Philadelphia Weekly

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Some problems not worth fixing

Ilyce Glink
Inman News

Most savvy homebuyers hire professional home inspectors to give the property they're about to purchase a thorough inspection. Those same buyers know how important it is to be present for the inspection.

(Frequently the best information given by home inspectors is when they are chatting about their findings while walking around the home. Some of that chatter is far better than the written reports that inspectors ultimately deliver to their buyers. You will want to read the written report carefully, but you should keep in mind what the inspector said during the inspection.)

Homebuyers hire professional home inspectors because they want to know what's wrong with the house they're about to buy -- but sometimes they're surprised when the inspector actually finds something seriously wrong with the property.

Whether it is an asbestos-clad pipe, unacceptable levels of radon in the basement, a serious crack in the foundation, water infiltration or mold spores, or even a pest infestation, there are small and large problems that can be found in a professional home inspection.

Sometimes, a home inspector won't find anything concrete, but will just have a hunch that a problem may exist or be more extensive than it appears, and may recommend an additional inspection.

If you receive a recommendation to get an additional inspection, you might want to ask why the inspector can't determine the extent of the problem and what the risks are if you don't get another inspection. If you don't ask, you won't know that the inspector may suspect a serious problem with the septic system and that problem could cost you $50,000. With that kind of financial risk, you should definitely get a separate septic system inspection.

Once the problem is found, you have to ask yourself two questions: Is the problem fixable or unfixable? If it's fixable, how much will it cost? Will not fixing it cause any other problems down the line?

There are some problems that are unfixable, no matter how much time and money you throw at them: the house sits on a fault line; the house sits in a floodplain (be aware that many communities have redrawn floodplain maps in the wake of global warming and wetter weather patterns, so be sure to check); the home's foundation is so severely cracked (a major crack is one that is larger than one-eighth inch); the property's water supply has been contaminated by the local dump; and, the house is located under electromagnetic power lines (perhaps more of a perceived problem than an actual issue, but a tough call nonetheless).

Just about everything else is fixable -- even most kinds of earthquake damage and destroyed septic systems.

If you decide that the problem falls into the "fixable" category, you have to think about how much money you're willing to throw at the problem. It simply isn't affordable or smart to try to fix every problem. In some cases, the house simply isn't worth it. In an era of declining or flat housing prices, spending an extra $50,000 may or may not make sense, depending on what you're paying for the property and what other comparable properties are worth. ...CONTINUED

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Ask yourself: Is the house worth the purchase price plus $15,000 for a new roof? What if you also have to spend another $10,000 on new appliances and $7,000 on a new furnace? What if the pipes are lead-clad and the house needs to be replumbed to the tune of $35,000? It might be worth buying if you're getting the home at a foreclosure or short sale for 40 cents on the dollar.

If the home inspection turns up a few minor flaws, you should be able to negotiate a monetary fix for these issues well before the closing. It's perfectly acceptable for a seller to offer a cash settlement at the closing table that will cover the cost of the repair.

Keep in mind that the cash settlement will have to be approved by your lender. Your seller just can't give you money at the closing without the lender knowing about it. Make sure you plan ahead to avoid closing headaches. If the seller is unwilling to give you a credit to fix the items, the seller might have the items fixed prior to closing or settlement.

If the issues are major, but you still want to keep the property, you should negotiate a reduction in the purchase price in an amount that will cover the cost of the repairs. You should get two or three estimates to have the issue fixed, and then negotiate a settlement well before the closing. It will be better if you find your own contractors to do the work and control who performs the work to insure that any major repairs are done to your satisfaction.

If the problems uncovered in the home inspection are beyond repair, you should be able to withdraw if you've written your home inspection contingency correctly. But be prepared to comply with the term of your contract and notify the seller of the problems with the home and your decision not to go through with the purchase.

If you live in a state in which real estate transactions are handled by real estate attorneys, your attorney should write a letter specifying why you are withdrawing from the contract. Otherwise, make sure you send the documentation to the seller to get out of the deal and get your money back. If you don't comply with the terms of the contract, you could find yourself in a situation in which you could lose any money you put down towards the purchase of the home.