Expert: liznarr - 2/12/2011

Question
Hello.
My husband is completely psyched about buying an a-frame home. The location is GREAT so far as proximity to highways, city and higher-priced homes. The lot size is incredible too given the location.   BUT the home is located just down the embankment from a RR track and very near where the train crosses a major road.  The track is defiantly in use for freight.  We have not had noise meter readings taken.  The property is another state, but we will move there.

We have an offer in for close to the lenders asking price and are just now finishing up our due diligence period.  We were aware the home would need repairs, but almost all components failed inspection and plumbing supply pipes are polybutelyne.  The home will need repairs totaling 1/4 to 1/3 of the the initially agreed-upon price.  Yes, the price was low for a house in that area, but not in real value I think.  It is a true a-frame with roof extending to about 8" from the ground. Fire place is found to be unworkable too.  I have the sense it is not all that well made.  I would like to change our offer to a true low-ball of about 1/3 less than the price we offered before due diligence began. It's not that long on the  market, so maybe the bank will balk, but I think despite the home's initial charm, other buyers will be as apprehensive about this deal as I am.  This home is unique in its area in that there are not other a-frames and really no snow.  There is a certain charm,yes, but it's small, dark, possibly not really well-built and I fear difficult to sell due to RR and style.  My husband wants to charge ahead, and I am worried.  I would be more inclined if we could get it for at least 1/3 off the initial offer.  Do you feel we have a case for this. I also worry that our RE wont love our coming in with a  much lower offer. The price is not high as RE goes ( still a lot of money and a lot life time spent working to pay it) so her profit is already not much at all.  Appraisal will come in after due diligence period is up.  Bank has granted only a three day extension, one of  them week days, though we requesters seven.  Andy suggestions?   Thank  you for your time and advice.

Answer
Hi Gigi,

This A-frame structure certainly has more defects than the average purchaser would want to deal with.  Given the defects you are already aware of, please keep in mind that when repairs are started, it is a GIVEN (for properties in this bad of a condition), that you will find additional damage, which will require yet even more money to correct.  So, if you do go forward, prepare and plan for the unexpected as it relates to time, aggravation and money.

My personal opinion based on what you have written is that I would withdraw my offer (if you still have that option) and run for the hills, literally.  However, if your husband insists on this particular structure, I would hope he would agree with you that the offer needs to be rewritten.

Considering the defects you know about at this time, have you asked your husband “why” he is still so gung-ho on this particular property?  I’m sure that there are other A-frames you could locate with fewer problems.  

If your husband still insists on going forward against your wishes and your better judgment, examine all aspects of potential future problems and consider the possibility of the effect on your marriage if you move to this home and you are absolutely miserable there.  I’m not trying to suggest anything other than to be prepared for anything you may not have already considered.

Your intuition/subconscious mind is telling you this is not a good deal for you, especially at the current price you have offered.  Even at the “right” price for you, do you really want to move to another state and live down an embankment from a railroad freight track?  The subconscious mind is a powerful tool to use when we listen to the message.

My suggestions, however, after expressing my thoughts above would be:

1.   Insist on rewriting the offer if that option is available to you.  And I would include language in a rewritten offer that if the cost of repairs exceeds “$___”  (whatever amount you want to insert as a cap for the amount of money you want to spend), you have the option to terminate the Contract at that point and receive a full refund of your earnest money.

At a BARE minimum, I would insist on an extension so that you can get accurate estimates for ALL repairs.  You and your husband need to have a good idea what this house could ultimately cost you.  

If the extension request is refused, this is your answer.  A “reasonable” Seller should not try to bind a purchaser to a deal that could potentially cost the purchaser financially and/or emotionally.  If the Seller refuses the request to either rewrite the offer or an extension, I would let it go at that point and walk away from the deal.

2.   Get estimates on corrections for everything by reputable, licensed contractors (the polybutylene supply lines could cause you MAJOR problems down the road),

3.   Just curious, but did this lender have any inspections performed and supply you with any copies of any inspection reports – and is this a foreclosure?

4.   Investigate the possibility of water issues, since you said this property is located down an embankment from a railroad track.

5.   Talk to any neighbors you can find in the area and try to get more history on this home.  Find out how long it has been vacant.  I would also investigate any potential crime in this area, including any nearby hobo camps, which are many times magnets for drug and alcohol abusers.

6.   You need to keep in mind, as you have already pointed out, that even in good condition, a future buyer (when you resell) will have all the same concerns you currently have.

I hope the above provides you some insight.  Good luck to you, and feel free to write again if you have additional questions.

Regards,
Elizabeth