would you buy this house?

purrusMay 16, 2009

Hi everyone,

We are interested in a house that is in a fantastic neighborhood, backs up to protected property that cannot be built on, and is otherwise beautiful (it has GREAT bones). It is a foreclosure.

There are a few things wrong with the property, though:

- it has been on the market for 410 days and is priced quite low--itself a warning sign

- the attached deck looks like it is rotting and all of the paint is peeling off (I'm not afraid of refinishing/repainting the deck, but I'm not sure it is salvageable)

- the biggie: We thought the house smelled musty, but it's a foreclosure and has been vacant for two years, so thought that was no big surprise. We went into the finished basement and while it seemed dry--none of the carpet was damp, and we've had lots of rain lately--we did notice some splotchy dark-colored mold on the lower part of one of the exterior walls and some greenish blue mold on a ceiling tile as well. We are planning to un-finish the basement anyway by demo-ing all of that anyway, which would presumably get rid of all of the mold food down there. I am, however. assuming there is more where we can't see it and am concerned about how extensive this problem might be.

This house was built in 1957 and an addition over a crawl space was added sometime later. The exterior wall with mold on it is underneath the addition and lines up with the beginning of the crawl space. So if there is a moisture problem I am concerned about how hard it would be to fix in this location.

I am also quite concerned about the mold issue. The basement has carpet, drywall and ceiling tiles, all of which I am assuming will need to be removed. Would you be very concerned about this? The price is excellent for the neighborhood but we don't want to buy a house that will make us or our pets sick. Googling this issue is making me freak out, so I am trying to sense here whether mold is over-hyped or whether this is something that should make us walk away.

the house was pending just a few weeks ago and apparently the deal fell through during the inspection, which increases my concern.

There was a dehumidifier down there that obviously hasn't been used for a long time because no one has been around to turn it on. Also the sump pump looks like it hasn't been on in ages--the basement seems quite dry. There is a leaky sliding glass door near the edge of the beginning of the addition--when we were there the carpet around it and the wall immediately next to it was wet from all of the recent rains. So I'm thinking that door plus the lack of dehumidifier use is the issue.

Thanks in advance for any insight you can offer...

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Put in a very low offer and go from there. The bank now knows from the earlier buyer that there are issues w/ the home.
The bank will give you time (usually 7 - 15 days) to perform your inspections, and during this time you have the right to back out of the contract for any or no reason. So, there is no risk to you, except for the $350 you might lose for the inspection costs. If you find out there are some costly issues, you can cancel the contract or renegotiate.
Go for it.

    Bookmark   May 16, 2009 at 8:49AM
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Well, we actually did--the inspection is Tuesday. Sorry, I'd written this out earlier, didn't post it right away and forgot to edit it.

The price is at least $115K below where it could be if it didn't have so many cosmetic/maintenance issues. Other houses in the neighborhood (and not many are for sale) are way, way more expensive. Also the fact that it backs to the protected land is a huge plus for us, having both grown up in the country.

I do have bad seasonal allergy issues and I'm a little nervous about that, but hoping that we can get it fully remediated.

Can one negotiate with a bank for repairs?

    Bookmark   May 16, 2009 at 9:05AM
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Also, we are paying for a regular inspection as well as a mold and termite inspection. That means we are dropping almost $700 on the inspection, but we would like to avoid any surprises that are avoidable (we have owned a fixer-upper before and we know that surprises are also ultimately unavoidable!).

    Bookmark   May 16, 2009 at 9:14AM
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What is the lot worth all by itself? What is the house worth *without* the questionable addition over the crawl?

I'd be concerned that even if you got rid of the mold and tore out the addition, the mold has spread via the HVAC and interior wall spaces.

We bought a 1950's ranch on a great lot, thinking we would remodel it. It had an addition that turned out to be sinking. We did a partial teardown, leaving the basement and chimney. Mold developed in the basement during a construction delay over the winter. That was $17K in 2000, for an unfinished 1800 sq ft basement -- men in moonsuits.

As things turned out, we're very happy we tore down and built all new, but it as an agonizing process until we made that decision. If I could have a 'do-over' I'd have ripped out the basement too! I only bring this up because you say surrounding properties are high-priced; sounds like the neighborhood supports teardown/rebuild.

    Bookmark   May 16, 2009 at 10:18AM
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Actually no--all of the houses in the neighborhood are original and similar to this one, just much better maintained and more updated.

We are wondering about the HVAC, too.

Was the mold in the basement just on the concrete?

    Bookmark   May 16, 2009 at 10:26AM
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The mold was most noticeable on some wallboard the owner had put up to hide the sump. But the remediation covered every inch of the basement: cocrete, sumps, waste pipes, bottom of first floor sub-flooring, floor joists, chimney brick, etc. We were lucky; this happened (2000) before insurance companies exempted mold. Our insurance paid all but $1K.

There was a story in our Chicago Tribune not long ago about a house where mold started after a fire was put out. The HVAC distributed the mold throughout the house before they realized they had the problem. (It got worse. The family moved out; some demolition was begun; a skunk got in under the house; there was no way to eliminate the odor. The house needed to come down.)

Sorry I misunderstood about the neighborhood values. Still, you might want to look at what the land alone is worth and use that as your starting point on an offer. Banks don't like to be in the RE business. They should want to unload the property.

    Bookmark   May 16, 2009 at 2:21PM
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I think your right to be very concerned and cautious about possible mold issues etc. What about life and living conditions while your fixing the house up?- Sometimes location and price isn't always worth the headaches and inconvenience or most importantly your health.

My husband and I looked at foreclosures and quickly learned it would be way too much work to live with all at once. We were able to find a house that was in the middle of the suburbs but in an area that use to be more country so we have empty land next to us and it was a home that needed cosmetic updating but was still nice and clean and had good bones.

This way we could live in the house, and update slowly without having to worry about the expense and inconvenience of having to change several things at once due to repairs or mold etc.

Foreclosures can have a lot of issues due to abuse and neglect from the former owners.

    Bookmark   May 16, 2009 at 4:58PM
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purrus, you keep saying protected land. Who told you that? Someone trying to sell you the house?

Have you checked to see who actually owns the "protected" land and can it really not be built on? You can find this out for yourself at the county.

You need to investigate that before you buy.

    Bookmark   May 16, 2009 at 5:05PM
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Hi gammyt,

It is a big deal where we live--it is owned by a university and it is protected because the tycoon who donated it said it was. Believe me, it is protected for at least 150 years! It is common knowledge and numerous neighbors that we know personally have also verified this.

Chisue: that is a very good point about the value of the land. I am not sure about that and will see if I can find out. In case I have misrepresented it, the house itself is in great condition except for a few maintenance things, which I realize can become big things. It even has a new roof. I think the owners probably either lost their jobs (common in this area as it is everywhere now) or something else happened in their lives that caused them to walk. I do know they tried to sell it for awhile at an absurd price, well over the neighborhood price, and then they disappeared.

Anyway, the things that are wrong that I know already (before the inspection):
- leaky sliding glass door
- (probably due to glass door) moldy basement drywall and ceiling tiles-- we are planning to remove this ourselves with heavy-duty masks and protection
- deck that needs a lot of attention
- new windows (they are original to the 1957 house and definitely need replacing--we are already planning on this)
- no appliances in kitchen (we are already planning on buying these)

I am attaching a link with pictures--this might give you a better sense of what's going on. The leaky door is one of the sliding glass ones pictured, and the basement picture with the white closet and drop ceiling is where we saw mold on the drywall and on ceiling tiles.

Here is a link that might be useful: the house

    Bookmark   May 16, 2009 at 5:24PM
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The tax assessment should break out 'land' and 'improvement'. Look at this house and neighboring comps.

I don't know how close the assessment there is to real market value. Where we live it's considerably below even after applying the stated multiplier and even in this Recession. At least you'll get percentages you can work with.

This looks like a typical 1950's ranch. We lived in one for 30 years, during which we replaced all the windows and put insulation in the walls (There was none; heat was cheaper than insulation when it was built.), re-did the kitchen, added a shower to a powder room, replaced the HVAC, replaced hollow core doors, the garage door, light fixtures, and on and on.

We were about to do something similar to the house we tore down. Fortunately our new neighbor, an assessor, pointed out that in the end we'd still have a 1950's house with 8-foot ceilings, small baths and kitchen, and would have spent a lot of time and money doing it. By building new we have 9-foot ceilings and all new *everything*, including mechanicals, resulting in much higher market value for the total package. Again, this made sense in our case because our new house is nowhere being the most expensive house in the neighborhood!

Since we moved in (2001), a slightly less well-placed acre sold for 30% more than we paid and the 2000 sq ft ranch on it was replace by a 5000 sq ft home. Right now there are four homes under construction in the immediate area -- all much larger than ours. It's a nicely placed neighborhood in a desireable suburb. People began to see the value of the land. Could happen where you are looking.

That's just our circumstance. Yours may be very different. Do look at the end result before you buy and tear apart to remodel. What's the land worth? What would you pay a builder to put a new house of similar size on the lot? You can never know what you will find when you start remodeling, but you can know you won't have the same market value as 'new'. Of course, you have to LIVE somewhere while this is going on! LOL

    Bookmark   May 16, 2009 at 6:06PM
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The house looks like its in very good condition for a foreclosure.(based on the pictures) Not all mold is dangerous and not all "mildew" is mold. It needs to be tested by someone qualified to do this. Ask your agent to ask the listing agent why the last offer (or subsequent) offers have fallen thru. If it is an inspection issue, these things should be disclosed. More likely than not, deals fall thru because of buyers dragging their feet or financing. Inspection issues, usually on a foreclosure are disclosed to subsequent offers because the bank doesnt want this to come up again, and if its health or safety related, they will have it remedied before you even knew it was a problem.

    Bookmark   May 18, 2009 at 6:22AM
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Hi everyone,

thank you for all of your advice and attention! We have a number of things we want to do to the house, and generally speaking we are big fans of older houses, so I really hope we don't have to tear down/rebuild!

I found out that the previous buyers did not even make it to inspection--they didn't dewinterize the house, so that's how we know. They either got cold feet or changed their minds or something else happened. I am thinking that we can probably negotiate more after inspection. We offered the previous asking price (not the one listed in the link above) of $147.5Kbecause we didn't know about the price change and around here everyone says you should offer asking price on foreclosures. We did get some cash concessions.

However, if we disclose a leak/mold issue to the bank, do you think we will be able to get more cash? They already threw in $1500 repair money.

also I have a question about disclosing mold to the bank--will this mean it is also disclosed to our insurance? We don't want the house blacklisted!!

The inspection is tomorrow morning--I will definitely update you but in the meantime would love to hear more about people's thoughts on negotiating with the bank, disclosing mold, etc.

    Bookmark   May 18, 2009 at 9:45AM
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Looking forward to your report. Don't worry about the insurance company. As far as I know all insurance companies exclude mold coverage today.

Is it too late for you to get a buyer's agent?

    Bookmark   May 18, 2009 at 10:45AM
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We have an agent. She's great and has been very patient and wants us to get an iron-clad inspection as well.

My concerns about the insurance company have to do with some things I have read/heard about insurance companies "blacklisting" (refusing to insure) houses that have been documented as having a "mold issue." Seems to me that what exactly a "mold issue" entails would be hard to define!

I don't want to have problems selling it in the future, in other words.

    Bookmark   May 18, 2009 at 1:28PM
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I think nailing down all the future related mold issues is wise if you can figure it out. If you plan on staying in the house long enough you won't have to worry about disclosing it later. If you only plan on being their awhile its a bigger issue.

As for negotiating all I can say is that a guy at work bought a REO and I was surprised at some of the things he said he got the bank to fix, so theoretically I'd say its possible. He did have the sewer line back up on him awhile after they moved in since it had been so long since anyone had used the lines and tree roots had grown in. But he's been pretty happy with his good deal overall.

    Bookmark   May 18, 2009 at 3:29PM
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Gah! I am going to scream!

The dewinterization company didn't get the water turned back on yet. So no inspection tomorrow! We will have to sign another addendum that will extend the inspection period. It's not our fault-this is all arranged through the property listing co/mortgage holder. I just want to know what is going on.

    Bookmark   May 18, 2009 at 7:13PM
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I liked the pictures of the house, it looks like it has great potential and is on a nice lot. I'll be interested to hear what happens. Good luck!

    Bookmark   May 19, 2009 at 1:41PM
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Hey all! Just an update--so our inspection was rescheduled for tomorrow, but has to be postponed AGAIN because a pipe burst during the dewinterization. Now, we have learned that it was vacant for one winter without benefit of winterization (2007-2008) and once the bank took over it was winterized for the following winter. I am a little concerned about issues it might have from being vacant and non-winterized that one winter, particularly about sewer lines. Any thoughts on this issue?

    Bookmark   May 22, 2009 at 5:50PM
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You might want to post on the 'Plumbing' forum about what happens when a vacant house in a northern climate isn't winterized. One burst pipe may only be a part of the story. (Damage to toilets, water heaters, boilers, walls, even electrical.) What's the HVAC in this house?

Have you talked to any neighbors? This would be a good weekend to walk around asking questions. The worst that can happen is that they won't want to talk to you. You may get an earfull!

I can't understand why you'd offer $147.5K when the photo page shows a list of $130K.

Was this a 1950's development -- one builder? Does the city's bulding and development department have plans on the original, and plans/permits on the addition?

I'd pass on this unless you can buy for little more than land value and would be OK doing a total gut of the house or teardown. How long do you plan to stay in whatever house you buy?

    Bookmark   May 23, 2009 at 11:13AM
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We've walked....I had too many doubts.

We have another place that we just LOVE now--we made an offer on it before but there was a wet basement issue. They've fixed that now and we are writing an offer tomorrow!!!

    Bookmark   May 23, 2009 at 4:28PM
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I started out reading your post and was relieved that you didn't put any more effort or funds into the first house. Then I went on to read that you're offering on a house that had a wet basement. How do you know it's 'fixed'? (Sez who?) Is there a 'dry basement' warranty that stays with the house? Many basement sealing companies issue warranties that only apply to the owner for whom they did the work. Regardless, the warranty only applies to work performed, not any new problems.

    Bookmark   May 24, 2009 at 12:41PM
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I think it may be a good thing you walked on the first house. I'm a Realtor in Texas and I'm curious... you planned to tear out insulation, tiles, etc. Did your realtor tell you that any home built before 1978 may have lead based paint (it was outlawed after '78) or more importantly that there is a good chance it has asbestos in the insulation and tiles?
Also, your realtor should find out if there are any inspections that have been done on the home you're wanting to buy. The seller is obligated to disclose all known defects. It's a real liability issue here if they don't.

    Bookmark   May 29, 2009 at 10:54PM
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