Need advice - plumbing issues in the inspection report

[Gorden Lopes]

Hi fellow members!

Things moved really quickly for me since I introduced myself in the BP forums couple of months back. I have put a house under contract and currently in due diligence phase. The house was listed for 120K and my accepted offer was 100k, the bank appraisal came at 5k. I had a contractor who quoted me around 8k of work needed to get this house rent ready. The house was there on the market for close to 300 days.

We got the inspection report and it showed that there is a plumbing issue (leak from the master bathroom, see attached pic), which looks like a red flag to me but my realtor (might be biased to closing this deal) has asssured that this is not a major issue and can be fixed.

I have requested the seller to fix the leak plus bunch of other minor stuff in the request for repairs. The seller has come back saying he will fix just the bathroom leak issue and not the other issues listed.

Now, there are multiple options that I have and I need all of your insight and suggestions

1. Walk away from these deal as one plumbing issue is a good indicator that there might be more hidden plumbing issues which can lead to this house being a money pit. I am ok to walk away from this deal.

2. Negotiate with the seller and reduce the offer price by taking into account the cost of replacing the entire plumbing (got a qoute of 5K from a independent plumbing contractor for replacing most of the plumbing).

I would really like to know from the experienced folks here in the forums what would you do in this situation or what would you recommend I do in this situation?

-Gorden

) 

[Derek Dombeck]

@Gorden Lopes

The answer lies in the cashflow analysis. Will the property reach your ROI and cashflow goals if you have to spend more money than you planned after closing? If not, adjust/ renegotiate your offer or walk away. Do Not do the deal if it doesn't accomplish what you want. It is that simple.

Where I live, a plumbing leak is not a big deal. But most of our piping is exposed in a basement. If your plumbing is in concrete, I would be more concerned as well.

Happy Investing

Derek Dombeck