What to do after our inspection?

[sunterp]

DH and I have put an offer on a house and just had the inspection. The house is being sold by the owners and we are working with a realtor, The owners bought the house in 2008 before the crash and then had to rent it out when they moved later that year. The renters were not the best at upkeep but after the inspection the landlords are not looking that great about repairs. We knew going in that there were some fixes (their quote was around 6 grand) and that did not include new flooring. We negotiated the price based on those items. According to the seller that is the lowest they can go and walk away even. Well now we have the inspection and the HVAC has not been serviced in years and one unit is original to the house (1985) the other units are 2002 and 2012 (due to a leak and also damaged the ceiling), The water heater is also older and only 40 gallons (currently leaking) and the inspector felt it might be on its last legs. Nothing is up to current codes so he told us all repairs will have to be brought up to code. There are no gfi plugs and the dishwasher does not work. We are going to get quotes for the potential cost of these items but our realtor feels like the sellers will not be able to go any lower on the price. What should we do? Does this sound like to many problems or manageable? Should we try to get them to lower the price? This is our first house buying experience and we do love this house but we do not have to move and could keep looking for something else.

Thanks.

[ssmjlm]

If the sellers aren't willing to pay for the mandatory repairs or provide $$$ compensation for you to repair, that bring things up to code, then I would walk.

It's hard to tell from your paragraph what is or is not code related. Sure it's not great that they haven't had the HVAC serviced, but around here, that certainly isn't a code issue.

[kaylie]

We bought our first house about a year ago. I promise you, there will be problems and things to fix that were not uncovered by the inspection so take that into account when you're figuring out if these fixes are manageable based on your financial situation.

I'm a bit confused by the three HVAC units, but if the main one is from 1985 you're probably looking at a lot of money to replace that. We bought a house with a 20 year old hot water heater and haven't had to replace it yet, but if yours is leaking it's going to have to go. A new one installed is probably ~$1,000 (more if they have to add an expansion tank to bring it up to code).

If it were me, I'd probably walk.

[sunterp]

Sorry the code things are new since the house was built in 1985 (so no real dangers). It appears that nothing has been improved since the house was built in 1985 and what is there is very old and not in great shape. He noted all the windows seals are gone. Some duct work is smashed and the insulation has deteriorated, which will make us less efficient but can be repaired over time. He felt that these code issues would sort themselves out when newer units were installed. We just worry that these repairs will be move costly. We expect things to break and need repairs but this just sounded like a lot of things could go wrong really soon.

[Deleted]

I would walk if they don't come down on the price.

[gtkim]

I tend to agree with pps that I'd walk if the seller isn't willing to make any more concessions.  I understand about wanting to come out even, but in some cases that just isn't possible.  If these are legitimate issues and they don't fix them for you they will have to do something about them in order to sell the house.
And you will encounter things that don't come up in an inspection as pp said, so definitely keep that in mind.

[sunterp]

Mar 13, 2013 9:39:47 GMT -5 kaylie said:

We bought our first house about a year ago. I promise you, there will be problems and things to fix that were not uncovered by the inspection so take that into account when you're figuring out if these fixes are manageable based on your financial situation.

I'm a bit confused by the three HVAC units, but if the main one is from 1985 you're probably looking at a lot of money to replace that. We bought a house with a 20 year old hot water heater and haven't had to replace it yet, but if yours is leaking it's going to have to go. A new one installed is probably ~$1,000 (more if they have to add an expansion tank to bring it up to code).

If it were me, I'd probably walk.

So there are two units for the HVAC. The one for the downstairs is the oldest unit. It is missing conduit and wire protectors and its closet inside is where everything is dirty and needs servicing for better evaluation. The upstairs unit has a newer 2012 but the attic air handler is from 2002. The attic handler had a leak and its pan is now rusty.

[sunterp]

SBP I think this is how DH feels. We plan to be in that house forever. It has the space we need with three kids and ways to make improvements. It is the best house we have seen in our area and in our price range. Everyone involved including friends who know the area say it is a great price and home. The current price will allow us to make the changes, like new floors both carpet and wood. However something is holding me back about these repairs. I don't mind adding new insulation or better windows as I would prefer the most energy efficient house I can get but something is nagging me about these repairs. Maybe it is the leak in the attic that they fixed but never repaired the ceiling. Our agent is trying to find out when that leak was fixed an how long they have been sitting on that repair. They did have tenants in the house until two weeks ago, no way would I have tolerated that as a renter.

A friend said pretty much what you did, that these repairs are not big when you consider they will be doing all the other things to even list the house. I feel it would not hurt to ask for them to bring money to closing or lower the price so we can have the extra savings in case things do go bad.

[sunterp]

Thanks guys. You have been helpful. I knew it would need repairs but after the inspection I kept thinking about that old movie the Money Pit. We will get the quotes for repairs to know what to expect and see what the sellers are willing to do.

[sillygoosegirl]

I think the sellers are nuts if they think they can come out even after buying in 2008, but really, that's not your concern. Now that you know about the issues found by the inspection, you have to ask yourself what the house is worth to you. If you felt like you were getting it for a really good deal before, then maybe with all the issues, it's not such a great deal any more, but still worth going with. If you plan to stay in the house for a long time, and it's exactly the house you want, then $10K in repairs shouldn't make or break the deal. That's like $50/month. Of course, if you only liked the house because it was such a good deal, then maybe it's time to walk. We made an offer on a house before the one we bought, and there were several counter offers before we walked away over a $2K disagreement in price. In hindsight, I can see that was a sign we just didn't like that house all that much.

[FoxInFiji]

I would definitely lean hard on trying to get some type of credit or have some of this repaired before you buy. Some of those things are just lack of maintenance and others could be more when you a pro in there to look at it. Be prepared for these things to add up and for it to be worse than an inspector might have thought...and for the inspector to have missed some other relatively big things.  We had lots of those in our house and in a rental they are bound to be even worse because every repair done is more like a band-aid than an actual repair.  I can tell you right now that until you get a mechanical contractor in there to look at the HVAC units you won't really know the extent of the issues. 

When you say replacing all of the windows and adding insulation what is your plan there? Do you have any quotes on how much windows cost? Because they are one of the single most expensive costs in a house and have one of the longest returns on investments. Logistically adding insulation anywhere besides and attic gets difficult. These are not small renovations you're talking about here.

[lovemymonkey]

I would walk. No one (or not many) who bought in 2008 is "breaking even" these days so if that's what your sellers are basing their sale price on, I would walk. What does your realtor say about the contract price? Is it in alignment with recent sales comps? I would only pay what the sales comps support minus what you think these repairs would cost. Just my opinion though. Good luck!