A couple of weeks ago we talked about the value of having a home inspection before you agree to complete the purchase of a Denver home. The assumption was that if the inspector came up with a few issues, you could negotiate with the seller to have repairs made or knock some money off the price. What happens when the inspector finds major issues? When do you haggle and when do you run like the wind?
Inspectors basically find two types of problems with homes: the fixable and the unfixable (at least at reasonable cost). The unfixable problems include major foundation issues, location of the home in a floodplain or on a fault line, contamination of the water supply, or location under electromagnetic power lines. Some problems might not affect the livability in the short term, but finding home insurance or a buyer when you want to sell could be difficult. These are the types of inspector findings that should make you talk to your Realtor® about pulling out of the contract.
Most other things are fixable, although cost may be an issue. The inspector might find asbestos-clad pipes, unacceptable levels of radon in the basement, a serious crack in the foundation, water infiltration or mold spores, a pest infestation, roofing issue, or problems with the plumbing or other major systems. He might find that you need a more specialized inspection if he suspects a problem with the septic tank or other system he cannot see.
If the list of things you need to do is long and expensive, you need to reassess if you still want the property. You might be willing to put down $5,000 for a new furnace, but what if the house also needs a $50,000 septic tank repair and $35,000 worth of plumbing repairs? Given that housing prices in most areas are flat or declining, is it worth it make that type of investment in the home? If you are still interested, you might be able to negotiate some price reduction from the seller to have some repairs made, but the investment might still be sizeable. If the economics don't make sense to you, dial your Realtor® about voiding the contract.
In the case of a Denver foreclosure or bank-owned property, you likely won't be able to do much, if any, negotiating on the price for repair costs, but the total cost including repairs might still make the home a good value. FHA has a special loan available that can include costs for repairs up to $35,000, as long as the home will appraise. You need to purchase this type of home with your eyes open. Never skip the home inspection! Many foreclosed homes that have been vacant for a while have hidden damage that only a trained inspector can properly assess. In Denver, a common issue is broken water pipes that go undetected until the water is turned back on.
At Bandy Homes, we can help you assess the facts. We have helpful Denver buyer reports available and, of course, will be by your side to work through any transaction issues when you purchase your metro Denver home.
Marianne Bandy
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