Would you still buy this property?

[observer]

Hello everyone, I am a long-time reader and I would greatly appreciate your wisdom on a matter. Suppose you are under contract for a house and discover major issues that will cost between 50k to 100k to fix in addition to a significant rehab cost. Initially, the sellers downplay the issue, attempt to cover it up, and even lie and deny its existence. When confronted with the truth, they continue to make up more lies. Eventually, they admit to the issues but refuse to fix or reduce the price. Given these circumstances, would you still proceed with the deal if you are still interested in the property?

[svelte]

No.

I’ve been in this situation before and walked.   The house did eventually sell, but at a much lower price that reflected the cost of the repairs needed.   If you’re really fond of the house, you might remind the owner that they will now have to disclose the defect to the next purchaser as a last ditch effort to get them to reduce the price to compensate for repair costs.  But if they won’t, I’d walk.

[sdrealtor]

Walk on. There’s probably even more you don’t know about

[JPJones]

Agreed.  Time to nope out.

[observer]

They say there are other buyers at full asking price. I asked if they had told other buyers about these critical issues, they said “not yet.”

[observer]

Walk on. There’s probably even more you don’t know about

 

We are aware of the potential for more surprises and repairs, but we like the location and lot enough to put up with a crappy building. However, the expenses are starting to spiral out of control.

[barnaby33]

“Spiral out of control,” is one of my favorite phrases to describe a long term asset that could become a liability. Top 10 for sure.

Josh

[an]

Depending on how much you love the lot.  If it’s in an older area, a similar lot might not come up often.  If you don’t mind buying another house that might not have the lot you want, then I would walk.  But if you’ll regret it in the future if it did sell for <$50k less than your offer, then I would buy it if it were me.

[urbanrealtor]

On the one hand:

Shit that comes off as shady (late disclosures, non-disclosure, lies) really pisses me off.

Today, I flushed a loan that I have been working on for 5 months. (!!!!)

That’s because they gave us some new requirements at the closing table.

On the other hand:

One has to evaluate the new facts as they are.

For example a $50k repair might not be a problem with a $100k price reduction.

The problem, though, is that if facts keep changing, that $50k repair might be a $200k repair.

Distrust is the most expensive thing in the market.

That’s part of why Trump got elected.

Nobody trusted Hillary (who was objectively more qualified).

[observer]

Depending on how much you love the lot.  If it’s in an older area, a similar lot might not come up often.  If you don’t mind buying another house that might not have the lot you want, then I would walk.  But if you’ll regret it in the future if it did sell for <$50k less than your offer, then I would buy it if it were me.

an, The only reason we are even considering this deal is the fear of future regret. Otherwise, there are 1000 compelling reasons to walk away. We are already overpaying by $100k based on two separate appraisals, and we also need to spend probably $150k on other repairs/rehab. The extra $50k-100k  in surprises is really hard to stomach. And the sellers are not willing to reduce the price even a dime. Regret is a two-sided coin: if we buy this property, there might come along a superior opportunity, and since we have burned our cash with this purchase, we will have lots of regret.

[observer]

urbanrealtor,

The main reason we are considering walking away is because of the distrust. One might even argue that what the sellers did was fraud. For your perspective, they kicked out the inspector when he confronted them about all the damages! They have also done quite a few of un-permitted work, so we might get surprised with even more repairs. It is really frustrating when people ignore the evidence and blatantly lie.

[sdduuuude]

This is definitely a “walk away” situation.

Keep in mind – just because you walk away now doesn’t mean you won’t get the house. The fact that they must now disclose whatever it is you found will make it very hard to sell.  If it goes back on the market and lingers, maybe you could jump in at $200K less later in the Summer.

Or, instead of walking away – change your offer to $150K lower. Make them walk away.

Wouldn’t surprise me if they pull it off the market, wait a year and try to sell it again, pretending not to know about the problems.

[Author]

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