Seller Lied about Appliance Age

Rental Property Investor · Indianapolis, IN · Member since 2018 · 2 posts · 0 votes

I am going to try and keep this brief. Currently I am in negotiations to purchase a home. For reasons here nor there, I would like to back out of the deal.

One of the things we discovered during the inspection was the fact that the water heater was older than they disclosed (6 years old, said it was 3). So my question simply is, is this enough grounds to stand on to be able to get my earnest money back? Also the inspection fee and appraisal fee.

I appreciate any support!

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Russell BrazilBusiness Member

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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

If wanting to back out of a contract over a 3 year estimate of a water heater being off, then owning real estate really isnt for you. Aproximate value of problem here, $100.

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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
6y
If wanting to back out of a contract over a 3 year estimate of a water heater being off, then owning real estate really isnt for you. Aproximate value of problem here, $100.
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Lien VuongBusiness Member
Real Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes
6y
You would likely be able to back out if you did not waive your inspection contingency. Your costs are going to have to be something you eat. That’s cost of doing business. Sounds like a case of cold feet rather than water heater issues. Nonetheless, you have to do what you feel is right in your gut.
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Michael King
Rental Property Investor · Navarre, FL · Member since 2019 · 913 posts · 640 votes
6y
Good luck on getting your EM back, let alone your other fees.
I had a lawyer back out on buying my residence in Texas a few years ago. I let him have his EM back no prob. Then he decides he wants his $1200 for inspections back, and I have 14 days to pay or expect a summons. Ummm nah pal.
There is an understanding that the fees of inspections and appraisals are your choice to ensure you have done your due diligence. There's no requirement other than the bank ordered appraisal, but that's got nothing to do with the seller. If you were paying cash you would have the choice.
If the water heater is the problem, wow really? For the sake of a $600 appliance you are prepared to step back from an incredibly lucrative and satisfying journey? Sellers lie, you're lucky it was just that, and I guarantee you, they didn't lie intentionally. I bet they were guessing. Why would they lie about 3 years on a water heater???
I'd say you've got cold feet and you feel like you have an out based on the sellers disclosure. I'll bet tomorrow morning you'll have an amended one and there goes your argument.
8 Reply
Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
6y
Ps. You certainly won’t get any fees back, the seller didn’t get them, the people you hired did. But as Russell said, you’re going to want to invest in something other than real estate. I couldn’t tell you how old any of my water heaters are, I wouldn’t even know where that would be disclosed.
If this is truly the reason you want out, PLEASE, Take the loss and try investing in something else. If you’re asking if it’s ok to lie and say that’s why but you have another real reason, talk to your realtor, maybe, possibly you could get your earnest money back but the fees are a VERY cheap lesson.
5 Reply
Adriel Hsu
Investor · Beaumont, TX · Member since 2016 · 171 posts · 277 votes
6y
You'll learn soon to just eye ball appliances and make a judgment call to add into your rehab budget or not. You shouldn't back out over a 6 year old water heater that will probably last another 6-10 years.
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Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
6y
@Account Closed As others said, you might get your deposit back, but you can't expect the seller to pay for your fees. Look at the inspection report and if there are items there, simply back out due to the inspection not being what you expected.
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John Teachout
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
6y
Were they deceptive on the age of all the appliances or just the water heater? And how do you know it wasn't installed 3 years ago from new old stock? This is a pretty minor situation as water heaters are pretty inexpensive compared to many other items. New ones are $400 to $500 plus installation. Vs an HVAC system that might run $5000.00. If the rest of the inspection seems like the place is solid, go ahead and move forward.
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Mike CumbieBusiness Member
REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
6y
Your contract will dictate on if you can get EMD back. On our contract it would depend on how far along you are and what contingencies you have signed off on. Your lawyer is your best advice.
In my area appraisals, inspections, time etc are all part of your costs. You could sue for them I suppose (never seen it done myself) but I would hope you have proof of installation date and "knowledgeable misrepresentation"
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6y
Originally posted by @John Teachout:
Were they deceptive on the age of all the appliances or just the water heater? And how do you know it wasn't installed 3 years ago from new old stock? This is a pretty minor situation as water heaters are pretty inexpensive compared to many other items. New ones are $400 to $500 plus installation. Vs an HVAC system that might run $5000.00. If the rest of the inspection seems like the place is solid, go ahead and move forward.
we dealt with this in new construction with some furnace's that were manufactured a few years ago but with the recession they did not get installed so they were new in the box but manufacture date was old.. had a few buyers agents bug me about it but we just blew past it .. I bought a killer Wolf range in 2006 then the economy crashed I had it in my Hanger until 5 years ago.. it apprecaited over 10k during that time.. and it works perfect.

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Aaron Mazzrillo
Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
6y
I've heard of people getting cold feet, but using the age of appliances as an excuse to mask fear?... That's a new one to me.
6 Reply
Mark Fries
Contractor · Jacksonville, FL · Member since 2017 · 1k+ posts · 2k+ votes
6y
@Charles Leonhard
So basically you made an agreement to purchase real estate when you shouldn't even be in the business of purchasing real estate and now you want to blame it on a water heater?
4 Reply
John Teachout
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
6y
Apparently someone hurt the OP's feelings as it appears they're "gone". From their perspective, they did get leaned on a bit harshly for asking a newbie question and no one else really knows their motives for thinking this was a big issue. Perhaps they feel like they were deceived about a little thing and likely big things too. They did indicate in the OP that there were "other" reasons and they were wanting to know if this appliance issue was adequate leverage to pry them out of the deal.

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Joe SplitrockPro Member
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Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
6y
Did the seller lie or did they make an honest mistake?
Most purchase agreements are written such that you can back out of any deal based on inspection findings within a certain period of time. You should be able to get the earnest money back, but not the inspection or appraisal fees.
I would not disclose the inspection reason. If you tell the seller it is due to age of the water heater, they are likely to just offer you a concession equal to the prorated value. A water heater lasts 7-15 years and costs about a $1000 installed, so at most this is worth $428. ($1000/7*3).
If you are backing out for "other reasons" then just be honest and let the chips fall where they may. Trying to use false pretense to get back your inspection and appraisal fees is kind of a chump move.
3 Reply
Michael King
Rental Property Investor · Navarre, FL · Member since 2019 · 913 posts · 640 votes
6y
@John Teachout I guess if he couldn't handle the truths he might not have made a good investor. I think Robert Kyosaki would refer to him as "Chicken Little". This is not for everyone.
0 Reply
Dennis M.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
6y
A water heater is 400 bucks lol definitely shouldn’t be investing if you can’t honor simple commitments . this poor fella likely lives in his mother’s basement looks like Napoleon dynamite and plays video games all day .
2 Reply
Stephen Robertson
Rental Property Investor · Lubbock, TX · Member since 2010 · 55 posts · 17 votes
6y
Ouch, some of these replies were a little harsh. While I don't disagree with the content anyone delivered, you gotta give people time to develop a thick skin. Most of us take a lump or two every once in a while, but that's the best teacher anyone can have.
OP did mention other reasons, but without that extra information, nobody can really provide an earnest opinion or adequate advice.
For what it's worth to anyone else who stumbles across this thread, I've found that the best way to increase your risk tolerance is to keep pushing it. Finishing up the biggest rehab I've ever done, now I'm on the hunt for package deals... pushing your comfort zone can become fun.
3 Reply
Dennis M.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
6y
@Stephen Robertson
I agree when things get tough push on and actually go bigger keep pushing the envelope and do it anyway
1 Reply
Pat L.
Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
6y
I agree with the replies. If the age of a HW tank discourages you, you need to reassess your reasons for going into this type of thankless investment & just keep your "day JOB".
Yesterday I drove an old friend to a job (he can no longer afford a vehicle). He once owned 4 duplexes but couldn't handle the mean & nasty tenants. Those same duplexes were taken over by another friend, rehabbed, pull great rents (that he now lives off) & the properties have doubled in value. Meanwhile my old friend, who gave up, is 58 years old & scrapping by on handyman jobs for $12-$15/hr. He spent a 30 deg day on someones icy roof tarping it for leaks for $120.
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Karen O.
NYC, NY · Member since 2016 · 617 posts · 456 votes
6y
Originally posted by @Pat L.:
I agree with the replies. If the age of a HW tank discourages you, you need to reassess your reasons for going into this type of thankless investment & just keep your "day JOB".
Yesterday I drove an old friend to a job (he can no longer afford a vehicle). He once owned 4 duplexes but couldn't handle the mean & nasty tenants. Those same duplexes were taken over by another friend, rehabbed, pull great rents (that he now lives off) & the properties have doubled in value. Meanwhile my old friend, who gave up, is 58 years old & scrapping by on handyman jobs for $12-$15/hr. He spent a 30 deg day on someones icy roof tarping it for leaks for $120.

Ouch!

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Frank Chin
Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
6y
Reminds me of a rental I sold.

I had it for 25 years, installed 2 new kitchens which looked great. At the time, the property was 65 years old, all the interior plumbing needs to be replaced. In addition, it's an attached triplex with water leaking from next store after heavy rains and it'll be wet a few days. Then I had a water main break, under the house which is on a slab, likely washing away some soil underneath, resulting in one side of the furnace room sinking half an inch.

I decided to sell when I priced the rehab costs. I underpriced it a bit by $50K, still good for me as the property appreciated nearly 4 fold. I placed in on the market to see what will happen.

A buyer was found, made his offer, almost asking, then bought a licensed home inspector who happened to be a friend and architect. They spent two hours and I watched. They went through the placed but was obsessed with the fire escapes, spending half the time looking at it, climbing up and down on it, finally saying it's not up to code. Then they explained what an up to code fire escape looks like. They didn't notice the sinking floor in the furnace room or asked about leaks evident from stains, or plumbing issues.

I was glad they didn't asked because it would've cost me big time to fix, the headaches, emptying out the building doing so perhaps, and I would've reduced the price further had they complained. Instead I was told that I had to reduce the price by $2K if I couldn't prove the fire escapes are up to code. I subsequently did, it was approved back in 1939 based on codes then and grandfathered.

Being in other businesses, I's sometimes amused when people get obsessed with the small stuff, and missed the big stuff.

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Sefa Demirtas
Rental Property Investor · Winchester, MA · Member since 2019 · 14 posts · 1 vote
6y
@Frank Chin Interesting confession. I am a newbie, so I may ask a naive question here. When is a seller legally obliged to disclose any such problems with the house they are selling? I sometimes see disclosures on listings, why would anyone do that if they can "possibly" get away like you did?
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Frank Chin
Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
6y
Originally posted by @Sefa Demirtas:
@Frank Chin Interesting confession. I am a newbie, so I may ask a naive question here. When is a seller legally obliged to disclose any such problems with the house they are selling? I sometimes see disclosures on listings, why would anyone do that if they can "possibly" get away like you did?

Back then, I'm not aware of any disclosure laws.

Since you phrased in as a naïve question, the NYC market is a little strange in the crazy way the values appreciate, and many buyers are caught up in it, where they bid above asking. This is so in the San Francisco market for many years where my brother in law offered $725K on a property listed for $700K only to be outbid by a $750K bid.

When the sale took place, in 2003, the up market still had 3 more years to run, till 2006, when a slight downturn came in 2007 thru 2009. In 2003, I placed the 3-plex on the market for $500K, below market, whereas comparable ones go for $550K. Several anxious buyers with offers showed up, but this one didn't go into why it's $50K less, I didn't volunteer why. If it was a normal market, either I confess this that and the other thing is wrong, or he would offer $100K less. He didn't ask, bargain and I didn't volunteer anything.

Turned out he did the right thing and so did I.

My alternate plan if buyers gave me a hard time, say offer $400K, I would take it off the market and do a gut rehab. I would probably throw $100K in to do it, which includes some vacancy. I bought the place in the early 80's for $150K, and for a $550K property, people offer up to $600K. I would rehab it, hold it another 20 years.

Why did I feel the buyer and I did the right thing? I had another 3 plex, needing rehab, sold it 2 years later for $720K although I got a high bid of $750K, and people were asking $800K. In fact, I wanted to list it at $699K for a quick sale, several brokers thought I was crazy, suggesting listing at $800K. I got this one for $180K and happy with just making $500K profit. This property is not that different from the one I sold in 2003, but the market had gone up 33% in two years. Finally, the broker I listed with is familiar with crazy markets agreed, list it for $699K, people will go crazy, bid over asking, and you'll get the market price. They did, all three top offers were over asking, and I got the offers within days of the open house. This property also had some plumbing issues but do you think people care if I mention it? No, now in that up market.

Now going back to my sale in 2003 where it went for $500K. If buyers are nervous with 65 year old houses, needing rehab, I'll follow my plan B, invest the $100K, and the value will be $750K to $800K in 2 years. Had I kept it till now, values have doubled since the last peak, duplexes and tri-plexes that went for $500K to $600K now go for $1.2 to $1.5 million. I know, I still own some, and several new ones blocks from me go for $1.9 million.

The buyer got a good deal at $500K, and if he kept it for 2 years, easily sell if for $200K more. At the time, I was busy with my budding IT career, my wife had a good career in finance, we had several other rentals, and to manage a gut rehab and manage rentals was way too much to handle.

Let me ask you, did the buyer who paid $500K and I both did OK given the circumstances?

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Sefa Demirtas
Rental Property Investor · Winchester, MA · Member since 2019 · 14 posts · 1 vote
6y
@Frank Chin Thanks for the perspective. My question was actually independent of the specific market conditions that may have made this transaction an OK deal for both the buyer and the seller. If the market was not like this, would you have mentioned the water damage?
I was just curious to see if there are laws against hiding problems that the seller is aware of regardless of whether the buyer will feel OK if they knew it. Why would anyone disclose anything other than feeling morally-obliged?
Thanks.
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Frank Chin
Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
6y
Originally posted by @Sefa Demirtas:
@Frank Chin Thanks for the perspective. My question was actually independent of the specific market conditions that may have made this transaction an OK deal for both the buyer and the seller. If the market was not like this, would you have mentioned the water damage?
I was just curious to see if there are laws against hiding problems that the seller is aware of regardless of whether the buyer will feel OK if they knew it. Why would anyone disclose anything other than feeling morally-obliged?
Thanks.
Once it's listed, it's in the hands of the broker to show and it's up to them to present information on the condition.
In San Francisco there is a disclosure requirement if any persons died on the property within the last 10 years. This is because of superstitions of many Chinese buyers. My brother in law was caring for my mom in law, she moved in with him when she was diagnosed with cancer, 6 months to live, he tried to move her to a medical facility, but died first due to the long waiting list.
But both here and San Francisco, brokers would take down info needed to meet disclosure requirements, and my position is I rely on their expertise. I don't want to get all worked up over moral requirements. One funny thing with the San Francisco requirement is the high number of Chinese buyers who believe in "ghosts" and that is important to them. So they would buy a property, see a ghost in it, check back and say, you mean someone died here and you didn't say anything and now I have to live with a ghost? I saw one last night. So in San Francisco, that requirement is on the checklist.
I wouldn't get worked up over ghosts. My brother in law now doesn't plan to sell his rental for 10 years at which point my mother in laws ghosts would find a place to move to.

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Victor S.
WorldWide · Member since 2016 · 1k+ posts · 1k+ votes
6y
this was probably a millennial trying to get their first home... and then we have threads on why they're still renting. you guys know how to scare them away...
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