Up the creek...and no paddle in sight.

By
Real Estate Broker/Owner with Jesse Clifton & Associates, REALTORS® AREC License #15292
Drilling for Soil - Alaska Recently we met with a couple looking for some help with a building project. They bought a parcel of land upon which they planned to build their dream home but due to a lack of planning and a little claimed deception on the part of the seller found themselves mired in a potential disaster. What takes this from bad to worse is the seller is a licensed (non Realtor) real estate agent.

What do you do when you don't know what you don't know? The seller, who happens to live next door, told them the ground in the area was good. Based in part on his statements the buyers didn't bother having a subsurface soils investigation done. They had no idea that could even be done.

Contrary to what some will say, you can not tell diddly about the soil without having the lot in question drilled. The type/size/age of trees or other vegetation won't tell you anything. The only ground you won't find permafrost under has palm trees growing up from it, as the old joke goes.

It wasn't until they hired a local company to excavate for the foundation and septic system that they discovered trouble brewing. Five feet down and no gravel.... 6 feet... 9 feet... 12 feet and still no gravel. Plenty of muck - wet clay that you couldn't build a dog house on, let alone a 2,200 sq. ft. house. Dig, dig, dig was the order of the day all the way down to 19' when they hit gravel... beneath 4' of water.

Having two test holes dug and examined would have cost $2,500. They are now facing a $30,000+ expense to bring in enough gravel to fill a 20' hole the width and depth of the foundation. We talked briefly about building the house on steel pilings but after looking at the plans we'll need roughly 25 pilings, which at $1,400 each plus a floating steel deck floor in the garage adds roughly $35,000 to the cost of the foundation.

They are understandably sick. I feel for them but at this point I'm not sure what can be done. They can't simply cut their losses and move on either as they paid, in my opinion, too much for the property. They could never resell it for what they paid and certainly not with the knowledge of the soil condition (at least in that spot). I'm not sure what options outside of litigation are available and even that's going to be a messy road to try and travel. The seller will simply hide behind caveat emptor as there are no disclosure requirements in the State of Alaska where undeveloped land is concerned.

If you're buying undeveloped land in Fairbanks or the Interior, have the property drilled. It could save you from making a very costly mistake which you could certainly end up regretting later.


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Charles Buell
Charles Buell Inspections Inc. - Seattle, WA
Seattle Home Inspector

For new construction, if you don't have a soils anaylsis of the property done, all I can say is:  "you get what you pay for."  Kind of like buying a new house without a home inspection----you better be a home inspector:)

Jun 02, 2008 07:01 AM #23
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Jesse & Kathy Clifton
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Susi - Ouch is right.  I feel bad for them on a number of levels.

Michael - You said it.  There's a whole boatload of work to be done before breaking ground.

Dennis - Very true... this would apply everywhere.

Chip - Agreed... their foundation costs just went up 230%.  Ouch.  I'm not sure what they're going to do but hopefully it will involve going after him.

Don - Penny wise, pound foolish comes to mind in this case.  In this case they buyers didn't even know to do a soils investigation.  Hard to imagine how they were going to get through an entire construction project.

Retha - No, they can't sell and pass on the problem.  It's possible there's some good ground on another part of the lot but the prime building site is, while not useless, certainly not a spot I would build on.

Scott - I wasn't privy to the original conversation but it certainly sounds fishy... I'm pulling records on the agents house to see what I can find... his well log should tell a lot, if I can get my hands on it. It is possible he's sitting on great ground.

Mel - Me too.  I tell every land buyer to drill... I don't always follow my own advice but I do bring a backhoe in and dig a test hole... it isn't high tech but it tells me what I need to know.  These folks didn't even do that.

Leesa - $2,500 up front vs. $30,000 or more.... seems like a no brainer to me.

Alan - We see it a great deal here; folks jumping into the role of general contractor without the slightest idea of what they're doing.  This situation had disaster written all over it - no representation when they bought the land, no due diligence, no construction experience, etc...  Folks just don't know and that's where problems come in.

Monika - I would hope this would reinforce the need to use a Realtor as well... more than likely the seller would have paid the sales commission and $2,500 out of pocket would have saved them $35,000. Heck, our services are bargain priced! :)

Audrey - The really, really sad thing here... the cost of the buyers rep fee would have been a lot less than the $2,500 drilling costs.  All of this could have been avoided for a measly $1,500 or so.  Talk about tragic.

Missy - Obviously there's two morals here - never, ever make any sort of representations about things you know nothing about and always use the services of a professional Realtor.  You're exactly right about the perc test... who knows whether even 50 or 100 feet one way or the other what the ground is like.  You'll never know until you drill.

Debe - That's the one unknown in this... what are the soil conditions like under the sellers house.  It could very well be solid ground under him.  While I tell folks gravel is generally pretty shallow, in this particular area I would never go so far as to represent where it was.  My X-Ray vision is non-functional. :)  The finished house would have had a market value of roughly $315,000ish... $2,500 is a drop in the proverbial bucket.

Jon - You nailed it.  Good is all too ambiguous.  What is good soil?  I can build on anything...it's just not going to necessarily be inexpensive.  This lot is buildable... it will just cost a lot more than they planned.

They did buy the lot FSBO from the seller without any representation and he did disclose the fact that he was a licensee... he didn't provide them the state required licensee disclosure statement up front, but it's in the purchase agreement.

No, I would think there are no ice lenses in Florida... but as I recall you do have sinkholes and other assorted building challenges.

David - The AS 34.70 (state disclosure statement) doesn't cover raw land.  Right now there are no disclosure statements.  They aren't really our clients... they called because we're building a house near them and they pass the site every day.  He happened to stop in one afternoon while I was on site.

The dialogue is right on.  I don't think they could prevail without evidence the seller knew what the soil conditions were like.  It's very possible he hit gravel within a few feet.  I'm building a house about a mile away as the crow flies on land that looks very much like their lot and we hit gravel at 5'.  The agent should have never made that representation but he may have made it in good faith.

Frank - There is definitely no free ride in life.  I'm sure that's painfully evident at this point if it wasn't before.

Colleen - No, folks never want to spend the money... but they always should.  I don't always drill lots I'm thinking of buying to build on, but I do bring a backhoe in and dig a couple of test holes, which tells me what I need to know. Pay now or pay later... as Frank said, there is no free ride.

Elizabeth - I have one of those forms actually... It's a ‘don't blame me for doing it your way and not listening to my brilliant advice' form. :)  These folks came to me after the fact though, so I wasn't there in the beginning or they wouldn't be in this mess.  $125 vs. up to $6,000?  Pretty sure that's an easy choice, huh?

Melina - Bingo.  Engineering is a marvelous thing.  We can build anywhere on anything.  The $$ it will take to get it done might stop their heart though. ;)

Lori - ... and that's why we get paid the big bucks. :)  If they had been represented by a professional buyers agent they would more than likely be watching the floor joists be laid today rather than wondering how to climb out of this mess.

Jeremy - haha.  That's a good thing.  Actually I wouldn't mind seeing some palm trees today. How's that new baby?

Charles - Absolutely... They started this project without even knowing the questions to ask.  That can't lead to anything but one mishap after another.

Jun 02, 2008 07:11 AM #24
Rainmaker
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Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
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  Too late now BUT.....when we built our home, we wrote into the sales contract that we would hit clay within x no. of feet OR the developer would have to pay...oh yup...when we got to the attached garage...down we went and the developer DID pay for the zillion quad axels of stone. In retrospect, we should have done what friends of ours did and gotten spancrete and put more basement under the garage....don't think there will be a next time....but for everyone else...it's a lesson.

Jun 02, 2008 08:04 AM #25
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Dawn Maloney
RE/MAX Trinity Northeast Ohio Real Estate Specialist - Hudson, OH
330-990-4236 Hudson & Northeastern Ohio

Thanks for the post - I appreciate learning more things to watch for in regards to buyers!

Alaska sounds amazing - one of my clients lived there and has lots of moose stories :)

Jun 02, 2008 08:24 AM #26
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Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Oh MAN that really stinks... Truly horrible.  Our area has a lot of WETLANDS and you have to be very, very careful about what is or is not a buildable lot.  Very tricky.  People (unfortunately) DO build on wetlands, but there are limits.

Jun 02, 2008 09:18 AM #27
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Gary Woltal
Keller Williams Realty - Flower Mound, TX
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Good point Jesse in you don't know what you don't know. It always pays to go slow with land purchases and check things out.

Jun 02, 2008 09:21 AM #28
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Roland Woodworth
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Jesse: Very interesting post..  I would hate to be cought up the creek without a paddle

Jun 02, 2008 10:09 AM #29
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Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Yikes!! Caveat emptor indeed. I don't think the buyer has aleg to stand on. This story is a perfect example of why folks need representation unless they have experience in these matters. I truly hope a solution can be found so they can build their dream house.i

Jun 02, 2008 10:16 AM #30
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Jesse, I feel for the couple. I'm guessing they will be sold on a Realtors service from here on.

Jun 02, 2008 01:17 PM #31
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Great advice for the novice home builder.  Too bad they didn't know sooner.

Jun 02, 2008 02:06 PM #32
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Fran Gaspari
Patriot Land Transfer, Inc. - Limerick, PA
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Jesse,

And who says real estate isn't local!!! Thanks,   Fran

Jun 02, 2008 02:16 PM #33
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Barbara S. Duncan
RE/MAX Advantage - Searcy, AR
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That's a pretty sad story for the buyer.  In our area, we tell them they MUST do a perk test to see if the land will hold  a septic system but you have to go further than that in your area.  Nice blog.

Jun 02, 2008 02:41 PM #34
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Diane Bell, Hilton Head Real Estate, Bluffton
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My heart goes out to those folks........they must be sick just thinking about the extra expenses involved. 

Jun 02, 2008 02:47 PM #35
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Doreen McPherson
Homesmart ~ Scottsdale ~ Tempe - Tempe, AZ
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Wow.  I feel bad for them, too.  What a hard and expensive lesson to learn.  I hope they'll be able to make it work.

 

Jun 02, 2008 07:24 PM #36
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Jesse, Congratulations on the STAR.

Jun 02, 2008 09:04 PM #37
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Jesse & Kathy Clifton
Jesse Clifton & Associates, REALTORS® - Fairbanks, AK
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Sally & David - It pays to be prepared doesn't it?

Dawn - My pleasure... thanks for reading.  We have a cranky old cow moose that hangs out in the woods behind our house. 

Ruthmarie - They do that here too... just bring in fill until they have a pad. haha.  That's gonna backfire on them too at some point.

Gary - Yes, sir.  Due diligence is a good thing. 

Roland - Same here buddy... I would prefer a small outboard but at least give me a paddle.

Bryant - Me either.  There's no evidence of the seller having drilled the lot, so it was an uneducated guess at best.  They acknowledged this could have been avoided if they had hired an agent.  That's something.

Duane - I think so... a couple thousand would have kept all this from happening.

Russ - Agreed.  People need to do more research before jumping off the proverbial cliff.  Too much money is at stake.

Fran - haha... tell me about it.  No permafrost issues in Pa, huh?

Barbara - Land here can be bought without any tests being done whatsoever... they just didn't know the questions to ask or steps to take.

Diane - I'm sick thinking about the extra expense.  At best they could probably sell the lot for 1/2 of what they paid for it as a cabin lot and take a $20,000 - $25,000 hit.  Any way you slice it this isn't a pretty picture.

Doreen - We're working on it.  The (not so) funny thing is they only dug in one area... the foundation is roughly 70x50... the soils could be much, much worse at the other end... and it will cost them about $7,000 to excavate just to find out. No easy solutions whatsoever.

Michael - Thank you my friend... good to see you.

Jun 02, 2008 09:05 PM #38
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Laura Giannotta
Keller Williams Realty - Atlantic Shore - Little Egg Harbor, NJ
Your Realtor Down the Shore!

And I thought this was a Maynard update!!!! 

Jun 02, 2008 10:52 PM #39
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Jesse & Kathy Clifton
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LOL... sorry Laura.  I haven't heard a thing from poor 'ol Maynard. He's probably in Hawaii by now sipping umbrella drinks thinking Alaska wasn't all that special after all. :)

Jun 02, 2008 11:04 PM #40
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Shannon Ziccardi
"A Quick Note" ...in Tennessee! - Clarksville, TN
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OOPS!  I read the blog title and thought this was a post about Hilary Clinton...sorry...

Jun 03, 2008 06:20 PM #41
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Jesse & Kathy Clifton
Jesse Clifton & Associates, REALTORS® - Fairbanks, AK
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LOL - Shannon, that was hilarious.  It would seem to apply to Hillary tonight wouldn't it?

Jun 03, 2008 06:29 PM #42
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