post inspection help needed!! please advise...first time home buyer

[SantaMar]

im sorry this is a long read!  i sincerely thank anybody who can respond....

original list price 219k.  we offered 200k.  we negotiated to 210k with them updating the electrical system (removing knob and tube wiriing) they accepted.  the property is an older colonial, plaster walls, older fixtures, but my fiance and i love it...def has charm!

after they signed the contract, we sent the contract to my attorney...my attorney had some suggestions and amended the contract and sent back to sellers (he didn like the way the contingencies were worded, didnt like "as-is" bla bla, he told me this wasnt in my best interest but this could help...i trust him)   after he sent the new contract back to sellers, they agreed and signed it.  the home inspection was yesterday.  il paraphrase what the inspector noted:

1.  house is electrically running likes its 1940.  half knob and tube  and half updated... (the sellers disclosed the knob and tube and agreed at the initial contract to update wiring assuming we decide to move forward with the property after the home inspection.) 

2.  water flow is somewhat retarded.  when you run the sink and flush the toilet and have shower on the flow is compromised.  inspector recommended replacing the galvanized steel water line into the house from the street.

3.  damp basement, water slightly seeping in after a small rain storm.  inspector recommends an outside drain system of sorts.  he followed up with a "when the basement is usually damp there usually mold in the attic....sure enough! see below

4.  mold in attic.  not much but enough to colonize and see with your eyes.  cleaning the mold can be done but the cause of the mold should be rectified (water in basement

5.  my personal favorite! compromised main sewer line.  all the plumbing in the house is pvc but the main line from the house to the street is 90 year old steel that runs under the front yard into the street.  there is a huge massive tree in the front yard and the seller disclosed that there are sometimes back-ups and the main gets snaked every 6-8 months.  im thinking "wow they stay on top of that issue, and it should always be clean"....the inspector brought up a good point and said that snaking a main drain every 6 months isnt always normal/good.  and considering the large tree's roots out front, at some point the main will be compromised.  that snake job every 6 months just keeps banging the inside of those old pipes and the tree roots strangle the outside...at some point the pipe will have to be addressed.  that could mean digging up the yard and street to replace the pipe and a possible 10k project from permits to finish. 

7.  roof should last about another 4 years....

8.  at one point there was termite damage.  the problem has been addressed.  the inspector saw how the treated the problem by driling small holes in the cinderblock foundation and liquid treated the issue...

inspector wasnt trying to talk me out of the house, even thought the house was a great house, but def had some issues that should, if not, need to be addressed.  the sellers original contract wanted us to buy "as is".  the sellers agent disclosed to my agent that the sellers were financially not in a position to make huge repairs.  they originally wanted us to sign a contract stating that if the property had repair work under $2500, after they replace and update the wiring, that we assumed the responsibility and couldnt back out of the deal.  my lawyer didnt like that and made changes accordingly. pretty much saying that we cant back out if the dishwasher was busted or a floor tile was damaged or a window wasnt shutting correct bla bla....all in all the inspector figured a rough idea of all the work that should be addressed before you even paint the walls might come in at the 30k range.  (replacing main sewer line, updating wiring, drain system surrounding the property, bleaching mold)

these issues are somewhat substantial...

here is my concern.  they can issue a credit of 30k at closing possibly but then again i would have to be the contractor.  i dont want to be a contractor.  my fiance and i dont have time to deal with plumbers and carpeters.  and what if the issues are over the credit amount?!

they can reduce the price of the house by 30k but i still dont like that idea anyway.  we are doing a 20% down conventional loan because we can safely do that and have a cushion, we also dont like the idea of paying PMI and FHA insurance.  so if i put down 20k on a 180 home, im out of pocket 36,000 plus closing cosst and still assume the responsibility of their issues and im gona pay the 30k??  so i would spend close to 70k when all is said and done?!

how would you navigate this?  im thinking having my lawyer ask the sellers what is the most they can repair?  can the update the wiring and the plumbing?  can they forget about the wiring but give us a new roof and drain system?  i dont think they have tens of thousands of dollars to repair the property...

o0o and what if they update everything we ask, then the financing falls through on our end?!  wow....my head is running circles....

[Walt_K]

Sometimes you have to walk away from a deal.  If it were me, those issues would be too much for me to stomach.  Best of luck.

[Booner72]

If you and your wife WANTED a fixer-upper, and got a great deal on the house, but had the time and money to do all this, then it sounds like something that can be done.

But you said that you don't want to be a contractor and don't have the time.  Sounds like that is your answer.

You can get a charming house that doesn't have to be that old and outdated.  or you can make it charming yourselves.

Good Luck. (Make a pros/cons list.  Write down everything you love and everything you don't love, and let the biggest list win!)

[SuzyStellar]

We are in the same boat.  Waiting for 2 or 3 estimates on water drainage problem int he back of our house, and the electric needs to be updated, and we have a septic tank that nobody wants to address.  The reator is not helping me, and comes back with they just had the septic drained in November.  Yes, they may have but I want the contact of the person that serices it, and I want it in writting that I asked for it to be drained and checked over and was told it had already been done.  We need a water heater too.  I am not sure if I can ask the sellers to pay for any of this stuff either.  Shoud we try to get them to pay, or can they just walk away from the dea if we put to  much pressure on them?

[germaine47]

If the inspector found that many issues, just imagine what you would find after you close.  If you have the time, energy, money and patience I would go for it.  I was where you are three weeks ago and I thought about this charming fixer upper, well the appraisal was shy of 15000 to roll the repairs into the loan.  I didn't have the money to go forward with the house, however if I could afford to pay that type of money for repairs why not find one that is move in ready and without the hassle.  I want to continue my education and on the grand scheme of things updating doesn't compute into my schedule.

[Anonymous]

I see three options:

1) Walk away (easiest, and maybe also the hardest)

2) Negotiate to add an escrow account for the repairs (basically, still pay ~200k, but ~30k of that goes into an account that can only pay contractors for the work in question)

3) Consider a 203k, where they can roll repair costs into the loan amount (this will probably complicate the process quite a bit, but can be done).

For 2 and 3, I'd absolutely get concessions from the seller, which knowing what all the issues are might be easier to do now. That said, personally, I'd go with option #1, unless appraisal comes back with some astronomical amount.

Then again, I have yet to buy my first home, so take all of that with a grain of salt good luck!

[SantaMar]

we have looked for houses on zillow, trulia, prufoxroach, as well as our realtor listings...this house was move in ready .  i use the term move in ready based on the fact the property is owner occupied with two kids and a younger couple.  this property wasnt vacant, just old.  maybe the inspector was a little too cautious.  he wasnt busting balls about windows or doorknobs or walls being uneven...he was scrutinizing the basement, plumbing, electrical.....

its amazing how we thought the house is just the one based on pics and two walk throughs, until the inspector brought up some concerns. 

from the financial side, we want to go 20% conventional.  i dont want fha because of the upfront insurance and the pmi and the insane amount of premiums we will pay thats not tax deductable...plus we have the ability to pay the 20% and still have a comfortable reserve amount....so if we put down 20% percent on a 210 house, thats 42 down plus closing costs (8-10k conservative estimate) which comes out to like 52k out of pocket up front before we get the keys....if the sellers agree to drop the price of the property 30k....we still come out of pocket alot of money plusssss have to repair their headaches....if they drop price to 180k.  we put down 36k plus closing costs anddddd then pay 30k for repairs?!  i think they would have to fix all we request or we walk away from house...

[cdtotten]

FYI: Through 12/31/11mortgage insurance premiums were tax deductable (past 5 years). Most people feel that this tax break will get extended, but no guarentees obviously. Just wanted to share in case you weren't aware.