Leaky Pipes...Deal breaker or no?

Question

So I'm currently in escrow with closing set for two weeks away...I had the property inspected about a week ago and am now out of option period. The inspector did point out some evidence of water damage on the ceiling and stated it might be from the upstairs bathroom...it tested negative for moisture but probably bc the unit was vacant at the time. We also noticed repair work on the ceiling hinting that it may have been previously repaired and he stated that it probably was remedied.

Ok so fast forward to now...the unit is now leased as the current owner recently leased it. We received the new tenants move-in checklist from his agent and it states that water leaks from the ceiling when the tub is ran in the upstairs bathroom. Of course this is now a problem as closing day quickly approaches. My question is, has anyone ever dealt with a similar situation? My option is looking like hoping that the current owner fixes this tenants complaint within 7 days as it states he has to on the lease or just walking away from the deal. This problem will become my problem once we close.

P.S. I'm in Houston, TX and if anyone knows of a good plumber...send him my way. I may need one lol.

Brian Karr · Answer

@Max James Depends on the size of the house. We charge anywhere between 350-500. Then any samples are an additional cost. Without samples you can't validate any problems.

Also, the goal is to identify source areas of mold growth (in walls, under canbinetry, in the HVAC, etc). If someone is just going to take a couple air samples, then don't bother bringing them out. It'll be a waste of money.

Brian Karr · Answer

@Max James I personally do it at every property during the contingency period. General inspectors are not specialized enough to be depended on. It'd be like asking a primary doctor to diagnose cancer.

I've saved clients tens of thousands of dollars in what they would've had to pay in remediation by performing an inspection prior to their contingency period ending.

I'd recommend brining in a mold inspector on all properties for 2 reasons:

1) We are trained and know what to look for

2) It can save you a lot of money in your negotiations. If you get a mold report that identifies several issues in the home, you could use that as leverage to bring down the purchase price. The other thing to keep in mind is once a mold report has been filed, it MUST be disclosed to future buyers (at least in CA). That's a major turn off for people. So not only can you negotiate the price down, but you can use it as leverage for them to sell to you at that lower price. In my mind that's money well spent.

Max T. · Answer

Sounds like a fairly minor plumbing repair. Shouldn't cost too much. You may need to cut into the ceiling below which means you will have to take care of patching the hole and repainting the area once the plumbing is fixed.

Ramon Smothers · Answer

Thanks @Mark Nelsonthe only problem is that I won't be able to test the drain until after close. I wanted to get some insight as to whether or not this problem would be a deal breaker or not. The feedback I've received is pointing toward it not being that serious.

Max James · Answer

Brian, those are great points.  I think I will definitely get a mold inspection for my next home.  Like you said, people get freaked out when they find out there is mold in their home and if it's not going to cost all that much to fix, the seller would be wise to pay for it to be fixed.

How much can you expect to pay for a mold inspection during the contingency period?  Does $300 sound reasonable

Brian Karr · Answer

@Max James I actually like properties with mold issues, because they can get you a discount on the price... but I say that with the caveat that I firmly believe in proper mold remediation, and NO shortcuts (such washing things down with bleach, or painting over problems).

Max James · Answer

Good input @Brian Karr . So do you suggest everyone have a mold inspector come out to the property during the inspection period?  I believe those run around $300 at the minimum.  I agree though, if there is mold, the $300 is nothing compared to the remediation costs.

Do you just always do a mold inspection no matter what?  Or do you do a mold inspection if you see signs of water damage?  Or do you just try to completely avoid any property with any signs of water damage?

Thanks!

Brian Karr · Answer

My day job is as a certified mold investigator. 75% of my clients are sick in some way as a result of mold exposure.

I see far too often where people purchase homes that have moisture issues and they do not take them seriously. Then down the road they (or their tenants) start to get sick, or the leak/staining gets worse, etc., and the issue finally must be dealt with. This can be a big expense, as well as a legal issue if you're dealing with tenants.

I've seen the majority of investors I've come in contact with downplay water and/or mold issues, and it's really irresponsible. I give the benefit of the doubt assuming they just don't know any better. But as landlords we have a responsibility to provide healthy homes for tenants (and ourselves).

I personally budget mold remediation into my rehab expenses when looking at properties. Most people don't do this because it will hurt their numbers for the deal. But sometimes money isn't the most important thing. This is probably why I pass on many properties. What ends up happening is mold issues get overlooked or covered up, and the end buyer ends up inheriting those problems.

I could talk about this all day, but what I'd say is:

If there is a water leak, there is likely a mold issue as well. You should take that into account when making your decision.

Max James · Answer

Yeah that's the way to do it. The first property I bought, the sellers weren't even nice enough to fix a GAS leak coming from one of their stoves.  They even had a tenant in their... I had to go in and replace that stove right away, but that fixed it right up

Ramon Smothers · Answer

Thanks for the feedback @Max James the sellers' realtor has me on ice sort of until she hears back from the seller. I've alerted the realtor and the seller is aware of it so its in his court as to how he would handle it. Not sure if the current tenants have put a complaint in or not so I'm not sure if he's even required to fix it at this point. I hope the feedback I've gotten is right and I'll just go in the day after close and have it looked at.

Leaky Pipes...Deal breaker or no?

Most Popular Reply