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Buying a home can be a real crapshoot...

Old 01-22-13, 09:46 AM
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Juan Foote
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Buying a home can be a real crapshoot...

Not that it's any surprise to any of you whom have done it a time or two. We went looking at homes all weekend. We drove to one of the areas we had been looking at with a couple of houses in mind, we actually had nine homes in our "cart" with the agent. While on our drive to the area, all but two of them had offers made on them and were under contract...so a late night with the agent's site and realtor.c we found a few more to see. What "seemed" lucky to us was that the one house which we had fallen in love with was still miraculously available.
We decided to take a look at the ones left in the cart first, and then to look at the new ones we had picked the night before. The first home was quite impressive, but older than we had planned to look at. They had done a genius remodel and really made the most of a rather boring floor plan as well as some really nice yard design work in the landscaping.
The second home was the one that we all had fallen in love with. It was a gorgeous home, with a pool, artistic landscaping, absolutely stunning layout and build, in a word, wonderful. The homeowner made out like they had purchased the house and then decided they wanted something bigger. The whole time we are trying not to gush about the house, but also trying to figure out why the folks would be moving out of it the way he was talking it up..and given the price they were asking, why it hadn't sold long, long ago.

Well, let me tell you folks....it turned out to be our first experience with "sinkhole home". Yup. We had not one single clue. The listing didn't say a word. The homeowner didn't say a word. Our own agent was even clueless about it. She didn't say anything specific about this home, but had a "talk" with us about the varying degree of issue many of these (claimed sinkhole) homes may or may not have had. Many of you may be able to relate to "storm damage" claims being made in excess after an event. She mentioned that IF we were to look at then it opened a possibility of having a lot more home for the money, if remediated.
We left in awe of this place, and honestly didn't see another home the whole day, even though we walked through about five more.
We got back to the office and decided to make an offer on this amazing and beautiful home before it got away. It had been explained off that the long period of non-sale was the holidays and we should take action.....
We put in a very conservative offer on the home, based on the owner's apparent spot with the new larger home to be paying a note on, as well as this one. We are making cash offer as well, so it helps when making a lowball offer due to the lack of paperwork, wait, approval, etc.

Not 45 mins after we make the offer the other agent is calling back asking if we meant it, like he is surprised we are making an offer this "high"....then we get it. We asked for full disclosure on the property and inspection rights, like a smart dog would, and he tells us. This home was/is a sinkhole home that the prior owner (not the current) put a band aid over and left un-repaired after getting a HUGE settlement from his insurer. It is no coincidence that this timed around the same as the bubble burst.
We were crushed, but asked to see the engineer's report before we recended the offer. As it was explained to us, many people hired companies to "find" a sinkhole and did as a way to get out from under huge mortgages on homes that were worth a fraction of that now. It didn't soothe our concerns. There were THREE rather large voids under the edges of the house. One was listed as pending to drain the pool, one at the MBR side, and the other on the guest BR side. Since the "band aid" fix, the current owner had to pull the tile from the beautiful living room and put down carpet to cover the huge crack that had developed across the floor. The report listed a bevy of issues that had been glossed over, no way in hell we were going to get into that.

Thank goodness this other realtor decided to be honest right up front. I mean, we would have found out during the inspection process, but why not LIST the home as damaged and reflect it in the pricing as unrepaired, not remediated?

It was quite a bummer, honestly, as it was well outside our budget otherwise and really set the bar higher than we should have been seeing in both build and neighborhood. We ended up finding another beautiful home to make an offer on in a really nice area, in spite of the HOA Nazi's....Now, just to see if the bank will consider our offer and we could once again be homeowners in a nice area with a terrific school for our son to graduate from. Wish us luck with the offer, and the upcoming inspection processes.
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Old 01-22-13, 10:48 AM
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Wow!

Sinkholes can be scary. I remember one in Hickory, NC swallowed a restaurant and it's parking lot.

Something I recently learned is it might be worth consulting an appraiser independent of a real estate agent. Real Estate agents REALLY want you to buy something and appraisers really don't care as long as you pay the fee. They'll give you the good, the bad and the ugly about a piece of property and the neighborhood sitting in their office looking at a database. I did these recently for a tax appeal. Man, if I would have talked to her before I bought my place, and I really like my home and neighborhood mind you, it would have giving me a lot more of a complete picture of my immediate neighborhood and greater leverage when we were negotiating price. The appraiser more than saved me her fee in tax savings last year.

Good Luck with your move.
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Old 01-22-13, 11:06 AM
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Thanks for the advice. On this particular house it is all going to be in the bank's hands as far as what they will accept. This home is a foreclosure, like so many others. The market is being "forcibly" recovered on properties like these by banks holding out on price and timeframe to artificially inflate what they are bringing. The housing bubble is over unless you happen to have cash in hand and just sit, waiting for good stuff to come up and are immediately available to go inspect and offer. Investors and banks have made sure that the good deals and prices reflective of the true market are rare on anything worth owning. I would hate to be a renter in upcoming years in many areas as well. There are LOADS of unsafe houses out there with band aids thrown over what could easily be life threatening issues and no requirement to disclose to the renter at all. Kinda screwed up, really.
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Old 01-22-13, 11:28 AM
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Knowing some geology and working in mapping Holocene (time right now) deposits and landforms is a real eye opener when I see where and how things are built. I live in a 5 plex built on alluvial mudflow deposits. I can see them in the exposed earth in the crawlspace. The place has cracks in the walls and ceilings. But we rent so we don't care.

I worked with some State of Colorado geologists who did a lot of work studying swelling soils and collapsible soils in the state. That falls under Geologic Hazards. They even gave me copies of the books they wrote on the subjects. Interesting stuff.

There was a piece in the news a year or two ago about a neighborhood in Rifle, CO where people were having sinkholes and tunnels open up in their yards. I could see from even the brief views on the news that they were living on Holocene alluvial deposits that are very prone to dissolution and piping. When I mapped these type of deposits for a project I looked for that characteristic.
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Old 01-22-13, 11:34 AM
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I'm so glad we bought a seventy year old house in a well established neighborhood with no signs of foundation problems or anything.

I figure, if the house was built on top of any geologic hazards, the neighborhood would have discovered it in the seventy years the house has been around for.

A friend of mine bought a house a couple years in the foothills near Denver that was built in the 80s. After they moved in, they discovered some rather large cracks in the foundation that didn't show up in an inspection. Litigation is pending on that... The structural engineer they hired called for a soil report as the area is prone to swelling soils and such.
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Old 01-22-13, 11:46 AM
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Originally Posted by mikeybikes View Post

A friend of mine bought a house a couple years in the foothills near Denver that was built in the 80s. After they moved in, they discovered some rather large cracks in the foundation that didn't show up in an inspection. Litigation is pending on that... The structural engineer they hired called for a soil report as the area is prone to swelling soils and such.
I'm going to guess the house is built on Morrison Formation. Deposited in the Jurassic and famous for dinosaur fossils, it has lithofacies that are very prone to swelling when wet. We have the plenty of Morrison over here on the other side of the state. I see whole subdivisions built on it. When hiking or mtn biking in the spring I avoid trails that I know cross Morrison. It's sticky nasty stuff when wet.
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Old 01-22-13, 02:02 PM
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Originally Posted by mikeybikes View Post
I'm so glad we bought a seventy year old house in a well established neighborhood with no signs of foundation problems or anything.

I figure, if the house was built on top of any geologic hazards, the neighborhood would have discovered it in the seventy years the house has been around for.

A friend of mine bought a house a couple years in the foothills near Denver that was built in the 80s. After they moved in, they discovered some rather large cracks in the foundation that didn't show up in an inspection. Litigation is pending on that... The structural engineer they hired called for a soil report as the area is prone to swelling soils and such.
I tend to agree about buying older, to a point, but with age comes it own special problems. One of the reasons I am looking for a much newer home in the area that I am is due to the building codes on newer structures.
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Old 01-22-13, 04:03 PM
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Originally Posted by punkncat View Post
I tend to agree about buying older, to a point, but with age comes it own special problems. One of the reasons I am looking for a much newer home in the area that I am is due to the building codes on newer structures.
I've had both. I really miss the older house for some of it's charm. But when I think about having to go under that house I appreciate my new one. The wiring in the nearly 90 y.o. had been replaced or re-routed many times and the old wire left in place, what a nightmare. There was rubble on the ground, no vapor barrier, jacks everywhere and a mish-mash of plumbing. But what a great old neighborhood and beautifully appointed home.
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Old 01-22-13, 07:31 PM
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Structure is #1, if that isn't right, everything else is just polishing a turd. I would never consider a sinkhole home. I'd rather buy a home that needed to be gutted to the studs but was structurally sound.
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Old 01-22-13, 08:17 PM
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Originally Posted by mikeybikes View Post
The structural engineer they hired called for a soil report as the area is prone to swelling soils and such.
There are a lot of areas with soils prone to swelling. Most areas have clay surface soils and clays shrink and swell with changes in moisture so this is just the way it works. This is a separate subject from sinkholes, clay acts in a predictable manner, only goes so far, and does it back and forth over and over again. It won't make your house fall into a hole but it will crack walls. A soil investigation will tell you how much movement to expect. There are a lot of things that can be done during construction to make the situation better, and there are things that can be done after construction to make the situation better, but sometimes it is just too much to overcome.
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Old 01-23-13, 10:19 AM
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So, the bank refused our offer and won't budge. The difference is about ten k we are trying to decide if it's worth it for the neighborhood.
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Old 01-23-13, 12:22 PM
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It's a shame most of those banks aren't forced to pay taxes on the properties like normal people/businesses are. Every single bank would be forced to short sale or make the state rich and their investors very sad. Either way win/win and sooner or alter they'd have to get rid of the property because they'd never be able to recoup the loss of having to pay taxes.
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Old 01-23-13, 12:26 PM
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the whole process is exhausting. Not surprising, as it's likely to be the biggest purchase you'll ever make. Good luck.
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Old 01-24-13, 04:46 PM
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Originally Posted by pgoat View Post
the whole process is exhausting. Not surprising, as it's likely to be the biggest purchase you'll ever make. Good luck.
Yes, thanks. I am pretty sure that we have found the area we want to live. The schools and neighborhood offer a lot and has apparent great cycling nearby. We decided to widen our scope of price ranges a bit. A lot of what we are looking at are investor fodder and it is almost impossible to get a foot in the door in time before some blind investor is tying the property up in a contract. It leaves a lot of distressed and boring same old, same old to look at. It seems like our tastes are a bit more expensive than we first thought.

The search continues.
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Old 01-24-13, 05:19 PM
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Originally Posted by punkncat View Post
I tend to agree about buying older, to a point, but with age comes it own special problems. One of the reasons I am looking for a much newer home in the area that I am is due to the building codes on newer structures.
Such as? I realize our building codes have improved quite a bit, but, I'm not sure I'd be turned away from an old property because it was built to old code.
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Old 01-24-13, 08:08 PM
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Originally Posted by mikeybikes View Post
Such as? I realize our building codes have improved quite a bit, but, I'm not sure I'd be turned away from an old property because it was built to old code.
When I built my first house (before losing it) we got a break on insurance simply because it was new construction. Probably because the risk of the insurance company having to pony up the dough on a claim is reduced due to all of the builder/manufacturer warranties.
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