Post inspection strategy

[Jack Srimani]

Hi
I am in the process of buying a property that is a bank owned (REO). Initially I gave the offer for thirty two thousand though the asking price was forty four thousand. The bank accepted the offer.However yesterday I had the inspection of the property. It revealed the following:
The roof need to be replaced
The furnace is twenty years and in a year (max) need to be replaced
Some electrical work need to be done
Some brickwork needs to be done which may go to nearly three thousand dollars.

So the total cost of fixing will be nearly ten thousand dollars.

With this situation should I ask bank to lower the price of the property by at least five thousand. Since this is my first REO I have no experience how things work. So I am looking for your advise to deal with this situation. Thans in advance.

[Lee Warren]

Most of what people are concerned with are what I call the Big 5. Foundation, roof, plumbing, electrical, and the HVAC. That typically ends up having the largest price tag of the things that usually need repairs. Out here in Texas, foundation problems are the norm. Yet that isn't the case in many other places. If you look at the ridge line of the roof, that can be an indicator of some issues there. Sagging, deflections, bowing of the ridge line, etc. can all be indicators of other issues. Poke your head in the attic with a flashlight and look for water stains on the underside of the decking. Look at the rafters to see if they are pulling away from the ridge beam or is they are bowed or cracked.
For the electrical, pull the panel cover and see if you have corroded connections, aluminum wire connections, wire sizes correct based on the breakers that they are attached to, ground wires visible, signs of burn marks, etc.
For the plumbing, run everything at once. If you get really poor water pressure at that point, it could indicate a bigger problem. If it is pier and beam, look under the house with the water running to see if there are any active visible leaks. With everything off, go look at the water meter and see if it is still moving. That will let you know if you have a supply line leak somewhere.
With HVAC, the general age shoudl give you a good indicator on how much life it has left. Look at the blower fan to see how dirty it is. A dirty blower fan has worked more than it should due to a lack of proper maintenance. Make sure air is coming out of all the ducts in the house. With the AC running, check the temperature of the air going into the unit versus what comes back out. There should be a 15-20 degree temperature drop. Anything outside of that range indicates an issue. This does not apply to the heater.
In general, look for signs of water damage. I don't make a huge deal about mold because it is easy to take care of. However, you always want to know where water is getting in, and how to best stop it. Check the walls behind the showers (usually bedroom closet walls).

That's kind of a long answer to your question I suppose. I don't know of any list that I have seen. These are just some of the things that I think about as an inspector, property manager, and investor. Hope it helps.