Oppositehousebuying

"Tristan" (casselts) 06/06/2018 at 00:09 • Filed to: None

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Yesterday was inspection day.

It... could have gone better.

The good: it’s still technically a house.

The bad: the septic system is not functioning. The floor drain in the basement is plugged and there’s new carpet down there. Also, the owners stated that it was pumped last month but the tank in brimmed. The drain field is obviously fubar’d and they lied on their disclosure.

The HVAC. It’s a 30+ year old train system. The condensate drain wasn’t even hooked up, and though heat was commanded at the thermostat, nothing happened at the unit. Shit.

The Ugly: The roof. It looked ugly, but my preliminary glance didn’t reveal water damage. some slight rot was found, nothing catastrophic, but it needs to be replaced NAOW!

We’re getting a full septic inspection so we know what we’re dealing with. I have low hopes of this deal going through. The owners are going through bankruptcy, so it’s an as-is kind of deal, and they don’t have the money to fix anything anyway. No bank is going to finance something without a functioning HVAC/roof/septic system.

We really really like the house/neighborhood, and we are sooooooo over house shopping... Pray for a miracle?

Deal Killer - Powered by Focus > Tristan 06/06/2018 at 00:44

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Sooo, you want to throw more money into house, with no possibility of return?

I’d suggest running, and running far, far away from this house. A bad septic can cost over $15 - $20 grand easy, and contributes nothing to value when fixed. Pretty much the same for a roof and mechanical systems. You’re fixing something that should be there anyway, not improving the property over and above what every other home has (function sewage system, heat, roof, etc.). And you’re right, no bank will finance a home with these types of issues. I’ve been appraising homes for almost 20 years, so I know what I speak of.

Highlander-Datsuns are Forever > Tristan 06/06/2018 at 00:45

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Oh that really sucks. Even one of those issues is a signal to run. HVAC is 15k, roof 10-15, and a drain field plus permits could be 20-30k to who the hell knows.

Eric @ opposite-lock.com > Tristan 06/06/2018 at 01:27

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I would see what it takes to fix. If the owners will sell it really low, it might be worth the time/money/effort to fix it if you have the money to do so.

The only thing that would really worry me is the sketchy basement drainage situation, provided you could afford to repair the rest. The septic could very well simply be poor care, in which case all it might need is a professional pumping.

If we had loved a house with problems like that, then between inspections and my FIL it was decided that it was repairable, we would have simply reduced our down enough and expected the seller to eat the costs (as we did with our house, in spite of the white-hot Seattle market, but we didn’t need to reserve much to cover what was needed). Just make sure you have realistic quotes for the work that is needed.

SilentButNotReallyDeadly...killed by G/O Media > Tristan 06/06/2018 at 01:38

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Running away is cheaper and less stressful than praying for a miracle.

Dr. Zoidberg - RIP Oppo > Tristan 06/06/2018 at 02:43

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At least when I bought my last home, the inside was terrible but the roof was new. Roof is serious money. Septic also, obviously.

Owners have willingly lied about the condition of the home. There will be plenty more things wrong with it that you don’t even know about yet.

Unless you can knock the price waaaay down to where you still come out ahead after fixing: don’t do it.

But if you do it anyway, congrats in advance!

Tristan > Deal Killer - Powered by Focus 06/06/2018 at 20:06

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The house is already well below market value, and there’s room for further negotiation. It’s in the suburb of Portland that the last to sink in a recession, and the first to recover.

What does contribute to value if not the mechanicals? I’d think a house with a new roof new windows, new HVAC and new septic would be far more desirable than the same house with 30 year old everything, some pretty paint on the walls, and nice hardwood. I’m not a normal buyer, though...

Tristan > Dr. Zoidberg - RIP Oppo 06/06/2018 at 20:12

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If I can get to close with the current roof intact, I’ll do it muhself. I used to do roofing during summers back in ol’ Minnesota. It’s miserable work, but it’s too easy and materials are too cheap to pay someone 12,000 to do it.

Probably. I had a thorough inspector, though and I’m reasonably confident these are the big headaches.

We had already knocked the price down pretty well with our offer. We’re planning to knock it down further. Even figuring a $50k initial infusion of cash into the house we’ll still be ahead of market value.

Tristan > Eric @ opposite-lock.com 06/06/2018 at 20:13

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I talked to the inspector that looked at it/pumped it last month. He’s confident that the tank is compromised and quoted $8,500. Not horrible, really.

Tristan > SilentButNotReallyDeadly...killed by G/O Media 06/06/2018 at 20:15

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I love my current house, but the godawful shitty schools in this town make me wanna get out before my youngster gets to school age.

Staying where I am might be less stressful for now, but long run not so much.

Dr. Zoidberg - RIP Oppo > Tristan 06/06/2018 at 22:51

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Are you thinking about lowering your downpayment to pay for the fixes?

Dr. Zoidberg - RIP Oppo > Tristan 06/06/2018 at 22:52

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Under 10k for a major septic issues? Notbad.png

Tristan > Dr. Zoidberg - RIP Oppo 06/06/2018 at 23:05

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No, just putting off some of the cosmetic issues we were planning to address immediately.

Our house in Florida is vacant and going on the market within the next week. We were planning to net a $25k profit on it, but shockingly the market has had quite the rebound down there recently. We’ll be able to list a bit below market, sell it quickly and make out like bandits. Also, the lady I thought was nutso for listing her house for $410k across the street from me? She’s under contract as of today. That should translate into mo money when I sell this house.

We knew this house was going to need attention, so we were bracing ourselves. New bathrooms would be nice, but they can wait.

Tristan > Dr. Zoidberg - RIP Oppo 06/06/2018 at 23:06

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I was shocked by his quote, honestly.

Deal Killer - Powered by Focus > Tristan 06/07/2018 at 00:27

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When you look at a home from the street, can you tell the difference between a brand new roof and one that is 5-10 years old? Or windows? A roof should last 20+ years, and isn’t something many buyers consider when buying a home, as most don’t live in a home for that long to begin with. Now, an old roof, mechanical systems and such will detract from value at a higher rate, certainly, and a home with those items replaced will, most likely sell faster, and at a somewhat higher price. But the cost/benefit is way less than people realize. And when a homeowner tells me that they’ve replaced water lines, or septic systems, my first reaction is, so what? You’ve replaced what every buyer/owner expects a modern home to have. Now, if you have a condemned septic? Then you have a whole world of difference. That’s like having a home without modern plumbing. No one is taking a dump in an outhouse anymore. The stigma of that is usually more than the cost to repair/replace. I know, I’ve done a few homes in that condition. If the home is way under market, and you’re going in with eyes wide open and know the costs, then it’s your decision. I’ve seen houses I wouldn’t touch with a 10.5 foot pole be rehabilitated into something amazing. I’ve also seen homes, that have been purchased out of foreclosure, fall back to the bank because buyers bit off more than they could handle. As always, buyer beware.

Tristan > Deal Killer - Powered by Focus 06/07/2018 at 00:46

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I value your input- that’s a good perspective.

I guess my biggest question about appraisals and getting financed is, does the bank really think a person will pay $450,000 for a house and not invest $20k into that house? I understand they want to protect their money and have a valuable asset in the event they would have to foreclose, but $20k is such a small amount of money in contrast to the cost of the house. It’s like saying “We won’t finance that 2016 F-150 because it has a flat tire and the key fob battery is dead, and we don’t believe you’ll ever fix those things- instead you’ll leave it to rot in the parking lot after signing the papers.”

I’m not disagreeing with you, I’m just be obstinate.

Most people are incapable of maintaining their homes, though... hence why this one is in disrepair. I’m on of those OCD types who gets a big kick out of folks walking by and telling me “I’ve lived in this neighborhood for 40 years and this is the nicest this house has ever looked.”

Deal Killer - Powered by Focus > Tristan 06/07/2018 at 01:24

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The answer to that first question is, yes, the bank trusts no one and nothing, because it’s not your $450,000 that’s buying the home, it’s the banks $450K (minus down payment, of course). Many people fail to realize this.

If I rolled up on a home with no functioning septic, I wouldn’t start writing word one until I knew how the lender wanted me to complete the report, or if they even wanted me to. The most likely scenario would be to write the report “Subject To” the repair of the septic, with funds being released once this issue has been corrected. Neither I nor the bank care who pays for the repair, as long as it is done.

You have a homeowner who basically flat out lied to your face regarding the condition of their sewage system. Now, why would the bank trust you just because you told some loan officer that you pinky swear you’ll fix the issues once they lend you the money? The L/O may trust you, but the bank? The bank just wants their money. With absolutely no surprises. Banks hate surprises.

Oh, and just to put into perspective the differences between where you are and where I live, I’m just finishing a report for a home in Monroe, MI that is selling for $375,000. It’s 18 years old and 2,600 sq.ft.. Updated kitchen and baths, about 950 sq.ft. of professionally finished basement, four bedrooms, in-ground pool and cabana in a golf course subdivision. For $450K, I could buy damn near any type of home, save something along Lake Erie. I can’t wrap my mind around housing prices in the Pacific NW. It hurts my brain.

Tristan > Deal Killer - Powered by Focus 06/07/2018 at 01:41

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That’s pretty much exactly what I figured.

Housing prices here are out of this world. I bought my house in Florida for $124,000 after it sat on the market for an entire year. 1,600 sf, 3br/2 bath built in 2002, 2 car garage, .25 acre. Nothing fancy, but decent. 4 years later (exactly 4 years ago today, to be exact) we’re getting ready to list it for $185,000. A tidy little profit. Our house here? 1,500 sf 3br/1.5 bath, 2 car garage, .25 acre built in 1957- $300,000. 2 and a half years later we’ll probably sell it for $390,000.

$450,000 gets me a 2,500 sq ft home with a pool on a golf course in Destin, FL.