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by Julie Broad
We've been struggling to put a deal together lately. When we
returned from Mexico we hit the market hard - looking at 20 or so properties in just a few
weeks. We made quite a few offers but didn't get very far with very many of them at all.
In
fact, we've actually found ourselves faced with some downright stubborn sellers and
ridiculously bad real estate agents. Here are just a few examples of the road blocks we've
hit recently:
- The sellers agent who had his Mom call our
agent about our low ball
offer,
- The seller where we're $5,000 apart from doing a deal.
The $5,000 makes a difference to us but we wanted to do the deal so we offered to split it
with them. The seller refused and has recently informed his agent that he expects to get a
much better price in the spring market,
- The sellers who have moved out of their home and refused
to even counter our offer - which was within 5% of their ask price.
We really like the home where the agents Mommy called our
agent so we actually sent our agent back in with a new offer that was nearly $10k higher but
required them to finish most of the incomplete work in the home. They want full price. Period.
Everyone was more civil about it this time around but we still didn't get anywhere.
We're going to pull up some stats to verify this, but there are a
lot of people out there looking but not buying. Right after Christmas the market picked up big
time - and homes were getting shown several times a day. I will be interested to see what the
January stats show but my feeling is that there haven't been that many sales. Most listings
we've been watching are either on the market still or went off market - they didn't sell.
Despite a lack of sales, the pick up in activity with more people viewing homes seems to have
sellers holding on to the belief that their home is going to fetch a bigger price.
So - we finally get a seller to come to an agreement on a house
that is in one of our target areas. It's not our top choice area but it's one that works for us
and would be a good one to put into our rent to own program. Yeah!! An accepted offer
...
As much as I liked the home and felt it would show fairly well
with minimal amount of work on our part, the home did have one red flag for me right from the
start and that was a lot of evidence of DO IT YOURSELF work. That's a red flag for us because
you never know how many different things someone tried to do themselves. Laminate flooring
poorly installed is one thing - electrical and plumbing work badly done is another.
So we sat down with the inspector fully expecting some issues
requiring a little work here and there. Instead of little issues here and there though - he
found the home to be in pretty good condition - with one big exception.
Inside the attic he found mold and mildew on the north-facing
side of the roof. It wasn't horrible but it was definitely there. Additionally he found a major
leak in the garage - which we had expected because it was disclosed to us by the sellers - but
the extent of the leak was worse than we had expected.
We asked for our subject removal period to be extended and
requested access so we can have the issue assessed by a restoration company and our
roofer.
Long story short, the sellers took immediate action and got a
restoration company in there the next day to begin repairs. The issue was immediately
addressed. We were impressed at their swift action. And we were pleased when we spoke
with the restoration company because they felt they had identified the likely cause of the
issue and had fixed it (insulation in the soffits). All was going well until we asked for a
piece of paper/guarantee/warranty on the work they'd done. The work had been done "off the
books" because the seller was a buddy. In other words - the seller saved some money but now we
had nothing to show the work had been done (nor could the company "guarantee" the work because
it was off the books). The risks we'd be taking on with this property were starting to
pile up but we wanted to make the deal work so we:
- asked if the seller would pay the extra few thousand
dollars to put the work on the books so we could get our warranty - they
refused,
- asked if there was ANYTHING the restoration could give us
besides their word that would verify the work had been done properly but there was nothing
they could offer,
- researched the reputation of the restoration company -
they were highly respected,
- asked our inspector to go back in and look at the work
that was done (he used to be an insurance adjuster so he has some expertise) and give us
something to say the work appeared to be done as stated.
It wasn't an ideal situation by any means but after doing
the above we assessed our risks. There was no mention of the "m" word any where the bank would
see it, our insurance doesn't cover mold anyway so they don't care about preexisting
conditions, which left our main risk with the tenant buyers (when we would do the rent to own)
asking to see an inspection and getting freaked out over the initial report. We figured
that issue could be mitigated by getting a new inspection report completed by a different
inspector if required.
We checked with our joint venture partner to make sure he was
comfortable with the situation and with what we'd done and we carried on to address the issue
of the leaky roof.
Our roofer took forever to get to the house and when he did he
had nothing good to say. He made comments like "In my 40 years I've never seen a chimney like
that" and "You can fix this but then you'll have to put new siding on the house" and "I could
put my fist through the hole".
None of these things were good, and just like in baseball
this house had three strikes and was now
out.
By this point we'd invested 20 or so hours into this property,
and we'd invested over $500 in the due diligence but there's a good chance that house is a
lemon so we walked.
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