Inspection kills the purchase

As you may know my wife and I made an offer on a house and six acres last Monday. Well, on Friday I enlisted my boss and he and I did a thorough inspection. What we found was that basically everything needed to be updated; the electrical service (only 100amps), insulation (there is none), foundation (you can see daylight through the crawl space walls, and part of one wall is leaning in), furnace (oil burning and no A/C – not an option in Indiana), septic (currently using an old cistern with a pipe that runs into the woods), basement door needs to be replaced, basement windows, ceilings, more outlets needed (currently only two outlets in the entire second floor). As you can see from the list it was going to take a lot of work. The house is not unlivable but it would be a lot less comfortable than where we are currently living especially for the little one. If we did not have a 4 month old baby I would not have hesitated to take on the project because I like the land, but she has changed the way we think about everything. The house is not insulated and while it could become insulated what that would mean is to pull all of the plaster off of the walls, insulate, then drywall and paint. If we could have bought the house without having to move in then this would have been possible, but there is not enough room to move our furniture from one room to another while we work on them and plus I want to try to keep the dust out of my little girl’s lungs for as long as possible. I was a little discouraged after the inspection but we were going to meet with the bank on Saturday so I had not given up all hope yet.
Well, the bank meeting turned out to be just as discouraging. Our plan was to split the land into two parcels. The first parcel was going to be the house and 1 acre. That was not possible because you have to have a minimum of 2.5 acres in the county due to septic permits. We could have possibly applied for a variance but the bank could not take that into consideration because it had not happened. So we thought that maybe we could do 3.5 acres for building and then the house and 2.5 acres. We found out that the bank would not release the 3.5 acres unless the house and 2.5 acres valued the mortgage that we took out to buy the house. Since we were looking at about 100% loan that would mean that we would have to get the whole thing for much less than the asking price so you can see it was starting to become a numbers game and the numbers were not adding up. We figured out that in order to get the house up to where it would need to be was going to be a minimum of $20,000 and there was no way the the house and the property would go up that much in value if we split it so it would turn into a waiting game. So on Saturday afternoon we contacted the realtor and let him know that upon inspection we were no longer interested in the house.
I can’t help but thinking that we could have gotten it and it would have worked out, but I know that is just me wanting to own land. We have not slowed our quest for a new home though and tomorrow we are going to look at a house in town.

3 Replies to “Inspection kills the purchase”

  1. Bummer, things always have a way of working out for the best. scott too would love to have some acres here in st louis but unless we win the lottery in ain’t happinin’– try 200K for 3 acres in the boonies and no house. truthfully the price for the acerage alone doesn’t sound that bad. have you thought about a real low ball offer and build from there? good luck with your search.

  2. Erin – Yes, I thought I would try a low ball offer but it was a no go. It is a bummer about the land because that is what we really wanted. No worries though. One day it will happen. Man, 66K an acre sounds pretty high. I hope you guys can find something at a better price than that. There are some neighborhoods in b-ton here that are even more outrageous so don’t lose hope. The guys I used to work for developmed an area with 21 lots in it. Each lot is 1 to 2 acres, the starting price is $149,900, and the only houses that can be built in it have to be of the craftsman or prairie style. So far they have only sold 1.

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