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Old 09-29-2009, 05:52 PM
 
Location: Tricoastal
353 posts, read 799,931 times
Reputation: 265

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We are looking at a lot of old houses that need updating, and are submitting offers deducting the amount of money in repairs the home needs. However, we are being told by listing agents that "replacing an A/C" is not an essential repair, whereas fixing a leaky pool is.

Is there a rule of thumb on what is a necessary repair?

If the A/C works, but barely cools, is that something that can be cited in an offer?

Other items:

1940s windows that do not open

1940s electrical, plumbing

1940s kitchen, baths

leaking pool

non-operational appliances
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Old 09-29-2009, 06:17 PM
 
Location: On the Chesapeake
44,990 posts, read 59,968,393 times
Reputation: 60546
Quote:
Originally Posted by saltzman143 View Post
We are looking at a lot of old houses that need updating, and are submitting offers deducting the amount of money in repairs the home needs. However, we are being told by listing agents that "replacing an A/C" is not an essential repair, whereas fixing a leaky pool is.

Is there a rule of thumb on what is a necessary repair?

If the A/C works, but barely cools, is that something that can be cited in an offer?
Maybe
Other items:

1940s windows that do not open
Maybe, you have A/C, might just be painted shut
1940s electrical, plumbing
No if otherwise safe and usable
1940s kitchen, baths
No, same as above
leaking pool
Yes
non-operational appliances
Maybe, depends on whether you write it in the contract



No seller is going to deduct for your remodeling cost (kitchen, bath) and if the plumbing and electrical meets the code for original installation era they won't do that either.
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Old 09-29-2009, 06:35 PM
 
Location: Land of Free Johnson-Weld-2016
6,470 posts, read 16,331,850 times
Reputation: 6518
Default Like I know

Hmm.

1940s windows that do not open - Windows may have been painted with lead-based paint. Don't be alarmed. Just be aware that lead particles may be released once you "crack" the seal" on those old windows. You will have to pay a fortune or spend LOTS of time to have those windows replaced or stripped and refinished. In either case you should not be in the house while this is going on because the "fix" create a hazard of whirling lead dust on the floor and in the air when the windows or removed....or you could keep them closed.
This is important maybe a 7/10

1940s electrical, plumbing - Just make sure the wiring is NOT aluminum. Other than that the wiring will be expensive to replace. It's important. The plumbing will be okay, I think unless it was galvanized encased in concrete. Have someone look at these if you can't tell. Aluminum wiring 9/10 and bad plumbing 5/10 on importance scale.

1940s kitchen, baths - IMO not that important if you like kitsch. 2/10

leaking pool - Important. But maybe not. One of my uncles had a pool that was leaking and had frogs and things living in it. Yeah, don't judge me! Anyway, it was that way for years. But I think the concrete can leach into the soil and poison things, so if you care that may be a 7/10.

non-operational appliances - Add up the cost for the appliances. If they're odd sizes double the cost. Stove = 500 with installation. Washer and dryer 1200 with installation for decent ones. ETC.
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Old 09-29-2009, 07:30 PM
 
Location: Salem, OR
15,508 posts, read 40,224,036 times
Reputation: 17378
I'm with the listing agent. Fixing an AC is not a necessary repair. You are looking at fixers...which means they need to be fixed.

We don't have a lot of pools out here so I can't comment on that repair. If the house is built in 1940, then I would expect 1940 electrical, plumbing, windows, etc. I assume the house would cost a lot more if those things were already taken care of. So the question isn't what is a necessary repair, but is the home priced in accordance with the condition.

I have a fixer listing right now. I looked at the house and comps and priced it 20% below to account for it's condition. Still had lowballs and crazy offers. Sold it for full listing price which was quite fair two weeks later.
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Old 09-29-2009, 07:51 PM
 
Location: North Texas
24,561 posts, read 40,111,483 times
Reputation: 28547
Quote:
Originally Posted by saltzman143 View Post
We are looking at a lot of old houses that need updating, and are submitting offers deducting the amount of money in repairs the home needs. However, we are being told by listing agents that "replacing an A/C" is not an essential repair, whereas fixing a leaky pool is.

Is there a rule of thumb on what is a necessary repair?

If the A/C works, but barely cools, is that something that can be cited in an offer?
Around here that is a potential dealbreaker but we have scorching summers. I do not know where you are located.

Quote:
Other items:

1940s windows that do not open
If your house catches on fire and you are trapped, it becomes extremely important. As others have said they may be painted shut, or may need a few squirts of WD-40 to get them opening easily again. Most of my 1950s aluminum windows stick, but are getting better with a liberal dose of WD-40. Unless the windows are actually broken I would not consider replacing them to be "essential."

Quote:
1940s electrical, plumbing
Depends on condition and technology. Knob and tube wiring can be totally safe if it is in good condition for example, or it can be a fire waiting to happen. Do not count on the seller springing for the cost of rewiring and replumbing the house. If both need to be done, the cost will depend on your location and the size of the job. For both I think you are looking at five figures, easy.

Quote:
1940s kitchen, baths
Depends on their condition. If they are in fine usable condition then I would not give you one red cent towards replacing them. My house has the original fixtures in one of its 52 year-old bathrooms and I did not consider replacing them as they are in excellent condition. The seller should not have to pay for replacing a usable fixture because it's old.

Quote:
leaking pool
That would be a dealbreaker for me; it is expensive to have pools fixed or removed. It may be priced into the asking price of the house though.

Quote:
non-operational appliances
Hard to say. I probably would not buy a house with no working appliances but again it may be priced into the house's list price. If I was the seller I would refuse to accept a lower offer on this basis but all of this depends on the seller's individual circumstances. If they are desperate to unload the house they may take a lowball offer, or they may refuse your offer and refuse any subsequent higher offers from you.
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Old 09-29-2009, 08:37 PM
 
Location: Tricoastal
353 posts, read 799,931 times
Reputation: 265
So basically everyone has a different definition of "necessary". Ya know, it's really tough to comp houses that need work and come up with a fair value. Of course the listing agents will say that the price of the fixer takes the work needed into account. But that is usually a lie. Unlike Silverfall, around here they price fixers just a little bit below comps, not 20% below. And then they sit on the market for a year.

I actually think that any repairs that are not cosmetic should be taken into account in the offer price or fixed by the seller at inspection time. When I sold my home, everything was working properly and nothing was in disrepair; there were no broken windows, leaks, holes in the floor, non-operational showers (no water comes out), wood rot, two-prong outlets throughout the house, mold stains in the ceiling, etc. All appliances were relatively new, etc. If a home has non-cosmetic issues, I am going to want the money it costs to hire someone to fix it, whether it's at the time I submit my offer or later after the inspection. I do not think things should be replaced because they are old, but if they are not working perfectly well, they need to be taken into account in the price/closing terms.

Our agent disagrees with us on windows and the A/C. I guess as long as the A/C runs (but doesn't actually cool) and costs $300 a month to operate b/c it's so old and inefficient (imagine paying $300 to run an A/C that does not actually cool), that is perfectly fine and does not need to be replaced! And I guess if the windows do not open because the mechanisms are shot, that is also perfectly fine because, well, they are so "old and charming."

Yeah, right!

Last edited by saltzman143; 09-29-2009 at 08:46 PM..
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Old 09-29-2009, 08:43 PM
 
Location: Salem, OR
15,508 posts, read 40,224,036 times
Reputation: 17378
Quote:
Originally Posted by saltzman143 View Post
So basically everyone has a different definition of "necessary". Ya know, it's really tough to comp houses that need work and come up with a fair value. Of course the listing agents will say that the price of the fixer takes the work needed into account. But that is usually a lie. Unlike Silverfall, around here they price fixers just a little bit below comps, not 20% below. And then they sit on the market for a year.
And I still got an offer for 50% off list...
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Old 09-29-2009, 08:48 PM
 
Location: Tricoastal
353 posts, read 799,931 times
Reputation: 265
Yeah now that is just dumb.
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Old 09-30-2009, 06:09 AM
 
3,631 posts, read 14,515,809 times
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You know - if someone has something to sell and someone wants to buy - it seems that it is whatever is negotiated.

In my county though the standard contract is pretty clear - A buyer can walk very shortly after the inspection no penalties, but if they submit a list of repairs only significant ones such as all utiltities in sound conditions, no active termite damage, structural etc are required.

When we bought a house where the tiles were cracked due to improper subfloor, we indicated almost immediately that we needed to rescind our offer or renegotiate because we knew it would not fall under the required repair clause. - and we did just that and negotiated a seller credit at closing to the flooring company of our choice for about 6K to rip up and replace those floors and the subfloor. I think had we simply signed the contract, and presented it as a repair they could have refused.

But having been on both sides of the picture, you really have to be reasonable, especially today where the seller is not necessarily going to clear much money and may even loose money on the house.

I had a buyer want me to replace the AC because it was 15, and I did agree to some repairs as required to hand over a functining AC [actually offered to pay the contractor for those repairs at closing and have them buy a new one if they wanted it] - but the house sold just below appraisal and I paid 5K towards closing. Appraisers take into account the age of these systems. Both people should get a fair deal.

I think anything that you would not repair automatically could be given as a check at closing to a contractor [you cannot give money to the buyer] because if you spend all that money, the closing may not happen at the last minute. It may also be more attractive to the seller who is paying the mortgage and may not be living in the house and may be tight on cash funds but could take it out of the equity.
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Old 09-30-2009, 06:36 AM
 
Location: North Texas
24,561 posts, read 40,111,483 times
Reputation: 28547
Quote:
Originally Posted by saltzman143 View Post
So basically everyone has a different definition of "necessary". Ya know, it's really tough to comp houses that need work and come up with a fair value. Of course the listing agents will say that the price of the fixer takes the work needed into account. But that is usually a lie. Unlike Silverfall, around here they price fixers just a little bit below comps, not 20% below. And then they sit on the market for a year.

I actually think that any repairs that are not cosmetic should be taken into account in the offer price or fixed by the seller at inspection time. When I sold my home, everything was working properly and nothing was in disrepair; there were no broken windows, leaks, holes in the floor, non-operational showers (no water comes out), wood rot, two-prong outlets throughout the house, mold stains in the ceiling, etc. All appliances were relatively new, etc. If a home has non-cosmetic issues, I am going to want the money it costs to hire someone to fix it, whether it's at the time I submit my offer or later after the inspection. I do not think things should be replaced because they are old, but if they are not working perfectly well, they need to be taken into account in the price/closing terms.

Our agent disagrees with us on windows and the A/C. I guess as long as the A/C runs (but doesn't actually cool) and costs $300 a month to operate b/c it's so old and inefficient (imagine paying $300 to run an A/C that does not actually cool), that is perfectly fine and does not need to be replaced! And I guess if the windows do not open because the mechanisms are shot, that is also perfectly fine because, well, they are so "old and charming."

Yeah, right!
You have to consider the age and condition of the house when making your offer but you also have to realize that the seller does not have to sell to you; he/she does not really have to do anything. I do not think any of those repairs are necessarily mandatory especially since you know the house may be in need of extensive repair/renovation. It may, it may not; it seems as if you have very high expectations of a house that age. It is not at all unusual for houses that age to need repairs, especially if their owners are elderly and have neglected the house because of their own lack of mobility, energy, and/or funds.

Ultimately whether you are successful buying this house at the price you want is going to depend on your offer, the comps, and the seller's circumstances. If the house is already priced well below its comps I am not sure how willing your seller is going to be to accept a lowball offer. In this city there are still dilapidated old houses going on the market in extremely trendy, "hot" areas. These houses are either torn down or renovated, but they do not sell for 50% less than their comps, nor are they appraised (for taxes) that low because the land value is so high that the houses, i.e. "improvements" are only a fraction of the overall tax value. What kind of neighborhood is this that you are trying to buy in? If the area is "trendy" then you may not have any luck at all getting the seller to throw in for "necessary" repairs.

Honestly none of those sound necessary to me, though I would not want to deal with buying a new AC compressor or removing a non-functioning swimming pool. I know of a foreclosure a couple of miles from here that sold with those exact same problems plus it reeked of smoke, had several broken windows and had problems with its wiring (evidenced by sooty black burn marks around several outlets). It was priced about 25% less than its comps in good condition and the cost of putting it right will probably exceed the difference between its sale price and its comps.

If you believe that this house really does need all of these expensive, disruptive repairs then maybe ask yourself if this is really the right house for you.
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