Real Estate Investor · Steamboat, CO · Member since 2010 · 295 posts · 34 votes
I have a first deal under contract, and on the sewer scope it show cracks at the City Tap (city is not responsible for taps) and the first person to view the property noticed that there is some blocking put in place under the floor joists to level it out and that another floor joist was cut almost all the way through when gas furnace venting was later installed.
Replacing the sewer line costs 10k and I am estimating 5K to put some piers under the flooring as the structural company can't come out for two weeks and the inspection deadline date is in three days.
It is an inherited property without debt, and I have more showings scheduled before I can go to renegotiate with the seller. The price to my buyers is 175K. How can I mention this on my showings when I don't know the outcome with the seller about these issues?
I haven't done a renegotiation with a seller and also seek guidance on how to re-approach them on it. Maybe the contract should be rewritten if the renegotiation goes well? What a learning process this has been.
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
14y
If it were me, I'd stop showing it asap. If you continue to show it and get offers based on your $175K asking price, you'll have both the seller and buyers (also known as future customers) frustrated with you. Don't waste a buyer's time if you don't have to. Why not keep the damages to just the frustration and disappointment of the seller? :)
Was the inspection clause written into your contract? If so, tell the sellers you want to cancel due to your findings during inspections. Mention "sewer/main line repairs" and "foundation damage and repairs". Really, a house can have a lot wrong. Mold, no roof, whatever. But foundation issues and main line issues can be deal killers. The sellers may or may not be aware of the issues. I'm guessing they are somewhat aware. Tell them you know the property was gifted to them as an asset (it was!) but that it has issues that make it risky for you. Tell them that the original contract price was "fair" but that given the findings of the inspection you can only go forward with $XXX. Tell them to think it over and let you know their thoughts.
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
14y
I'm also wondering about your sewer repair quote. If the issue is cracks at the city tap, is that accessible at the street? Does your municipality require a full line replacement from street to house? Or can you just repair the tap and a certain number of feet away from the tap? IMO, a street accessible repair at the tap shouldn't be $10K. But again, it could be your muni. I know of one muni in CA that requires a full-on mainline inspection, by a city inspector, from street to house upon transfer to a new buyer. They don't allow repairs of the line prior to 1980 (something like 1980). Rather they require replacement of the entire line, by the transferee.
Real Estate Investor · Steamboat, CO · Member since 2010 · 295 posts · 34 votes
14y
I spoke to the neighbors across the alley today and they said they replaced their sewer line voluntarily due to multiple problems with their line, but that the next door neighbor was required to replace his line and tap by the city. Apparently they "scope" the main line periodically and require those with cracked taps, etc to replace the tap at the homeowners cost. When a homeowner doesn't do it, the city does it and places a lien on the house.
This tap is in the alley and accessible. The line is probably 50 years old and the house was built in 1890. Its in a desirable downtown area. The plumbing company indicated just the tap could be replaced, but it would seem wiser to do the whole line. A call to the city will likely be revealing. The seller did know of having to have the line cleaned periodically, and the scope showed it hadn't been cleaned in a while.
I have a copy of the DVD to show the seller. It sounds like I should take a copy of the Notice of Cancellation with me to the renegotiation, if it doesn't go well. I will try to meet with the seller the day before the notice deadline though. Giving the Notice at the meeting might be a little heavy-handed; I am not a pro at this.
Telling the seller that the contract was for a fair price with the information I had at the time sounds like a very good approach. Thank you for the suggestions, K. Marie Poe.
I'm not quite sure what to do about the showings, as they are already scheduled and cancelling without a clear explanation could also be damaging.
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
14y
If it were me, I'd call the seller asap and tell them that the inspections revealed some issues and that you'll need to cancel unless a different price can be reached. I wouldn't want to drop that on a seller in person as they need to time to digest that you won't be closing at their asking price.
Real Estate Investor · Steamboat, CO · Member since 2010 · 295 posts · 34 votes
14y
Telling them on the phone is great to know - I would be in shock too if I learned I would be receiving 15K or so less than I had planned on. I'm also glad the owner has no debt against the property.