Problems discovered after due diligence but before closing. What now?
March 29, 2014 2:04 PM   Subscribe

First-time home buyer here. We're about two weeks past having had a home inspection and our due diligence period. In moving furniture in the basement, the seller has discovered a water leak, effervescence and mold. See pictures below:

The seller emailed the following to her realtor along with the above pictures:

"In the interest of full disclosure I would like to convey this information to the prospective buyer.
I understand that this maybe a significant concern. I do not have the flexibility to remedy any problem associated with water in the basement at this time. I do not wish to be held liable in the event that buyer finds it necessary to make repairs in this regard.
Also, after making requested repairs to the water line ( changing pressure valve) water pressure in the house has signifcantly dropped and water stream is very low if two or more facets/appliances are used at the same time. Not sure what is the cause. I know that water line is original."

Our realtor has suggested it may be due to clogged drains. FYI, the house has a septic system, with a new tank having been installed in 2010.

Right now, we're kind of freaking out. What are our options here? What should our next steps be? Thanks!
posted by rbf1138 to Home & Garden (36 answers total) 3 users marked this as a favorite
Get a plumber to do an inspection of the lines. You may also want the foundation inspected by an engineer.

Me? I'd bag the deal and walk.
posted by Ruthless Bunny at 2:14 PM on March 29, 2014 [3 favorites]

I would go back to your inspector, ask how they missed this, and ask whether they can comment. And then the plumber and engineer - perhaps at the seller's cost. What is your realtor saying?
posted by Chaussette and the Pussy Cats at 2:30 PM on March 29, 2014 [6 favorites]

As my first step, I'd get my home inspector back out there. Are there water or sewage pipes in or above that wall? Has it been raining?
posted by sageleaf at 2:30 PM on March 29, 2014 [1 favorite]

I would walk away from this situation in a New York minute. But that's because my current house is a water leaking mess. I would never, ever knowingly buy a house with a wet basement. EVER.

You might think that getting a repair done now before closing could satisfy you. But it's likely that such a repair might temporarily fix a problem, or seemingly fix a problem that just doesn't have time to manifest before you close. In any case, it's nearly certain that any repair done right now in a small window of time cannot be verified to be permanent, correct, and true in terms of stopping all the leaks causing the damage you're seeing.

WALK AWAY WHILE YOU STILL CAN. Don't freak out. Just find another house. You don't have to buy this house. You probably shouldn't buy this house.
posted by ImproviseOrDie at 2:31 PM on March 29, 2014 [5 favorites]

Response by poster: Our realtor just told me he feels she is still liable for this, as she clearly felt inclined to disclose it after having found it now and as the current owner of the house. She can refuse to fix it, but if we walk she'd be left having to fix this for a future buyer, anyway.

He suggested we have our inspector go back out and take a look, then have a waterproofing company come as well and give us an estimate.
posted by rbf1138 at 2:32 PM on March 29, 2014

Good on the seller for being honest. The basement moisture is the kind of thing that will obligate the seller to amend the disclosure form, which (*IANAL) should let you back out of the sale without losing your earnest money. So that's one option.

A pressure value was replaced and now water pressure is too low, but it was okay before? Is it possible that the valve just needs adjustment?

Depending on how much you like this house, you can ask for a credit from the seller to address the moisture problem. Fixing this kind of thing can be expensive (dig a french drain around the affected areas of the foundation?), but you won't know until you get some quotes. If those photos show the extent of the problem, it may not be so bad. This also depends on how competitive your real estate market is. If it's a hot market, you may not be able to get anything for this.

The one thing not to do is to eat the cost. This unfortunate discovery has a negative impact on the property value.
posted by qxntpqbbbqxl at 2:35 PM on March 29, 2014 [1 favorite]

Response by poster: And if we walk, how much of our 3,000 in earnest money are we forfeiting? That's a pretty tough pill to swallow and would basically mean we give up on buying a house. Is our realtor even our best advocate at this point? Isn't his intention to close and get paid?
posted by rbf1138 at 2:36 PM on March 29, 2014

You should forfeit NONE of it.
posted by Ruthless Bunny at 2:43 PM on March 29, 2014

Your realtor is not your best advocate for exactly that reason. Read all of your purchase contract very carefully. It will define the conditions under which you can walk away and keep your earnest money.

I disagree with the advice to have a home inspector look at it. They will just recommend a specialist. You need a quote from a specialist who repairs foundation drainage issues.

On the topic of quotes, speaking from experience: get at least three quotes. I've hired more than a dozen contractors in the last year, and it is not unusual for quotes to differ by a factor of two. You may also need the seller's cooperation to get quotes. Many contractors will only give a quote to the current homeowner.
posted by qxntpqbbbqxl at 2:45 PM on March 29, 2014 [3 favorites]

Yes, your realtor wants to close and get paid, even if its for a house with a galvanized plumbing line that needs replaced, or a foundation that's not sound, or with mold. He should be advocating for you, not pushing you into a questionable deal.
posted by Ruthless Bunny at 2:46 PM on March 29, 2014

If you otherwise love this house and it would be difficult to get something similar, I would ask the various companies to give estimates and then try to put it on her to fix to your approval. However, if something goes wrong in future, will you kick yourself forever? I would also talk to your real estate lawyer and ask them how to structure the deal. As noted, your realtor has a huge incentive to make the deal happen - if s/he isn't already pointing you to do as I and others have suggested, I would definitely be taking cues from a lawyer and other professionals.
posted by Chaussette and the Pussy Cats at 2:55 PM on March 29, 2014 [1 favorite]

Is your earnest money really only $3,000? In terms of possible expenses of owning this particular house, that is a small enough amount that I would not let it influence me on this decision. In any case, it is a sunk cost. Say you are paying $500k for this house. Would you make on offer on it today for $497k knowing that there will be a bunch of out-of-pockets costs and headaches from the water problems? Or would you save your $497k to spend another, more desirable house?

If you do go ahead, who pays for the necessary repairs is a matter of negotiation. The seller is (probably, IANAL) within her rights to refuse to pay. You are free to walk away from the deal but she would get to keep your earnest money. (Unless you have some reason to say she has breached the contract e.g.. that she knew or should have known about the problem and failed to disclose) If she refused, she has to put the house back on the market with known problems. If you walk away, you lose your deposit and have to find another house. If that would be worse for her than you, you have leverage. If it is a hot market and she can easily find a buyer to take it as-is, she has all the leverage here.
posted by metahawk at 3:15 PM on March 29, 2014

Response by poster: Spoke with the realtor again, and it seems that we'd likely get our earnest money back because as noted above (thank you!) this is something she'd have to disclose in a future sale and as a result she is liable. We've just contacted several companies to get the estimate process started. Curious about how it will work because as noted above (thank you!) they may only give the quote to the homeowner.
posted by rbf1138 at 3:19 PM on March 29, 2014

You need a lawyer along with a realtor.
posted by jbenben at 3:28 PM on March 29, 2014

Oops! And an independent lawyer, not one your agent recommends.
posted by jbenben at 3:29 PM on March 29, 2014

Response by poster: Let me ask this: if the only issue that a contractor finds is the one shown in the pictures above, is that still a reason to run? Is there any chance that this really is a minor fix and not something that is going to derail buying this home for sure?

My girlfriend (and co-borrower) is feeling like even if they think whatever the problem may be is minor that it's a telltale sign of things to come. Is she 100% right, or let's say, 50% right?
posted by rbf1138 at 3:45 PM on March 29, 2014

FWIW, the pics show what I'd consider to be a pretty minor water problem. I live on a steep hillside now and never have water issues here, but the last town I lived in was in a pancake-flat area and virtually every house had worse basement water problems than what's visible here. If it were an automatic reason to run, very few houses in that town would ever have been sold.

Have you taken a look at the outside of the house in the area of the leak? It could be as simple as a separated gutter downspout, or a low spot in the soil that needs to be filled in a bit. Regardless, look for a clear understanding of why water is consistently coming in at that particular spot. It looks like it's coming in high on the wall in one particular spot, rather than infiltrating near the floor level in many areas. That's good, because it implies a localized, possibly surface-water issue rather than a high water table and plugged/absent footer drains.

Unfortunately just as Realtors tend to dismiss problems that might stand in the way of the sale (and therefore commission), my experience is that basement waterproofers tend to prescribe the same very expensive treatment for every problem because that's the solution they're in a position to make money by providing.
posted by jon1270 at 3:55 PM on March 29, 2014 [5 favorites]

If I otherwise liked the house, then I wouldn't run from the deal. Basement seeping can be fixed pretty easily usually, so before you make a decision you need to know how bad it is and what the remedies are.

Personally, I recommend against having the seller fix it. If you do it, you will have control over the repairs and costs and the methods. Get some quotes, then discount the purchase price enough to fix it.

The pics aren't a major problem as near as I can tell. It's seeping, not leaking. Now, it could be indicative of a much larger issue, but springtime seeping is common enough that it should be an easy fix - Drain tile and french drain. Mine cost about 1500 dollars.
posted by Pogo_Fuzzybutt at 4:01 PM on March 29, 2014 [1 favorite]

Where is the water service in relation to the leak? How old is "original" and what is the material? My first thought hearing low water pressure and water seeping is that the service pipe may be damaged. The water company should be able to check that, though will probably only talk to the owner (but maybe you). New water service lines are expensive, but also something that would be easy to get a quote for assuming it is recent enough not to have done additional damage.

It could of course be something else entirely.
posted by sepviva at 4:30 PM on March 29, 2014

As a first-time home buyer, you may not know that the reputation that basement waterproofing contractors have for being crooks is well-deserved. Get estimates from local, recommended contracting companies. Stay away from the franchises.
posted by still_wears_a_hat at 5:10 PM on March 29, 2014

FWIW, I live in central Ohio and just had some leaks fixed, all the work was done from the inside. It cost us about $750 per crack.
posted by Poldo at 5:32 PM on March 29, 2014

in my deals, the due diligence period extends right up to the closing. get estimates for remediation, take it out of the cash down or nobody gets any commishuns! i semitrust the small claims court to deal fairly with my earnest money in light of such an untimely disclosure, and i would not be adverse to involving promptly my state's department of real estate in its regulation and disciplinary capacity. i would not close on a pig in a poke if i learned that it had a serious disease.

as long as you haven't closed yet, you hold the ace, king, queen, jack and the ten.
posted by bruce at 6:08 PM on March 29, 2014

And if we walk, how much of our 3,000 in earnest money are we forfeiting? That's a pretty tough pill to swallow and would basically mean we give up on buying a house.

I'm a little concerned that $3000 would make a big impact on your purchase of a house. Houses are the biggest purchase most of us in the 99% ever make, and they're prone to having things like the roof go out or the furnace break in the few months after closing on a sale.

Even if you live in an area with cheap houses (where cheap is under $100K), $3000 shouldn't be a make or break number for you.

As you are a first-time homebuyer who doesn't sound like you altogether trust your real estate agent, I want to ask whether you're sure you're not buying too much house for your budget--and if you're sure you're not, whether you've got a 'unexpected things go wrong' budget for what you'll need to repair after you buy the house?
posted by librarylis at 10:08 PM on March 29, 2014 [1 favorite]

Best answer: Oh hey, this was me many years ago. Similar situation, after inspection the seller noticed a water leak, mold, etc. I really wanted this house, it was a very tight market, and I wanted to fix the problem and just move in.

* I realized that the broker would do just about anything to save the sale and used it to my advantage. I told her that I was going to do the following and it was either coming from her commission or from my accepted offer:
* I hired a basement leak repair company as well as an environmental analytic service to get an estimate to fix the problem as well as a baseline for the toxicity of the air.
* I presented the estimates to the realtor via my brand new lawyer to see if the seller would sign off on the repair and air remediation.
* The cost of repairs was around $1k but the air remediation cost about $2k.
* The seller agreed to everything.
* I bought the house.

So, I would tell the broker that you want to keep this deal alive, you're getting a lawyer to represent your interests, and you're getting estimates that you will present to the seller, and those costs will be deducted from your offer or from their commission.

It should be fine.

If the seller and broker say they're not going to budge and you still want the house, then I'd just go ahead and do it.

As far as blaming the home inspector, you really can't. They only see what they see. And in regards to future problems cropping up, you could get the house inspected by another company, but that's kind of the beast when you're buying a house. All sorts of things break down and even the best inspector won't know.

But definitely get the lawyer.
posted by kinetic at 6:05 AM on March 30, 2014 [1 favorite]

Response by poster: Kinetic, I believe that's how we will proceed.

Just a thought: couldn't the seller file this as a claim with her insurance company? What effect would that have in this situation?
posted by rbf1138 at 6:45 AM on March 30, 2014

Chiming back in to say what looks like simple seepage can easily be a much bigger problem. Waterproofing the inside surfaces is often just whitewashing a deeper problem. I have thrown thousands at a multi-factored water problem in my house. I wouldn't trust fewer than three estimates not for "waterproofing" but to "fix the entire problem."
posted by ImproviseOrDie at 11:08 AM on March 30, 2014 [1 favorite]

Just a thought: couldn't the seller file this as a claim with her insurance company? What effect would that have in this situation?

In my case, the damage was because of one very snowy winter and a sudden thawing which had all sorts of water seeping into the basement. The house was not in a flood zone, the owner didn't have flood insurance so the answer in my case was no.

But this is exactly why you get a lawyer. Totally worth the money. They know all this stuff.

(and now that you reminded me, part of the fix was digging up the yard adjacent to the house and putting in draining pipes and rocks...still cost $1k total.)
posted by kinetic at 12:29 PM on March 30, 2014

Response by poster: Kinetic, did you get any sort of assurance that your problem wasn't going to lead to much bigger and more expensive issues down the road? Did you worry about your ability to resell it knowing you'd have to disclose this issue?

Even if this can be fixed for 2-3k, which seems like the best case scenario here, it's the lingering questions about the future that may push us to walk.
posted by rbf1138 at 1:18 PM on March 30, 2014 [1 favorite]

Well, when I had various specialists come and inspect the issue, they pretty much all agreed that after fixing the drainage, the actual basement mold (and walls) and the air quality, this problem wouldn't repeat. All my contractors also gave me a 10 year guarantee which I never needed.

A good contractor will not only repair the damage but put things into place to ensure it doesn't recur.
posted by kinetic at 2:02 PM on March 30, 2014 [1 favorite]

Don't rely on the inspector for this. Home-sale inspectors are often cautious about giving specific recommendations. If they can't actually see what the problem is, they're not going to be able to tell you anything useful.

When I was the seller in a similar situation, I disclosed the problems because it was the right thing to do. I also didn't want to take care of the repairs myself, but came to an agreement with the buyer and gave them cash back at the closing so they could fix the issues themselves. I offered to get an estimate from a plumber that they chose, and I also called in my own plumber. The two estimates were different; I gave them the amount of the higher bid.

Your seller has good reasons not to do the repairs. The plumbers might do some damage in the course of the work, and the seller would have to deal with that. Or hidden problems might be uncovered. Also, it's inconvenient and stressful, and the seller already feels like he's "done" with the house.

As a buyer in a similar situation, I asked to oversee the repairs myself after closing, with double the expected cost put into escrow in case there were unforeseen expenses. I refused to let the seller handle the repairs, because I didn't trust them to have it done right. In that case, the seller got nervous and agreed to have the work done before the closing if I dealt with the contractor and workmen, and that's what we did.

At this point in the process, your agent really wants this sale to go through and might not be your best advocate. Figure out what you want; don't trust anyone who would lose money if the sale didn't happen.
posted by wryly at 2:30 PM on March 30, 2014

I'm back to say that not a lot of people are addressing the issue with the water source and low pressure.

If your supply lines (from the meter to the house) are galvanized steel, they will need to be replaced. This is standard maintenance, and insurance won't cover it, neither will the water company, or the county. It's all on the homeowner.

I've been through this twice.

Get a plumber to run a camera through the waste pipes and the supply pipes. What you want to see is a nice clear pipe. No rust, no tree roots, no broken clay pipes (as was the case in MY pipes.)

Here's the thing, if you need to replace the pipes, you'll need a plumber to come with a crew and a back hoe and they will dig up your yard. As deep as they need to go (in our case, 9 feet) they will need to go doubly wide, (in our case 18 feet.)

This will trash your yard, you'll have to replant the entire thing. Also, if there are tree roots growing into the pipes, you'll have to have them cut down.

This is an EXPENSIVE undertakeing. And disruptive and upsetting.

I IMPLORE you! Have a plumber run a camera down the pipes and have it checked out.

Unless $12,000 is no big deal to you. We paid $7,000 for the plumbing and $5,000 for the landscaping. We also paid $4,000 to have dead trees removed, but we would have done that anyway.
posted by Ruthless Bunny at 7:23 AM on March 31, 2014 [1 favorite]

Response by poster: So, here is today's big reveal: the seller has now told her realtor that she had french drains put in 5 years ago. This was not something she had disclosed before. She is also standing firm against paying for any sort of repairs or fixes.

Our realtor believes she undersold the house, wants to now de-list it, fix the issue and re-list at a higher cost.

My girlfriend thinks we need to walk away from this, but I feel more emboldened to get a lawyer, get repair estimates and then get her to (with the help of a lawyer) pay for a water issue she fraudulently left off a disclosure form.
posted by rbf1138 at 8:08 AM on March 31, 2014 [1 favorite]

Response by poster: Ruthless, I should clarify that the low water pressure is the result of the inspector having found a broken pressure valve that had the water pressure in the house too high initially. The seller had it fixed for us and was complaining that it's now too low. This doesn't concern me as I believe that is a pretty simple fix. I don't believe it's related to this issue.

Spoke to the realtor again today and he seemed more calm than the first time we talked this morning. He explained that he didn't believe it was malicious on the seller's part, that she was foreign and some of this may have to do with a language barrier. Apparently the two french drains were put in when she re-did a concrete porch in the front of the house 5 years ago. It sounds like they were precautionary rather than a remedy to an existing problem and is why the seller has been adamant about not paying for a fix; she's never had water before apparentlya nd doesn't believe this is her problem.

We have our first contractor (a local company) coming out to do an estimate tomorrow. It will be at no cost to us and our realtor and my girlfriend will be present. We're hoping that this gives us some guidance as to how to proceed.

He emphasized that if we wanted to walk away, it would be no problem with him, it's not about his commission right now but about making us happy.
posted by rbf1138 at 3:33 PM on March 31, 2014

Response by poster: And after getting an estimate of 600 to fix it (turned out to be a very minor problem) and the sellers realtor offering to pay out of her commission to fix it, now the seller is saying that her elderly mother (who she lives with) is upset and is refusing to move. They want us to cancel the contract. I can't even express how drained and upset I am right now.

We either hope it blows over, threaten legal action hoping they budge or go to court where we will win. But my girlfriend has no desire to pay for a lawyer and go through the agony of that process. And so in the end we may walk. I'm just beyond frustrated and I feel that the last month of my time, energy and money have been wasted and abused by this crazy seller.
posted by rbf1138 at 1:02 PM on April 3, 2014

This situation sucks, but it may be a blessing in disguise. Her "my mother doesn't want to move" may actually be trying to avoid liability for paying for potentially very expensive repairs. You don't just "forget" to tell someone you jackhammered up your basement and put in French drains. It seems almost certain the basement has been something she's been trying to deal with for a while.

I know it's super frustrating, but you are probably actually very lucky. You have almost certainly dodged a bullet. You can find a house you like that has a drier basement.
posted by ImproviseOrDie at 3:48 PM on April 3, 2014 [1 favorite]

Response by poster: On the contrary I think she's trying to back out to sell it for more money. We got it at a good price and it has appraised for several thousand more than we paid. I think she may have seller's remorse and this is her ploy out of the deal.

If I see this house relisted after we walk feeling guilty about her mother I would feel cheated and I'd be livid.
posted by rbf1138 at 4:33 PM on April 3, 2014

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