Is 25k too much for a fixer upper?

Question

I now have a mobile home under contract for 25k. I knew the house was a fixer upper as it is listed as "as-is". The seller told me it needed a new HVAC and drywall in parts of the house. As well as cabinets, door fixtures, and cosmetic work. All of which I could see when I looked at it. I've since gotten an inspection done and some things came up that he didn't mention. The report says that it has polyethylene plumbing and organic growth on some spots on the kitchen ceiling, but they don't show elevated levels of moisture. I was quoted $9000 for a new hvac system and $7000 to replace the plumbing. That's already 16k in repairs right there. Not even counting appliances, carpet and drywall. I don't even know where to start with the roof. There maybe issues there too. I asked the seller would he be willing to bend on the price based on the other issues found in the inspection but he says he has a back up offer over what I offered in writing and 4 other people waiting to make offers. However they haven't gotten an inspection done as I have! I have 2 more days left in my due diligence period to decide rather or not I should back out or push the issue on renegotiating the price? I'm leery of doing that because I don't know if the seller can back out of the contract or not. I've been looking for a house for so long that I don't want to mess this up, but I don't know if i'm getting a good deal or if i'm being stiffed. I don't feel good about it. The seller is not using a listing agent BTW.

Charles Goetz · Answer

@Mike Jones Why do you need to replace the plumbing system? The polyethylene (PEX) is very common. It's used in most new construction. PolyButylene (BP) is the stuff you don't want. The spot on the ceiling may just be a small repair. I would call around and get some other estimates on the HVAC. On the other hand, not knowing about the house, is it on land or in a park? While mobile homes are easy to work on, their value goes down real quick. I personally wouldn't be afraid of buying a mobile home, but be sure the deal is good. I would not spend that much for one in a park, but that's just me. Just because you've been looking a long time, don't but a deal you don't feel good about just to get something. Don't get backed into a corner by the seller telling you he has more and better offers.

Mike Jones · Answer

I plan to live in it. I'm not an investor.

Kirk Lewis · Answer

What do you expect it to sell for after repairs? Can't evaluate a deal properly without that number.

Charles Goetz · Answer

@Mike Jones I would probably keep looking. You don't have to replace the plumbing, but you will have problems with it at some point. There just sounds like too many issues plus if the dollars don't make sense it's just not worth the hassles. The guy may not have all those other buyers lined up and if he does, that still won't make it a good deal for you.

Mike Jones · Answer

Yes. I said that. I am speaking on the inspection results. As I said I got an estimate of $7000 from a plumber.

Mike Jones · Answer

Sorry. PolyButylene is what I meant. The inspection report says it's a national recall and needs to be replaced. The mobile home on it's on land. I just feel like i'm being charged too much. I see properties listed in the same area for the same price or a little more that don't need nearly the amount of work or none at all. The properties that I see needing this amount of work generally sell for 15-20k. There are 6 examples in the same neighborhood from the last 6 months. I made the 25k offer based on what I saw and what the seller told me, but what the inspection revealed is not worth 25k to me. Not to mention a listing for this property from 2015 is still available online. It sold for 23k. and it did not have any of its current issues. At least cosmetically. I'm paying more for less.

Theresa Harris · Answer

@Mike Jones All that matters is if the numbers make sense. Do you have the money to do the renos and is the house worth it? Are you planning on renting it or flipping it? You knew about the HVAC when you saw it along with the other list from the seller, so the only possible surprise is the plumbing and that may or may not be an issue. Get a plumber in to look at the plumbing and go from there.

Alex G. · Answer

Unless you believe that a rehabbed mobile home in your area is worth $50,000, walk away.

Clark Kirkpatrick · Answer

Find a different house. The rehab will cost a lot more than $25k. I get it that you found a house and it seemed good, and that means you've become emotionally invested in it.Go find an easier one. The rehab for the easier one will cost more than you expected too - but 50% over budget for a 10k rehab is manageable. For this, you'll really be hurting.Once you've done an easier one, you'll know what you're looking at a lot better for bigger rehabs.