Talk me out of buying this house?
April 13, 2022 1:03 PM   Subscribe

I like a tiny house for sale from the 1920s (great light, great location, just enough room for me, nice old features like hardwood floors, etc.). My realtor is convinced that it's significantly overpriced. It also may need some major work, possibly including foundation replacement- I have an old estimate for $25k for that. The current foundation is made with clay structural blocks, (the same basic material as terracotta flowerpots!) and it has some problems. I am willing to pay for the work and deal with the annoyance.

The house is about to be listed at $195k and the realtor thinks that if it were in good condition it should be more like $160 or $165. The repairs would push it lower. The current owners had it for a short while as a rental property and made several repairs, including anchors on the foundation that may or may not permanently help. There are some other repairs that are necessary now. My realtor is strongly opposed to the house largely because of the price.

Ideally I'd like to stay there for a long time and don't mind overpaying somewhat, but don't want to go too far in case I need to sell it. Should I wait to see if it sells quickly or they reduce the price, or make a much lower offer now, or forget it completely, like my realtor wants? As anyone looking for a house at the moment knows, there aren't many options out there. I've been looking for a while and this one is by far one of my favorites, despite its serious flaws.
posted by pinochiette to Home & Garden (30 answers total) 2 users marked this as a favorite
Listen to your realtor. Realtors make money on a sale. Your realtor is willing to not make money because they think this is such a bad idea.

If a car salesman said to me "don't buy this car. It's a lemon" I'd listen!

You should, too. Please listen to the realtor unless you have 200K to throw away.
posted by ReluctantViking at 1:06 PM on April 13, 2022 [44 favorites]

just enough room for me

Do you have a plan for what you will do if you ever need to house an in-house caregiver (for you), a relative, a neighbor, a friend, a visitor, etc? This can occur completely coincidentally - for instance, if you have a serious injury or if one of your relatives requires long-term care that they can't afford, or has no facility available to help them with.

By yourself, you could perhaps just accept all these costs. If you never sell the place and you can afford to do so, the notion of "overpaying" for a property is somewhat academic - similar to you buying a piece of artwork that has no resale value. That said, reality can result in surprising turns of events. If the house is really just big enough for you, and you will need to house more than you, you may be forced to sell the house - and then all those expenses you're referring to will show up as realized losses on the property.
posted by saeculorum at 1:12 PM on April 13, 2022 [1 favorite]

If a realtor advised against me buying a house, I would not buy the house, no matter how much I loved it. I'm no RE pro but I've bought houses in three states and never had a realtor advise against a purchase. I won't even use a home inspector recommended by a realtor because their working relationship is based on every sale going through regardless of the house's condition.
posted by headnsouth at 1:14 PM on April 13, 2022 [9 favorites]

Best answer: 25k foundation estimates have a way of becoming 75k bills once they start digging.

Never knowingly buy a house with foundation issues.
posted by hwyengr at 1:15 PM on April 13, 2022 [41 favorites]

Buy it, the realtor wants to make more commission on a bigger place. Make the bid you want to make, you are not on tap to make either the seller's or the realtor's dreams come true, just yours.
posted by Oyéah at 1:16 PM on April 13, 2022 [1 favorite]

I would always consider foundation issues a NO GO red flag. Also remember interest rates are higher than they have been in a while, so if you overpay for a house you're overpaying even more on paying your mortgage.
posted by matildaben at 1:27 PM on April 13, 2022 [1 favorite]

Why are the current owners selling? If it was set up as a rental and they invested money in fixing it, why would they suddenly want their hands clean of the house? To me that sounds like they're tired of throwing good money after bad. The fact that the sellers know repairs are needed indicates this. Ask your realtor to ask the selling agent for any extra information. Usually you can get the story. But I agree this is a massive warning flag.

If you really, really like the house, and if I were you, I'd offer the $165K your realtor suggests.

It will most certainly be turned down but on the off chance it's accepted, you then get a serious set of brand new estimates on remediation. And get them from actual contractors, not a home inspector. Then you negotiate those repairs into contract modifications to lower the price even more so the amount you pay in repairs ends you up at $165K.

That makes it an even longer shot, but you never know. And at this price level a 1% move in interest rates isn't going to swing the mortgage payment that hard so don't focus on that. Good luck.
posted by JoeZydeco at 1:28 PM on April 13, 2022 [15 favorites]

Best answer: I bought my house over my realtor's objections due to known need for non-structural repairs. It's been so much more work than I imagined and took over my life for a while. My realtor also gave me good bid advice when I wanted it anyhow, based on knowing the seller's situation. Listing price is not tightly linked to what a place is actually expected to sell for, things are under- or over- priced all the time.

Definitely don't trust the price on one repair estimate from a while ago, get a couple recommended foundation folks in to look at it, everything is more expensive now. Will you still have a reserve for repairs after fixing the foundation (+ expected 30-50% overrun)?
posted by momus_window at 1:29 PM on April 13, 2022 [19 favorites]

Are you buying this house with a mortgage? If it's really that overpriced, it might not appraise high enough for you to get your loan.
posted by juliapangolin at 1:31 PM on April 13, 2022 [15 favorites]

Your realtor is willing to not make money because they think this is such a bad idea.

I totally agree with everyone saying to listen to your realtor, and the concerns about it not appraising high enough to cover your loan, but honestly the difference in commission is going to be something like $500-800. Nothing to sneeze at sure, but it's also not what I would consider THE REALTOR IS THROWING HIS LIVLIHOOD ON THE LINE FOR YOU money either.
posted by phunniemee at 1:33 PM on April 13, 2022 [1 favorite]

Best answer: If I ever buy another house I'll be taking into account how it's situated for maintenance and repairs: is there space around it to allow for earth moving equipment? Is the roof at a steep, problematic pitch? Is there space enough around it to set up scaffolding? Is there room for a bin? Are there trees that the city might require me to avoid damaging? Do neighbouring properties slope (drain) toward it? I've had underpinning done and would not have bought the house if I'd know what it would turn into.
posted by brachiopod at 1:33 PM on April 13, 2022 [8 favorites]

Best answer: If you're really determined, you could make a low offer with an escalation clause (in the event that a competing buyer is also willing to pay $$$ for it). That way, "the market" will determine whether you or your realtor is right.

And, yes, if you are seeking financing, you should also make your offer contingent on the house appraising.
posted by toastedcheese at 1:39 PM on April 13, 2022 [3 favorites]

Best answer: (Actually, I feel like you should pay to get this house appraised even if you're paying cash, and put that in as a contingency. You want all the contingencies so that you can back out if your risk assessment changes.)
posted by toastedcheese at 1:42 PM on April 13, 2022 [7 favorites]

I wouldn't say "never buy a house with foundation issues". My brother bought his house and replaced the foundation. Of course, he also paid less than $25k for the entire thing, so...
posted by kevinbelt at 1:44 PM on April 13, 2022 [1 favorite]

Pay for a structural or geotechnical engineer to come out and make a professional assessment. Maybe even both.

Not a home inspector, a registered & licensed engineer with up-to-date E&O insurance.

If you can't afford to do so, then you cannot possibly afford this house.
posted by aramaic at 1:48 PM on April 13, 2022 [9 favorites]

Response by poster: Super helpful answers, thanks. I would be paying cash. The current sellers live out of state and are renters themselves, and want to sell in order to have a down payment to buy a house they can live in. I have been talking to them directly (long story) and find them trustworthy, though of course I'd have inspections/get estimates on repair work if I move forward. I've seen detailed engineering assessments from 2019 when it was last sold.
posted by pinochiette at 1:54 PM on April 13, 2022 [1 favorite]

Uhm, just to consider: the realtor might also be considering buying it himself, if he's that kind of person.

Honestly it sounds charming as heck.
posted by amtho at 2:00 PM on April 13, 2022 [3 favorites]

Make the bid you think it is worth contingent upon inspection and appraisal. Be there when it is inspected. Ask specifically about the foundation. Get 3 estimates for all the work. I do not know what it costs to replace a foundation, but if I had to guess, $25k would be low. Very low.

Appreciating your willingness to overpay a little, I would probably bid them like $150k explaining the foundation work and be willing to negotiate it up to $160k. Then if you pay $50k for the foundation work you are at $210k, more than it would likely sell for, but over decades of living there, not too high.

I have bought and sold several houses. I can tell you this: A house is worth only what the nest person is willing to pay for it. My primary reason for buying a house was because I wanted to live in it and liked the community and the layout of the house. I never considered the investment value of the house. If you are looking for a "deal", this ain't it. But you like the house features and location, etc. That is not always easy to find.
posted by JohnnyGunn at 2:51 PM on April 13, 2022 [4 favorites]

Best answer: I bought a house under similar circumstances. Our inspector/contractor-friend said "why, out of all the houses, would you ever buy this one?" It cost a lot more than we thought it would and consumed hours and hours and hours of our time. It leaked. It had disasters. We didn't vacation for 7 years really, we didn't have leisurely long weekends. We were at Home Depot and digging and cutting and hammering.

When we eventually moved, we got a much more solid house that I have also come to love. It's had more "normal" hours and expenses.

But I still loved that little first house. If you have means and security, you may be able to afford to love this little house. But if you don't have an extra $75k and a ton of time, you may want to do other things with the next 5 years of your labours.
posted by warriorqueen at 2:59 PM on April 13, 2022 [16 favorites]

My first realtor was terrible and wouldn't even show me the house I eventually purchased. He was focused on an area many miles away, so I have less trust of realtors than average.

Also, if you have a repair estimate for $25k and a lousy inspection report, then you probably have a real chance to negotiate down to $140k-$150k or so. Most super wealthy people aren't buying houses for less than $200k and you have an all cash offer, so you will be competing with flippers who also low-ball.

You are powerful, and can beat most competing offers! So throw out a hook, and don't be too broken up if you don't win.

BTW: my house I bought required foundation repairs. No basement, concrete slab - 33 piers for $6000. I had a structural engineering inspection and an estimate in hand before purchasing.

It was a lot of money for sure, but it was among the easier repairs we've ever done and it has been pretty good since.
posted by The_Vegetables at 3:09 PM on April 13, 2022 [1 favorite]

Do you have the ability to get someone to inspect the home during the process? If so you can make a spreadsheet of all the problems and figure out the total cost to fix everything. Also, are you someone who likes Lowes and projects? If not, then as a solo owner you’ll have problems. Any house ends up being a time sink so think about that before buying any house alone. I learned to enjoy that stuff because the incremental costs of paying someone for every problem get crazy quickly. I also once bought a 1960s house for a couple hundred thousand and within 5 years blew $60k on many things I didn’t expect. 10k to dig up the driveway and replace sewer pipe broken by roots. Later, $30k to jackhammer through the foundation and the den floor to dig out the rest of the sewer pipe that had sunk and was full of fatberg and flies, then rebuild the den. Etc.

YMMV but so many things pop up with older houses that I’d want to start with a clean bill of health at purchase. That way when you inevitably get roof replaced, AC replaced, water heater goes, etc. it won’t be on top of an existing list.
posted by freecellwizard at 3:38 PM on April 13, 2022

Is it "just" the foundation that is the problem? Not that that isn't enough to be concerned about, but is it really a perfect house aside from the foundation? When I was house-hunting, I had the chance to bid on a perfectly adorable Sears kit house. I'm an architectural historian, I love that period of architecture, and I really wanted that house. I thought I could tell what I needed to spend money on and I was ready to do it. But when I walked through it, I brought along a contractor friend. He found all kinds of other warning signs that showed the house had been poorly and cheaply maintained and I was going to have to spend the money to correct all that.

I will second the suggestion that you find some actual foundation contractors to do an inspection, NOT a home inspector - and preferably someone who has experience with old houses. They are going to know what is what. Structural clay tile is a perfectly fine building material in and of itself (it was used in skyscrapers!), so what caused the damage, and has that been corrected?
posted by Preserver at 3:40 PM on April 13, 2022 [4 favorites]

Structural engineer before a bid. Not a regular inspector, an actual structural engineer. If it has known foundation issues, that can mean walls, windows and roof issues. It can mean doors not hanging right. It can mean flooding or or or. There's a reason that foundation issues are considered a reason for a hard no. If you were talking about somewhere that you were also wanting as a rental and to flip, maybe it would be worth it. You wouldn't have to deal with the long term fall out. But since you want to stay long term, I would buy somewhere that will actually last long term.

I would also think about the rest of the impacts of a 1920's house - is the insulation ok? What are their usual electricity/gas bills? Are the windows up to code? Is the electrical still knob and tube or has it been updated? Are you in an area where termites are a concern? There are so so many things that make an older house a forever project, so unless you enjoy handyman work it's sort of a nightmare.
posted by Bottlecap at 4:03 PM on April 13, 2022 [7 favorites]

The first realtor I went to wouldn't show me anything under a certain amount, claiming "you'll never be able to sell it" so I went to another agent, who found me the perfect little house (one that the first realtor rejected!) I loved living in it and ten years later ended up selling it in under 2 weeks for almost 3 times what I bought it for. As long as you do inspections and get good quotes for the repairs, I think you can trust your own judgement. I'm pretty sure that the first realtor I talked to just didn't want to bother selling anything inexpensive because he wouldn't make much commission.

If you are able to delay your move-in date and live somewhere else while the repairs are being done, that will help take a lot of the stress out of the equation.
posted by 5_13_23_42_69_666 at 5:37 PM on April 13, 2022 [4 favorites]

Add me to the list of people who have been given poor realtor advice over the years. I don't mean that you should just dismiss what they are saying out of hand, but don't listen to them to the point that you don't listen to yourself.

That said, I agree with all the comments above about getting an up to date assessment and quote for the foundation situation -- if nothing else, prices have gone up thanks to the pandemic.

In a normal market the advice above to go really low on your offer would make sense, and it might still for this house. But in some places, even houses needing major work get multiple offers. It doesn't necessarily make sense but in some locations it is the way things are going. Don't let that push you into overpaying, but also be realistic.
posted by Dip Flash at 6:15 PM on April 13, 2022 [1 favorite]

With an old house, just get a thorough inspection. I am almost done with the remodel of an 1890s house, so 30 years older than yours. We thought it needed to be painted and have the old carpets removed to refinish the hardwood floors underneath. Inspection turned up: unsafe wiring, unsafe galvanized and lead pipes, asbestos, mold, cracked sewer line, missing shutoff valve on water line, unsafe framing, furnace issues, and of course lead paint. During the remodel we also found a gas leak and even more unsafe framing. PLUS all the cosmetic and livability improvements we wanted to make. We were able to negotiate a massive discount on the contract price and also had a sizable budget for a remodel. I love the house and don’t regret it but please please find out everything you can about the house beyond just the known foundation issue.
posted by amaire at 8:18 PM on April 13, 2022 [1 favorite]

Best answer: Eh. There was a house I was interested in and my realtor didn’t even want to show it to me, calling it a “miserable little house.” Fast forward ten years and I am writing this from the upstairs bedroom in that house because the man who bought it became mg partner. It’s a lovely house. And people do replace foundations, all the time. It doesn’t have to be a tragedy.
posted by HotToddy at 8:44 PM on April 13, 2022 [3 favorites]

It's great for a realtor to have an experienced eye out for a client getting in way over their head or adopting a lot of sales drama, but your realtor's strong objection to this house sounds a little misplaced. $165K vs $195K isn't that drastic if you're not already at edge of your price range. Realtors are humans with biases, and a lot of people are biased against older, smaller houses.

It sounds like you're financially on solid ground for this. Instead of trying to talk you out of the house completely, why isn't your realtor helping you negotiate options for having the current owners credit some repair money back at you within the sale contract?
posted by desuetude at 9:06 PM on April 13, 2022 [4 favorites]

Before considering this, you need to get estimates on what the foundation repairs will cost now. Costs have gone way up and $25k is possible, depending on what the house needs, but it could be much worse. That offer might also have been too low at the time; the company wants the job.

I live in a small old house that needs foundation work myself, and the quirks of how the house is built and situated means it's not going to be easy. Luckily my family is in this line of work and we can do a lot of the work ourselves, because otherwise it would be way, way more than $25k.

But there are houses we've done foundation work on where $25k is the right ballpark, because they were easier, smaller jobs.
posted by Kutsuwamushi at 6:37 AM on April 14, 2022

I bought a tiny 1920s home and adored it. It was absolutely perfect when I was single. I wish I could have afforded to keep it.

Try not to overpay, and budget more than estimates for repairs.
posted by banjonaut at 8:21 AM on April 15, 2022

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