Do we make an offer on a house we suspect has some issues?
March 22, 2013 7:53 PM Subscribe
First time homebuyers, both excited and nervous as high hell. We've been looking at houses for a few months and have finally come across one we absolutely adore. It's an older house (constructed 1922) that seems to have been immaculately kept and regularly maintained. However, with a house that age, it seems likely that there may be some issues.
We're interested in making an offer but we absolutely don't want to be stuck with a huge amount of repairs from the get-go. Do we go ahead with an offer and hope for the best? Is this what a "contingent on inspection" offer is about, and in the case of that, is a routine home inspection sufficient for structural matters? The house has a rubble stone foundation, and I'm a little worried that it may either need to be parged or repointed (if I'm getting the terminology right). None of the joists are sagging, which is great, but it appears there may be a touch of moisture damage. That being said, I have no freaking idea because I'm a web developer with a bachelor's in music, which makes me about as qualified to inspect a house's structural integrity as... well, you get the point.
We don't want to have this house fall through if it turns out it's structurally sound, but we also don't want to get burnt. What's the normal operation in this kind of scenario?
We're interested in making an offer but we absolutely don't want to be stuck with a huge amount of repairs from the get-go. Do we go ahead with an offer and hope for the best? Is this what a "contingent on inspection" offer is about, and in the case of that, is a routine home inspection sufficient for structural matters? The house has a rubble stone foundation, and I'm a little worried that it may either need to be parged or repointed (if I'm getting the terminology right). None of the joists are sagging, which is great, but it appears there may be a touch of moisture damage. That being said, I have no freaking idea because I'm a web developer with a bachelor's in music, which makes me about as qualified to inspect a house's structural integrity as... well, you get the point.
We don't want to have this house fall through if it turns out it's structurally sound, but we also don't want to get burnt. What's the normal operation in this kind of scenario?
You usually have to put down in the contingency clause the things that are deal-breakers. That way, you don't just have a get-out-of-deal-free card, which protects the seller. In a house with water damage, there might be mold. In Indiana, at least, that is an add-on text that costs an additional fee.
So you need to educate yourself as much as possible about potential pitfalls in houses like these, and talk to your inspector about your specific concerns. In a house that old, for example, you might be dealing with a lot of knob-and-tube wiring. That can make it difficult or very expensive to get homeowner's insurance.
posted by headspace at 8:00 PM on March 22, 2013 [2 favorites]
So you need to educate yourself as much as possible about potential pitfalls in houses like these, and talk to your inspector about your specific concerns. In a house that old, for example, you might be dealing with a lot of knob-and-tube wiring. That can make it difficult or very expensive to get homeowner's insurance.
posted by headspace at 8:00 PM on March 22, 2013 [2 favorites]
Put in an offer, within 5 days of acceptance, have a Thorough home inspection, then decide how to proceed from there! You can back out if it's too overwhelming (within the first 5 days), or ask the seller to fix issues that come up with respect to the inspection.
posted by katypickle at 8:02 PM on March 22, 2013
posted by katypickle at 8:02 PM on March 22, 2013
Response by poster: @headspace, so, for example, if we suspect there may be foundation or joist damage, we list those as issues in which the seller would either have to rectify or the offer is void? Just trying to wrap my head around it.
posted by Mali at 8:03 PM on March 22, 2013
posted by Mali at 8:03 PM on March 22, 2013
Yes, exactly. You can put it down as an absolute deal-breaker, if you find these issues, then we withdraw our offer. You can ALSO let the inspector find what s/he finds, and then negotiate with the seller to fix them.
When we bought our house for example, we made our offer contingent on the inspector finding zero evidence of mold or mold damage (because I'm allergic to it.) But when he found a couple of plumbing issues, we asked the seller to fix them. They could have said no, and everyone would have walked away.
So even if you can't think of something that would be a deal-breaker, and your inspector finds something of that nature-- you can still walk away if the seller refuses to fix it. The contingency clauses just specify the ones which will nullify the deal entirely.
posted by headspace at 8:07 PM on March 22, 2013
When we bought our house for example, we made our offer contingent on the inspector finding zero evidence of mold or mold damage (because I'm allergic to it.) But when he found a couple of plumbing issues, we asked the seller to fix them. They could have said no, and everyone would have walked away.
So even if you can't think of something that would be a deal-breaker, and your inspector finds something of that nature-- you can still walk away if the seller refuses to fix it. The contingency clauses just specify the ones which will nullify the deal entirely.
posted by headspace at 8:07 PM on March 22, 2013
In my area, buyers contractually have the right to renegotiate price or back out altogether, upon inspection.
Don't you have an agent representing you? It costs you, the buyer, nothing. Get an agent; she'll help you with this stuff!
posted by kestrel251 at 8:07 PM on March 22, 2013 [5 favorites]
Don't you have an agent representing you? It costs you, the buyer, nothing. Get an agent; she'll help you with this stuff!
posted by kestrel251 at 8:07 PM on March 22, 2013 [5 favorites]
Seconding kestrel. Get an agent. This is THE biggest purchase you will ever make. Be as informed as you can be. If the seller doesn't want agents involved, walk away.
And yes, a satisfactory home inspection is a very normal condition of sale. There are some markets (like the one I live in) where there is enough competition that you may have to give it up, but that's the exception right now.
Take your time. Do this right.
posted by dry white toast at 8:15 PM on March 22, 2013 [3 favorites]
And yes, a satisfactory home inspection is a very normal condition of sale. There are some markets (like the one I live in) where there is enough competition that you may have to give it up, but that's the exception right now.
Take your time. Do this right.
posted by dry white toast at 8:15 PM on March 22, 2013 [3 favorites]
In Michigan it is the same as kestrel stated. Your offer is written up contingent upon inspection, no special clauses needed. I walked away from one home and received back my earnest money deposit because I simply changed my mind after the inspection.
However, if you attempt to renegotiate price after your offer was accepted, the seller then has the right to walk away from the deal without repercussions (so my attorney informs me).
posted by notaninja at 8:24 PM on March 22, 2013
However, if you attempt to renegotiate price after your offer was accepted, the seller then has the right to walk away from the deal without repercussions (so my attorney informs me).
posted by notaninja at 8:24 PM on March 22, 2013
With a house of that age, you will also want to know about the state of the electrical wiring (one of my friends has a house of that vintage, and...let's just say the wiring was interesting) and the plumbing (is it cast iron? copper? updated to pex?). What does the insulation look like? Does the house have wood windows, and if so, in what shape? With a 1920s house, bear in mind that you may need to purchase custom-made windows, doors, &c. if any of these things are in need of replacement, or source salvaged originals. Even in a 1950s house like my first abode, there were some things, like vent grilles, that were incompatible with 2000s equivalents.
posted by thomas j wise at 8:31 PM on March 22, 2013 [2 favorites]
posted by thomas j wise at 8:31 PM on March 22, 2013 [2 favorites]
Another thing to look for is blue staining in any of the sinks. Houses that old often have copper plumbing. Blue stains are an indication that the copper is pitted and leaching into the water.
posted by headspace at 8:38 PM on March 22, 2013 [3 favorites]
posted by headspace at 8:38 PM on March 22, 2013 [3 favorites]
As others have said, yes, you can make an offer contingent on the house passing inspection. If issues are found during inspection, you can request that the buyer correct the problems, or you can back out of the offer.
With a house this old, I highly recommend you have a certified electrician and a plumber inspect the house, in addition to a home inspector. It will be well worth the money you pay. I purchased a home built in the late 40s that had significant wiring and plumber problems (that we were well aware of - we were looking for a fixer upper). We had an electrician and plumber inspect the home prior to purchase so we knew exactly what we were getting into. You may wish to have other contractors involved with the inspection, too, but this should be the minimum with a house of this age.
posted by pecanpies at 8:56 PM on March 22, 2013 [3 favorites]
With a house this old, I highly recommend you have a certified electrician and a plumber inspect the house, in addition to a home inspector. It will be well worth the money you pay. I purchased a home built in the late 40s that had significant wiring and plumber problems (that we were well aware of - we were looking for a fixer upper). We had an electrician and plumber inspect the home prior to purchase so we knew exactly what we were getting into. You may wish to have other contractors involved with the inspection, too, but this should be the minimum with a house of this age.
posted by pecanpies at 8:56 PM on March 22, 2013 [3 favorites]
You just make your offer contingent on the inspections. When the inspectors find something (and they usually do, even on newer houses) you have these choices:
- walk away from the deal
- leave the deal as-is and fix it later
- ask for money to cover the repair, or an equivalent reduction in price
- ask for the seller to make the repair
Legally, the seller should put any known problems in the disclosure agreement.
Go with your gut! You will of course have a general home inspector, but if you have concerns about the plumbing or foundation, call in specialists in that area.
I would shy away from having the seller deal with major repairs. On our current house, we asked the seller to get three estimates, average them, and then knocked that off the price.
Keep in mind that if the house needs a lot of work it may appraise for less than the negotiated price. Banks will not finance a mortgage greater than the appraisal.
posted by Ostara at 9:27 PM on March 22, 2013 [2 favorites]
- walk away from the deal
- leave the deal as-is and fix it later
- ask for money to cover the repair, or an equivalent reduction in price
- ask for the seller to make the repair
Legally, the seller should put any known problems in the disclosure agreement.
Go with your gut! You will of course have a general home inspector, but if you have concerns about the plumbing or foundation, call in specialists in that area.
I would shy away from having the seller deal with major repairs. On our current house, we asked the seller to get three estimates, average them, and then knocked that off the price.
Keep in mind that if the house needs a lot of work it may appraise for less than the negotiated price. Banks will not finance a mortgage greater than the appraisal.
posted by Ostara at 9:27 PM on March 22, 2013 [2 favorites]
Have you checked out the many suggestions in this almost identical question from earlier today?
posted by trip and a half at 11:41 PM on March 22, 2013 [2 favorites]
posted by trip and a half at 11:41 PM on March 22, 2013 [2 favorites]
The whole point of the contingent offer is to provide safety for a buyer who doesn't know enough about houses to recognize every possible problem that might impact the value of the house. Basically you're saying, "I'm no expert on houses, but I like this house and if it's as good as I think it is I'll pay $X for it. If that's an acceptable price, I'll have my expert house person / people look it over and we'll go from there." You *can* write in dealbreakers if there are potential problems you absolutely positively won't deal with, but it's unnecessary. The process is the way it is because home buyers generally aren't experts on houses. You don't need to guess at or anticipate every possible flaw.
That said, don't ignore glaringly obvious issues. It's tough to come back after an initial offer and say, "We just noticed that the kitchen counter is bright orange, so we want $1500 knocked off to change that." Contingencies are things you wouldn't reasonably be expected to have noticed, or understood the significance of if you did notice them, or been able to predict; not things about which you might change your mind.
posted by jon1270 at 3:57 AM on March 23, 2013
That said, don't ignore glaringly obvious issues. It's tough to come back after an initial offer and say, "We just noticed that the kitchen counter is bright orange, so we want $1500 knocked off to change that." Contingencies are things you wouldn't reasonably be expected to have noticed, or understood the significance of if you did notice them, or been able to predict; not things about which you might change your mind.
posted by jon1270 at 3:57 AM on March 23, 2013
Response by poster: Aargh, @trip and a half, totally somehow glossed right over that one. This whole thing has me a little fried at this point. Thanks.
posted by Mali at 4:56 AM on March 23, 2013 [1 favorite]
posted by Mali at 4:56 AM on March 23, 2013 [1 favorite]
Get an agent. A good one will explain all of this (and more things that you don't know that you don't know), all for no cost to you.
posted by Fig at 7:46 AM on March 23, 2013
posted by Fig at 7:46 AM on March 23, 2013
I'll add to this by saying that if the inspection does turn anything up, I usually prefer to have the work done myself instead of the seller. This is simply because most sellers will try to get the job fixed for as little money and as quickly as possible. Of course you can have the completed work inspected, but nobody is going to treat the job as thoroughly as you, the potential new owner, would.
If I were to be informed of some issues I would get some estimates and either negotiate a deduction from the sales price or have the seller use my estimates and my contractors to have the work done.
posted by tgrundke at 8:13 AM on March 23, 2013
If I were to be informed of some issues I would get some estimates and either negotiate a deduction from the sales price or have the seller use my estimates and my contractors to have the work done.
posted by tgrundke at 8:13 AM on March 23, 2013
IANAL You make an offer contingent on successful inspection. If the inspection comes back with only minor issues, then your offer is enforceable, and you must buy the house, perhaps with the issues being repaired. If the inspection comes back with significant issues, like rot in one corner of the eaves, or some needed foundation repairs, then you negotiate. If the inspector finds really major issues, you should re-consider the choice.
I had a house built in 1910, and built on fill on top of marine clay (it settled, is still settling, and will always be settling). Once in a while, a plaster wall cracked, and it affected windows, but it was a very well built house for its time, and I enjoyed the old woodwork and detail. Buying a house is fraught, but do-able. Get a fierce, thorough inspector; they vary a great deal.
posted by Mom at 11:05 AM on March 23, 2013
I had a house built in 1910, and built on fill on top of marine clay (it settled, is still settling, and will always be settling). Once in a while, a plaster wall cracked, and it affected windows, but it was a very well built house for its time, and I enjoyed the old woodwork and detail. Buying a house is fraught, but do-able. Get a fierce, thorough inspector; they vary a great deal.
posted by Mom at 11:05 AM on March 23, 2013
In addition to the home inspection I recommend testing for radon and if not accomplished recently a survey of the property.
posted by KneeDeep at 2:26 PM on March 23, 2013
posted by KneeDeep at 2:26 PM on March 23, 2013
Buying an older home? Prepare to learn a lot about home maintenance! Try to look at it as a fun challenge. You're paying your inspector good money, so this is you chance to ask every general, stupid, "I've always wondered" type of question that pops into your head during the walkthrough. If you decide against this property, you'll still have gained knowledge that'll be helpful on the next one.
Get it into your head that a house of this vintage is likely to require at least a couple major jobs. Something like repointing the foundation can't really be done until the weather is a bit warmer. It's possible that they're selling before the spring melt gets really underway. Owning an older home are similar to owning a classic car, you need to develop an interest in how it works and how to care for it. Also, that it's not going to be in perfect shape.
posted by bonobothegreat at 5:05 PM on March 23, 2013
Get it into your head that a house of this vintage is likely to require at least a couple major jobs. Something like repointing the foundation can't really be done until the weather is a bit warmer. It's possible that they're selling before the spring melt gets really underway. Owning an older home are similar to owning a classic car, you need to develop an interest in how it works and how to care for it. Also, that it's not going to be in perfect shape.
posted by bonobothegreat at 5:05 PM on March 23, 2013
Get a fierce, thorough inspector; they vary a great deal.
This.
posted by IndigoJones at 7:49 AM on March 24, 2013
This.
posted by IndigoJones at 7:49 AM on March 24, 2013
You might want to get a hold of David Crook's The Wall Street Journal. Complete Home Owner's Guidebook: Make the Most of Your Biggest Asset in Any Market. A lot of food for thought on all aspects of home ownership.
posted by IndigoJones at 7:53 AM on March 24, 2013
posted by IndigoJones at 7:53 AM on March 24, 2013
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