Hi folks. I need some advise on this house we’re looking at buying.
When we first decided to make an offer on the house, we had an inspector come and inspect the house. Essentially the original house is in fine condition, apart from cosmetic needs like carpet and paint, but the addition, which is two floors and includes the entire kitchen, was in the words of the appraiser “all wrong.” There was wiring and plumbing funkiness, the wrong kind of insulation, wrong kind of studs, etc. But most importantly, we were told that 1/4 of the foundation under the addition was essentially nothing: cinder blocks on card board.
Our realtor advised us that a house with these kinds of problems would not pass FHA appraisal, so we got a contractor at our church to give us an estimate of what it would cost to brink the addition up to code. Estimate in hand, we proceeded with the FHA appraisal, with the expectation that the seller (a bank) would make whatever repairs necessary to pass FHA standards and sell the house.
Sunday we heard back from the appraiser that the house would need two things to qualify for our FHA loan: new flooring and new paint. No mention of any of our concerns about the addition. No mention of the foundation (or lack thereof). I don’t know if that means the appraiser just didn’t notice, if he considered it none of his concern, or if he thought the foundation was actually fine.
So my question: obviously, I’m not buying a house with no foundation. I think there’s a verse in the Bible about that. But I would like to buy this house. So how do I go about ensuring that the addition is in fact safe? Do I simply lay down at the seller that we’ll buy the house if they fix the foundation? Should we get the addition re-evaluated? I’m not sure what the proper way to proceed is, and I’m open to any suggestions.
neumatikos 
Kyle, was your contractor’s repair estimate itemized? If it were just a single number, I could see the bank’s appraiser not recognizing the need for a foundation. It’s just too much beyond the pale to think of a house not having it.
The lack of foundation would be a good reason to NOT move forward. There will be other houses.
Alternatively, you could make an offer on the house. The standard contract will have a figure above which you can void the contract and get your deposit money back. I have seen $3000 before. (Make sure your contract has this provision, and double-check my reasoning with your realtor.) If you offer a low price and it is accepted, and THEN submit your contractor’s itemized results, you would be able to a) get the seller to fix it, or b) get out of the contract and get your deposit back, or c) go through with the house purchase and have your realtor hold the money for the foundation repairs in escrow.
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My advice would be to require the Bank to make the repairs before you would buy the house. I know that you all really want this house but the problems with the house are too big to sweep under the rug for now. The costs are substantial and will have to be done to make the addition safe. Even with these repairs the issues of the upstairs ceiling, in the addition, are pretty major. If the Bank will not make the repairs then I would walk away from it.
Thanks,
Greg Reynolds
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Rajah,
My quotes were very broken out. The FHA inspector is an apriaser that has a FHA certification. They are looking for cosmetic things and do not have any expertise in structural things. I would require the work to be done prior to closing because there may very well be other issues that are found in the house. For your info the foundation issues were under an addition that the previously did on his/her own without getting inspections. Another reason to use a licensed contractor that you trust….hehe
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Greg – thanks for commenting. Your opinion is invaluable, since you actually looked at the foundation. Are you recommending that we insist on all the repairs (plumbing, electrical, gutters and siding) in addition to the foundation work?
Just to reiterate: we’re absolutely not moving into a house unless it has a foundation.
Rajah – we had already made an offer and have been working through this process for a month or two. I think what I’m mostly asking for is whether we ought to pursue your a), b), c), or if there are other methods for ensuring the house is up to spec before we close.
I don’t believe I understood the escrow option, though.
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Kyle,
I would ask that all the items that the home inspector had as major items, and I think you listed all of them, be repaired. This lets the bank counter. I would not budge on the foundation, the deck, and the plumbing/electrical. As far as the siding and gutters these are not as important and can be repaired by you at your leisure. The bank is between a rock and a hard place since now they know of the problems and have to disclose them to any potential buyers, which will probably scare a lot of them off. I think they have no choice but to fix the problems. They may be able to get it done cheaper so let them fix the problems.
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Based on what Greg has said it sounds like the prior builder probably didn’t file the proper building permits when the addition was built. You definitely need to find out what the ramifications of that omission are.
I’ve never dealt with this situation myself, but my understanding is that the municipality may require the permits to be filed retroactively, may require additional fees and/or interest from when the construction was done, and may even require the addition to be demolished. This could turn into a whole can of worms you don’t want to deal with.
Definitely find out what was filed, and if they didn’t do their paperwork find out what the local government will require.
There are plenty of houses out there. Be sure you’re not getting into one that is going to trap you in a legal mess in addition to whatever the physical mess turns out to be.
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Kyle,
I agree with the above advice. I would tend to trust the appraiser you hired instead of the bank. FHA wants foreclosed homes sold as quickly as possible. I believe the reason they want new paint and flooring is so the house “looks good”. Don’t expect the gvmt to be looking out for your best interests. They just want those foreclosures (if I remember correctly, this is a foreclosure right?) off their backs. Demand that the bank fix the (major) flaws pointed out by your inspector.
We bought a FHA foreclosure, so I know all too well how they operate.
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Kyle,
Remember that this is a “Buyer’s Market.” I would give an itemized list (foundation, deck, plumbing, and electrical) to the bank and tell them if these are not fixed at their expense, then there is no sale. As an alternative, you could give them a list which also includes the siding and gutters, that could be negotiated out. This makes you appear to be flexible, but still gets the most needful things fixed. As I told you before, home ownership is a “Money Pit;” you should not expect to start out in the Grand Caynon. Lastly, let me remind you that you are welcome in our home for as long as it takes. We love you and are grateful that we are able to support you.
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I have a story for you that is very round-about in a Garrison Keillor kind of way, although probably not as well zig-zagged.
For at least a couple weeks, maybe more, we had been aware of an unpleasant odor coming from our bedroom closet. But we have been really busy so it was pretty easy to ignore. Just close the door, right? But when the door was opened a stronger than usual whiff of the offense was waiting to pounce. So the easy way to deal with the pouncing whiff of offense: leave the door open. Turn on the ceiling fan. That helps.
Well, one day Diana came into the bedroom and the pouncing whiff was lounging in the vicinity of the closet and it let out a quiet belch. The belch was quiet but its after-effects were heaped up. perhaps even repugnant. Not recognizing the the belcher as the pouncer she thought it might be a gas leak. She called me but I could not come home to investigate. Natural gas in our place is all supplied at the opposite end of the house so it didn’t really make sense. But the gas pipe does come into the house between the bedroom and the livingroom, where the fireplace is. So maybe there was a possibility that there could be some sort of gas leak that is congragating in our bedroom closet.
We decided that she should call the gas company, just to be on the safe side. The gas lady told Diana to vacate the premises but stay close by in case the service person should need her. So she packed up the rowdy gang of ankle- and knee-biters into the family van and went down the street to wait.
Eventually a gas company truck pulled into the driveway. A man went in, came back out, went in again and then came out and drove away. “What do I do?”, she asked me. Not knowing the answer, I made a phone call and asked someone who seemed to know. After asking all the vital questions the customer service lady told me that since no one was home, they turned off the gas and are waiting for Diana’s arrival back home. When she tells them she is home they would schedule a return visit from the service man. I advised her that Diana’s return was preiminent and would they send someone back out.
Much sooner than we had even hoped, the man returned, turned the gas back on, relit the appliances that have pilots and said there is no gas leak. He agreed that the bedroom aroma was an unpleasant, even unwelcome one. But nontheless, the odor is not the natural gas variety. He suggested that it actually smelled like something dead
Dead? Well, 20 year-old Kristen had disappeared about a month ago and is presumed expired somewhere. Could Kristin the Antique “Queen Being” be the Keeper of the Dead-Odor? I had searched the closet and all other possible indoor resting places, including the attic a few days after we were sure she was not coming back alive, with no results. Could a cat disappear, be presumed dead and withhold the death aroma for a week or two before making its malodorous appearance? Surely not, but it won’t hurt to reinvestigate. So I searched the floor of the closet yet again. I did find some never to be worn agian shoes that were cowering in the corner, my corner, no less, hoping that this was not the time for them to be ejected into the trash. Their fears were realized and they now reside at the city dump. None were the source of the odor. Standing up, I realized that the odor was coming down from above. Did Kristin make it to the attic? I went back up into the upstairs oven to find out. We need more insulation above our bedroom but there was no indication of an odor source up there.
That left only one logical location to be investigated. And once again there was an opportunity to verify the validity of the residence of the many items on the closet shelf. One by one, I removed future Christmas or birthday gifts along with all sorts of other things. And then finally, the “AHA!” discovery. Did you remember that Pysanki decoration is done on whole eggs? These were all new this Easter as the ones from the past had met their demise in the garage. The closet Pysanki had met their doom: one had exploded and five had just leaked. The lurking, pouncing, lounging belcher had been finally identified, but not without great effort and frustration.
We were pretty sure something was wrong but didn’t know what to look for. And although we thought we knew where to look we didn’t know for sure. And even when we looked where we knew the problem should be we didn’t find it. I don’t have a good feeling about the house you want to buy. It could be a Pysanki. There are more known things that the house needs to be fixed than the bank will want to fix. They won’t want to put more money into what is now a bad investment for them. I suspect and fear that you are approaching a place that people who bid for something at a live auction where there is competition or someone who is gambling. You have worked so diligently for something that is not quite yet attainable that you are subconsciously, perhaps, claiming ownership of despite the lack of bonafide possession. People who are in such a predicament can lose sight of the additional potential costliness of further pursuit. Cou come by it naturally. Your mother has reminded me of situations in our life that I had set my mind on, regardless of practically that I would not let go that I must admit in the far, far away later on that were bad decisions.
Jack made some observations that sent the red flag much higher that I had it. In fact I saw the silly thing burst into flames, it was so red. He suggests the possiblity of a can of worms. I’m thinking Indiana Jones and the snake pit. Holy Cow! Holy Toledo! Holy Moley! Holy Terror! You were already gone from home, but do you remember the two years or so that Diana and I had three cars between us? It seemed necessary because every time I got the third car working again, one of the other two would break down. What a frustrating time!
Consider the possiblity that that house could be all three cars. Ouch! You are looking at a very used car that was not maintained properly. When it got into a crash the other party didn’t have insurance but they “knew a guy”. He fixed it alright but used parts from a salvage yard. I’ve done that myself but I knew where I was getting the parts and was willing to take the risk. In this case, nobody knows much. It’s not a two-year old low-mileage car with no scratches, dings or collisions that has been maintained under warranty. It’s affordable when you only look at the mortgage payment. I think there are too many what-if’s.
I know you really want to own your own house. I don’t blame you. Rajah said “There will be other houses.” Jack said “There are plenty of houses out there.” Greg said “. . . the problems with the house are too big to sweep under the rug . . .” Your Mom Evans, whom I am intensely grateful to have taken, so graciously, you and yours into their home, reminded you of the folly of trying to start out in the Grand Canyon of home ownership Money Pits. Your dad says do whatever you need to do to get out of the contract. Get the money back if you possibly can. If not consider the thousands and thousands and possibly more thousands and thousands that you won’t have to worry about losing.
In a mostly unrelated observation, did you know that when we went to Enid to go into the photography business, the bank was trying to unload a bankrupt business and that they were trying to keep from losing their whole shirt all at once? They convinced me that the business had all kinds of potential because it had enjoyed a great reputation for about 15 years. The senior season was about to begin and the phone would be ringing off the hook. But don’t go around asking people about it because the bankruptcy filing had just been done and most people didn’t know that it happened. If we worked quickly and quietly the value of the business would remain high.
I wanted to be in business so badly that I chose to ignore the fact that that appointment book was absolutely blank. Not a single appointment was there for any type of portrait session and not a single wedding was pending. I chose to ignore that hardly any camera equipment was there. I had met the guy who walked away from that place and knew that he would have had a lot more equipment than was there, but it didn’t belong to the bank. They had been dumb themselves and had not kept a record of equipment that was collateral for their loan to him. I wanted to be away from Clinton for very specific reasons that, and they were some very good reasons to not be in that town, as it turned out. I wanted to be in business for myself so I took the bait and signed up for a good portion of the other guy’s debt to the bank. It was after I was the new official debtor that I found out that I couldn’t have the phone number to that studio because the other guy owed nearly a $1,000 to the phone company and they were not about to release that valuable connection to the world without its collateral being redeemed.
So I got a new phone number for the studio that had enjoyed a great reputation for all those years. Just as I was ready to start advertising the new phone number for that great old studio I got a letter from the bank’s lawyers advising me to not use the name of that great old studio on any signage nor in any advertising due to the great financial risk of being liable for the debts that were coming more and more to light. The negatives (pardon the pun) that were unknown at the time of the purchase of that “property” continued to come to surface throughout the two years that we were there.
You have told me that you feel that you are too far into the process to just summarily back out. There are probably an infinite number of situations where contracts were backed out of at the final moment. Talk to your realtor. Ask for his help in getting out of the process and in getting your deposit back. Remember your dad here is a known “Mr. Subtle”. Consider that Mr. Subtle is saying something bluntly here. As President Nixon was known to say, let me make this perfectly clear: Even if you lose your deposit, that is the only money you will lose on the deal. RUUUNNNN!!!!
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Kyle, You have some good advice on this page. I think your path is clear.
A house can indeed be a series of financial hurdles to overcome (take the tree in my back yard that decided to die and is estimate at $2K to take out) that areunforeseen. If you have any interest in budget advice I am more than willing to sit down with the two of you.
It is a buyers market…
…for those that are prepared.
<><
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(This is the wife who is too lazy to log off her husband’s side to make a quick commnent:)
To answer the building code question above….
When we first had it inspected, the inspector mentioned that he didn’t think that the addition to the home had been built with a permit and gave me the number of the county permit office. Since building permits are public knowledge, I called and asked if the home had had any and the answer was “no.” At the time, Kyle and I were thinking of getting a permit ourselves so I asked if our getting a permit to fix/repair the home would be affected by the lack of a permit originally. Again the the answer was “no.” In other words, as long as a permit is used to repair the home, either by us or by the bank or both, it would make up for the fact that there hadn’t been a permit in the first place to build the addition.
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