Really need advice on a real estate question

In My Humble Opinion
1

Hey, y’all! :slight_smile: I could really use some advice and thoughts about this real estate situation, or maybe just some moral support. Anyway, here it is… and I warn you, it’s long.

I decided a little while ago that I really did not want to rent anymore, as it was driving me nuts and I’d been taking care of virtually all maintenance anyway. I have never found a house rental situation in this area where the landlord took care of things, I’m sick of dealing with it, and I don’t want to live in an apartment again if there’s ANY way to avoid it.

Well, I found a cute house in an adorable neighborhood. Built in 1954, it had been a 2 bedroom, 1 bath, and an addition had been built (the owner was vague about when, but said “last 20 years”) that had another bedroom and a bath. Cute! However, when I walked on the floor of the addition, it felt like a great big sponge. :rolleyes: I’ve helped my grandfather build 2 houses from scratch, so I know just enough to get in trouble, and I KNEW that was not a good sign. Well, being me, I began to do some digging. I went down to Metro Codes and spent most of an entire day researching the sordid past this poor house had been put through. I pulled all records of permits (which covers pretty much all work done on on buildings in Davidson County except paint and wallpaper type renovations, installing a driveway or a fence, or replacing less than 33% of the roof.) I also talked to the chief building inspector and many other inspectors there. (It was fun, and they all reminded me of my grandpa. :))

Well, it turned out that the owners never had permits for any of the additions they did, which also included a deck and an aboveground pool. But that was just the beginning. In 1992, Metro Codes sent out an inspector, who made up a LONG list of code violations, including the lack of permits for the deck and pool (they didn’t catch that the original addition also had no permits; maybe the deck and pool were being worked on right then and that’s why they noticed.) Codes was also called out in 2004 for trash in the yard, and possibly other times too. In Davidson County, there are 15 inspectors for 500 square miles, so it takes a LOT of complaining by MANY people to get them to go out to a site. The owner was ordered to make repairs. Well, four months later, in
April 1993, he hadn’t, so he was sent a summons and a court date in May 1993.

That’s where the trail goes cold from Metro Codes’ end. I talked to the original inspector who was sent out in 1992 (he’s still there.) He didn’t specifically remember those people, but he said that if the case had been settled one way or the other, the result would have been included in the official file, which it is NOT. He believes that it somehow “fell through the cracks” at the Davidson County General Sessions Court. The thing is that the owner said in writing in late 2006 in the seller’s disclosure that she doesn’t know anything about any problems (I have a copy.) But Metro Codes has an official document in its files that proves she DID know in 1992, and that these code violations were NOT fixed-- there’s no evidence they were EVER fixed, and if there was, Metro Codes would have that. Doesn’t this mean that she was fradulent on the seller’s report??

That’s still not the end of all the fun, though, and that’s because of the court case. It took a LOT of digging to find the person at the Environmental Division of Sessions Court who could find this information by pulling old documents, and by the time I found her, she’d gone home on Friday. So I’ll talk to her next week. The inspector who actually was on the original case from Codes’ end, remember, believes that the case was never actually closed. Metro Codes has a short statute of limitations-- if an owner slipped through and didn’t fix a violation more than 4 years after being cited, they can’t be forced to fix it after that by Codes-- but I already know that the county court does not operate on that same statute. (I just don’t know what theirs IS yet.) So isn’t it at least possible that the case NEVER expires, and that it could be potentially reopened at any time? And that if they find the same violations still existing-- which I know for a fact that some of them still do-- the owner could be dragged back into court? And that this could even be true if the house has a NEW owner??? Well, I’m going to find out THOSE things next week.

The final fact is that four, count 'em four sales have fallen through on this house in the past year, and it’s been on the market for almost a year. With all of them, I do know that it happened pretty late in the game. I doubt anyone else did the kind of digging I did and am doing (I was an investigative reporter for YEARS,) but my guess is that it was after the inspection. I wouldn’t be one bit surprised to hear that the entire floor, subfloor, and joists have to come up in that addition, and that MAY very well not be all. (I seriously wonder if there’s bad foundation news…) I talked to a building inspector friend of mine, and he said that although I’d have to wait for the inspection on Monday, it sounded to him like they’d have to tear out to the ground and start over with that floor, and that he’d seen this kind of thing before when homeowners tried to save money by using unlicensed contractors.
But here’s the thing. The inspection (for me) is on Monday. I have a great inspector, and I’ve already told him about what I’ve found at Metro Codes. IF he comes back and says that the problems are fixable, but that it’ll be around $15,000 (or less, or a little more would be okay too) it might very well still be worth it to me to buy this house IF the owner comes down enough on the price. She’d be nuts not to, IMHO, because she’s really painted herself into a corner. She LIED on the seller’s report and the proof is in official files. (Why do people do this to themselves???) Doesn’t this legally have to be on the seller’s report from now on (well, not that she lied, but that she DOES know about the problems?) Isn’t her realtor going to force her to do it now that I found out about that Metro Codes document, because otherwise it’s just putting himself at risk? Who on earth would ever buy this house besides a developer who’s just going to tear it down anyway? And can you imagine how they would lowball her, knowing they were her only chance for selling the house?

If the repairs are $15,000 or less, I want to offer a fair price. I do not want to take advantage of this person even though I am NOT happy about that seller’s report thing. Who knows why people do desperate things? I think she and her husband may have just made a series of bad decisions when they built the additions, it turned out to be a disaster, and it just snowballed. According to her agent, she is DESPERATE to sell the house (strange thing for the seller’s agent to say, it seems to me. Maybe he figures there’s no point in trying to hide it!) I don’t want to behave unethically because she’s doing it. I was talking to a contractor about this, and he said, “Well, she’d cheat you, if she could.” I said, “Maybe so, but that’s on her conscience. I won’t have it on mine.”

BUT… the price really would have to be fair. The bid I made and they accepted, contingent on the house inspection (without any of this knowledge having yet come out, of course!) was $90,000, plus they’d fix the floor, pay $3000 of the closing costs, and put a year warranty on everything left in the house (plumbing, water heater, appliances, wiring, etc.) That’s low for the neighborhood, but not completely out of line. That exact area hasn’t been truly gentrified yet, although it’ll happen, no doubt about that. So cute, with a park and an elementary school, lots of trees, good neighbors, etc…

Knowing what I now know, I suspect that that price will have to come WAYYYYYYYYY down. I already know that the owner does NOT have the money to fix anything before selling. So I would have to put $15,000 cash of my own into it and come up with that immediately to pay contractors. That I can do, it’s ot a problem, and it won’t be a problem with my mortgage lender either, since I’ve already checked on that. My financial situation is very unusual, with an unimpressive cash flow but lots of liquid assets and perfect credit. But very few people can do that. I don’t think anyone else is going to come along and buy this house. If anyone did and then found out about some issues after the sale, I can’t see how they could lose a case against that owner for fraud, given the Metro Codes evidence (and there may very well be much more to learn at Sessions Court, too.) Developers really haven’t targeted that neighborhood yet. The owner is REALLY stuck, but if the price goes low enough, I’ll buy. In that case, what’s fair to offer? $60,000? $50,000? $40,000? What about if the house is totally unsalvagable, and it only has value as a lot? The Davidson County property tax appraisal value of just the land is $13,700 (those are extremely accurate to true sales value in that neighborhood; I checked that, too.) So in that case, is THAT a fair price, or maybe $15,000? $18,000? What would a developer pay for this house?

I guess I don’t really know for sure yet. If the inspector tells me it’s completely TOTALLY hopeless and really does need to be torn down, then I do think I’ll back out. There are other houses to buy! But if it needed a certain level of repairs, well, that’s the kind of situation I’ve been looking to get into-- buy cheap, have contractors do the structural stuff, do the cosmetic work and landscaping work myself (love it!), and live there for at least a couple of years. But… I want to behave ethically here. I will not take advantage of this sad and desperate person who owns the house.

This was a LONG post, y’all, and if you’ve borne with me thus far, many many thanks. Please let me know what you think about this situation, or any aspect of it. All advice appreciated! :slight_smile:

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I don’t think you need any advice other than support to do what you already know is right. :smiley: You’ve done all of your research (and you’re right, very few people would bother to do all of the digging that you did). Offering a lower price to the seller is absolutely reasonable, because you’d be offering WHAT THE HOUSE IS WORTH. You’re under no obligation to pay more because you feel bad about the situation she put herself in by ignoring the law.

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I forgot to add - do you trust your home inspector to find everything? It sounds like there could be god-knows-what problems hidden in the walls or basement…

4

I’m intrigued. If three or four prior sales have fallen through this year, and you believe it may be because of the inspection, I’m surprised that the seller hasn’t amended her disclosure statement. Here, at least, the inspection report is given to all parties, so if her buyers got a bad inspection, she’d see it. She’d have to disclose it, too.

She may have failed to disclose the code issues if she believes she fixed them. Remember, it could be the city that fell down. But I do think you can tell her that you’ve found out about the prior violations and would like to see evidence that those have been resolved.

Personally, I’d wait for the inspection on Monday, but I’d also ask for any prior inspection reports on the house. And, frankly, if I found that she had not been forthcoming about even one thing, I’d probably walk away, on the theory that it’s probably just the tip of the iceberg.

Good luck with this. Like I said, if it were me, I’d walk away. But if you decide to stick it out, get bids from contractors before making another offer. You’d hate to cut your offer by $20K only to find that it’ll cost you twice that to get the work done.

5

Think about this question. Do you want a home or a hobby? Remember, you said you’re tired of having to take care of your apartments. If you want a home, buy something else. If you want to play Grownup Lincoln Logs, buy this one.

6

Not to be snide, but why wouldn’t you want to take advantage of this lying weasel that has tried to overcharge you at least double the market worth after spending decades doing the wrong thing??? :dubious:

Caveat emptor. After the inspection, I’d say value of the lot is x, value of the house is y, given your history I wouldn’t expect a warranty to be worth squat, so therefore my offer is x + y - a discount to compensate for uncovered risk and lack of warranty.

7

So why do you want to buy a crappy house?

I like the idea of buying less house than you can afford (if I’m getting your point right). I don’t see any value in buying worst house you can find though.

8

This is all guessing until you get the inspection report, but my husband and I flipped several houses (all quite profitably) so I do have some experience in this. What was the asking price on the house? We would always try and guess the absolute least amount the seller would take and then offer about 20% less than that. The seller can then counter-offer and you can get a better idea of how low they really will go. You’d be surprised. We often found that we guessed high, and a couple of times had our absolutely horrible offers accepted as is (including one 50% of asking price offer).

As for the value of the lot if the house is a tear-down, it costs money to tear down a house and haul away the debris. I would say the value of the lot would be less than that of a vacant lot.

This kind of project can be really rewarding even if you have to start over on the addition. Is the main house habitable while you’re renovating? If not I’d skip it. Good luck, and let us know how the inspection turns out.

9

Thanks, y’all! :slight_smile: The inspection is tomorrow, so I’ll know much more after that. If the inspector (and he’s very very good) thinks that the structural repairs would bid at more than about $15 to maybe 20,000, well, that’s it. If he thinks they’d bid at around that, then I’ll tell my realtor that I know the whole history of this house with Codes, and that the owner needs to stop playing games if there will be any chance of my buying this house. I like doing cosmetic stuff, quite a lot, also landscaping, but I’m not getting into any structural problems that are more than I could pay contractors to do. I am not going to take on endless problems in that way; they will either bid out at an amount that could be fixed right now by professionals, or I won’t get into it. And in TN, owners aren’t required to provide inspection reports, but if I don’t see this one that the owner had done, that’s it. I will also ask what was done in response to that 1992 Codes list of violations. (I already know that everything wasn’t fixed!)

I will only buy MUCH less house than I can afford. That’s why I drive a 1987 GMC van that has the side mirror held on with duct tape, wash and reuse aluminum foil, and buy clothes at Goodwill. :slight_smile: I pay cash for everything, and I was sorely tempted to do it for a house, but I can make more by letting that much money stay where it is. (Yep, I WAS raised by my grandparents who grew up during the Depression, why do you ask? :wink: And…

Because… I can’t do it. I’m going into the MSW program at UT-Nashville this fall, and I kept thinking of how I would try to relate to this woman if she were my client in some kind of geriatrics-related social program. So, I can’t do it. But I won’t go above a fair price, either. Anyway, I’ll post tomorrow about how that inspection goes!