Dilemma: Should I Go Ahead With This Home Purchase?

12 years ago

We found a home that we really like in the neighborhood we really want to be in. It sits on a beautiful lot - a Cul de Sac with a wooded area behind the house (no neighbors/no new homes will be built). The exterior appearance is exactly what we want; the front and backyard are nicely landscaped and there's a stamped concrete patio in back looking over the wooded area. Inside, it's just as nice - move in ready. The kitchen is a little smaller than what we would like, but overall, it's fine for the two of us. (We're two 60 year olds with no children at home.)

We made an offer at $900 below asking price and they accepted.

Here's the dilemma: the furnace and A/C unit are original to the house (1991). We've already had the home inspection and the inspector advised us to have an HVAC guy come out for a thorough inspection because of the age of the units. (THE SELLERS DISCLOSED THE AGE OF THE UNIT, BUT WILL NOT REPAIR OR REPLACE THE UNIT. THEY ARE BUYING A HOME WARRANTY FOR US IN THE DEAL.)

So, yesterday, the HVAC guy came out and inspected everything. The A/C passed, but he said he found 2 cracks in the heat exchange unit. These people have 3 small children, so I don't think it's to the point where the house is flooded with carbon monoxide. I know they have a CM detector in the house and if it was really bad, those babies would be dead by now.

WHAT'S YOUR OPINION on the Home Warranty that comes with the house? Are they reliable? Do they really replace things or do they keep coming out on service calls and make the unit limp along until it's time to replace it, but by that time the warranty is expired? (We will actually be getting 2 years of warranty because my agent offered to pay for another year.)

Would you walk away from this home, screaming all the way down the street?

Or would you go ahead with the deal and hope the Home Warranty will take care of it?

Or would you take this as a sign that this home isn't meant for you to live in?

Thanks for your input!

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Comments (33)

rubyaches
Original Author
12 years ago
P.S. The warranty company is HOME WARRANTY OF AMERICA, if that helps.
OttawaGardener
12 years ago
Sorry, I'm Canadian so don't know anything about the warranty. But... if the furnace is 1991, is it a big cost to simply get a new one? It would be much more efficient. I wouldn't pass on a home I loved just because I might have to pay an additional $3,000 for a new furnace/HVAC.
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blubird
12 years ago
I have to agree with ottawavalleygardener.....the cost to replace a heating system isn't that horrendous to prevent me from buying a house, as long as you're aware of the issue when you're buying.

I have a home warrantee through American Home Shield. It has been an enormous cost-savings to have had it....While I haven't had any major utility replaced, I certainly have had them repaired. I would suspect, though, that any warrantee co. would rather repair than replace.

My daughter has had her fridge replaced by the warrantee company when replacement parts for her 5 year old LG fridge could no longer be obtained. She did have to go through several repair attempts before they gave her the go-ahead to replace the fridge.
turtleshope
12 years ago
I'm with the others. It's perfect, except for the furnace? Buy it!! You can get a better furnace. Unless you think such perfection is easy to find ... which has not been my experience.
rubyaches
Original Author
12 years ago
turtleshope - No, I certainly don't think perfection is easy to find. The furnace and A/C were only one item on the home inspection list of issues. Most were minor - soffit repair, wood rot around certain south facing windows, etc. However, the inspector also found a gas leak around a furnace pipe and a Romex wire that was improperly wrapped. So we're going into this with eyes wide open.

I guess I just keep having this gut feeling that maybe all of these things together is a hint of more to come. We're having the electric panel/breaker box inspected tomorrow (the sellers had it covered over too much with shelving in the garage to get to it the first time out). If that comes back with any issues, I think we'll just throw in the towel.

Thanks for everyone's input thusfar.
chispa
12 years ago
The house is 21 years old. If everything is original then there are things that could start failing ... water heater comes to mind, but none of these are things that should stop you from buying this house. Do you expect perfection and things that never wear out or break? Have you owned a home before?
nancylouise5me
12 years ago
Home warranties do not impress me in the least. Most are not worth the paper they are printed on. They will make you jump threw hoops to make a claim and then just deny the claim in the end. I have read that scenario so many times on this forum.
If the house is one that you really love and it is just the furnace and other minor things bothering you , I would still by it. Ding money off the asking price for repairs(I'm not one to accept what a home seller says the repair costs will be) after the inspections are through. If you do decide to walk away how will that make you feel? Will you feel as if you made the right decision or will you be kicking yourself in the butt for the one that got away? NancyLouise
weedyacres
12 years ago
Inspectors always find a few things, and houses always have wear and tear and things that break. If this were a case where the finding was indicative that the home has not been well-maintained, and other issues might be lurking unseen, then it might be a signal to move on. But this doesn't sound like one of those things. Nor do the small gas leak or the unwrapped Romex.

I'd stay the course. Especially since it seems like the house is a really good fit in all its features with what you want and need.
brickeyee
12 years ago
If the heat exchanger is cracked it should now be red tagged as 'not usable,' it gas supply turned off, and the unit reported to the gas company.

That is the law in most places.

You are NOT allowed to use a gas heater with a cracked heat exchanged.

Period.

Ever.

Not even a little.

Depending on the size of the furnace (BTU/hour) it may not be all that expensive to replace (a few thousand dollars).

Just make sure you have enough cash after settlement to make the repair, or have enough money put in escrow to make the repair.

Do NOT allow the owner to make the repair.

You may be forced by local law to have the owner fix the heater, since in many places you cannot sell a house without heat since it is not considered habitable.
Happyladi
12 years ago
I don't see the big deal, the house sounds great. If you got a fair price on it, just replace the unit.
jay06
12 years ago
I'm amazed that the sellers aren't immediately fixing it and are allowing their kids to live in a house with a cracked heating unit.
krissie55
12 years ago
Most mortgage lenders will not approve lending money on a house unless the A/C and heater are repaired before closing, etc.

FHA or VA loans are very strict.

You should check with the lender if you are going to have one and see what they have to say about things that need to be fixed.
kirkhall
12 years ago
Renegotiate the price or have the seller's fix it before closing. That is what an inspection contingency is for--renegotiation after an objective 3rd party has a look and finds things that are in need of repair/dangerous.
graywings123
12 years ago
I agree with Kirkhall.
Billl
12 years ago
"That is what an inspection contingency is for--renegotiation after an objective 3rd party has a look and finds things that are in need of repair/dangerous."

No - a contingency is for the seller to cancel a contract.
brickeyee
12 years ago
"have the seller's fix it before closing."

Only if you want the absolute lowest quality work buy the lowest cost vendor.

Getting a price reduction and arranging for the work yourself is far better.
OttawaGardener
12 years ago
what brickeyee said.
If I've learned anything here on this forum, it's that there's a strong chance the seller will cheap out under these circumstances.
frugalwallflower
12 years ago
Home warranty companies are a rip-off, at $75 per service call and the cheapest fix possible, if they don't find an excuse to deny claims.

We had a crack in furnace that wasn't discovered until I smelled natural gas and warranty company wanted to do a fix, not replacement. There are more exemptions on the brochure than covered items. We bought a new furnace at about $3,500 and don't worry about carbon monoxide. Don't live with a cracked furnace. They are hazardous!

I learned too late that it's smart to hire a roofer, a basement company, an electrician, a plumber and an exterminator, even if it costs more. Don't rely on inspectors who aren't experts in every area.
rubyaches
Original Author
12 years ago
UPDATE: On Thursday, April 26th we went back to them with Inspection Response #3 - Fix the heat exchanger or give us $900 towards the repair. NOTE: WE HAVE NO INTENTION OF REPAIRING THE HEAT EXCHANGER - WE WOULD USE THE $900 TOWARD A NEW FURNACE.

So, they had until 7 p.m. Saturday night to respond to this offer. 7 p.m. came and went with no response from my agent. I didn't hear from him until 4:30 p.m. Sunday and he said their agent had been out of town and would get back to us today (basically 48 hrs after the deadline).

I'm so honked off at this point, I'd like to shut down the whole deal, but my agent advises "If you back out now, you will lose your $1,000 earnest money. The only way left to back out this far & have earnest money returned at this point (27 days in) is if thereÃ¯Â¿Â½s a reason you canÃ¯Â¿Â½t be approved for financing. Our finance contingency is 30-days, which expires on Thursday."

So now I'm sitting here waiting on the seller's response to my offer. I'm at the point where I wouldn't mind if they come back and say they're pulling the house off the market for now. Ugh!!!!
terezosa / terriks
12 years ago
Doesn't your inspection contingency allow you to get out of the deal with the return of earnest money if the results of the inspection are not satisfactory to you?
nancylouise5me
12 years ago
I know, that doesn't sound right to me either terriks. You should be able to get your money back if the inspection does not meet expectations. Read your contract. NancyLouise
turtleshope
12 years ago
Check with your lawyer on losing your deposit ... your agent wants the deal to close & may be misleading you.
Also check if the bank will give you a loan on something with this kind of very dangerous defect -- one of the earlier posters said you cannot use a heater with a cracked exchanger at all. My bank indicated that any such defects would have to be fixed before the deal could go ahead -- hopefully yours is similar.
mike_home
12 years ago
Tell your agent the cracked heat exchanger is a dangerous situation. If you want to get out of the deal then call your insurance agent and ask if a fire insurance policy can be issued on a house with a known cracked heat exchanger. I am confident the agent will say no thank you. You can then inform the agent you cannot close on the house without a fire insurance policy.
notto
12 years ago
1. Many Home warranties are misleading. Many times they have fine print which does NOT cover anything expensive, or have exclusions. I would not trust the home warranty.

2. People have unrealistic expectations about "everything" working properly in a house. Even brand new homes, nowadays have cheap, easily breakable things, with warranty running out after 1 year, or 2 or 3. Then it's cha-ching. I know I have owned several brand new, or custom built homes, and have overpaid for them being told that my house will be free of repairs for at least 10 years. BALONEY! First there are kinks in a new house. Then when the warranty runs out, BIG ticket items start breaking. I swear. I'm not making this up.

3. If you found a house that you love, and you got a decent deal, and it only needs a couple of items, buy it.

There is no such thing as a perfect house, or "forever" functioning/working items in a house. I can tell you that a house built 25 years ago is stronger than one built today. It seems as though we have more plastic and less wood in a house. Appliances last 3 years...hot water heaters...ice makers, AC...let's not even talk about plumbing ;(
marie_ndcal
12 years ago
I agree with brickeyee. YOU tell your agent that breaks the contract and provides a dangerous health situation. If your agent won't back you, go to the building department or fire department and tell them..Relative is a building inspector and he said he would call the utility company and have the gas shut off now!!
sweet_tea
12 years ago
I had a HVAC company tell me there was a crack in the heat exchanger and gave a large quote and cut the wires between the exchanger and the rest of the unit. I got 2 other companies to come out for a quote and neither found any cracks whatsoever. Seems the first place was hoping I would get scared and hire them right away to resolve.

I did get stuck having to replace wiring and related parts. Lived in the house for several more years and never any issues.

Original Poster...please give us status on how things went. Hopefully you go forward.
ncrealestateguy
12 years ago
No one here really can say if her deposit is returnable or not. We do not know if the contract had a Due Diligence period, and if so, when the period is(was)over.Or maybe the contract states that "all items shall be performing the function which intended."
You could, and should, let the other side know that you will make sure that if this deal unravels, that you will make sure that they disclose the material fact that the heat exchanger is cracked.
Notto... where in the Country are you buying homes that have appliances, plumbing and AC that only last about 3 years?
mike_home
12 years ago
Have your real estate attorney review the contract carefully about returning deposit monies. As others have stated the furnace should be shut down and no longer usable. It is the same as selling a house without an operating furnace. There should be a clause in the contract which states what happens in this case.
ncrealestateguy
12 years ago
Mke_Home says:

"It is the same as selling a house without an operating furnace."

Which the Seller is able to do if he so wishes.
mike_home
12 years ago
I assume the seller advertised the house as having a furnace. if the furnace is non-operational, then I would think the buyer has the ability to negate the deal on the grounds the house is incomplete. The buyer should not be losing his deposit over this.

I don't think you would get a certificate of occupancy to sell this house in my township in NJ. I know you would not get a CO if your smoke detector had a dead battery.

I personally think $900 is a fair compromise for the seller.
ncrealestateguy
12 years ago
I believe most states do not require a CO inspection during a sale.
rubyaches
Original Author
12 years ago
UPDATE: Okay, we decided to go thru with the purchase. The more we thought about it, we realized that we had to take the emotion out of the deal and focus only on the house. Their agent is a real you-know-what (he actually put on the last counter inspection report "This is the sellers final offer. If the buyers want to break the contract the earnest money will be forfeited". Legally, I don't think he can do that. Nonetheless, we decided we really wanted the house because it met all of our requirements and wants in a house, so why dwell on something that can be fixed? And who knows? Maybe the guy who came out to inspect the furnace and a/c was just blowing smoke up my hiney (pun intended).

So we took their final offer of $450 towards the furnace along with their $1500 toward closing costs. I've decided not to get a home warranty because, from what I've been reading, they're not worth the paper they're written on. Our local utility also has a rebate of $150 on a new furnace, so in the end, we'll come out okay on the furnace install.

We're closing on May 16th, but not moving in until May 25th, so I'm going to have a couple more HVAC companies come out and give me an estimate on a new furnace and a/c and maybe one of them can do the install before we move in. I got an estimate from a Bryant dealer who said he could do the furnace only for $1600 - $1700. Seems reasonable.

Thanks for all of your input! It's been very informative!
mike_home
12 years ago
I am glad you have reached a compromise which makes you feel good. Sometimes the additional stress is not worth a few hundred dollars.

When you are ready you can post your furnace quotes on the Heating and Air Conditioning forum. There are several people who can advise you. The weather is geeting warmer so no need to rush an installation on the furnace before you move in.

Dilemma: Should I Go Ahead With This Home Purchase?

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Dilemma: Should I Go Ahead With This Home Purchase?

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