House has been inspected. Can I bail on my offer?
July 9, 2015 2:48 AM   Subscribe

Hi, MeFi. So I put an offer on a house, and it was accepted. But after getting the results of the inspection, I'm having second thoughts. Details below.

(First and foremost, I know you're not my attorneys or realtors, but if you have any advice, I'd appreciate it. This situation is going down in Ohio.)

There's nothing structurally wrong with the house. The electrical and plumbing are in good shape. However, a couple of problematic issues:

- The furnace is 30+ years old, and the HVAC is also very old. While functional, they need maintenance that the current owner has not had performed. They should probably be retired.

- The hot water heater is in need of immediate repair, and probably replacement in the short term. It is a bit of a hazard right now.

- The detached garage is useless. The current owner stores junk in there. The garage door has fallen off its runners, and the roof is at the end of its life. I will not be able to use it for my car unless I spend the money to repair it first.


The other houses in the neighborhood are all going for about the same list price as this one. Which is to say, if I spend $10,000 on the basic maintenance that the owner should've been performing this whole time, will I recover those costs if I sell the house in, say, 5 years?

Honestly, my gut is telling me to back out of this deal, but I don't know if my reasons are legally sound. Can I bail after the inspection? Can the seller force me to buy this house, or do they just get to keep my earnest money and we all go our separate ways?
posted by schooley to Home & Garden (32 answers total) 4 users marked this as a favorite
 
i don't know about the usa, but in the uk you certainly can. the last place we sold, their inspection found some issues. we countered with a lower price to cover the work and they were happy. seemed completely normal to me. (and our lawyer seemed ok with it all - why aren't you asking your lawyer? they should be on your side...)
posted by andrewcooke at 2:53 AM on July 9, 2015


This is a question for your realtor. The answer depends on your state laws and the contract you signed.

Instead of backing out, you also have the option of countering with a lower purchase price, requesting that seller make the repairs, or requesting money from the seller to make the repairs yourself.
posted by pecanpies at 3:10 AM on July 9, 2015 [20 favorites]


Does your offer say that it's contingent on inspection?
posted by thomas j wise at 3:25 AM on July 9, 2015 [8 favorites]


Did your contact have an inspection contingency?
posted by devinemissk at 3:26 AM on July 9, 2015 [2 favorites]


My contract does have an inspection contingency. It says minor repairs and routine maintenance are not valid reasons, but having to overhaul the garage almost completely and replace the hazardous hot water heater first thing both seem like pretty major tasks?

I should also add that I will of course be consulting my realtor about this too, but I could stand some advice from anyone who's been through it. :)
posted by schooley at 3:30 AM on July 9, 2015


No, they can't force you to buy the house, and their getting to keep your earnest money is an unlikely worst-case scenario.

That said, none of these issues would be a dealbreaker for me if I liked the house otherwise. If you think that this house would still be a bad deal even if you could get the price adjusted to cover the repairs then go ahead and back out, but don't fall into the trap of rejecting a real house because it compares poorly to some imaginary perfect house. Most houses on the market will need some attention.

Replacing a water heater is no big deal. Fixing or replacing a garage door is no big deal. Re-roofing the garage should be no big deal assuming it's got typical asphalt shingles and isn't already leaking. You obviously don't have much experience around stuff like this so finding good service people and arranging the repairs at fair prices would involve a learning curve, but if you're going to be a homeowner then you will have to learn to deal with these issues sooner or later.
posted by jon1270 at 3:56 AM on July 9, 2015 [18 favorites]


Isn't this scenario one of the reasons for an inspection contingency?

Still, you're paying a realtor and a lawyer for a reason...
posted by sebastienbailard at 3:57 AM on July 9, 2015 [1 favorite]


I was recently on the other end of this situation (in PA). The buyer didn't withdraw his offer, but he did ask for credits to conduct repairs, effectively lowering his bid. So, if you think it will take 15k to repair garage and HWH, you could ask for a credit in that amount. (or more, our guy asked for way more than was necessary and didn't back down even after we got bids for the work showing it could be done for less than he was asking. the deal eventually fell through)
posted by qldaddy at 3:57 AM on July 9, 2015 [7 favorites]


Expect to have to repair or replace something when you buy a property. Work out the cost, and negotiate a discount with the seller. It's what you do with an older home.

Remember that, once the work is done, those parts of your house will be new and (in most cases) under guarantee. A water heater that needs to be replaced now is preferable to one that you'll have to replace in two or three years, because you have an opportunity to offset the cost of repair/replacement.
posted by pipeski at 4:12 AM on July 9, 2015 [9 favorites]


When we bought our house, we countered with a reduced offer following an inspection that revealed the need for some joist/structural work in the basement, a new oil tank, and a new heating system. The owner balked at first, but then a car exploded in front of the house and he became much more amenable to reducing costs to cover basement/heating/explosion costs. We knew the house needed a new roof soon as well, but did not seek a reduction based on that and instead paid for that out of pocket/with explosion insurance money.

We could have walked at any time, but thanks to a neighbor's poor car care, we really had the guy by the melted siding.
posted by robocop is bleeding at 4:50 AM on July 9, 2015 [3 favorites]


Follow your gut.

You should not back out completely though. You should first request either:
1. Seller fixes these items, or
2. Seller discounts sale price so you can fix these items.

If they balk, you walk. Legally sound? Cross that bridge when you get to it. If they refuse to give back your deposit, then you decide to either: buy the house to save the deposit, hire a lawyer to sue them to get deposit back (ie. split deposit with a lawyer), or let them keep the deposit.

But your gut is saying that you need to re-negotiate the deal. Try. See what happens.
posted by Flood at 4:52 AM on July 9, 2015 [11 favorites]


The offer should be written so that you can get out of it. Talk to you real estate agent.

You can also renegotiate. After our inspection which indicated the roof would need to be replaced, the seller gave us $7500 cash just to complete the sale.
posted by betsybetsy at 4:53 AM on July 9, 2015 [1 favorite]


1. This is what the inspection contingency is for. Talk to your realtor.
2. Get the things repaired by the seller or get the price reduced to cover the cost.
3. The things you listed sound like typical house maintenance kinds of things - water heaters need to be replaced every 10 years, furnaces need work/updating and garages often need overhauls. My two cents - every house you put an offer on will have some issues, even brand new ones - consider having seller repair items or get price reduced. It is VERY common.
posted by Toddles at 5:25 AM on July 9, 2015 [3 favorites]


To me these sound like pretty standard straightforward things to emerge from a house inspection and I'd be happy nothing worse emerged. Nobody who's thinking about selling their house pays to replace their old boiler.

It's certainly worth seeing if you can use the inspection to reduce the price or back out of the deal if that's what you actually want to do. But if you don't want to buy any house that has a couple of things to fix, you'll be looking for a long time! Houses ALWAYS have a couple of things to fix.
posted by emilyw at 5:47 AM on July 9, 2015


This is kinda the whole point of the inspection, otherwise you wouldn't bother with one or have it done after purchase.

Either tell the seller you're not willing to proceed until the issues have been fixed or tell him that you're reducing the offer by the amount required to fix the issues.
posted by missmagenta at 5:48 AM on July 9, 2015 [1 favorite]


The garage seems like the issue - older HVAC systems are probably going to pop up everywhere, so I would not make those a deal breaker if everything else was ok.
posted by yarly at 5:57 AM on July 9, 2015


I agree with a lot of the advice above, but want to add one note: don't offer to reduce the purchase price by the repair costs unless you are willing to undertake the necessary steps to get things repaired. We purchased our last house under similar conditions, and received a concession on the purchase price after the inspection to cover a handful of medium to large repair issues. It was great that we got a discount, but it still ended up being a giant pain in the ass and taking a significant amount of time to actually get the repairs done. And to make sure the repairs were done to my satisfaction, we ended up spending more than the discount we received from the sellers at closing. So: if you like the house and are willing to undertake the repair efforts, you can certainly ask for the discount. But sometimes it's easier to just find a house that doesn't need the repairs.
posted by monju_bosatsu at 6:00 AM on July 9, 2015 [4 favorites]


older HVAC systems are probably going to pop up everywhere, so I would not make those a deal breaker if everything else was ok.

Unless you're pretty comfortably flush with CASH, I would make any repairs over a thousand bucks or so a deal-breaker. So a water heater is fine since that's just a couple of hundred for the equipment (and it's DIY-able) and maybe a few more for a plumber to install it; but replacing an air-conditioning or heating component is probably not fine--those can get pretty pricey.

The bank will make sure you have enough cash to buy the house; you need to make sure you have the cash to undertake repairs--especially the unforeseeable ones--once you've bought it.

This is why the purchase-price concession is a good thing to get out of negotiations, for sure, but you need to make sure you have the money to do the repairs. "Hey, my loan's not as big!" is awesome to say, but "Hey, my loan's not as big but I still don't have the money to replace substantial HVAC components!" is not awesome.
posted by resurrexit at 6:34 AM on July 9, 2015 [3 favorites]


========
Honestly, my gut is telling me to back out of this deal,
========

I was given a piece of advice when I bought my house, and it turned out to be correct for me and for everyone else I've subsequently watched buy a house:

Expect two things:
1. a feeling in your gut that you're making the wrong decision (especially as the inspection report comes in), and
2. drama of some sort on some end at the closing.

Nearly all houses have problems, nearly all houses lack basic maintenance. The houses that don't will cause you problems, too. Houses are problem-generators, and while we like to think we can minimize that, it's really just part of the gig.

As for recouping the $10K at resale, unless you're buying a nano-house, that's nothing more than rounding error, and the fact that you're even trying to do this calculation makes me think you're just getting nervous. Rental living is about spending hundreds. House living means spending thousands. Again, that's the gig.
posted by Quisp Lover at 6:45 AM on July 9, 2015 [12 favorites]


Just one thing people haven't said yet - 2/3 of your three issues above are actually super-easy to deal with. They do cost money and in our case we needed a roof and we split the cost with the seller. But HVAC and hot water heaters generally are installation jobs, and then they last for years with shiny new warranties, so they are some of the best problems to have with a new house.

An option I don't necessarily recommend but that is possible is if you can handle a few days disruption in your heating (like you could stay with a friend after opening your pipes), HVAC is something you can allow to die in place. It then is a bit more expensive because you're not in a great bargaining position, but it won't damage the rest of your house while it's dying. When we bought our first house we were told it needed a new furnace and we were super tight on money but knew as soon as I got a job things would improve dramatically, so we took the risk of waiting and actually it lasted until we sold the house. But had it broken that first winter I might have felt differently. Just saying though.

The garage is a different case; that's a hassle-filled project, potentially, especially if the roof has water damage. And yet it's also outside your living space, it may impact on your car and parking but you can come inside and ignore it safely unlike a leaky basement, electrical issues, fridge dying, etc.

So basically from the point of view of a longtime homeowner who has owned a true fixer-upper, unless you are so tight on this purchase there is no way you can make the necessary changes and they won't negotiate, or you basically want a new house, these are great problems to have and not worth pooching a deal that is otherwise great about. That may not be right for you! But it is my perspective.
posted by warriorqueen at 6:53 AM on July 9, 2015 [2 favorites]


Seconding that these are great problems to have because they result in new appliances that will last 20+ years. Negotiate with the sellers to have them cover the new water heater and part of the fully depreciated HVAC and furnace.

The garage is a bit of a hassle but it's not your living space, so it'll be easier to deal with. Unless you want a new house (that will come with the price of a new house), these issues are going to be common in all real estate transactions.
posted by lydhre at 7:07 AM on July 9, 2015


I backed out at this point once. It was a bit of a nightmare. I tried renegotiating with the sellers. They did not want to budge. As a warning - my realtor turned into a nasty bully. Hopefully yours is not an asshole. Said realtor lodged all sorts of threats my way. Realtor was wrong, wrong, wrong. In the end, I got out of the deal. I got my earnest money back, but I was still out several thousand from the inspection itself and related bank fees (I don't remember specifically what those fees were - but they were nonrecoverable).

Short version - don't let anyone bully you. Yes, it may cost you a few hundred or a few thousand to back out, but it is better than ending up with tens of thousands in repairs you can't (or don't want) to afford.

Also, to echo what's above, expect repairs to cost more than the estimate.
posted by slipthought at 8:33 AM on July 9, 2015 [2 favorites]


Hi! I'm closing on a house next week, and dealt with some things pretty similar to what you've listed.

For some of the items, I got a credit (I think we're up to around 6k, somehow. My real estate agent is fantastic.) and some of them they've fixed (to the tune of around 2k.) This is the nitty gritty of how it worked.

1. Inspection was performed.
2. My agent and I went over it line by line, deciding what needed to be fixed or replaced.
3. For each of those items, we then decided if I wanted a credit or a repair.
4. I wrote a note to the owners, sent through our agents, outlining what we decided in steps 2 and 3.
5. They replied (they accepted the credit and were reluctant about the repairs.)
6. I replied and countered their reluctancy.
7. They said okay.

All in all, it was really easy, and my agent walked me through the entire thing.

That all said, if you really, really don't want this house, just say nope and then they keep the hand money. This is why the system is set up the way it is, really.

Good luck!
posted by punchtothehead at 8:36 AM on July 9, 2015 [4 favorites]


Seconding that these are great problems to have because they result in new appliances that will last 20+ years.

Which is great if you want to be in that house for 20+ years. Or at very least, if you want to be in that house for 10 years without a gradually increased chance of something breaking and needing an expensive repair or replacement. The OP is apparently thinking of a five-year ownership period. That's probably not enough time to roll the cost of those fixes on the sale value of the house if you were to make them yourself -- but five years is barely enough time to come out ahead on a house purchase anyway.

I'd agree that there's always a gut-rumble moment in the house-buying process where it feels like you've made a terrible mistake, and that's often just stress at work. I'd also agree that heaters and HVAC and even the garage are less serious issues than anything structural -- and you shouldn't assume that other houses nearby with the same list price have had routine maintenance either, because people are people and houses wear out.

Check with your agent/lawyer to see what state law entails, ask for credits/repairs, see what the seller says.
posted by holgate at 9:13 AM on July 9, 2015 [1 favorite]


Realtor was wrong, wrong, wrong.

Be ready for the possibility yours is one of those buyer's agents who at this stage is more interested in closing the deal quickly, getting their share of the commission, and moving on to other buyers, than in the details of your long-term best interests. That said, you absolutely should bring up anything you're not comfortable with and be prepared to assign monetary value to each in negotiation about how much seller should spend to repair or you should get as price reduction or escrowed money to do repairs someday, and consider priorities in case you find yourself negotiating hard and need a sense of which are must-haves versus not (since in any compromise it's unlikely you'll get everything you want).

Also, be aware everyone gets qualms and second thoughts (particularly if you're a first time home buyer) at this stage, no matter how good the property.
posted by aught at 9:27 AM on July 9, 2015


1. Seller fixes these items, or

I also meant to mention that, down the road, you might be happier with working it out so that you get to manage the repairs (by a credit / escrow deal or by negotiating a lower price and putting the difference in the bank as part of a repair fund). Someone on their way out of town might not be as diligent at choosing the best (i.e., probably more costly) contractor to install a new water heater (or choose the model you would consider the best quality) or reshingle a roof etc.
posted by aught at 9:36 AM on July 9, 2015 [2 favorites]


I literally just went through this (almost twice) in the past month.

Inspection on first house exposed roughly $60,000 worth of necessary work. We walked away from the deal at that point and received our earnest money back. All it took was us sending a request for mutual release and referring to the inspection contingency. The seller was embarrassed that so much was wrong, but relented. Had he he not signed, it would've gone to an escrow arbiter who would've ruled in our favor anyway.

The inspection contingency is there for a reason and your realtor should help you exercise it if you're not comfortable.
posted by Jacob G at 9:53 AM on July 9, 2015


Seconding aught. If the seller carries out repairs, it's in their interest to do it as cheaply as possible. You are probably better off getting a reduction of the purchase price, or cash back at closing, and then carrying out the repairs to your own satisfaction.

A reduction of the purchase price will eventually benefit you more than an equal amount of cash back at closing, because you'll save on mortgage interest and property taxes. But you can ask for cash back if you think you may need it to cover the upfront cost of repairs.
posted by aws17576 at 10:57 AM on July 9, 2015 [2 favorites]


I walked away after an inspection. The seller replaced the furnace but then decided not to complete the other repairs I had requested and I had a gut feeling, just like you. I got my earnest money back, no problem. These kind of things are why you have an inspection, so don't worry about it. Look for another house that suits you better.
posted by notaninja at 3:26 PM on July 9, 2015


I'm kind of surprised how many people are telling you to talk to your(?) realtor about this. My understanding is that it's 100% your lawyer you should be talking to and getting advice from, as they're the only person whose incentives are really aligned with yours, especially if you're getting cold feet about the deal. Really at the point the contract has been signed all communication can happen through your lawyer. (I guess this advice is assuming you're paying them a flat fee, and not by the hour.)
posted by nobody at 6:16 PM on July 9, 2015


I think I'd be wanting to replace a 30 year old furnace anyway, because furnaces can be so much more efficient now.

If you really don't want the house, you should be able to back out. But these issues don't necessarily seem to be reasons to back out on their own. Worth negotiating a discount for, yes.
posted by oneirodynia at 8:01 PM on July 9, 2015


I'm chiming back in to suggest that, if issues like the ones you've discovered are concerning for you and you end up backing out of this purchase, next time, take someone knowledgeable about general house maintenance with you when you look at a house. All of the things that came up in your inspection are things that someone could have discovered merely from a simple walkthrough of the house. Every time I look at a house I'm seriously interested in, I look at the water heater, furnace, and HVAC. I take a peek at the electrical box. I walk the boundaries of the property. I examine any outbuildings, such as garages or sheds. I get a good look (as best I can) of the roof. In my state, the age of the furnace and the age of the roof are both listed on disclosure forms. If that's not required in your state, have your realtor find those things out prior to making an offer. You didn't do anything wrong in not finding these things out before making your offer, but getting a little more information prior to making an offer may save you time on your next go 'round.
posted by pecanpies at 6:48 PM on July 11, 2015


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