What's a fair offer for a house that needs major repairs?

February 14, 2007 2:10 PM

My wife and I put in an offer on a house for $187,000, which was accepted by the sellers. However, the inspector found a major problem that will cost about $22,000 to fix. What's a fair counter-offer given this problem?

House is a 3/2 built in 1958.

Here's what needs to be done, according to one contractor:
>Scope of work:
>Demo interior bathrooms, removing all fixtures, interior walls and tile,
>removing floor/subfloor, inspecting all electrical wiring and plumbing.
>Remove all construction debris
>
>Installing new sub-floor in both bathrooms, install imperial board with
>textured plaster finish, new tub in hall bath, new light fixtures, new
>contractor grade tile, (white or bone color), tile work includes tub
>surround and walk-in shower and ceramic tile for the floors. Install new
>commodes, 4' vanity with a single sink for the hall bath and 24" vanity for
>the master-bath. Vanities with cultured marble tops would be procured
>from local distributor, (contractor grade selection, any custom build or
>difference in price of customer selection would at owner expense above
>contractor price). Prime and paint interior walls with paint matching, (as
>close a possible to current paint scheme).
>Any electrical or plumbing work will be done by licensed contractors, all
>sub-contractors names and phone numbers will be given to owner upon
>completion of project if requested.
>
>Total price including materials, labor and permits:
>
>$22,500.00 (twenty-two thousand five hundred dollars)

Other than that, the house is still in relatively good shape.

posted by jay_wiese to home & garden (30 comments total)

This doesn't tell us what is wrong with the baths, a lot of it just sounds like updating.

Is it a safety issue or a cosmetic one?
posted by stormygrey at 2:16 PM on February 14, 2007

We had issues with a house that we sold, and we (the sellers) got bids on the work to be done as well. We ended up averaging all of the bids obtained by us as well as the sellers, and then deducting that amount from the offer price.

I would start with asking to deduct the $22,500 from the initial offer, but expect the seller to get bids on the work as well. It could take a week or two to work things out.
posted by Ostara at 2:17 PM on February 14, 2007

The time for counter-offers has past if the seller already accepted. You are now in a negotiation for a rebate. You don't note why the bathrooms need to be completed renovated. The mantra in Cailfornia is "repairs are the responsibility of the seller, upgrades are the responsibility of the buyer." Which is it?
posted by mzurer at 2:19 PM on February 14, 2007

This sounds like updating. What's wrong with the bathrooms? The selling price likely already considers the need for updating.
posted by acoutu at 2:20 PM on February 14, 2007

Definitely a repair; the subfloor and joists underneath the bathrooms are almost completely rotted away.

The bathrooms actually look quite good until you get underneath.
posted by jay_wiese at 2:27 PM on February 14, 2007

You don't say what the problem is. Was there water damage or a structural problem that would require the bathrooms to be demo'ed?

Even so, replacement fixtures would generally be estimated with a very wide range+, acknowledging that this depends on the taste/means of the buyer.

Also, this sounds like a strange amount of detail (color specifications?!) for an inspector to provide...is the inspector the one that provided this description of the work?
posted by desuetude at 2:30 PM on February 14, 2007

Ha, they always trick you like that. Often you can't get a mortgage till its fixed, which is of course the kicker. First, hindsight is 20/20, make sure there is some kind of contigency like "offer contingent upon inspection" or whatever.

You might just be stuck with the price if you made an offer and they accepted. But look at your estimate, it is almost all updates and not the actual repair. You can fix the joists without destryoing everything else. People use to piecemeal repair their homes all the time. Get on down in your basement or whatever and replace the joists. You know, your scope of work doesn't address the joists, just the subfloor. You can fix that yourself.

Always, always, always go into basements and look at joists and such before making an offer.
posted by stormygrey at 2:32 PM on February 14, 2007

The bathrooms actually look quite good until you get underneath.

Should'a previewed. So why would you need completely new comodes and tubs and vanities and light fixtures?
posted by desuetude at 2:33 PM on February 14, 2007

Get ready to lose the house.

The sellers would be bona fide idiots to accomodate the preferential crap present in that S.O.W.

The contractor is quoting replacing all of both bathrooms down to the subfloor and toilets?

What the hell is wrong with it, radioactivity?

The fair thing to do, is to separate 'preferential' from 'required' repairs, and offer them a reduced price for the required ones and do the decorating with your own budget.

To clarify, things like removing lead supply pipes would be required. Things like marble countertops are preferential.
posted by FauxScot at 2:35 PM on February 14, 2007

From my father, a retired GC:

"Tell them to scab new joists to the old rotten ones"
posted by sandra_s at 2:38 PM on February 14, 2007

So why would you need completely new comodes and tubs and vanities and light fixtures?

Exactly what I was thinking. If I were repairing something to sell it, care would be taken in demoing to ensure those items could be reused.

If I were the seller I would counter that those costs should be removed from the negotiation.

The mantra in Cailfornia is "repairs are the responsibility of the seller, upgrades are the responsibility of the buyer."

158k for a 3/2? It's probably not in California.
posted by Big_B at 2:46 PM on February 14, 2007

Doh! 187k not 158 - It might be in California.
posted by Big_B at 2:46 PM on February 14, 2007

We found some structural issues with our house, made a counter-offer, and were rejected by the seller. Just know this can happen, and the seller is then not required to make good on the original offer (which we then went back to).

Think about the house. Do you have a good deal or not? I also question some of the "repairs". It's one thing if you are having the house assessed for legal and structural issues that the seller was unaware of but MUST be fixed, but if you've just decided you want to remodel the seller has probably taken that into account already. Why would an inspector tell you you have to have cultured marble tops in your bathroom? Why would he tell you you need to repaint the walls?

Usually in these circumstances, the issue is more like "foundation repairs must be made to the house" or "building is in violation and an exit must be built in the basement" or something like that. You should assess whether or not the house is worth the price given the extra money you want to invest in it to remodel.
posted by xammerboy at 2:48 PM on February 14, 2007

Aside from everything that is said - I REALLY don't like that estimate. Note how it just says "inspecting all electrical wiring and plumbing" but does not say that the costs of any repairs resulting from the inspection are included in the estimate. If they aren't you're looking at a lot more cash. If the are, then the contractor is likely padding quite a bit to handle the worst case scenerio.
posted by true at 2:51 PM on February 14, 2007

I did everything on your list with no construction background (or clue really) for the cost of materials, a few grand tops including a rather awesome clawfoot tub I found on craigslist for $100.
Materials will not run you $22,000.

Maybe it's time to call in all those favors from friends and buy a sledgehammer. Amazing how many uses you find for a sledgehammer once you come up with an excuse for buying one.
posted by paxton at 2:53 PM on February 14, 2007

I think you need to get a split estimate. You didn't say where you are, but in most states the things that they have to accept in a counteroffer are structural repairs. New cultured marble countertops and bathroom fixtures do not count as structural repairs.

So get the things you WANT split out from the things you NEED done to bring the house back to exactly the shape it's in minus the structural repair (which in this case I would think would only include jacking the floor up, sistering joists as allowed by building code, and getting on with your lives, and having someone drill holes in the wall that are patchable that you can use to inspect the condition of the studs in various parts of the house. It's usually pretty easy to tell where the water that rotted out the joists was originally coming from ... if the contractor says no, GET ANOTHER CONTRACTOR because that one sold you a bill of goods.

Of course, you can try just deducting the 22k from the price... but make sure they don't see the 'marble countertops' item!
posted by SpecialK at 2:53 PM on February 14, 2007

$175,000.
posted by thinkpiece at 3:02 PM on February 14, 2007

The time for counteroffers has not passed, at least not as it relates to this. This is not a simple counteroffer. That is the purpose of the inspection, to identify any potentially hidden defects. You then have the opportunity to either back out or re-negotiate.

Here there seems to be a mixture of repairs and cosmetics. For instance, I think you are going to have a difficult time convincing the seller to discount the price to cover new fixtures, tubs, toilets etc. The floor repair though is fair game. I think you would do well in today's market to knock $10 to $12 K off the price. If you get more, you may negotiate my next house transaction for me.
posted by caddis at 3:04 PM on February 14, 2007

If something is actually exposed in the inspection as broken, such as the furnace, that's the kind of thing you can get the seller to account for, or even replace. But, as others have observed, this may fall into the normal wear and tear category.

Lets say this problem isn't bad enough to get you out of the deal, nor is it something that the seller is willing to figure into the cost. In that case, I like sandra_s' answer.

Lots of 60-year-old houses are going to have sagging joists from years of bathroom leaks and condensation. Mine sure as hell did, and it showed - the toilet leaned in to the corner! Easily fixed by pulling out the subfloor and scabbing the joists. I did this (myself) as part of a complete bathroom overhaul and floor-tiling project, and I think this particular component of the project probably cost me less than $200. I had never done anything like it before, and got all my instructions from the intertubes.

Good luck!
posted by M.C. Lo-Carb! at 3:37 PM on February 14, 2007

Could some enlighten me. If there was an offer and an acceptance it is a contract, correct? If the work is required by the state than it is on the seller to pay for or reimburse. Unless there is something about real estate law I am not aware of?
posted by geoff. at 3:42 PM on February 14, 2007

geoff. - it would depend on the wording of the contract what the penalty would be for breaking it. It might be worth it for the seller to break the contract rather than pay for the repair or rebate the buyer.
posted by mzurer at 3:49 PM on February 14, 2007

geoff.: house offers normally contain a number of "subject-to" clauses such as
187,000, subject to:
- financing
- inspection
- title search
- lien check

etc.

Buyers drop these subject-to's in very competitive seller's markets, but do so at considerable risk.
posted by Rumple at 3:52 PM on February 14, 2007

Caddis is right. Standard real estate contracts always have an inspection contingency.

Unless it's based on 'as is', the buyer can have the place inspected and present demands for remedies to anything that is not evident at the time of offer. Either buyer or seller can opt out at that point, but customarily, they arrive at some accomodation and go on to close.

There are time limits to most of the contingencies... for instance, inspection has to be done within X days and if not, buyer is usually stuck accepting it, as is, under the terms of the contract, and usually subject to forfeiture of any earnest money deposit.

There are usually other contingencies, too, such as being able to obtain a loan. It's one of the reasons that cash sales are a little easier.. no loan contingencies.
posted by FauxScot at 3:57 PM on February 14, 2007

That estimate of what's wrong with the house is 90% cosmetic. I've never had or witnessed a home inspector say "This light fixture is ugly, I recommend you get a new one."
posted by jerseygirl at 4:09 PM on February 14, 2007

90% cosmetic

???
Rotting floor joists are not cosmetic. New tub, perhaps, but 90% of the cost is not in new tubs and other cosmetic things. Depending upon access, joists can be a real bitch to replace. First floor joists accessible from the basement - not so bad. Second floor joists above a finished ceiling - major job.
posted by caddis at 4:40 PM on February 14, 2007

Forget that estimate. They want to do way too much and they're using a lot of meaningless language to make it look like they're doing more than they actually are. For instance, wtf is "contractor grade" tile? It's tile purchased by a contractor. And no dice on the "subcontractors names and numbers provided after completion". You want that up front, along with a schedule.

That said, you can use that estimate as a negotiating tool. Go back to the seller and tell them it'll cost $22,000 to bring it up to code, settle for $15,000 off the purchase price, do the demo yourself and spend $5 grand on the actual repairs. The other advantage is that once you have the floor opened up, you can tell exactly what's wrong and what needs to be fixed.
posted by electroboy at 4:43 PM on February 14, 2007

Another note:
IANARealtor but I have a few in the family, and in my experience and in hearing about these types of situations your realtor needs to be dealing with most of this issue. That's what they get paid to do.
posted by Big_B at 4:59 PM on February 14, 2007

I know joists are a bitch to replace, caddis. I was speaking of the list aside from the joist issue. Like you said earlier, the floor is completely fair game. Most of what is listed in that estimate (asking for a new tub, new cultured marble vanity tops, new vanities, new light fixtures, new commodes, paint) is excessive. I'm sort of borderline on the paint though.

My thoughts to the original poster is this: be fair about it. Take a good look at what's necessary and not in that list. If you need to get another estimate just on the joists, go for it.

Honestly, if I am the seller and you bring me that list requesting 22k to replace a hell of a lot more than the joists, I'd probably just let you bail out of the purchase and sale agreement.
posted by jerseygirl at 5:59 PM on February 14, 2007

I think we disagree only on percentages. I think the floor repair is probably about half of the total bathroom rehab estimate, not ten percent. Whatever. How can I argue? It's Valentine's Day, and I love Jersey girls, and oh Hell, whatever you say. I just got a big smooch from my Jersey girl and I am just feeling too agreeable.........................
posted by caddis at 6:13 PM on February 14, 2007

If you can get two bathrooms plus all the other things you mentioned done for $22,500 I would take the deal. That is a huge amount of work for $22.5K . It is very much well worh it.
posted by JayRwv at 6:49 PM on February 14, 2007