First time home buyers needs negotiation advice from home inspection & pest report!? (San Francisco: appointed)

[pkcheng55]

We are located in San Francisco bay area and as the first time home buyer, we are a little bit worry about our first offer being accepted recently. The house was first start at $659K but due to the change of the market condition and the seller is very motivated (this is not a short sale, the owner bought the home at 450K in 5 years ago), the asking price was dropped to $590K within 40 days. We like the neighborhood and the price seems right to us (I guess), so we had offered at 590K (full price??) with home inspection and pest report contingency.

After, we have done the pest report and home inspection, it doesn’t looks very good. Here is the report they have found:

From the Pest report:
Estimate for fungus, wood eating beetle and dry rot for $9000.00 to repair. Due to the inaccessible to the attic (owner has a lot of personal stuff to block the entrance of attic), they are not able to check over there.

From the home inspection:
• Roof is not in a very good condition, only estimate for another 2-3 years life expectancy. (again, the attic is not accessible and it can’t be tell if there is any leak since the raining season is not starting yet). Our agent estimates $7000 to replace the roof.
• A few receptacles not grounded properly and GFIC needs to be upgraded for some area.
• Most of the windows don’t lock properly and gaps for the windows installation.
• Garage door is cracked (12”x14”) and the door seal needs to be replaced.
• A few other small issues.

The big chunk will be come out from the roof and pest report. The first question is that since the roof is not leaking now (at less the home inspector can’t be tell for sure since the attic is not accessible), does it consider as a problem or this is just an upgrade issue?

The second question will be how much we should negotiate down base on those 2 reports? We estimated for at least 16000.00 discount from the home price for the pest control and roof replacement. Our buyer agent also recommended us to add another 10% on top of it for the attic’s uncertain condition. Should we ask for more discounts or is it a fair deal? Please help!

[Ultrarunner]

It is best to negotiate from a position of strength and in this case that would be if you are willing to cut your losses and look for another home.

That being said, now is the best time in years to get concessions. The seller must disclose the information on your report to any future buyers. The seller could also offer to repair the items noted. It is not unusual for agents and brokers to kick-in part of their commissions in a last ditch effort to get the escrow closed.

I sold a home in otherwise very good condition except it had the original windows and some had been painted shut over the years. The seller made a big deal about it.

She wanted a credit for new windows because according to her, they could not be fixed. I personally check the operation of every window and let her agent know all were now operating perfectly. She was disappointed because she really wanted new windows... Three weeks after closing I noticed all new windows being installed.

If she had asked a modest offset, I would have given it to her...

If you want the house, I would approach the seller by saying that you are having second thoughts based on the reports... you still would like to buy if you can come to an agreement, otherwise, thank everyone for their time and let them know you are looking at another property.

Everything is negotiable and don't let anyone pressure you into something you are not comfortable doing... when it is all said and done, it is your money!

I would go for a price reduction... and don't be bashful about it.

[DMenscha]

The items in the pest report are usually paid for by the seller and completed prior to closing with the costs taken from the sellers proceeds. Rarely do pest inspectors make more than a cursory check of the attic.

It sounds to me as if the price reflects the condition the home is in. If the seller spent $7,000 to replace the roof before he sold it to you he probably wouldn't have dropped his price so dramatically.

Your agent is probably the BEST qualified to answer your questions and to assist you in completing your transaction. If they are a true buyers agent (You are paying them a fee to represent you out of your pocket) then go with what they tell you. If they are being paid from splitting the commission paid by the seller, my advice is the same. They are representing you! They know what is customary and necessary in your neighborhood.

Buying a home is one of the 5 most traumatic things one can do, rely on your agent to give you the right guidance and support. Good luck to you

[pkcheng55]

The big quesiton mark for us is that our home inspector said the roof has a regular sign of aged and with moss vegetation was noted. He also put a note said the termite report is advice for the attic since there maybe moisture gets inside. Unfortunately, non of them is able to get into the attic by the time.

[Peninsula gal]

See if the seller will split the cost of a new roof. As for the other things, they really are not big issues. The roof is the last leg of its life as they last about 15 years unless they are shingle. If there was water damage it would have shown up inside the house, as water flows down and over so ceilings and walls show water damage. If you see none, and your inspector saw none, there likely is none. The plugs are a common comment in reports of older homes. It's not expensive to have them replaced with GFI's either by you or an electrician. It is not a negotiable issue in a house purchase, even today. I am a Realtor and the only issue you might want to focus on is the roof and negotiate this in counter offers. I am sure your agent will help you with this. This is a perfect example of why it's best for a seller to have all inspections done before putting the house on the market rather than after. The buyer then knows what to expect.