House #4: Maybe Not

The Yellow Stain House caused some frustration the past couple days because the seller (the bank) didn’t want to provide a due diligence period; after giving them a large deposit ($5000) and agreeing to close in 2 weeks, they refused to allow me time to do any inspections before committing to the sale. While the property seemed to be in good shape, I’m hardly a home inspection expert after only a few months, so I was very reluctant to sign the contract before getting an inspector through the property. So, I told my agent to hold off on submitting the contract until Thursday afternoon, and I made arrangements to have the utilities turned on and an inspector come out first thing Thursday morning.

And I’m glad I did!

The first thing that became apparent when the water was turned on was that there was a rupture in the main line from the meter to the house. While no water was running in the house, the meter was spinning (meaning water was flowing), and then a large pool of water started to form around the water meter and the meter box started to fill. It appears the rupture is near the meter box (making it easier to find and fix), but who knows if there are additional rupture points as well. The house has polybutylene plumbing, a rubber-like replacement for copper plumbing pipes that was common for about 15 years; unfortunately polybutylene is known for rupturing and leaking, and houses with this type of piping are susceptible to plumbing issues. While I knew this before the water was turned on, it wasn’t until afterwards that I realized that there was already a major rupture.

But, this wasn’t the worst of it…

The inspector did his inspection, and most of what he found I already knew or suspected. But, he did find one major issue that I had overlooked. In the basement, along the concrete foundation wall, was a large horizontal crack about 12′ in length. Apparently, this wall is in the early stages of a structural failure; if not remediated, the wall could collapse at some point down the road. Unfortunately, I have little experience with foundation/structural issues, so I have no idea whether this is a $2000 problem or a $20,000 problem. And because the bank didn’t want to give me a due diligence period, I didn’t have the option of bringing in additional contractors and engineers to help me better understand the problem and the solution.

So, I called my agent, and told her I wanted to back out of the deal before she sent the final contract to the seller. She told me she’d give the seller’s agent a call, and see if they had any suggestions on how to handle the situation. My agent called me back a few minutes later and suggested that the seller (the bank) would be willing to consider a price drop based on the new information; unfortunately, I still didn’t know if I needed a small price discount for this problem or a large one. While I considered just asking for a ridiculously large price drop, I decided that I’d be unlikely to get one without additional evidence of the problem. I asked my agent for another 24 hours.

I got on the phone with a structural engineer that my inspector recommended, and he will be meeting me at the house Friday morning to take a look at at the problem and write a report recommending a course of action. Hopefully he’ll also be able to give me an idea of what it would cost to fix the problem, and then I can go back to my agent with a reasonable request for a price concession. As of now, I’m not confident that The Yellow Stain House will actually end up as House #4, but between inspections and engineering reports, I’m spending several hundred dollars in hopes that it will work out.

Hopefully by early next week I’ll have a new offer to the bank, and will have received a response one way or the other…until then, I’m just going to be happy knowing that this whole thing could have been much worse had I signed the contract before doing the inspection. Lesson to anyone still reading — always do your due diligence, even if the other party tries to dissuade you from doing so!