Bay Area

[rysmom]

Hi all,

We just entered contract on a Marin property in a hillside house on a wooded area.  Very low inventory area.  House has been extensively remodeled on the interior, and is large with good sq footage.  Offer accepted at over $100 K below initial asking price because the place was on the market for 4 months.  We were excited, the price was great.

There were very few disclosures.  Fast forward to our inspection-- inspector found evidence of beetle infestation in the carport with resultant dryrot, inadequate drainage/ flashing with no gutters leading to possible rain damage, a few cracks in the foundation, and rot in the decks(decks should be replaced).  He estimated $100-150K max damage.

Our realtor believes we can get the seller to pay for a large part of this, but definitely not in the range quoted by our inspector.  Note that we did not use the realtor's inspector, but our own.

What should we do?? Do people generally walk away from homes with this much structural damage?  Interior is pristine with no remodel needed.  We are first time homebuyers with no experience working with contractors, and have 2 young children, full time jobs and not a ton of spare time.

Any advice greatly appreciated!

[tjh]

Using the inspection report as the guide for needed work, get estimates from other contractors.

This will give you a better idea of the scope and the cost of needed repair work and more solid ground to negotiate with the seller on.  

At this point, there is public information about issues with the property.  This is just information, not necessarily good nor bad. You have the opportunity to pass and let the next buyer decide how to handle it or, if you like the place, you can buy it with your eyes wide open as to what it's going to take.  The seller can't ignore the findings now, so there is incentive to negotiate.

You also need to consider if this affects your loan possiblities.  In some circumstances, the lender will not fund the loan until much of this work is completed.

Good luck.

[Fishmarty]

Walk away from it.

This will be issue even for experienced investors like us.

You have to get a contractor to estimate repair to come up with a real amount.

Lender will have to ask you to do the repair 1st before consider underwrite.

And in case that $100-150k damage is real and seller agrees to credit damage repair, don't be fooled to accept a large amount of seller credit because lender will not allow credit to be more than 3% asking price.

[El_Katz]

If you're in love, hire an engineer to look at the foundation.  When I hear "hillside" and "foundation cracks" used in the same sentence, it gives me the chills. 

Home inspectors are not contractors.... so I'd take his "estimate" with a grain of salt.  Costs can go both ways.  The suspected water damage could be nothing other than superficial or it could require herculean effort to repair it, especially if it's into the framing.

[sfsfr]

I would not buy a house with serious foundation problems unless it was very clear what caused the problem and that problem can be fixed. You don't want to spend $100k+ to fix the foundation only to have the issue return because the soil is bad, hill is sliding, or such. Hiring a geotechnical engineer to take a look could cost thousands just for the analysis, but is probably in your best interest.

[rysmom]

thanks you guys, your input is invaluable.

our inspector IS a contractor-- he rocks.  so I think it's an accurate estimate.

I will talk with our realtor about the concerns you guys have raised.  it is worrisome that the max we could be credited would be 3%-- there is no way that will cover it.

keep the suggestions coming!  I am a 1st time homebuyer and working mom of 2, so this whole thing is really not my area of expertise.

[rysmom]

PS all-- it turns out the seller was aware of all of these problems, but did not disclose them.  he had a previous inspection done, but has not come forth with it-- he alluded to it on the day of our inspections and even alluded to the findings, but claims not to have a copy. isn't this illegal?? we have already put a lot of $ into inspections (more than I'd care to admit)-- would love to have him cover some of that if he is not negotiating in good faith.

[Fishmarty]

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rysmom wrote:

it is worrisome that the max we could be credited would be 3%-- there is no way that will cover it.

---

If you pursuing seller to compensate repair, try to ask seller to drop the price accordingly.

I did this last time but agents from both sides came out to object before the seller did. But mine was a cheap house and credit was $10k. At the end we found a way to get the credit but not dropping price.

[New2BA]

Hi rhysmom-  though no expert, I'm a recent homebuyer who understands that hillside homes are *very* hard to resist!  In my search I did hire a geotechnical engineer at one point (at a rate of $500+/hr) to inspect one property.  Seeing how this could get very expensive, I also did some of my own research- re Keith Avenue slide and mat foundations- and decided to limit my search to parcels located outside of active creep zones designated on a map by Alan Kropp in east bay.  

I don't know of a similar map for Marin County- try http://marinmap.org/dnn/ ?  Survey says areas east of the San Andreas fault (covers most residential) have a "melange" of different underlying rock compositions which contribute to varying rates of expansion/contraction-> shifting regardless if you get a new foundation.  So if this concerns you, study up.  At least the pest/dryrot problem can be solved though it could also become a money pit.  That no one else snapped up a property with 'pristine interiors' might give you additional reason to be vigilant of the potential problems (esp since I have found many people do not seem too worried -4 mos without a buyer seems unheard of, unless the seller actually doesn't want to sell).  Just be careful and prepared if you decide to take on the project!  I wound up in a no hazards zone myself but I still can't let go of my dream home with views.  Good luck to you.

[basschick]

if the house is going to cost the going rate or more after the repairs, it might be simpler to wait until another house in the same area pops up that doesn't need massive repairs.  sure, it could take a while, but large repairs can go over budget, and can also go looong over the estimated time to do the repairs.