House #28? Maybe not!

November 10, 2011 · 4 comments

We had verbal acceptance of an offer on what would have been House #28 yesterday. The bank sent over the addenda that we needed to sign to make the contract official, and because we didn’t have an inspection period or any contingencies that would allow us to back out of the deal if we found any issues, I decided to head over to the property one last time before signing and sending back the contracts…

I’m at the property this morning, and the first thing I notice when I open the basement door is a strong mold odor. I hadn’t noticed this the other day when I first saw the property, but at that time, there was an employee of the listing broker at the house taking pictures, and he had all the exterior doors open; my thought was that there was enough fresh air coming into the house that I had missed the musty smell (I don’t believe the employee was trying to hid the smell, I think it was just bad timing). Given the smell, my project manager, one of my trusted contractors and I decided to do some investigating.

We quickly realized that many of the baseboards around the basement had been recently painted over, so we removed one, and sure enough, there was a good bit of mold behind it. Likewise with other baseboard we searched behind and also some mold on the walls in the closet. Without taking down a bunch of sheetrock, there was no way to know how extensive the mold was, or where it was coming from. But we were able to take off an access panel on the ceiling and found some mold there as well.

While I absolutely hate doing it, we had to tell the listing agent that we couldn’t sign the contract under the current terms. We offered to go through with the offer if the seller would agree to give us 3 days to investigate further (an inspection period) and also knock $5000 off the purchase price to cover demo, remediation, fixing the water issue and sheetrock repair. Now, I don’t know if $5000 will cover those costs, but I’m willing to take the chance if the seller will agree.

We’re still waiting to hear back from the agent/seller with their decision. Given that there were multiple offers on this property (not sure if any of the other buyers knew about the mold issue), the bank may decide to take their chances with another buyer; but there’s also a chance they’ll accept our proposal.

Hopefully we’ll find out tomorrow…






4 responses to “House #28? Maybe not!”

  1. steve says:

    Under these circumstances I always put a very clear worded Addendum together. “THE BUYER HAS DISCOVERED SUBSTANTIAL AMOUNTS OF MOLD IN THE BASEMENT AREA AND WOULD LIKE A $5,000 DISCOUNT TO COVER A PORTION OF THE COST OF REMEDIATION.”

    The idea being, if the Listing Agent and Seller know they are supposed to disclose. If you put that to them in writing it would be pretty hard to deny. Will they disclose it in the future, not for sure? But it makes there ability to completely deny it lower.

  2. Lance Dunn says:

    I have made offers to bank properties that had mold. None of those offers were ever accepted, so I am interested to see how your deal shakes out… But Steve’s advice sounds like good advice.
    As a property manager, I have had to deal with mold issues in properties that I did not own. In one case, $5000 was the cost to remediate mold in two bathrooms. From your description, the area is much bigger. The costs could be much more than 5k.

  3. Ravi says:

    Hey Scott,

    As always an excellent blog entry. I had this happen on the last house we had U/C. During due-dill period we found this. Same story, multiple offers, FNMA as seller, and the listing agent didn’t want to even receive the inspection report. I turned it in anyway with the “addendum to adjust price”. Of course they turned it down. Luckily, at the last minute the HOA refused to issue letter unless O/O buyer, so we got off the hook. With the remediation costs the numbers didn’t make sense.

    Scott, I had sent you a couple of emails directly, I wonder if they ended up in your junk folder. Anyways, How do you handle your insurance for the business? Do you get an umbrella policy, LLC or case-by-case? Can you reco your business/commercial insurance agent? We are looking for one.
    Thanks
    Ravi

Leave a Reply

Your email address will not be published. Required fields are marked *