Existing Property Issues and Related Liability

[Teddy Smith]

Hi All,

I'm a newbie trying to put together my first deal. I've put an offer in an a 4-plex in the East Bay of the SF Bay Area.

Redfin lists it as being worth an estiamted $1,070,000, and I offered $1,000,000, mostly because the disclosures list out $80,000 in needed foundation work and another $15,000 in termite work. (I am using an FHA 203k loan so I could conceivably address these issues right away).

They countered back at $1,050,000.

My realtor is telling me that I don't really need to take care of either the foundation work or the termite work, that the building is livable and rentable in it's current condition.

And that by not taking care of the work now, it doesn't expose me to any add'l liability if something were to go wrong due to not addressed these disclosed issues.

A couple questions: first, is what my realtor is telling me accurate? 

Second, if so, does anyone have an opinion on what I should do about the counter?

with $95k in known work needed and with the FHA foreclosure moratorium set to end at the end of next month, which will likely cause a decline in prices, I'm inclined to stay put at the $1,000,000 offer, but I'd be curious to hear some opinions of more experienced investors.

Let me know.

Any feedback is appreciated.

[Bjorn Ahlblad]

@Teddy Smith what your realtor is telling you is accurate; however your lender may require you to address both issues. You really need your contractor to come up with numbers for you rather than accepting those from the seller. 15k for termites in the Bay Area is almost a clean bill of health! On top of those issues I'd get an inspection to see what else is potentially going on.

Lots of 'experts' are making predictions about prices going down or up next year based on this and that; truth is nobody knows, although some markets are more vulnerable than others.