Buying First Home - Inspection Follow Up Advice

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JerLon
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Buying First Home - Inspection Follow Up Advice

Post by JerLon » Sat Jul 19, 2014 6:51 pm

My wife and I are under contract to purchase our first home. We had our inspection today and I am looking for some advice from those of you who are more experienced and wiser in this arena than I am.

Here is some background info:
Owner purchased home in 2009 for $115,000
Owner put on a $8,000 roof in 2012
Home is in Rural Western, NY, village with fairly stable real estate values but some rise has occurred in last few years
Owner listed for $125,000, we offered $112,500, she countered at $117,500, we have purchase agreement at $115,000

We like the home. Perfect street, great bones, near family...

The inspection noted the following items that I will either be asking the owner to fix or fixing myself in the first year or two of ownership:
Two Crawlspaces over dirt are not insulated properly and old batts have fallen out of floor joists
Fireplace needs to be repointed
Chimney needs to be repointed (not all of it, just a portion above the roof line)
All facia boards and soffit boards (not a ventid soffit) need to be scraped, primed and painted (they're peeling/flaking badly) - Some need to be nailed or replaced as well
About 100 sq. ft. of cedar shakes on garage need to be replaced
Attic Insulation is installed improperly and needs to be removed/replaced
***There were a number of other items that I have no issue with any plan to take care of myself***ie: pocket door off track, some outlets were converted to three prong when they need to be two prong or gfi because they aren't grounded, some downspout placement issues, sticking doors...

So, given these details, I am curious what of these items (1) the lender might require to be fixed (assume USDA/FHA Mortgage), (2) you would require the owner to fix in order to the deal to go through and (3) which you would say "I am buying a 95 Year Old House at a good price and need to fix myself"

Thanks for any advice you can give me.

retiredjg
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Re: Buying First Home - Inspection Follow Up Advice

Post by retiredjg » Sat Jul 19, 2014 7:10 pm

Your lender might require the safety issues to be addressed before closing - like the electrical shortcomings.

Regarding the other stuff, get estimates from the appropriate contractors, ask for everything and take what you can get. You can ask for a reduction in price, for credit toward repairs, or to have them fix things before closing. The downside of having them fix it is that you have little control over the quality of the work. This is a re-negotiation of the contract.

If you feel you have already gotten a good price or the best price you can possibly get, just have them hire an electrician to fix the electrical issues and call it good.

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White Coat Investor
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Re: Buying First Home - Inspection Follow Up Advice

Post by White Coat Investor » Sat Jul 19, 2014 7:17 pm

You're doing this all wrong. The inspection has nothing to do with deciding what to fix and who should pay for it. It has two purposes.

#1 If the house is all screwed up you get to walk away without losing your earnest money.

#2 It reopens negotiations. The sellers don't want to fix anything, and you don't want them to fix it anyway since they'll do it the cheapest way possible. You want them to sell the house to you for even less than they already agreed to, and they want to sell it for as close to what you already agreed to as possible. So I'd focus on the big ticket items. Don't ask them to fix anything, ask them to lower the price enough (or provide a credit) to cover the cost of the most expensive thing noted to be screwed up on the inspection. Then go back and forth once or twice and call it good.

I'd probably spend all my effort on the insulation, the garage roof, and the facia/soffit boards. But you want money, not repairs.
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Novine
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Re: Buying First Home - Inspection Follow Up Advice

Post by Novine » Sat Jul 19, 2014 8:29 pm

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Last edited by Novine on Sat Jul 19, 2014 11:04 pm, edited 1 time in total.

Novine
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Re: Buying First Home - Inspection Follow Up Advice

Post by Novine » Sat Jul 19, 2014 8:29 pm

Great points EmergDoc.

spectec
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Re: Buying First Home - Inspection Follow Up Advice

Post by spectec » Sat Jul 19, 2014 8:36 pm

Excellent advice.
You should listen to EmergDoc and retiredjg.

If you decide to go through with this deal, you need to be well covered for the cost of the repairs. Even if you get good estimates, something will inevitably go sideways and it will cost more than you expect.
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JerLon
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Re: Buying First Home - Inspection Follow Up Advice

Post by JerLon » Sun Jul 20, 2014 5:51 am

Thanks for the advice.

stan1
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Re: Buying First Home - Inspection Follow Up Advice

Post by stan1 » Sun Jul 20, 2014 6:22 am

Important to keep in mind that an inspection and an appraisal are two different things. An inspection is theoretically for your benefit, although it's also for the seller's and both Realtor's benefit to avoid lawsuits over undisclosed defects (known or unknown). An appraisal is for the lender's benefit. Has the appraiser already visited the house, and has the lender raised any issues with the appraiser's report? Peeling paint can be a showstopper for FHA loans -- but that's a subjective evaluation so it will depend how the appraiser (not the inspector) documented the issue. Is the garage roof leaking (might be issue for lender) or is it just old (not an issue for lender)?

The seller should be expecting some renegotiation unless there are multiple offers on the house or it sold within days of listing. If I was the seller I'd say that issues like the roof and paint have already been taken into account in the price you agreed to pay (you knew that part of the roof was not replaced and should have seen that the paint was peeling when you made the offer). If the house has been on the market for a long time you have more leverage in negotiations; few sellers would walk away from the deal over another $1-2K at this point.

carolinaman
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Re: Buying First Home - Inspection Follow Up Advice

Post by carolinaman » Sun Jul 20, 2014 6:31 am

JerLon wrote:My wife and I are under contract to purchase our first home. We had our inspection today and I am looking for some advice from those of you who are more experienced and wiser in this arena than I am.

Here is some background info:
Owner purchased home in 2009 for $115,000
Owner put on a $8,000 roof in 2012
Home is in Rural Western, NY, village with fairly stable real estate values but some rise has occurred in last few years
Owner listed for $125,000, we offered $112,500, she countered at $117,500, we have purchase agreement at $115,000

We like the home. Perfect street, great bones, near family...

The inspection noted the following items that I will either be asking the owner to fix or fixing myself in the first year or two of ownership:
Two Crawlspaces over dirt are not insulated properly and old batts have fallen out of floor joists

Insulation falling out of floor joists is usually sign of excess moisture in crawl. The moisture gets on the insulation and it falls from joists. It also may have compromised the insulation that fell. I would ask inspector why he thinks the insulation fell and whether there was any other signs of excess moisture: wood rot, mold, etc.

mw1739
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Re: Buying First Home - Inspection Follow Up Advice

Post by mw1739 » Sun Jul 20, 2014 6:50 am

You said some downspout issues are on your list of things to ignore. In my opinion that's a bad idea. You want to make sure that water is draining away from your house as best you can otherwise you're going to have foundation issues.

JerLon
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Re: Buying First Home - Inspection Follow Up Advice

Post by JerLon » Sun Jul 20, 2014 6:57 am

johnep wrote:Insulation falling out of floor joists is usually sign of excess moisture in crawl. The moisture gets on the insulation and it falls from joists. It also may have compromised the insulation that fell. I would ask inspector why he thinks the insulation fell and whether there was any other signs of excess moisture: wood rot, mold, etc.


There is not excessive moisture in the crawl spaces. The insulation was likely not installed properly. Tough to see. There is not great access. If I am going to reinsulate and put down vapor barrier on the dirt, I will have to crawl through a hole the size of four cinder blocks a few times (there are four crawlspaces like this). My plan is to put vapor barrier on the dirt, stake and tape seams, go up the walls about six or eight inches and seal with firring strips and acoustical sealant. Down the road, I will likely insulate the walls. I believe this has to be done with fire resistant foiled paper as there will be no fireblocking material over the top so this won't be super cheap and may take me some time to get it done. The alternative is to reinsulate with batts between the joists and put up chicken wire which wasn't done before.

House was on the market for eight weeks before I made my offer. It had received no other offers and I don't believe it has received any since that time.

JerLon
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Re: Buying First Home - Inspection Follow Up Advice

Post by JerLon » Sun Jul 20, 2014 6:59 am

stan1 wrote:Important to keep in mind that an inspection and an appraisal are two different things. An inspection is theoretically for your benefit, although it's also for the seller's and both Realtor's benefit to avoid lawsuits over undisclosed defects (known or unknown). An appraisal is for the lender's benefit. Has the appraiser already visited the house, and has the lender raised any issues with the appraiser's report? Peeling paint can be a showstopper for FHA loans -- but that's a subjective evaluation so it will depend how the appraiser (not the inspector) documented the issue. Is the garage roof leaking (might be issue for lender) or is it just old (not an issue for lender)?

The seller should be expecting some renegotiation unless there are multiple offers on the house or it sold within days of listing. If I was the seller I'd say that issues like the roof and paint have already been taken into account in the price you agreed to pay (you knew that part of the roof was not replaced and should have seen that the paint was peeling when you made the offer). If the house has been on the market for a long time you have more leverage in negotiations; few sellers would walk away from the deal over another $1-2K at this point.


Great questions -

1. Appraisal has not been done and I won't have that report for 7-10 days. I had to have my inspection done within 10 days of purchase contract and now have a 3 day window to reopen negotiations. I will not have the appraisal by that time. If FHA (well, actually USDA, but they use FHA/HUD guidelines) is going to require the repointing the the painting of the trim for the loan to close will I be able to reopen that negotiation at that point or should I just ask for it now? I would assume that negotiations reopen after appraisal given that my offer is contingent on financing.

2. I should have clarified in my first post that the cedar shakes are on the walls of the garage, not the roof. It does not appear to be leaking but you can see sunlight through the cedar from the inside of the garage.

JerLon
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Re: Buying First Home - Inspection Follow Up Advice

Post by JerLon » Sun Jul 20, 2014 7:00 am

mw1739 wrote:You said some downspout issues are on your list of things to ignore. In my opinion that's a bad idea. You want to make sure that water is draining away from your house as best you can otherwise you're going to have foundation issues.


To clarify, I did not say ignore. Adding an extension and restrapping some downspouts is well within my range of skills and I will take care of myself. I see no need to ask the current owner to fix that.

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Re: Buying First Home - Inspection Follow Up Advice

Post by midareff » Sun Jul 20, 2014 7:04 am

spectec wrote:Excellent advice.
You should listen to EmergDoc and retiredjg.

If you decide to go through with this deal, you need to be well covered for the cost of the repairs. Even if you get good estimates, something will inevitably go sideways and it will cost more than you expect.



Agreed and I would include another point of view. Things you could see or easily detect when you looked at the home should have been things you knew and are responsible for "as-is". Things that are disclosed by inspection by a professional ... roof repairs, chimney, improper electrical, etc., certainly reopen negotiations. You had every right to assume they were in proper order when you looked at the house and tendered your offer. Most states require fair disclosure of known items, these will have to be disclosed to any subsequent potential purchasers if you can't reach agreement.

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Re: Buying First Home - Inspection Follow Up Advice

Post by retiredjg » Sun Jul 20, 2014 7:43 am

JerLon wrote: If FHA (well, actually USDA, but they use FHA/HUD guidelines) is going to require the repointing the the painting of the trim for the loan to close will I be able to reopen that negotiation at that point or should I just ask for it now?

I'd ask for it now and any other repair you were not aware of during the initial negotiation. There is no reason to wait. They may or may not agree to fix it or give you credit for the fixing. If they don't agree and the USDA requires it, they will have an additional change to agree to it.

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Re: Buying First Home - Inspection Follow Up Advice

Post by harrychan » Sun Jul 20, 2014 10:40 am

You can ask for anything but chances are you won't get anything. From what I see the issues are all non significant. Be prepared to take the house as is. I've been through several transactions and EVERY inspection will yield some issues. Just make sure you don't skip on important ones. I would highly recommend a licensed electrician to do an thorough electrical inspection. If the house is still occupied by the seller, I would do what I can to look behind beds, dressers, and other large furniture. General inspectors will not touch furniture to inspect walls. There may be extensive termite damage or even mold.
This is not legal or certified financial advice but you know that already.

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Re: Buying First Home - Inspection Follow Up Advice

Post by WhyNotUs » Sun Jul 20, 2014 11:06 am

JerLon wrote:Owner listed for $125,000, we offered $112,500, she countered at $117,500, we have purchase agreement at $115,000

We like the home. Perfect street, great bones, near family...

The inspection noted the following items that I will either be asking the owner to fix or fixing myself in the first year or two of ownership:
Two Crawlspaces over dirt are not insulated properly and old batts have fallen out of floor joists
Fireplace needs to be repointed
Chimney needs to be repointed (not all of it, just a portion above the roof line)
All facia boards and soffit boards (not a ventid soffit) need to be scraped, primed and painted (they're peeling/flaking badly) - Some need to be nailed or replaced as well
About 100 sq. ft. of cedar shakes on garage need to be replaced
Attic Insulation is installed improperly and needs to be removed/replaced
.


Have you looked at enough houses to know how $115k compares to the market. In other words, are you buying over, at, or below the market?
Crawlspace insulation is not too surprising, you could ask them to have it reinstalled.
Repointing is deferred maintenance and without seeing it, I am not surprised, every house you look at will have something like this.
Same with fascia and soffits. I would learn how you attic is vented before figuring out a fix. You can do the fascia first since they get more sun/weather.
Garage shakes could be a deduct, need more info.
Attic insulation is something I would want to know more about, why is wrong with installation? Attic insulation is critical to proper climate control. Could be a deduct or could be overstatement by inspector.
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JerLon
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Re: Buying First Home - Inspection Follow Up Advice

Post by JerLon » Sun Jul 20, 2014 11:13 am

WhyNotUs wrote:Have you looked at enough houses to know how $115k compares to the market. In other words, are you buying over, at, or below the market?
Crawlspace insulation is not too surprising, you could ask them to have it reinstalled.
Repointing is deferred maintenance and without seeing it, I am not surprised, every house you look at will have something like this.
Same with fascia and soffits. I would learn how you attic is vented before figuring out a fix. You can do the fascia first since they get more sun/weather.
Garage shakes could be a deduct, need more info.
Attic insulation is something I would want to know more about, why is wrong with installation? Attic insulation is critical to proper climate control. Could be a deduct or could be overstatement by inspector.


1. I've kept an eye on every home that has sold in this village for a number of years. I think I am below the market but there isn't a significant market for homes above $90k in this village. Median is 75k or so.

2. Attic only has ridge vent. Construction does not have soffit venting. I may add gable vents at some point but that is a catch-22 because keeping water out of stucco is not easy and this could make issues.

3. Attic insulation is two R13 batts stuck between each floor joist (each batt is paper faced) and then packed down to fit between the 2x6 (maybe 8?) joists. OSB is installed on top of this. This is certainly not a deal breaker but I will have to rip out all of the batts and OSB, build protection around junction boxes/fans/lights, and then blow in cellulose/fiberglass to R49 to meet current standards.

August
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Re: Buying First Home - Inspection Follow Up Advice

Post by August » Sun Jul 20, 2014 12:06 pm

I'd look into getting soffit vents to work with the ridge vents if I was re-doing the soffits. Soffit vents and a ridge vent are meant to work as a system and while you will get some ventilation from just a ridge vent, it will be much more efficient to have soffit vents as well.

Novine
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Re: Buying First Home - Inspection Follow Up Advice

Post by Novine » Sun Jul 20, 2014 5:03 pm

Keep in mind that the OP noted the house is 95 years old. Structurally, not all of the suggestions are feasible considering how these homes were constructed. Even the OP's idea for adding insulation in the walls may not be a good idea depending on the interior and exterior wall materials and construction.

Leemiller
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Re: Buying First Home - Inspection Follow Up Advice

Post by Leemiller » Tue Jul 22, 2014 7:43 am

Have you checked for lead based paint? I'd want to get that addressed sooner, rather than later if the paint is peeling.

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Re: Buying First Home - Inspection Follow Up Advice

Post by 4nursebee » Tue Jul 22, 2014 11:27 am

Assuming USDA/FHA, they will mandate what has to be fixed.

The current owners purchase price and upkeep costs have nothing to do with your offer or purchase. It helps to "frame" things for you, perhaps can help you to not feel taken. What is most important is what you want for what price. What are the comps?

Everything is negotiable for a strong qualified buyer.

115K agreement
Subtract best estimate for needed repairs
New offer price
They can say no
You can counter
Everything is negotiable, where is the line in the sand.
4nursebee

ubermax
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Re: Buying First Home - Inspection Follow Up Advice

Post by ubermax » Tue Jul 22, 2014 2:23 pm

I liked EmergDoc's answer so much I stopped reading most of the others responses - our daughter and son-in-law are where the OP is at also - I think it gets to be a bit of a poker game - and the buyer can only guess whether the house is under, over, or priced just right for the area - if buyer's agent really knows the local market, it would help a lot .

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