It's go time

[Gator]

My wife and I put an offer in on a house, the offer was accepted and we had the inspection today. Things went better than expected, considering we thought the septic tank was original (house was built in 1955) and would fail with flying colors. Turns out, it wasn't original, installed in the early to mid-1980s. Furnace is old, real old, but serviced well over the years. It needs a chimney liner ($1,500) and there are other small issues that came up in the inspection. The house is a fixer-upper for sure (guy who lived there died at 91 and the decor represents him well, but under the shag carpeting is preserved hardwoods throughout, which is nice), but it's priced very well considering.

So, long story short, what I thought would be a way out with a failed septic tank turns out to be a pretty sturdy house ... at least for now. It's time to act, and I'm scared ****less. Of course this is the biggest decision any couple has to make, and the last thing I want is to dump everything we've saved into a money pit.

Having been on the hunt for the past six months, we've seen a lot of houses and bypassed them all, mostly because they were priced out of our range. This one fits our financial situation, and it's in a nice neighborhood. Of course nobody has a crystal ball, but I would hate to buy it, then see the furnace crap out and the septic go to ****. This stuff is really nerve-racking.

Anyone feel the same on the home-buying trail?

 

[The Big Ragu]

I don't have a ton to add. Just want to say congrats. That is awesome. It sounds like you did a diligent search and held out until you found something you could work with in your price range. I hope you and your wife have many great years there. I'm happy for you.

It will be great if you can rip up the carpet and there are nice hardwood floors underneath. It can make it into a completely different place. I think places like the one you described can be great. You just have to make it into your own. A little TLC after nothing has been done for years can take a solid old home like that and give it new life.

Since you know it is a "fixer upper" have you left yourself a little cushion so you have some money put aside to deal with things that might come up?

 

[Baron Scicluna]

Congrats, Gator.

I'll repeat what an elderly neighbor, who has since passed away, said when I told him nearly the same thing that you posted when he had come over to welcome us: that my wife and I were worried about buying the place, what if something goes wrong and we can't fix it, what if something happens and we miss a mortgage payment, a whole bunch of other what-ifs.

He told me, "Everyone who buys a house is young and broke. We (him and his wife) were too. Everyone goes through it. You'll be fine; it'll always somehow work out."

He had been married to his wife for 50-something years, they'd been in their small, modest house for 50-something years, raising a half-dozen kids. He knew what he was talking about. We've been in our house 15 years, and in the beginning, I fretted if the grass hadn't been mowed one day longer. After a while, you learn that everything is relative, and life goes on.

 

[micropolitan guy]

We paid about $15 K over what we though was our budget 26 years ago. Were scared to death, that first house is a big step. House was built in the early 1970s, needed some work so we've redone both bathrooms, added a heat pump, etc. Houses cost money to update and maintain.

But our investment has tripled, we've had great neighbors for more than 20 years, it's been equity for two refis that not only lowered the monthly payment but allowed us to get a little extra to pay off debts with higher interest rates (cars), and now we're near the end of the road on a 15-year morgage at 4 % that makes my house payment less than what the local college students are paying for a one-room apartment.

You like the house, you like the neighborhood, it's priced right, and because not much has been done on the house in the last 30 years you can do the upgrades how you want them done. Sounds as if you hit the jackpot. Congrats.

 

[Gator]

Thanks MG, that's reassuring. We've been renting for eight years together, and now that we have a little one, it's just time to buy, staring building equity. And I always told myself I wanted to buy while the market was in a good player for buyers. We have impeccable credit, so we'll get a rate of our 3.75-3.85%.

To answer Ragu, after the down payment, we'll have about $10K for repairs. How far that stretches, I don't really now. The hardwoods throughout are very nice, if they only need to be sanded and redone. We could take out another $15K loan for full repairs, but I think we're going to save that in case something seriously goes wrong. After the initial $10K, we'll chip away at the other things.

 

[Michael_ Gee]

Gator, I think you've done all you could and done it well. One question: How are the appliances? Those can add up if they start failing in tandem. One warning. Getting hardwood refinished is costly. But let me join the chorus. The only reason we were able to afford our house in 1993 was because it had been beat to **** as a neglected rental property. We've lived there for 23-plus years and have dealt with improvements through sweat and or debt as they came up. We've been real happy living where we have.

 

[Gator]

Hardwoods and painting every wall, door and trim is the top priority. New flooring in kitchen and partially finished basement (where there is asbestos flooring ... yikes!) is second. Appliances are old, but were in use until he died in December. None of this will be done in a day. We know that. But again, for the price and a little elbow grease, we hope to turn it into a great home (fingers crossed).

 

[The Big Ragu]

To answer Ragu, after the down payment, we'll have about $10K for repairs. How far that stretches, I don't really now. The hardwoods throughout are very nice, if they only need to be sanded and redone. We could take out another $15K loan for full repairs, but I think we're going to save that in case something seriously goes wrong. After the initial $10K, we'll chip away at the other things.

I have two homes (long story -- one I actually won't go into). Home #1 (an apartment in NYC), I bought it in 2000 and it needed work, but I put off doing it for the longest time. I actually had the money put aside, but I had trouble building the momentum to just do it.

I finally got around to moving everything out and doing a complete "tear it down to the studs" renovation about 8 years ago. There were already nice hardwood floors in the living room -- they just needed a good sanding and coating. My bedroom had these weird crappy tiles on the floor. I had no idea what was underneath them, but we ripped it all up and I was very pleasantly surprised. Someone had nailed a board over the original hardwood floors which matched the living room (the building is from late 1800s / early 1900s -- I have no idea how old the floors actually are) and tiled over it. The floors were totally salvageable. They just needed some minor work and a sanding and they looked beautiful when it was done. I was left scratching my head about why anyone would do what they had done to the room.

It sounds like you totally have the right idea. From what you described, you nailed it. I don't know how handy you are, but I watched them do the floors. My co-op would have had a heart attack (yet another story) if I tried to do it myself, but if you are a DIY person, you can rent a sanding machine, and honestly, the job didn't look that difficult to me -- and I say that as someone who is only about a 4 or a 5 on the handiness scale.

 

[Gator]

Not a DYI guy, whatsoever, and even though my wife watches a lot of HGTV, she's not either (although they make it seem so simple, huh?) I would be willing to try a few things here or there, but on smaller jobs that I can't screw up even more, making them more costly in the long run. There is a horrible, horrible, floral ceiling fan that has to go, and I'm thinking about pulling it out and replacing it myself. That will be a monumental victory for my DYI skills.

 

[Gator]

Another question for home buyers. Things came up in the inspection, as mentioned, like a furnace that is on its last legs. My brother, who is in sales, says, "The more you ask for, the more you'll get." My wife wants to just ask for the safety issues, things that could potentially be dangerous to our daughter. I'm in the middle. I want them to spring for as much stuff as possible, without scaring them off.

We were the first people to put in an offer on the first day it was listed on the market. They have the leverage. They could say, "Screw you," and keep it on the market. Or we could be left with all of the fixes ourselves, which is what I don't want. Any advice?

 

[Ace]

Another question for home buyers. Things came up in the inspection, as mentioned, like a furnace that is on its last legs. My brother, who is in sales, says, "The more you ask for, the more you'll get." My wife wants to just ask for the safety issues, things that could potentially be dangerous to our daughter. I'm in the middle. I want them to spring for as much stuff as possible, without scaring them off.

We were the first people to put in an offer on the first day it was listed on the market. They have the leverage. They could say, "Screw you," and keep it on the market. Or we could be left with all of the fixes ourselves, which is what I don't want. Any advice?

I would give it a shot, why not? I would not focus on the old furnace. I would hit them with the cost it would take to safely remove the dangerous asbestos flooring in basement. That's a real resonable red flag to hit them with, especially if it came up on the inspection.

Good luck. Sounds like you are doing great.

 

[The Big Ragu]

A bit hard to answer that. ... How much does the negotiated price already take into account that the house needs work? That is the way they may see it.

Regardless, it usually can't hurt to ask for concessions, especially with your inspection in hand. Don't assume they have all the leverage. There is a lot to be said for a quick sale. They may be just as eager as you are to get it done. Usually, the worst that will happen is that they will say no, in which case you can still try to negotiate for something smaller. ... or even just do the deal for the original asking price because it sounds like you are moving forward either way. It's pretty rare for a seller to back out of a deal because of these kinds of negotiations, and if you already have signed a contract, backing out is difficult anyhow. I'd negotiate a little.

One tactic I like is to give them a number of options (some better for you, some worse), so they don't feel like it is a take it or leave it negotiation. That way it becomes about which concessions they will accept (not a yes or no proposition), and you walk out with something. ... but you won't walk out with everything.

If you can get absolutely nowhere on concessions (let's say their feeling is that the sale price already reflects the necessary work), one thing to consider is asking them to pad the sale price to account for any immediate repairs you want done, and then have them pay for the repairs up front with the extra $$ you are padding the price with. They are not out anything that way -- they pocket the same amount they would have -- but you can add the cost of the repairs to your mortgage with your down payment only going up by a fraction of the cost of the repairs.

 

[Amy]

Isn't the contract written so that you have a deal to buy the house for $XXX, pending the inspection and financing? So you, after the inspection, can decide whether you still want to buy the house for $XXX, ask for credits/fixes for things found and decide what to do if seller doesn't budge, or just walk away because you are unhappy with the results of the inspection? So seller can refuse to fix stuff or give you credits, but can't get pissed and cancel the deal because you asked?

Definitely expect to get the chimney liner fixed. I'm not clear about the furnace. If you knew it was an old furnace when you made the offer, as the seller I'd say "too bad, buddy, you knew the age of the furnace and should have taken that into account in your offer." You don't know if you don't ask, though. My experience is most people throw every freaking thing possible into the request after inspection.

 

[Gator]

Isn't the contract written so that you have a deal to buy the house for $XXX, pending the inspection and financing? So you, after the inspection, can decide whether you still want to buy the house for $XXX, ask for credits/fixes for things found and decide what to do if seller doesn't budge, or just walk away because you are unhappy with the results of the inspection? So seller can refuse to fix stuff or give you credits, but can't get pissed and cancel the deal because you asked?

Definitely expect to get the chimney liner fixed. I'm not clear about the furnace. If you knew it was an old furnace when you made the offer, as the seller I'd say "too bad, buddy, you knew the age of the furnace and should have taken that into account in your offer." You don't know if you don't ask, though. My experience is most people throw every freaking thing possible into the request after inspection.

Yes, the offer is contingent on the inspection. There are things about the furnace that we didn't know, though. For example, there is no mixing valve, meaning when the hot water runs, it runs HOT! And it's a safety issue with a 2-year-old in the house. The chimney liner is another. Some minor repairs in the roof are needed, but as a whole, it's about 10 years old.

We are looking to walk, but we're also trying not to get make this decision off emotion. Being headstrong is paramount. We met the buyers at asking, so I'm hoping they are willing to concede things, especially the safety issues. Hoping for the best but expecting the worst. Then we really have a decision to make.

 

[Amy]

That's way more than just an old furnace then. Absolutely ask for fixes/credits for costs to fix. If they have a good realtor, the realtor will explain the realities of what those items mean in selling the house to you or anyone else. Are the chimney and furnace issues code violations?

Good luck!

 

[Gator]

That's way more than just an old furnace then. Absolutely ask for fixes/credits for costs to fix. If they have a good realtor, the realtor will explain the realities of what those items mean in selling the house to you or anyone else. Are the chimney and furnace issues code violations?

Good luck!

That's a good question: The inspector only pointed out the issues, but didn't say anything about being up to code. That would obviously force the buyers hand a little bit. Not sure how you find that stuff out.

 

[qtlaw]

That's a good question: The inspector only pointed out the issues, but didn't say anything about being up to code. That would obviously force the buyers hand a little bit. Not sure how you find that stuff out.

Code issues mean that it is not up to current code but usually, existing houses are not required to be "up to code." So asking for code-compliance would essentially be an upgrade.

As for the negotiation, this is where you should rely a bit on your realtor to give you an accurate feel for the market; is it so hot that the seller can easily go to the next offer? Even so, with the inspection and some major items, there's the risk that the seller would have to accommodate the new buyer as well. Yes realtors are motivated to make the sale, but if they are professional, they know that they rely on word of mouth and if they help you out, you'll recommend them to someone else and/or use them when and if you sell.

I'd ask for concessions on the major safety items, that would be a reasonable request and you do have some leverage as you are the only one in contract to buy, others are just offers out there. I myself would not just nit-pick everything. You have not disclosed the price (not asking you to) but I would keep in mind how much the request is in light of the price, if this is a desirable property, don't want to ask for too much of a discount.

We've bought two houses and sold one. Home ownership does mean you have to spend $$ to pay for unexpected stuff like a new garage door, painting, landscaping, appliances, but the tax breaks and (hopefully) appreciation make it more than worthwhile.

My only advice is get a feel for your neighbors if possible. You can have the greatest house but if you are miserable with your neighbors, not good.

Congrats though and I'm sure it'll be a great place for you, sounds great!!

 

[93Devil]

Have them do the work and be sure it is up to your standards. That includes the roof.

If they say they will take $15,000 off the price of the house, that still means you don't have the cash to do the work needed.

Don't worry about asbestos tiles unless you start chipping them apart.

 

[trifectarich]

Given a choice of asking the owner to fix a problem or reduce the price of the house an appropriate amount because that's one thing a new buyer will have to do, go for option 2. If it's a dishwasher that doesn't work, the owner is likely to say, 'Yes, we'll replace that,' and then go find something for $119 at a scratch-and-dent sale; that's not what you want.

My wife and I put about $90,000 into repairs at a fixer-upper we bought 15 years ago. The project was long and difficult. I found one key was to know what we could properly do on our own and what needed to be done by a professional.

Good luck.

 

[Gator]

Put in the request for the work we wanted done (or credits toward said work) and now we wait. It wasn't a crazy list, just things that could save us a few dimes that would go toward the remodeling upgrades.