Andy

Ok, here's a weird one to get comments on. Our realtor just emailed and said it would be best if just he and the foundation contractor met at the house tomorrow to prepare the estimate. (we also know the seller wants to be present, and wouldn't put it past him to try to wander by). This seems very odd to us, as we are the ones that will need to size up the contractor in person and understand the details of his assessment. Is there any rational reason that we should *not* be present to meet with the foundation contractor? - Fri Dec 21 2007, 14:08

Updates and responses for everyone interested in the story-- thanks so much for your input! It's really helpful, and my wife and I appreciated it!! We will continue to post on this for the next few days, and would appreciate the continued support and feedback.

I would say the current questions aren't very emotional; I'm just trying to get a feel for normal expectations in resolving home inspections. I think there is no clear answer on this, as people tend to react so differently to the items uncovered. I'm trying to remain as analytical as possible here: since these are major issues that (for us at least) directly affect market value and usablity, we expect full resolution by the seller for the price we are paying.

The home inspection didn't scare us; in fact, quite to the contrary it affirmed the good general condition of the house (except for the foundation issue). Our inspector was a registered professional structural engineer, and as another professional engineer I felt very comfortable with his findings, and identifying the handful that were important. Perhaps if we weren't engineers we would be overwhelmed by the 55-page summary identifying 80+ items :) Of course most of it us just attentional, or minor....

It is correct that the affected area is small (~60 -100 sf), but that doesn't mean it's not damaged, nor that it won't cost money going forward. Our inspector/PE told us this is something that would continue to settle-- it's already 3/4" off level over 4 feet-- and could easily result in plumbing and other issues in the affected area. Also: we will likely sell the home someday, and I'm sure that the words "foundation settlement" on a disclosure aren't a magic formula for getting the best resale price! Thus we almost feel that just paying for the repair is "getting off easy" for the current owner-- even having such repairs may reduce future market value slightly (refer to other Trulia Voices posts for example), or narrow the pool of potential buyers.

The foundation repair company we contacted is highly regarded in the area with numerous superlative reviews. Obviously $11K is a high estimate-- he told us as much since he could only look at photos and the inspection report. He has agreed to come out to the property this weekend, inspect in person, and provide a free written estimate. Reviews of his services on kudzu.com note that he is price-competitive in the area. We likely won't pursue additional quotes since there is an onus on the seller, now, to work a little and we're happy with this firm. I would be happier if the seller hired a structural engineer to assess the damage and spec repairs, and will likely suggest that. The ideas of termination upon additional damage discovery, and specifying the contractor are great and we will use those! Quick question for those paying attention: the seller wants to be present at the inspection by the foundation engineering company. Does this seem like a good idea? Us, our realtor, the contractor, and the seller...?

The price of the home was meant to convey that neither we nor the seller anticipated any big finds from the inspection report. and as such we received no price concession The actual ratio is perhaps a bit high, but then again we think the house is pretty well priced (comps, etc.). The seller actually had another active offer on the house when we made ours, and we just did our best to negotiate a fair price.

I seem to read and hear a lot of "old homes aren't perfect" and "expect wear and tear" comments, and find it curious: doesn't every house hunter realize this? I can only infer from these posts that many real estate clients freak out over little things like scuffed molding, a 5-yr olf fridge, a loose doorknow, etc. We have a simple philosophy on this matter: we expect our home to be in proper living condition at close
with no undue big-ticket expenses impending (unless otherwise negotiated). Thus roof maintenance that needs to be performed immediately, a deck that can't support more than 2 people safely, and a foundation settlement are all items that raise flags for us. What we're unsure of is how much we should negotiate on this, and frankly our current realtor has disappointed us with advice in this regard. Fortunately, this forum is active and the overwhelming consensus I see is that we should expect the seller to pay for major items.

Thanks to everyone for reminding me that there is plenty of inventory on the market. We actually came to this conclusion last night after dinner and started looking for other properties to consider in case this deal falls through. If we do end up househunting again you can bet we'll be shopping with a different agent, too, as you all have answered our questions more thoroughly and informatively than our current realtor! - Fri Dec 21 2007, 12:36

Update: we're preparing our amendment. We got an estimate of $11K to fix the foundation and are asking for that and ~ $1300 in other fixes (deck, roof maintenance, etc. to satisfy safety and usability). Just a quick poll: should we expect seller to pay full foundation costs? Home is probably priced fairly at just under $400K, we are paying 97.5% LP:SP. - Thu Dec 20 2007, 20:55

I haven't signed an agreement yet. I assume that means I have no legal responsibility to pay this agent's commission if I subsequently change agents and make an offer on one of the properties I was shown. Is this correct? Also, are these agreements typically limited to properties shown, and by time?

Can someone explain buyer's agreements to me-- is there any benefit to me at all? Are they common? While it's fine to say that without such an agreement in place the realtor has the seller's interests in mind, it seems logical that the agent must provide the buyer buyer-oriented service or they simply won't use the agent to make an offer. - Mon Dec 10 2007, 22:43

Thanks for all the helpful comments so far! A few replies/comments to some of the questions so far...

Everyone-- I pulled comps by writing software to query the county assessor by neighborhood id. All square footage as listed there. There are approx 100 props in this neighborhood, all built post-2001. Nearby neighborhoods are much more expensive, or much older so I didn't consider those in this calculation (I did analyze them, though, and they would actually help my case). Comps are for same-size homes (~ 3300-4200 sf) , same BR/BA, same builder, same lot sizes, same age, etc. Basement premium is estimated by knowing which comps have finished basements (drive by), assuming a full basement (the norm in nbhd) area equal to main floor area, and comparing finished/unfinished comps ppsf. Note that I inflation-adjusted sales prices to Sep '07 dollars using standard CPI calculator, and further added 2% annual increase due to real property appreciation. The numbers I have compare well to zillow.com Roswell ppsf estimates, and surprisingly to adjusted '05 comps (yes, I did those, too). As a check, I looked at the '07 total tax appraised value and found the relative values in the nbhd to be consistent. I know home county sales reporting online lags by a few months, but I've been doing drive-bys since July so I I'm missing at most 1-2 sales. Does any of this sound unreasonable? Suggestions for better comps (aside from the obvious MLS data I can't access)?

Everyone-- so many detailed responses, let me also throw out this info: there are currently 5 listings in the nbhd, 1-2 new 60-days, all priced lower (square-foot adjusted, and real), one priced almost the same with 25% more sq ft but unfinished basement. Two bank-owned properties not advertised according to RealtyTrac.

Lee-- I agree the seller's finances are also important; that's why I included purchase price in other thread. I'm sure they don't want a loss, so that's the psychological floor. Their real floor may be much higher based on relo, finances, etc. You realtors can provide insight into how important rational valuation is in selling a home in this market... I suspect that a fair deal is probably acceptable at this point, and that a skilled buyer's agent can help present an offer as fair. Market timing must be a looming consideration, also....

Jane-- good advice also, but you seem to contradict your post on my other thread a bit. There you say that 10% is too low to offer, here you say it can work... there you discount the owner purchase price, here you say it's important.

Brett-- excepting recent (6-mos) sales, I think my raw comp data is solid....

Diane-- good point. We want the house, and it's our current favorite potential, but there are at least two others that are very exciting alternatives. If it was *the* house I could just offer 5-10% lower and negotiate a typical sale. Since I can wait, though, I want to get the best (fair) value I can. I'm pretty sure the house is top-25% for its class, but it's mispriced and there are *so* many newer resales and new constructions available within 2 miles. I just don't see a strong bargaining position for the seller. I realize that doesn't mean *they* share my view, tho, which is why I started this thread!

Diane-- Btw, I'm not sure why comps from peak season last year would be *worse* than slump this Fall, especially since I accounted for inflation and 2% price appreciation per year... Does a single possible additional sale in the neighborhood this summer really affect the strategy that drastically, especially as we head further into slowdown?

Claire-- as mentioned, there are no sales in this nbhd within 3 mos. Nearby neighborhoods are '80s or '90s homes, or million+ homes. An appraisal would be interesting, but shouldn't that occur at a more committed point in the buying process? After all, I still don't have an agent yet..... Also, perhaps mistakenly, I'm under the impression that you can get a 600K property appraised +/- 10% by proper choice of appraiser, and that is within the margin of my desired offer, so I expect either buyer or seller could make an appraisal work to justify price. - Sat Oct 13 2007, 16:28