Please help with inspection result issues

[Aly W.]

Hi all,

I would appreciate any advice in this situation. I had made an offer on a rental property 2 weeks ago and my offer was accepted for $220K - asking price was $225K. I could see the house needed work, but there is a good tenant living there who wants to stay and has agreed to a rent increase.

Two days after accepting my offer, the seller claims another offer came in the same day mine did that he decided to accept as it was full price. Because we were still in attorney review (in NJ), either of us could cancel the offer. There is no final contract until both sides sign off on all terms.

Anyway - I agreed to increase my offer to $225K. The inspection was last week. Because the house is over 50 years old and had been a rental, there were quite a few things on the inspection list. The most pressing include a leaking main water pipe in the crawlspace, several dead outlets, non-grounded outlets and non covered outlets, a loose shower liner/insert that has caused mold and moisture damage on the bathroom sheetrock (there is no vent/fan in there), and the carport and porch roof are leaking. The main roof is sound.

The seller is refusing to fix anything beyond what is needed for a certificate of occupancy. He did not offer a credit for me to fix anything. The C/O inspector will be out next week but we already know what they will require, and most things are not the big ticket items on my list.

My attorney, realtor, and myself are preparing a letter to the seller that will specifically ask for a $5K credit, based on the offer price they had originally accepted from me. The leaking water pipe in the crawlspace has been there for quite some time, and the handyman who works on the house acknowledged that to me. The seller's disclosure section that asks about known leaks was left blank. It will have to be fixed, as it could burst, never mind all the wasted water constantly leaking.

My question is - since I'm buying this house as a long term rental investment, and there is a tenant already in there, at what point do I walk away? I realize the house is priced below market value due to its visible issues, and that's what my original offer was based on. I agreed to pay $5K more, not knowing the full extent of the repairs needed. Now that I know, I have to decide if I should walk away if the seller refuses any credit. We are supposed to close in less than 3 weeks.

Since the seller now officially knows about the house's issues, isn't he required to disclose all of them to future buyers if I walk away? From a seller's perspective in this market, I would think he'd agree to the credit and get this deal done.

Any feedback is much appreciated!