Not so good B&P - What to do?

Gday all,

Currently have a place under offer in Northern Brisbane. Had the Building & Pest Inspection completed and it came back with some issues:

• High moisture readings in shower walls and shower base. Wood rot to some walls surrounding the shower also. Owners have used excessive sealant and looks like issue has been there for quite some time.
• Timber rot to fences down left side of property, will need to be replaced.
• Double Brick wall to front of house is not vertical and may have structural issues (needs to be confirmed by structural engineer).
• Carport concrete slab is not level and cracking has become evident in the slab (new carport).
• Multiple other minor issues around property (such as no termite treatment, cracks to walls, broken tiles, etc)

House is a fibro house that was built in the 60's, so I knew some work would have to be done to it. I estimated repairs to the bathroom to be up to $5k when we signed the contract but quotes have now come back to between $13k - $18k for the bathroom alone.

It was a 7 day B&P, but I have had it extended to 14 days to get these quotes. Now with these quotes, I'm worried that it's too expensive to have it all fixed up and am considering whether I should pull out or not.

Any advice?

 

Do you still think it's a good buy if it costs $18k + other costs to fix up?

 

Hi Kael

High moisture readings in the shower walls is quite common and can often be resolved with new silicone, some thread tape and/or new shower rose and taps. Normally things would start to dry out within a week of such work and moisture readings would reflect this.

Wood rot to timbers surrounding shower - what exactly due you mean by this? ie are you referring to skirting boards?

Wood rot to skirting boards near shower is a common one. Tricky to avoid particularly with pivot doors since as a shower door is opened and closed, it will inevitably drop some water outside of the shower cubicle. Skirting boards are cheap so I wouldn't get shy about possibly needing to replace the odd section.

However the mention of the non-vertical front wall is a biggie which won't be cheap to overcome.

Did you take a look at the property before putting it under contract? (Or have someone look at it for you)? It sounds like a fair bit of the trouble would have been quite openly visible.

 

Also including the extra time of having no tenants, and stress involved in undertaking repairs like that long distance. Personally, I'd have no interest in major work like that - in old houses you pull a string and you can find a chain reaction of more and more expensive issues (like asbestos removal.)

 

I'm with @Jess Peletier , you are bound to uncover a can of worms once you start. Sounds like there are ground issues, cracks to walls, slab uneven and cracked, front wall not vertical (that is major building surgery on it's own). Time to walk away Renee.

 

Nope. Guess that answers my question

I've heard high moisture readings can be common. I could just be worried about because of previous experience with another IP I have where I had to have both the bathroom and ensuite showers replaced, then have walls around it replaced.

The wood rot isn't in the bathroom itself. It's in the walls and door frame of the laundry backing onto it, along with the linen cupboard door frame in the hallway. Hallway has also been patched up.

As for the non-vertical wall, my thoughts exactly. If we have problems with that down the track, could cost thousands or tens of thousands.

Yep. Looking at around 4 weeks of lost rent to get the work done. I've done a bathroom renovation for an IP in Melbourne but if I can avoid doing one on my next purchase, I will. And having the house checked over, there is definitely a large amount of asbestos, which adds another week onto the timeframe.

Most people are saying to walk away, so looks like I may have to. Shame, it was such a nice house. Plenty of houses though

 

Lots of things in this world are nice. Such as the flowers in your nearest botanical gardens. You can however look at them, appreciate them, and walk away.

 

Terminated the contract this afternoon so thank you to everyone for their advice on this.

Real Estate agent rang me within the hour asking why and asking me to try negotiate with the owners further. Unless we can get a huge discount ($25k +) then there is no chance they'll sell to us.

Starting to look at more properties now Thanks again guys

 

Probably for the best, if you had gone ahead and it turned to crap...
Good luck, there's another deal around the corner.

 

Agreed, probably for the best. If the "discount" you get from the normal price of such a property far outweighs rectification costs, then excellent. If not, walk away.

It'll cost you a fair whack to send building and pest guys to properties you haven't inspected, so think carefully about how often you are prepared to do this. Attend the property yourself or have an appropriate person do so on your behalf.

 

Agreed I inspected this property, along with a few others. Did notice bathroom issues but didn't expect the issue to be so large, so thank goodness for the B&P.

 

Have you spoken to the B&P directly?

What's written on the report to what they can tell you over the phone can be very different.

Cheers,
Michael

 

@Michael_X raises a good point. Inspectors do note everything regardless of how small, and give you closeups of small cracks in plaster cornicing that make it look like the house is ripping apart at the seams. All in the interests of disclosing everything they see so as to be covered from a liability perspective. Speaking to them on the phone they'll say "Oh it's nothing. Every house has that."

However this house of yours does sound very problematic.

 

Yup, rang him the morning after I received the report He was very helpful, telling me that a lot of the issues were common for a house of this age but that the bathroom and front double brick wall could become troublesome, so that's when I arranged for quotes for the bathroom and enquired with people about the wall.

 

@Kael
So how much that you have forfeited so far ? is it the 0.25% deposit + B&P costs ?

 

Didn't put down a 0.25% deposit - put down $1k. When had the B&P report done and found issues, requested for extension through my conveyancer, they accepted. Had quotes done on the bathroom and that's when we terminated the contract, so we are getting our $1k deposit back.

Out of pocket the B&P ($530) plus Conveyancing (searches, termination, etc - Approx $750).

 

@Kael whoa... that's "collateral damage" mate, thanks for letting us know about the story.
Let us know how you go with the investing journey.