Polybutylene pipes, Va loans and insurance

[Erica Muller]

Question regarding VA loans. I've never dealt with one before because I work mainly with investors but I am flipping a house I rehabbed and the buyer is getting a VA loan. Here is the issue that I am unfamiliar with, the buyer is requesting a $5000 credit due to the fact that the house (which was built in 1991) was piped with polybutylene pipes. They are saying that most insurance companies won't insure a house with this type of piping and that VA will have issues with it. This sounds a bit extreme to me. Is this accurate or are they just reaching at straws here to get a discount on the home? Other homes in the neighborhood have seemed to have closed just fine and they are all built the same way.

[JD Martin]

I think the request is fairly reasonable, unless the home has already been priced accordingly. PolyB is junk and it's not if it will fail, it's when. My own house, they used PolyB for my service line from the meter to the house, which ran under my driveway and under the slab of my garage. It failed, somewhere under all that infrastructure, in about 10 years. I had to run a new service line all the way around my property to avoid jackhammering half of my hard surfaces. Thankfully, my interior piping was copper & cpvc (these guys were schizophrenic when it came to plumbing materials).

Anyway, it's a known faulty product. 

PS: Find out if the pipe is polyethylene or polyB - there's a difference. Based on the age of the house it is probably PolyB.