Lance and I have been in negotiations with a seller on a 3 bed 1.5 bath house. This past week we (We meaning Lance) were finally able to get inside the house to take a look. Have you ever seen the show Hoarders? This place might fall a bit short for that show, but it was definitely a mess.
The first time Lance and I went to the house, the owner was not there so we just were able to look at the exterior and peak through a few windows. Needless to say the inside of the house was not a shock to us once we got in. A few things we noticed on are two inspections of the property were this…
1) Front Steps needed to be replaced
They were covered with overgrown vegetation, the grout was hard to find with deep pockets between the bricks and there were A LOT of cracks and broken bricks. After talking with our coach, it was decided we’d need to completely redo the steps. Total cost estimate is about $6000.
2) The back steps need to be repaired or replaced with a deck
It’s no telling how bad those cracks are on the left, but in this area many of the places have a back deck. It was recommended to remove the first step and build a small deck over the top of it. Cost estimate is about $3000
3) Foundation Cracks and Bad Ones!
This first crack is not the worst of them all, but usually the rule of thumb is that if you can stick a quarter into the crack it’s not good. Also this one is a vertical and those aren’t always bad.
This crack is more worry some because it’s on the corner of the house and the land really falls away from this corner. The house sits on the side of a mountain (large hill) and slops down away from the back of the house.
This is the worst crack. This crack is around the corner from the previous crack and you might not be able to tell from the picture but it really steps down. Also notice how wide the crack is in certain spots. The more we looked at this crack and the one above we realized that the foundation has severe problems and is basically falling down the hill. Initial estimates to repair are about $15,000.
When we offered the lady 87k, those were based on a 50k repair cost. After getting some more opinions on the above problems it’s clear that we will be changing our offer by about 20k. Not only is the foundation expensive to fix, I’ve heard from a few people that it will affect the ARV of the house even after fixing it by about 10%. Anyone of any comments about that?
And Pictures of The Mess…
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We have the ARV at $240k
I would have to agree, that you probably need to re-negotiate it down a little further. You’re still not looking bad now, but $20k less you’re looking really really good.
Whoa Scott, those cracks in the pics in #3 look really bad! Good thing you got a second opinion on them. Looking at the pics and condition of the home, it’s going to be a really hard home to sell to the average homeowner. So, yes – this is definitely in investor territory. Best of luck in the negotiation process! 🙂
Thanks Rachel, we are suppose to hear back from the owner today sometime
those prices on rebuilding the steps sound awful high to me. but i agree with mobilehomegurl, get a second opinion from a structural engineer on those foundation cracks. yes, you will have to disclose them to the next buyer, and yes, it will affect resale. but if your arv is correct at 240, you have a lot of room for error! best of luck!
I agree – the estimates for step repair seem high. Of course, we can’t really tell how many steps are needed from the first picture. Anyway, I would get multiple estimates just in case.
There are about 8 steps in total, and they curve around a corner a bit as well.
Thanks for backing up what I had heard about resale value. The front steps that are cracked have roughly 8 steps, so it’s a pretty big undertaking.
Scott – A lot of buyers will be scared off by the work done to repair the cracks when you disclose that. But if you can get the house cheap enough and give the end buyer a great deal, you will be able to sell the house so long as the neighborhood is good.
Sharon makes a very good point. Either way, good luck.
thanks Jason, will let you all know how it works out. Probably have a conclusion this week.
There is a reason the house has been vacant for a few years for sure. Now we know it’s probably the cracks and the junk in the house that caused it.
That should put you in a great negotiating position Scott.