CT SFR Inspection came back with Major issues. Is it worth it????

Question

https://drive.google.com/file/...

Seeking advice on a property. Here's a little backstory.... My girlfriend and I placed an offer on this SFR a while back and were outbid. Today, we noticed the property came back on the market. We contacted our agent to resubmit our bid. The seller reached out to us and wanted to be upfront. They sent us the home inspection report from the first buyer who backed out of the offer. The link above  ( which hopefully works ) shows that the property is in need of some major CapEx. It has some Termite damage (common in the area) asbestos siding, active Knob and Tube as it is an older property, and some cracks in the foundation etc etc etc. It says the foundation is " in need of repair" but at 2nd glace it says the cracks are 1/8" thick or less and do not appear to have any structural significance. As a "first time home buyer" is this something I should even be considering or am I out of my mind. Property is a 2800 sq foot 3 bed 2 bath listed for 179,900 located in a "C" area. Closely located to many amenities but in a lower income neighborhood. My thinking is...If we got a good enough deal on this, it would be a good live in flip. Sure it needs work but we can fix these things over time. Its not like the cracks in the foundation are going to make the house fall over when we move in. We can hire an exterminator and replace the damaged termite wood. Is this the totally wrong way of looking at it? I just thought I'd give it a deeper look rather than go with the crowd and say I CANT DO THIS. What do you guys think?

Filipe Pereira · Answer

Hey @Jorden P Dupont, you have a unique opportunity here and it's important to see that. @James Carlson gave you some great advice, and I echo most of what he said.

I think it's also important to realize that while this area may be a "c" area, it's a "C" area by Manchester standards, which is still far better than most "C" areas across Hartford County CT.

The siding is basically a non issue unless you plan on eating it. I had termite damage in my 1890 home and had to replace a sill plate. Not the end of the world, and very doable. As for the K&T, that can be pricey, but given that it's only 2 floors, the electrician can usually feed from basement and from attic. On 3 story properties it becomes even pricier. It's really going to come down to price. I was able to get a massive price reduction on mine (60K) so it made perfect sense to live in flip mine. Good luck!

James Carlson · Answer

@Jorden P Dupont

First off, I'd lean hard on your agent to help guide you through this. That said, here are some of my thoughts:

We work with a lot of buyers and investors in Denver and Colorado Springs where the market is hot, and sellers have a lot of power and buyers have to accept more "issues." Is what you're talking about a big deal? Totally depends.

I think there's an idea out there that there are good houses and bad houses. The truth is more gray. Most houses that aren't brand new will have some issues. If it's not termites and knob and tube wiring on this one, it's a bad sewer line and ancient furnace in the next one. Erin and I bought kind of our dream home in Colorado Springs that has some active knob & tube and some settling. It's an 1890s home, and we're fine dealing with the issues over the coming years.

In your situation, I'd do a few things. Ask the seller up front if they're open to addressing some of those issues. If they are, and you like the house enough, get it under contract. You likely have an inspection contingency. Use that period to get a few specialized techs out. Get an Orkin tech out to tell you how bad the termites are and what it would cost to abate that problem. Get a structural engineer out to give you an idea of the seriousness of the cracks. Get an electrician to do the same with the electrical.

Once you have an idea of the scale of the problem and the amount needed to fix it,  you can take that to the seller and see what they're willing to address in either fixes or seller concessions. Maybe they agree to fix all of it or just some of it. Then you can make a better informed decision whether the price and the amount needed to address issues in the future are worth it to you.

Good luck!

Steve K. · Answer

At the right price, almost any property can make sense to purchase. However, the asking price on this one is nowhere near the right price in my opinion (I grew up in Wethersfield working on properties like this as a carpenter. My brother is still a carpenter in the area and my uncle is a Realtor in Manchester). Unless you can get it for way under asking price, like less than half what they're asking, this would be a hard pass for me. Here's why: The asking price is only ~$12k less than the average home in the area. Fixing all the known issues is going to cost A LOT more than $12k (replacing the K&T will probably cost close to that much all by itself). You're also going to want to budget for unknown issues on a colonial property restoration project like this. Just getting engineers, exterminators, electricians, and asbestos/lead abatement companies out there to help you start figuring it out will start costing you some money real quick. Once the walls are open, you're certainly going to find more issues. I've never worked on a property like this that didn't have more issues once the walls were opened. How's the plumbing (inspection says dated), windows (look pretty beat in the photos), insulation, sewer line, rafters/roof, floor joists (looks like they're shot from termites in the photos), appliances (dated), water heater (looks like it's about go), etc? Properties in that area built in the 1880's with tons of deferred maintenance can be absolute money pits. With an ARV of only ~$200k, there is not enough upside to dump a lot of money into it.

Another thing to think about is unless you're a cash buyer, it may be a non-starter as you may not find insurance/be able to get a loan on it with active K&T, asbestos, stone/brick foundation with some issues, etc. (which is why it says no government loans in the listing description). Knowing the area, I don't see enough value in this location to make all the known issues worth it, never mind the yet-unknown issues. I'd recommend moving along, especially for your first purchase!

Lynnette E. · Answer

Its the kind of house I love to do.  But I generally get them for $60k in TN and when fixed they are worth about $170k, depending on their appeal.

One thing I did learn in the past two years is that when the entire house has low water pressure:

1.  Check the water delivery system.  Is there a leak or split pipe?  You maybe running a new main.  I have done 3 of those in the past 2 years...about $1500-3000 depending on how the line goes into the house, length and it really tears up the yard!.

2.  If the water pressure into the house is fine, but it is low within the house, you likely have pipes that are filling in or have way too many leaks to deal with.  With the Victorian houses its generally filled in pipes.  Repiping the 4 houses I did in the past 2 years was $8 to 20k.  And if you are repiping you may as well update the fixtures....  BTW, the $8k was the only house that was not a Victorian-it was just a 70's box with a torn out floor for easy access.

David Wolber · Answer

@Filipe Pereira Thank you for acknowledging the siding as a non-issue!

@Jorden P Dupont Asbestos siding is bullet proof.  It's really a great product.  They make perfect replacement tiles that fit awesome should one get cracked.  I own 3 properties with the stuff and half the houses I manage have it.  It's fine, don't grind it and inhale it, don't eat it and try not to smack it with a hammer.

CT Inspectors have a good fact sheet about homeowners doing their own abatement.  Search: Asbestos Siding Fact Sheet

A point about a Home Inspection is that you are literally hiring a person to find everything wrong with the property.  They'll write a 40 page report of everything wrong with a brand new house.  So don't read it and panic, lean on your Realtor and if need be, a trusted contractor and weed out the important things.

The K&T has been working for years, it too is also probably fine.  HOWEVER, the insurance company won't like it.  So you will either have to find a company that is ok with it or fix what they can see.  As said before, it's not a hard fix usually; at most a few holes to patch, but you wanted to paint anyway...right?

Would I be scared, heck no.  Would I use this to low ball the hell outta them, sure would.

Good luck!

CT SFR Inspection came back with Major issues. Is it worth it????

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