Buying REO From Bank, Got An Inspection, There Is Blackwater

General Real Estate Investing
1

I have a REO under contract from the bank pending a signed off approval. The Bank already paid a contractor to bring the property up to code without an inspection in place. I just had an inspection done on the property and the inspector came back and told us there is a 25 feet radius pool of black water directly underneath one of the bathrooms which still has the original cast iron system and ABS, which was caused by leaky 45 year old pipes. I understand this to be a health hazard, because it is hazardous waste. Please advise as to how I can negotiate the bank to pay for this before I purchase the property. I believe their listing agent is being a stickler and telling me to buzz off and trying to force me to purchase the property “as is” with this problem intact.

Q; What should I do? Can I force the bank to fix this problem?

Subject property is in San Diego, CA.

2

I will assume that your contract has the usual provisions for an inspection of the property, and that you have the right to cancel the contract without penalty in the event that some problem is uncovered that cannot be remedied.

This would be such a situation.

Ask the bank to make repairs. Ask the bank to lower selling price to cover repairs. If not, walk away.

3

That is pretty standard, price reduction or fix it and re-inspect.