Any of you with experience buying/selling houses?

[Guest]

I just had the house I'm in escrow with (to buy) go through various inspections. Lots of things not to code, but a major one was a retaining wall behind the pool. Apparently it's not just not to code, but there's some earth that's in danger of collapsing, and it really has to be fixed. Apparently the fix could easily cost $150,000. Is this something the buyers will usually agree to fix or cover the cost? Or will I have to completely re-negotiate? It doesn't look as if this fix was optional. There were some other potentially expensivish stuff, like difference in heights of many of the outdoor stairs (not to code), but that doesn't seem to be as essential to fix.

[+ sam.fitzpatrick]

Yes - I would go back with the findings of the inspection and negotiate that it is fixed to your inspector's satisfaction prior to closing. They may come back with the a counter offer to reduce the price and have you fix it. Regardless, something of this nature should also affect the appraisal, so assuming you are not doing a cash transaction, may impact your It may be that the sellers will not accept that, but in that case you should be able to get your escrow back.

[+ azdr0710]

I assume you're still in the "inspection period" in which you can back out of the sale and get all of your earnest money back.....if you want to do that

 

I don't think ??? things that aren't up to current code are necessarily a deal-breaker......if the building was built to code at construction and the code changed since, those things would be grandfathered in, I think......much like old cars are still allowed to drive on the road today, despite the fact they break all pollution and other safety codes today.....

 

sounds like the retaining wall is definitely a negotiable item - mostly because of the collapse threat, not because it wasn't built to code (it probably was built to code at construction and the earth has shifted since????)......you don't have to "completely re-negotiate", but only need to negotiate this one item as a response/request to your inspection......your realtor should help you with this.......

 

the outdoor stairs difference in height thing and similar stuff is not a real threat or defect, in my mind, but can be a negotiation tool......personal preferences and taste shouldn't be used as a negotiation tool, of course, though......

 

if you have your heart set on this place, you may be willing to forgive some stuff......if buyers are lined up, though, the seller may reject all your requests for fix-up and move on to the next hot buyer (unless you love the place and decide to fix everything yourself)

Edited September 27, 2020 by azdr0710

[rvwnsd]

The question I'd ask myself is whether the price of the house is substantially lower than other, similar homes that are in better repair. If it is and that price difference is more than the cost to replace the retaining wall, then it might be worth buying the place. Then again, you have had difficulty getting homeowner's insurance. A retaining wall that is on the verge of collapse will complicate getting insurance.

[dbar123]

Insist that the buyer fix it or take your escrow and leave

[+ Pensant]

A $150,000 retainer wall replacement? Is this in West LA? Sounds awfully expensive.

[Guest]

A $150,000 retainer wall replacement? Is this in West LA? Sounds awfully expensive.

It's in the western Hollywood Hills, and the wall will have to be quite long. The geologist who examined the property said "The engineering permit alone will cost you $20,000." That estimate was concurred by our "family contractor" (who built my mother's and brother's homes).

[+ Lucky]

Once a friend and I offered $153,000 on a 2-flat in San Francisco's Haight neighborhood. Contractor's inspection showed a need for $17,000 in immediate work. My friend said no, so we backed out. Later the seller offered it to us at $17,000 under the first offer. My friend again said no. The property is now worth a million. I coulda been rich!

[former lurker]

I just had the house I'm in escrow with (to buy) go through various inspections. Lots of things not to code, but a major one was a retaining wall behind the pool. Apparently it's not just not to code, but there's some earth that's in danger of collapsing, and it really has to be fixed. Apparently the fix could easily cost $150,000. Is this something the buyers will usually agree to fix or cover the cost? Or will I have to completely re-negotiate? It doesn't look as if this fix was optional. There were some other potentially expensivish stuff, like difference in heights of many of the outdoor stairs (not to code), but that doesn't seem to be as essential to fix.

 

If it is covered by the seller's homeowner's insurance (doubtful, but you don't know until you ask), you can defer the closing until repairs are completed and pass inspection. I'm assuming this is a single-family home that is not part of a condominium or homeowner's association. If there's a condo board or a home owner's association, responsibility for maintaining the retaining wall may fall on the association, depending on the local laws and the bylaws of the ownership association.

[+ haring222]

If you're going to be asking for a major repair or credit...make sure that you have a couple of concurring opinions. And make sure that these are clearly sent to the listing broker, who will now have the responsibility (at least in Illinois) to let other potential buyers know that they have seen these reports. It's harder to argue if you present it as 'here is what the home inspection said, so we brought in a seismic engineer. We also brought in another seismic engineer to get their opinion, and they all agree about this issue'

[spider]

All this is why you need a good attorney. Some of these things are hard to sort out and local laws vary. When I sold my house in the Chicago burbs the buyers wanted me to pay for all sorts of things including totally replacing the piping. The attorney was the one who found the clause that said something like “items that are in working condition and that are common for houses in the neighborhood of the same age are not the sellers responsibility”. Bingo. That described the plumbing to a T. But, something like a collapsing retaining wall would now since it is clearly not in good condition.

And then the buyers moved a working washer dryer to the garage for storage and months later tried to claim it was my problem when it wasn’t working. Myattorney was on that like white on rice.

Edited September 27, 2020 by spider

[Danny-Darko]

I've always used a good real estate lawyer when I sell. Though I've never had such an expensive issue like you, I've usually done the fixes and then just added it all onto the cost of the house and have ended up winning. Because when the bank comes and does the inspection for the potencial buyers loan they are presented with all the paperwork and bills of all the updates and repairs done on the house since I've owned it and easily justify the cost. If I have to fix anything I won't budge much on the price. If it can't be sold "as is' then I'm not gonna loose if I have to invest more. On my last house sold I made over 10K in repares and upped the price by 30K and made a 20K profit on top of what I made selling the home! Thanks to the advice of my realtor I hired I did what she suggested but then when she tried to quick sell the house to the buyer I said no to his offer and reminded her of what she initially told me to do. I did it and now this is my new last price! The buyer somehow found the money and bought at my price. Good luck with your sale man!

[former lurker]

I've always used a good real estate lawyer when I sell. Though I've never had such an expensive issue like you, I've usually done the fixes and then just added it all onto the cost of the house and have ended up winning. Because when the bank comes and does the inspection for the potencial buyers loan they are presented with all the paperwork and bills of all the updates and repairs done on the house since I've owned it and easily justify the cost. If I have to fix anything I won't budge much on the price. If it can't be sold "as is' then I'm not gonna loose if I have to invest more. On my last house sold I made over 10K in repares and upped the price by 30K and made a 20K profit on top of what I made selling the home! Thanks to the advice of my realtor I hired I did what she suggested but then when she tried to quick sell the house to the buyer I said no to his offer and reminded her of what she initially told me to do. I did it and now this is my new last price! The buyer somehow found the money and bought at my price. Good luck with your sale man!

 

You raise an interesting point in mentioning the bank. There's also the FHA. If you are getting a mortgage, both the bank and it's insurer will want the property value to be greater than the mortgage loan. Expensive repairs, particularly if not completed, could be a roadblock to mortgage approval.

[Luv2play]

Once a friend and I offered $153,000 on a 2-flat in San Francisco's Haight neighborhood. Contractor's inspection showed a need for $17,000 in immediate work. My friend said no, so we backed out. Later the seller offered it to us at $17,000 under the first offer. My friend again said no. The property is now worth a million. I coulda been rich!

Was that before or after the earthquake that hit that area a decade or so ago. Wasn’t that neighbourhood demolished as the ground as unstable.

[Luv2play]

It's in the western Hollywood Hills, and the wall will have to be quite long. The geologist who examined the property said "The engineering permit alone will cost you $20,000." That estimate was concurred by our "family contractor" (who built my mother's and brother's homes).

I would get another quote or two from firms that do municipal work and not a landscape architect or designer. In our town a few years ago when I was involved in a new park installation on an old industrial site that had been a storage area for road salt, we found on inspection that the tie rods holding up the adjacent metal sea wall had corroded (the new park was to be on the river going through town). The wall was some 500 feet long and we had to remove 5 feet of fill, thousands of tons, before the new rods could be anchored. Then refill. Total cost was $250,000. And about two months work.

[nate_sf]

Assuming you have an inspection condition in your offer and the timeline for that condition has not lapsed, this is negotiable. Based on what you've described, it sounds like an involved repair that could take several months if done properly and with permits. This is not to say it's not worth it, rather that it is probably not practical to expect the seller to make the repair within the timeframe of the escrow. I'd suggest you get an estimate from a qualified contractor to determine the expected cost of the repair, and use that to negotiate a credit before removing your inspection condition.

 

This is assuming you are not in a competitive bidding situation. If it is competitive, it may not be worth it or able to be resolved.

 

But replacing a retaining wall in a hillside area is not unusual. Over time as soils shift and moisture accumulates (or disappears), these structures fail. So it is not necessarily a cause for huge concern, but it is a significant construction project.

 

In California most residential real estate transactions do not involve an attorney (unlike other states). However, your agent or broker should be able to help navigate this, including suggesting a contractor to get the estimate from, and devising a strategy for negotiating the removal of the inspection condition. That's what they get the big bucks for! But some agents are better with this kind of thing than others.

Edited September 27, 2020 by nate_sf

[+ Lucky]

Was that before or after the earthquake that hit that area a decade or so ago. Wasn’t that neighbourhood demolished as the ground as unstable.

It is in the Lower Haight and still looks great.

[Luv2play]

It is in the Lower Haight and still looks great.

Nice to hear. As in all real estate transactions, location, location, location. Lol.

[+ Lucky]

Nice to hear. As in all real estate transactions, location, location, location. Lol.

 

OMG! I looked up the current market value! $3,602,341 We turned it down for $137,000.

[Guest]

...

This is assuming you are not in a competitive bidding situation. If it is competitive, it may not be worth it or able to be resolved.

...

There's the rub. I really don't know. They said they had a bid, and I upped the bid by 125,000, but I don't know if they were telling the truth about the other bid. I was certainly the only one who went under contract. When I got a counter-offer, they said it was a multi-person offer, or whatever the term was, but my agent said that it wasn't necessarily so. I have been looking for a property for several months in the area, and I really like this one, I have to say, as have a lot of my friends and co-workers. An extremely handsome co-worker asked if he could come and bring his wife and kids, and I thought of saying "Only if you promise to use the pool while I'm there."...

[Deadlift1]

Once the inspection report is given to the seller that problem will now have to be disclosed to all future potential buyers. 75% will run scared. The sellers most likely want to get out. Tell them u want a haircut on the price equal to the retain wall fix.

[Deadlift1]

But if u love love the house. Offer 1/2

[thisidethatside]

generally a code violation is only enforced if it is a danger to people (e.g. broken fencing around a pool, missing railing on stairs, no fireplace brick, etc.) either the sale is contingent on the current owner paying for and managing all fixes or they lower the asking price to compensate for an estimate repair cost and you oversee the renovations - make sure the contract is revised properly either way you go.

 

there are many reasons you may prefer one option over the other, both have positives and negatives. make sure you weight them carefully. keep in mind that California is a very unique state to own property in because once the due diligence period is over, that is it, you are fully responsible for any problems or issues you may uncover during the repairs. the previous owner is not responsible once due diligence ends and the contact is signed. so, if you find out there is another issue connected to why the retaining wall is failing (e.g. drainage pipes are too small) that will be on you to pay for because you didn't find out about it during due diligence or if something is wrong with the roof that the inspector missed, etc. i can not emphasize enough how thorough, strict & demanding you should be during due diligence. i've experienced some really dubious behavior from agents and/or sellers firsthand.

 

if you are unsure about the safety of the stairs or something else simply call the inspector and ask if the problem is an issue that could result in a fine (you may have to read between the lines, although it sounds like they were clear about the wall). keep in mind code violations are one way cities make easy money. i've been fined too many times to count; violations/fines are common.

[Guest]

generally a code violation is only enforced if it is a danger to people (e.g. broken fencing around a pool, missing railing on stairs, no fireplace brick, etc.) either the sale is contingent on the current owner paying for and managing all fixes or they lower the asking price to compensate for an estimate repair cost and you oversee the renovations - make sure the contract is revised properly either way you go.

 

there are many reasons you may prefer one option over the other, both have positives and negatives. make sure you weight them carefully. keep in mind that California is a very unique state to own property in because once the due diligence period is over, that is it, you are fully responsible for any problems or issues you may uncover during the repairs. the previous owner is not responsible once due diligence ends and the contact is signed. so, if you find out there is another issue connected to why the retaining wall is failing (e.g. drainage pipes are too small) that will be on you to pay for because you didn't find out about it during due diligence or if something is wrong with the roof that the inspector missed, etc. i can not emphasize enough how thorough, strict & demanding you should be during due diligence. i've experienced some really dubious behavior from agents and/or sellers firsthand.

 

if you are unsure about the safety of the stairs or something else simply call the inspector and ask if the problem is an issue that could result in a fine (you may have to read between the lines, although it sounds like they were clear about the wall). keep in mind code violations are one way cities make easy money. i've been fined too many times to count; violations/fines are common.

Thanks. There are some minor drainage issues, but the cost of fixing those are quite minor compared to the cost of that retaining wall. Also, many of the stairs need handrails, but, again, these are not $150,000 problems. Believe me, I've had 8 people inspect the place (including a separate tree person, pool person, chimney person) and had my family contractor go over the blueprints and city plans of the house remodel which was done 4 years ago to the studs (that was done well). The mystery is how many others are interested in buying. FWIW, the price we've agreed on is quite a bit under the Zestimate...

[thisidethatside]

it is nice to hear you have people that you trust for the inspection & general support. sounds like a fun place to putter around & fix. i wonder if zestimate is taking into account the shock to the market from covid-19. it's a weird time to price a house with so much ongoing instability i'd imagine - that must be to your advantage though. bidding on property (of any kind) can be a nerve-racking & an emotionally draining process. i've placed significantly more bids than i've made actual purchases and it sucks man ha - so i feel you and hope it works out!