First deal analysis, after home inspection. Should I walk away?

Question

Hey all,

Got an offer accepted on first deal and after having the inspection I'm second guessing the purchase so I will break it down.

2 unit 4bd/2bth upper and lower

PP-130 with 25% down

Originally seller wanted all cash offer for 124k. They were worried the place wouldn't pass bank inspection. Cash offer pulled away b/c it has a shared driveway. They now opened to conventional so I offered 130 with a 2 month post occupancy (they are currently looking for a house to buy). Inspection revealed that the service line from outside to the panel inside the house has a lot of water damage and you can see the calcium deposits on the breakers. Looks like its been an issue for a long time. House also has a single car garage but its a complete loss as the foundation is compromised and the whole garage has a lot of structural issues. I'm fearful that the garage if knocked down will hurt appraisal in the near future. Both furnaces are over 20 years old and showing signs that water is getting into them-very possible the chimney needs to be repaired.

I don't want to lose the deal but struggling to find a way to make it work. I plan on going back to the sellers and asking for some sort of either price reduction or credit. Good chance they'll tell me to pound sand. Any insight or advice would be greatly appreciated

John Teachout · Answer

You need to have someone look at the issues that can give cost estimates to repair them. Does the pricing take those into account? If the issues were resolved, would the property be worth more? It's just a numbers issue. Figure out how the cost of the property plus the cost of repairs compares with the ARV.

Bruce Woodruff · Answer

You've got a lot of money going into repairs there....not including the deal about the garage. It's true if you lose it, it will affect the value....and it will cost a lot to bring it back. I think you've got $50k to make the place right. Is it still worth it? Probably not.....

Robert Hubbard · Answer

Thanks for the insight, giving it a thirty thousand foot view I could definitely find a better deal! Appreciate it much!!

Michael Plante · Answer

Have you seen the threads on this forum about the nightmares of doing a post occupancy?

I would walk away for they alone. Not to mention the other red flags

Robert Hubbard · Answer

I have been doing the research to get an idea of cost and it's hard to determine the ARV bc there's nothing recently sold in the area that was a 2 unit on the nicer end.
also the pricing does not take any of the issues into account

Thank you for the input!!

First deal analysis, after home inspection. Should I walk away?

First deal analysis, after home inspection. Should I walk away?

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