? If you’re tight on cash you could raise offer and ask seller to make repairs. You’re essentially paying for them, but without the hassle and it rolls into mortgage. It’s a concept I used to have a new Hvac put in prior to close on one of my duplexes.
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Irina Belkofer
Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes
7y
Inspectors are expected to find problem to justify their fees.
If place is rented, then it’s already money maker. You still have to fix something since roof was that bad - there will be something to fix.
I’d take $500 and close rather than lose $1450 already spent.
The seller won’t lose much - the house get back on the market and will be sold with new roof probably on higher price.
I wouldn’t push my luck and try to split the difference. If seller get upset, your $1.5K get lost and you start looking for another deal.
All that correct unless you feel you’re buying above market and house is severely overpriced. Then it’s better to lose $1.5K....BTW, did you get 3 quotes or you presented the highest quote to the seller?
1 Reply
Randy E.
Rental Property Investor · Durham, NC · Member since 2014 · 1k+ posts · 1k+ votes
7y
@Michael Henry
If everything else about the deal is satisfactory to you, there is NO WAY I would allow this to stop me from buying this investment.
First, the quote is most definitely (probably) overpriced. Assuming the ceiling damage does not include rafters/joists and is only a question of replacing drywall/tiles, that should only be a few hundred. Mold in the laundry area might just be a surface mold problem which can be cured with a disposable breathing mask, some towels, and some bleach spray. The staircase problem seems like probably a loose railing issue, and if that is the case, that would only be a few hundred dollars (at most) to repair.
I would not allow the cost of those fixes to stop this deal. That the seller is pitching in $500 makes it all the better for you. Heck, the $500 might cover the cost of all the repairs if you're lucky, but it should be 1/3 to 1/2 anyway. And if not, as the others have said, $2K-$3K should not be the difference between a good deal and a bad deal.
Lastly, unless you're buying a property advertised as turnkey or new construction, get used to having to repair or touch up a few things immediately after purchase. That part of the game.
Congratulations on hopefully closing this deal!
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Khalid Bryan
Real Estate Broker · Fort Lauderdale, FL · Member since 2018 · 196 posts · 191 votes
7y
@Michael Henry despite the cost of repairs. How are the margins looking on the transaction? If this issue only slightly affect your margin but it’s still a good profitable investment. Someone else will likely take it and fix those issues. If you are unable to handle the repairs however it may be worth it to lose a couple grand and live to fight another day. Not all investments are meant to be won. Live by the concept that they might NEED to sell THAT property. But you can buy any property any where at any time. Don’t get too bent up over one in a million.
1 Reply
Matt M.
Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
7y
@Michael Henry
Take the $500. $3000 repairs isn’t much on a quad.
1 Reply
Kevin Mitchell
Member since 2019 · 24 posts · 12 votes
7y
@Michael Henry
You could also increase your offer to align with the repair costs and require the seller to fund the Same amount in an escrow account to be used for said repairs. Submit receipts for work completed on repairs and title company would disburse accordingly
1 Reply
Michael Henry
OP
Rental Property Investor · Palm Bay, FL · Member since 2019 · 75 posts · 53 votes
7y
Originally posted by @Anthony Wick:

@Michael Henry
You didn’t state purchase price, but I imagine $3k difference on a 4 plex is not a big deal. Would you buy the place at $3k higher if the repairs were done? If you’re tight on cash you could raise offer and ask seller to make repairs. You’re essentially paying for them, but without the hassle and it rolls into mortgage. It’s a concept I used to have a new Hvac put in prior to close on one of my duplexes.
This is a great idea after downpayment and closing close my cash will be minimal so I may try this method if all else fails.
0 Reply
James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
7y
Originally posted by @Michael Henry:

Would like some advise here I’m under contract for a quadraplex, during the inspection period I had a property inspector find a few issues, damage to the ceiling from a prior leak , safety issue with the stability of a staircase , and mold in the laundry area. These were the major issues in my opinion. A contractor quoted $3500 to fix these issues which may be a bit high , but the seller came back and said he would contribute $500 to repairs. Is this something I should just deal with and fix myself or back out?
Backing out would cost me $900 for the appraisal I already paid for plus $525 for the inspection.
On a side note the roof was replaced at a cost of $6500 2 days ago at the sellers expense.
You've got $3,500 in repairs. Selling willing to pay $500 towards them. Do you still like the deal at an increased cost of $3,000? I'd hope you do as $3,000 is an irrelevant sum of money on a 4 unit apartment building. If it makes sense at say $100,000 I see no reason why it wouldn't make sense at $103,000. If it doesn't deal was probably too thin for you to do anyway.
1 Reply
Chris Purcell
Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes
7y
Originally posted by @Michael Henry:

Would like some advise here I’m under contract for a quadraplex, during the inspection period I had a property inspector find a few issues, damage to the ceiling from a prior leak , safety issue with the stability of a staircase , and mold in the laundry area. These were the major issues in my opinion. A contractor quoted $3500 to fix these issues which may be a bit high , but the seller came back and said he would contribute $500 to repairs. Is this something I should just deal with and fix myself or back out?
Backing out would cost me $900 for the appraisal I already paid for plus $525 for the inspection.
On a side note the roof was replaced at a cost of $6500 2 days ago at the sellers expense.
Renegotiate and meet in the middle
What you said doesn’t seem major
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Bill Buzzell
Perry, GA · Member since 2016 · 46 posts · 21 votes
7y
Those are all minor repairs that any competent handyman could do for $500 or close to it. Mildew in a laundry room? Take a pump sprayer and spray some bleach. Five minutes. Sheetrock repair should be no more than $250 unless it is extensive with lots of areas to patch.
If the staircase is really bad, that could be an issue but if it just needs some bracing that should not be a big deal.
Sounds like you need to find a reasonably priced handyman.
3 Reply
Michael Henry
OP
Rental Property Investor · Palm Bay, FL · Member since 2019 · 75 posts · 53 votes
7y
Originally posted by @Bill Buzzell:

Those are all minor repairs that any competent handyman could do for $500 or close to it. Mildew in a laundry room? Take a pump sprayer and spray some bleach. Five minutes. Sheetrock repair should be no more than $250 unless it is extensive with lots of areas to patch.
If the staircase is really bad, that could be an issue but if it just needs some bracing that should not be a big deal.
Sounds like you need to find a reasonably priced handyman.
After a second opinion the itemized break down is:
Stair landing welding / brick repair $950
Laundry room door repair / change $500
Remove vegitation from building / stairs $150
Repair / repaint ceiling bathroom @ kitchen $1200
The deal - $152,500 quadplex , fully occupied $1,775/mo rent. All utilities paid by tenant
0 Reply
Chris Purcell
Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes
7y
Originally posted by @Michael Henry:

Originally posted by @Bill Buzzell:
Those are all minor repairs that any competent handyman could do for $500 or close to it. Mildew in a laundry room? Take a pump sprayer and spray some bleach. Five minutes. Sheetrock repair should be no more than $250 unless it is extensive with lots of areas to patch.
If the staircase is really bad, that could be an issue but if it just needs some bracing that should not be a big deal.
Sounds like you need to find a reasonably priced handyman.
After a second opinion the itemized break down is:
Stair landing welding / brick repair $950
Laundry room door repair / change $500
Remove vegitation from building / stairs $150
Repair / repaint ceiling bathroom @ kitchen $1200
The deal - $152,500 quadplex , fully occupied $1,775/mo rent. All utilities paid by tenant
$1200 to paint a bathroom come on
2 Reply
Victor S.
WorldWide · Member since 2016 · 1k+ posts · 1k+ votes
7y
Originally posted by @Michael Henry:

Originally posted by @Bill Buzzell:
Those are all minor repairs that any competent handyman could do for $500 or close to it. Mildew in a laundry room? Take a pump sprayer and spray some bleach. Five minutes. Sheetrock repair should be no more than $250 unless it is extensive with lots of areas to patch.
If the staircase is really bad, that could be an issue but if it just needs some bracing that should not be a big deal.
Sounds like you need to find a reasonably priced handyman.
After a second opinion the itemized break down is:
Stair landing welding / brick repair $950
Laundry room door repair / change $500
Remove vegitation from building / stairs $150
Repair / repaint ceiling bathroom @ kitchen $1200
The deal - $152,500 quadplex , fully occupied $1,775/mo rent. All utilities paid by tenant
is that the only repairs that the property needs? looks like a very nicely cash-flowing deal, especially if there is more upside to raise rents.
1 Reply
Mario Am
Specialist · Nashville, TN · Member since 2019 · 187 posts · 83 votes
7y
@Michael Henry take into consideration that replacing the roof can add more than 10k+ value on a property.
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Michael Henry
OP
Rental Property Investor · Palm Bay, FL · Member since 2019 · 75 posts · 53 votes
7y
@Victor S.
There was a laundry list of very minor items that were marked during the inspection but nothing that was immediately concerning. I’m proceeding with the translation despite the seller not fixing anything , awaiting the appraisal.
1 Reply
Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
7y
Agreed $3k shouldn’t be a deal breaker.....you could easily spend that on your first turnover.
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