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So, we found another house, and believe it or not, it has some structural damage! (the house we were gonna buy had structural damage that the agent did not disclose, so we backed out of the deal after a $600. inspection.) This house has a full disclosure and a structural engineer report. The report suggests about $25,000 to fix the damage. Its listed at 200K.
However, the selling agent has told my agent they will not deduct the cost of the repairs from the asking price. He said the repair costs are reflected in them already lowering the price. But we didn't see it at a higher price, and its already at the top of the comps, i don't think it may even appraise at that price. The comps are like 150 max., for a 1bd 1bth, which is what it is. But the selling agent is holding firm, he says the sellers will not give allowance for repairs.
I don't know what to do.
I really like this house, and it can probably be lived in without the repairs, for a while,
but I don't know how to either make an offer, or get a mortgage for it.
If I let it go, I think it will sell, because there is so little out there in that price range. And I can't qualify for a larger amount.I need to find something soon, as we have to be out of our rental in about 3 months.
How do I make an offer with the repair costs built in, and how do I get a mortgage for that amount?
I don't want a 203, because I have read so many people have had major problems with that kind of loan.
Aren't there any other kinds of loans that incorporate repair costs?
This is the second time we have come across this. I don't mind if the repairs were going to add value, like a new kitchen, but these are just repairs to the structure.
I'm worried that if we buy it, we'll never be able to sell it. It is a nice area, though, and it would still be one of the lowest price houses in the neighborhood.
There are all kinds of "structural damage" and each kind should be evaluated in the context of not just "how much it might cost to fix" BUT ALSO what sorts of information about HOW it occurred, WHAT your future requirements might you have to disclose these issues to future buyers and what implications there might be for things like INSURANCE and even day-to-day cosmetics...
Take, for instance, damage that occurred due to a serious error in constructing the foundation and/or main bearing walls. The "primary issue" might be estimated at $25K to deal with, like repouring the foundation or rebuilding structural walls, but will that address the appearance? Might it re-occur because there is unstable soil? Will that mean no insurer will write a policy without some kind of costly rider? When it comes time for you to sell will this be an albatross to scare all but the most bargain hunter buyers???
If you can pay cash and are contractor and can deal with the issue yourself and also "pretty up the place on your own time" that is worlds of different than having to BORROW to do the work, face contractors that don't want to get involved and end up leaving the place looking like it was patched together like a Frankenstein monster...
Thank you all, for your replies.
they were all in agreement...pass on the house.
There are a lot of valid points here.
I'm wondering , how are ANY buyers are going to get a loan, or insurance, if it is indeed structurally unsound?
I know the sellers lost a previous deal because of these findings. Why would they not be more open to negotiating a deal?
Do you think the agent is really helping them by not advising them to lower the price more? or pricing it that high to begin with?
How is it going to appraise? and if it doesn't, where does that leave the buyer?
Or do you think they will not mention the inspection in their contracts? Maybe they will get a contractor to buy it. Maybe they will just push it under the rug, as they have done since they have lived there. They told my agent that its never been a problem for them!
And, I didn't consider that the 'fix-up' after the repair might be an added expense.
Once again, Thank you all for your input. Its pretty much done.
Thank you all, for your replies.
they were all in agreement...pass on the house.
There are a lot of valid points here.
I'm wondering , how are ANY buyers are going to get a loan, or insurance, if it is indeed structurally unsound?
I know the sellers lost a previous deal because of these findings. Why would they not be more open to negotiating a deal?
Do you think the agent is really helping them by not advising them to lower the price more? or pricing it that high to begin with?
How is it going to appraise? and if it doesn't, where does that leave the buyer?
Or do you think they will not mention the inspection in their contracts? Maybe they will get a contractor to buy it. Maybe they will just push it under the rug, as they have done since they have lived there. They told my agent that its never been a problem for them!
And, I didn't consider that the 'fix-up' after the repair might be an added expense.
Once again, Thank you all for your input. Its pretty much done.
Over the years I have seen quite a few situations like this. Sometimes it is an error that the initial builder made, other times it was caused by an incompetent remodel. The basics generally involve a elderly couple that has the home paid off but they want want to downsize or relocate to a nicer climate. They hire a real estate agent that gets them excited by saying something along the lines of "Home like yours recently sold for $350k, if it will cost $25K to fix your issue we can list from $310k to $330K and it still a good deal. After a few dozen buyers realize that they cannot get a loan and don't have cash to fix it a contractor eventually comes by with a $275k cash offer, the sellers counter with $295k and maybe they agree to $280k. If the contractor wants to live there for long enough for anybody to forget all the whole defect it can work out...
Don't make buy the house because you feel you might miss out and there are not enough inventory out there. Even if you have to rent or live with friends and family for while, don't allow desperation cause you to make a big financial mistake that you will have to deal later.
The $25k is just an estimate. The costs might triple if you buy this house and more problems begin to surface.
Keep looking. I was tempted to buy a overpriced house with a roof leak. Seller won't lower the price and made it clear to every interested buyer that saw the property. I almost signed that contract but so grateful I changed my mind at the last second.
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You are not the right buyer for this...
