After the FSBO accepted my wonderful offer (so I thought) with contingencies, I decided to run my inspections. My eyes are now wide open. The property has black mold everywhere in the basement, kitchen and bathroom, all the plumbing is shot (the city turned the water on and leaks everywhere…a flood in the basement), the electrical is actually 60 amp instead of 100+. I don’t know what to do with the mold…
After all that news, I received a call from the title company and they stated he owes nearly $4,000 in back taxes and their is a lein against the property for $12,000. My offer was in the $40’s to begin with. My original thought was to offer $10,000 plus pay for his back taxes, but now he has that lien I don’t know what to do. Do you guys have an estimated repair cost for updating electrical breaker and redoing all the plumbing in a 1300 sq ft home with one bath?
By the way, after repair value should be $85,000 for an easy sale. Before I knew about the plumbing and electrical, I was estimating $13,000 in repairs.
Do you guys have any thoughts…run…renegotiate…how hard is it to remove mold?
Sounds like it may be time to invoke the contingencies and drop it…
Keith
Or maybe an opportunity to negotiate a lower price (based on all the things you didn’t know when you made the original offer). Why don’t you find a good contractor and ask him to estimate the repair costs? Even if someone could give you an idea of cost in this forum, it would still be risky if you don’t get someone out there to check things out… Hope this helps… Good luck!
Trying to say that a house is the same as it was before mold is like trying to say I’m a virgin all over again. Once the mold is in the house it’s pretty much in the house. Please realize that just because you see mold growing, and just because the color of the mold is black…this does not automatically make it THE black mold that is so notorious for destroying people’s health. Have a mold abatement company look at it. If it is the real black mold, I would just walk away. There are things that you can do to remediate and hopefully eradicate mold.
http://www.epa.gov/iaq/molds/moldguide.html
http://www.epa.gov/mold/moldresources.html
Plumbing and electrical will come in at less than 85 grand, but I would err on the side of caution and estimate 50 grand in remodeling expenses. With a 12K lien and 4K in back taxes, you stand to maybe profit 19 thousand dollars.
If this place will bring in $1300 per month, then I would offer to take it off of his hands for free. Does that sound crazy? You might wonder what kind of desperation this seller is experiencing. It sounds like the place is WAY too messed up. I would buy the seller coffee, bagels, and sit down and talk with them about the liens, the back taxes, the BLACK MOLD!!! The consequence of being in the chain of title of a messed up property…(did you know that you can be sued for problems with a property just because you are in the chain of title, and I am an accomplished real estate guy who will get rid of your mold and help your property get better and help you sleep at night.)
If this seller seems like better offers are coming in, then give them your contact information and wish them a nice day. The most you have lost is a business card and the cost of coffee and bagels ( I’m serious about that, by the way) but what you stand to gain is a cash flowing property.
You would really estimate the repair cost being around $50k? Holy cow. I need to run from the house. When I looked at it and had some people’s opinons on adding all new plumbing lines ($2,000), updating the electrical ($1,500) , and have someone do the drywall ($3,500), I was looking at $7,000 on top of my $13,000. Throw in some misc expenses (add another $5,000) and I would be at $25,000.
Am I way off track with this mold or electrical or plumbing?
Funder,
Do you think I should spend another $185 to check this type of black mold or should I just count my loss so far as a learning experience?
Also mentioned if he would give it to me for free, does this include if it does have the true black mold? When you mention it beinig free, does that mean I still need to pay for the taxes and lein?
This house is wonderfully laid out and has the rent potential of $1,000 when fixed up or a resale of $95,00($85,000 to make sure it sells quickly).
I have a 2800 sq ft house (and all the plumbing that comes with kitchen, laundry, and 2.5 bathrooms). I have copper plumbing. Last week a plumber gave me an estimate of $4000 to replumb my entire house with PEC.
Updating the wiring may be as simple as updating the main electrical panel – converting fuses to circuit breakers of the correct amp rating. If this is the case, then maybe your cost could less than $2000.
I would definitely have the mold tested. If it is toxic mold, you have to decide if the mold remediation cost and the liability risk is something you want to take on. I wouldn’t – there are too many other properties out there for me to invest in.
Monnchew,
I would hate to see you make a decision based only on the advice on this board. Labor varies regionally, and you can come up with all sorts of money saving ideas. I agree with j1dias, you have more work to do. If a breaker box, plumbing and drywall are all that you need, you could practically get a bid over the phone. Dave just described one way to solve a problem using a newer technology plumbing and a circuit box conversion. There are a lot of variables here…What kind of plumbing? How old is the house? Would you want to run new wire or fixtures? Is it on sewer or septic? Are there other repairs or items near the end of their useful life like the roof or HVAC? Are you better off doing a total rehab? Only you can decide.
It seems like these things always cost more and take longer than you think. Pit this place against other deals. You should know what a good deal looks like in your area, if you are looking at rehab properties, you need to know what needs to be repaired and how much repairs will cost. Then and only then will you know if you are getting a good deal.
My real point was to determine the level of panic and desperation in the seller. That would be the first place I would go. If he has a realtor, try to sit down with the seller when the realtor is not around. If he deliberately withheld this information, what else is he not telling you? Be NICE. A lot of this is about negotiation. You could look at deal after deal after deal…listen to the lies, watch what these people say, build the inner critic that says “what these people are telling me is not necessarily true.” Some people are not willing to take any less than X for the property where X=too much. Sometimes the property sucks to the point where you might not want to take it if they gave it to you for free. What’s important is not that you find THE ONE. Learn to find lots of deals and learn how and when to start negotiating. If a property has multiple problems and the market is flooded with inventory, the seller’s nerves could be frayed and he might let it go for much less than what it’s worth. Bid the repair only after you have evaluated the seller.