Bargain or ripoff? House price depends on location, condition

Real Estate Matters

November 09, 2008|By ILYCE GLINK | ILYCE GLINK,thinkglink.com

I am thinking about purchasing a house built in 1909, and I would like some advice.

The house is structurally sound and has very sturdy oak floors and solid walls. The roof is only about seven years old and still in good condition. There is a bit of old water damage on the ceilings, but it is more cosmetically ugly than anything else. The wiring is up to date, but the plumbing is in bad condition.

The house has six bedrooms, two bathrooms, two living rooms (both with fireplaces), a sunroom, kitchen and dining room, a partial basement and a full attic with a tall ceiling.

The owners are asking $70,000. Does this sound like a good purchase?

I have no way of knowing whether this house is listed correctly at $70,000. Depending on where the house is located, it could be a fabulous bargain or ridiculously overpriced.

You also have to consider what problems you're having with the plumbing. If you have to dig a new sewer line, build a new septic field, or replace all of the plumbing in the house, you could be talking about spending anywhere from $20,000 to $100,000.

You also don't mention how much, if any, land comes with the property. Do you get 10 acres or is it on a tiny city garden lot?

The best way to know whether this house, or any house, is worth the price is to look at what comparable homes in the area have sold for in the past three months. If no homes have sold, then you should look back to sales within the past six months. If you look for sales comps any further back than that, you risk comparing your property unfairly to sales that were closed before the housing crisis.

Once you do a thorough exploration of the local marketplace, you'll be able to tell whether you're being offered the bargain of a lifetime, a good deal or something that you should pass on.

I closed on a home in July. The builder stated that I have a one-year warranty on the home for repairs.

Well, you know the story. The builder can't be reached to make repairs to my home. I haven't had the inspection I was supposed to have after living in the home for 90 days. Also, the builder was to provide a 2/10 warranty for my home, which was returned by the warranty company unprocessed. The 2/10 warranty amount to be provided by the builder is on my HUD-1 closing form.

What legal recourse do I have that would get the builder to honor the warranties? I waited until I was 50 years old to buy a home, and now I don't want the house. I need help. I don't know where to turn.

I understand that buying a house can seem like a scary amount of responsibility. But you already purchased this house. You generally can't return a house as you might return a product purchased at a store. You might be experiencing a good dose of buyer's remorse brought on by the builder's bad behavior.

Are you having major problems with the home? Or were you looking for your builder to perform an inspection of the home and hoping it would fix the issues that came up during the inspection?

If you're not experiencing problems with the house, you could spend some money and find a good residential real estate inspector to go through and see whether anything comes up, particularly if you don't have a clue about the ins and outs of living in a new home.

Just keep in mind that you'll pay the inspector a fee to go through the house. You will still have to pay someone to fix any items that might come up during that inspection if you determine that your builder is not coming back.

Please talk with a good real estate attorney who has experience with new construction contracts. You'll want to review what was promised to you in terms of the warranty. Then, have your attorney contact the builder to see what's going on.

What you may find in the current economic climate is that the builder is bankrupt, has gone under or is slowly going under. If the builder goes out of business, your warranties from the builder will likely be worthless.

However, there could be underlying warranties from the materials manufacturers that might protect you somewhat.

These manufacturer's warranties might include windows, heating and cooling systems, plumbing fixtures, roofing materials and some other components installed in the home.

You have to face the fact that the builder may be unable to provide the warranty you were promised. If that's the case, you own the house and will have to step up and make the necessary repairs to keep it in good shape.

It's only in extreme cases that a buyer has the right to rescind the purchase of a house. These extreme cases may involve fraud on the seller's part. Your attorney can counsel you further.

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