Why our first offer fell through

Why our first offer fell through

• 12.06.2017

Real estate talk. Buying, fixing up, and selling the Stanley 90's Reno in about a year's time was a huge lesson for us in hard work, drywall repair, and real estate risk. We didn't intend to sell it so quickly; we thought we'd be there several years at least (read more about why we sold here) and weren't thinking about immediate profit. But, we were able to sell it to our advantage because:

1. We bought it for way under appraised value because it was in such bad cosmetic shape!
2. The market improved.
3. We did a ton of cosmetic upgrades! It showed well.

We had a ton of initial interest and received 4 offers the first weekend it was on the market, 3 of them over the asking price. We accepted a very strong one and the buyer moved forward with inspections, etc. But that offer fell through, and rather than hide in shame, I thought I'd share why!

Our buyer was interested in our home as an investment property, not to live in herself. She had a huge down payment, about 75% of her offered price, and even wanted to buy a bunch of our furniture!

She had inspections done on the home. A few minor things, like a loose faucet and sticky windows, came up. We installed the faucet so we could fix that (oops). The windows are stick, yes... they are the original 90's aluminum ones that we didn't think it was worth it to replace in this type of home.

But, three BIG issues came up, too.

1. The roof. The inspector said it was past its useful life. We knew the roof was old when we bought the house, but our inspection a year prior had said it had 3-5 years left. We did find a couple issues and we had them patched, but weren't ready to replace the roof yet. But here's where we went wrong:
1. Well, I think our painters power-washed the moss off... I've heard multiple places that power-washing takes years off a roof. Not sure if that's always true, but it was for us. The inspector said the grit of the roof was gone and specs of it were in the gutters.
2. We should have asked the previous seller for a roof certification. Sometimes banks will require this when a roof is on the older side, and a roof certifier comes out and can sometimes "certify" that the roof has 3-5 years of life left. Then he may cover it if the roof fails before then. Our agent didn't advise us about this when we bought, and I really wish we'd known to ask about it then.
2. Water in the crawlspace. It's a pretty flat yard and has a standard crawlspace, which we've been in before (see these terrifying photos), but apparently something went wrong with the vents or the drain, maybe rodents, some dirt was covering a drain, some insulation was pulled down, there were signs of water in the crawlspace. This kind of thing is pretty standard around here, but I guess didn't come up in our inspection a year ago. I dunno. We got a quote for these repairs, about $3k. Not that bad and totally fixable by a drainage contractor.
3. THE BIG ONE. Remember the awful DIY paint job the house had when we bought it? Well. Sounds like the previous owners also tried a DIY or super budget contractor job of re-siding the house a few years ago, as well. The siding is good Hardie Plank stuff, but was installed improperly.
1. They used huge nails instead of tiny finish nails hidden under the overlapping pieces.
2. The overlap of each piece is not consistent so some are at different angles.
3. They didn't stagger the ends of each piece so there are a couple places where the joins (caulked) form a channel for water to run down.
4. The windows aren't flashed property and the siding sticks out beyond the window trim in some places.
5. With all of these issues, the contractor we talked to doubted that they used the right kind of moisture barrier, so the house could be rotting under the siding. 

You can't just fix those siding issues. When you remove it (up to $2k fees for disposal, by the way) it crumbles. You have to do all new. The quote we got from this very affordable contractor that works with our realtor was $13,000 to replace the siding. Plus $2,300 to paint it (again! We just had it painted!).

So. That was some bad news. And--the inspection report we got a year ago DID NOT address this siding issue.

So, we were quite sobered by the results of our buyer's inspection report. We got our realtor's favorite contractor our right away to give us some bids on repairs for the big items.

But before we could even go back to our buyer and offer a credit or to do some of the work, she decided it was too much to handle and walked away.

Luckily, we hadn't started packing yet! We debated doing the repairs and going back on the market in the spring, but I will be very pregnant then and we were so ready to move on at that point. We put the house back on the market, disclosing the issues and being up front with other agents about why the house was back on the market after a sale fail. We also raised the price $5k, since we'd received multiple offers at that price and knew we'd need a little extra cushion to credit a future buyer.

So, after the first weekend back on the market, we received another offer. Full price, first-time homebuyers aware of the issues. 

We moved forward with them and while we didn't see their inspection report, we understand the same issues came up. They asked for some repairs: HVAC servicing and fix some ducts in the crawlspace, repair the roof again (not replace, for some reason--sounds like it's time to me to replace it!), and re-side the whole house.

We didn't want to lose them, but I also didn't want to credit more than $10k! Or do the work before they moved in. It's winter; not a great time to re-side and paint a house. And I don't want to deal with it. But, of course they want the sale to go through, too. They were willing to accept a credit rather than ask us to do the work. We ended up negotiating a $14k credit off the listing price. More than I was hoping, but we still ended up comfortably in the end.

We closed yesterday. We hope the buyers love their new home!!!!!

Thought I'd end on a positive note. Here's our "after" tour again!