Home Buying in Phoenix>Question Details

Al Foster, Home Seller in Phoenix, AZ

What are the required code compliance levels to make home sale legal? (E.g., can a home with unsafe wiring be sold without seller fixing first?)

Asked by Al Foster, Phoenix, AZ Fri Aug 19, 2011

Back again -- still trying to get that house I'm looking for here in Phoenix ... one we can afford. :-)

We are looking at a house rehabbed by a non-profit. The contractor (since long-gone, I am told) did a terrible job, replete with unfinished or badly installed plumbing, electrical, ductwork systems, and I'm just getting started. Another scary example is the otherwise good-looking complete stucco cladding being flashed wrongly or not at all.

Despite our inspector's devastating report, our realtor wants to give the non-profit a chance to "make things right." I'm willing to give it a chance but, before we have a meeting soon with the seller and their (new) contractor to hash things out, I could use a better idea of what is negotiable and what is flat-out required that they fix.

I went on the Phoenix codes site, but it's hard to get an overview there. I don't expect a full study course here, but would appreciate tips on where I might find something to use as a sort of checklist.

Help the community by answering this question:


Hi Al:

Gotta admire your persistence! :)

It is going to depend upon your source of financing. Conventional is a little looser than FHA which is a little looser than VA. And, all of them are going to depend upon what the appraiser has to say as far as the livability and safety of the home.

VA is VERY picky, as their charge is to protect the veteran from getting into a bad deal, where the vet is going to end up spending money to fix. They will make you fix chipped paint, broken windows, etc., etc.

FHA's standard is "livable and safe", so they aren't suppose to worry about things like chipped paint, but only those things which could prevent someone from living in it (does it have a stove, toilets, etc.?) and being safe (which is where your wiring and such will come in.)

Conventional financing is the most lenient, but even there Fannie and Freddie lenders are not going to allow code violations, etc., to go un-corrected if pointed out by the appraiser. In other words, is the appraiser going to give you an OK with an "as-is" appraisal or come back with a "subject-to" appraisal. One never really knows until you have the appraisal in hand.

If these things can't be handled prior to closing, your best bet if you wish to proceed is to get a private-money loan, fix the place up, then go to permanent financing with the "market rate" type lenders discussed above.

As it just so happens :), Legacy Group provides both types of financing just for this particular situation. Give me a call.

Bill Parker, Loan Officer
AZ Lic# 09011570
NMLS #223607
CPA--Licensed, no longer practicing

Legacy Group Lending, Inc.
15333 N. Pima Road, Suite 300
Scottsdale, AZ 85260
(O) 480-993-3080; (M) 602-565-3646; (F) 480-993-3081
EM: Bill.Parker@Legacyg.com
Website: http://www.LegacyG.com

MISSION STATEMENT: To create an unbelievably enjoyable experience for my clients, while guiding them through the most important financial transactions of their personal lives. My clients know me as their Mortgage Lender for Life. I truly appreciate your referrals.

If you think it's expensive to hire a professional to do the job, wait until you hire an amateur.
Red Adair, Oil well firefighter
2 votes Thank Flag Link Fri Aug 19, 2011
You don’t get it do you? Do you have any clue what your about to do? This is a classic amateur way of investing. Take advice from a investor. Or don’t. Buy the house and in 9 months I will say told you so. Now yer stuck. This property you want so badly will destroy your bank account to zero. Not only will that, booking inspectors take months. Getting a CO, (Certificate of Occupancy), is not easy. You won’t get any answers from people here because we haven’t done a walk through. You need to make about 45 phone calls to City of Phoenix inspectors.

MLS# 4611932. This property is a classic no no investment. Looks like a killer bargain right? There was another one for sale for $42K 6 months ago same floor plan. I was very interested in this property and went to work buying it. But here is the problem if you purchased the place. There is no CO. This place is a 4 building attached unfinished townhouse with existing inspections to be complete. Not only would you have to complete all the inspections through City of Phoenix for this property, you would have to compete the other 3 townhouses that are attached. Fire hazard. If you decide to work on the property anyway SRP electric will not turn on power. Also City of Phoenix will not turn on water or sewer. So you would have to spend all this money doing work on the other 3 townhouses to get inspected when you don’t even own them. City of Phoenix fire dept would inspect the sprinkler system and need inspection and so on. Problems galore.

So go ahead and buy the house you want so badly. Go for it. And one last thing. You keep mentioning “non-profit.” No such thing as work for free. There’s always a profit with a contractor.

Investor Mike
Gilbert, AZ
1 vote Thank Flag Link Mon Aug 22, 2011
Al, if I were in your shoes I would run, not walk, in the opposite direction. I would not give the non-profit a chance to fix, because if they do, you'll be stuck with whatever is left and in a house like this there will be a ton of hidden problems. Have you seen the movie, "The Money Pit"? That's what you will be getting. The purchase price does not make this home affordable. Get out and move on.
1 vote Thank Flag Link Mon Aug 22, 2011
Very classy, Al.

Good luck. Let your friends, etc., know we are here to help whenever possible.

0 votes Thank Flag Link Mon Aug 22, 2011
Reporting in: The seller's rep (a board member of the non-profit, I think) was too defensive by half when we all met this morning. He seemed to think that our inspector's straightforward list of the house's problems was somehow specifically blaming the non-profit which "rehabbed" the place.

Being almost ready to bail anyway, it didn't take too much of his attitude to get me to take my agent aside to let him know that we were done ... now. Offer off the table.

The good news is that later today we were able to re-offer on another house (that we like better anyway), one we had earlier lost to a higher offer by someone whose financing apparently later fell through (as it just came back on the market).

I wanted to let you kind respondents know that your advice was of significant help in this matter. My thanks and best wishes to you all.
0 votes Thank Flag Link Mon Aug 22, 2011
Dear Al,
Usually non profits are good about having important issues up to current code. A rule of thumb is: building that is not permitted or out of compliance, is poor work. You will ultimately be responsible for that. IF you are a tradesperson in one of those fields, you might be able to correct the issues, but if you are not the burden of uncovering and correction will be on you . Personally, I wouldn't want to have that pressure and would be looking at other homes.
0 votes Thank Flag Link Mon Aug 22, 2011
Bank properties are being sold every day AS Is so there is no requirement to be up to code, you buy at risk! If you buy, you now become responsible for the code upgrades needed and are responsible if the county finds you in violation! So always Buyer Beware. always inspect even if it is an AS IS sale. This way you know what you got on the table and you can decide if the house is still worth the sale!
0 votes Thank Flag Link Mon Aug 22, 2011

Having a licensed contractor look at the property might be a good step to get some ideas of the true risk and cost.

Arizona Homes for Sale by a Guy from Iowa
Web Reference: http://www.McVinua.com
0 votes Thank Flag Link Fri Aug 19, 2011
Ohh man are you going to open up a can of worm with this property. City of Phoenix will have a field day with violations and cost. And this will take months booking appointments with the city. You will sit around waiting loosing money.

Here’s a good tip. RUN!

Investor Mike
Gilbert, AZ
0 votes Thank Flag Link Fri Aug 19, 2011
I'm sorry, Bill, but I ran out of space. Our realtor asked my mortgage broker to hold off on sending out the lender's appraiser until we and the seller's reps have our meeting.

My offer was based on FHA financing. I am VA qualified, but I know this one won't wash for that.

Again, I'm just trying to get a better feel for the horse trading that will inevitably transpire at the meeting. Knowing what the seller simply has to do anyway in order to make the sale legal (safety concerns, e.g.,) would seem to give me a leg up in the negotiations, hence my wish for a kind of handy checklist.

Thanks for the responses.
0 votes Thank Flag Link Fri Aug 19, 2011
Get a price from your contractor to fix the problem and negotiate a price reduction accordingly.
0 votes Thank Flag Link Fri Aug 19, 2011
It should be disclosed in SPDS as that could be a material fact to a Buyer.
Mamta Jain
0 votes Thank Flag Link Fri Aug 19, 2011
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