For a first time homeowner? Run the other way. You're vastly underestimating the dollars that this home will need. And if there have been leaks, there IS moisture damage.

Leaking faucets, drains, and toilets are not as concerning as leaky windows to me. Why are they leaking? Were they installed improperly? That's a huge mess to have repaired. A home inspector cannot see behind interior or exterior walls and cannot inform you as to what may exist. There may be rot, mold, etc. on the inside and outside.

Even replacing the roof is less of a concern to me personally although I would absolutely not be willing to wait a year until it was replaced. Is it also leaking? That's another year of damages.

I agree with live_wire_oak...

We bought an almost new house (not foreclosure) as our first home. We thought given how new it was, there shouldn't be any problem. Well...the first day we moved in, a small roof leak surprised us... then we got caught off-guard by a water leak in the basement a few months later. Just these two problems alone cost us $4000+ to fix.

There were other problems that we didn't discover until after we moved in...the repair/ replacement cost adds up very quickly....you can never overestimate it.

This post was edited by ILoveCookie on Thu, Jul 25, 13 at 15:32

Unless you are a contractor or have experience building or remodeling homes, you could be getting in too deep. There could be many issues you cannot see and most home inspectors will miss. Fof a better inspection contact your local city or county buiding inspector and see if they will do an occupancy inspection. They do this in Los Angeles county and these people are very knowlegable.
Also I do not think you can live in the house unless your loan company approves it and this could mean bringing the house up to code.

Go back and have your inspector use his moisture meter around the leaks and see if there is moisture behind the drywall.

If you don't have the cash to do the repairs, you shouldn't get involved in a fixer. It'll stretch you too thin.

$15K below value isn't much of a discount to make up for the risk. As a comparison, we recently bought a foreclosure that'll be worth $60K when fixed up, and we paid $14K, with $20K budgeted for repairs. That's the kind of math you need to have to dive into a major fixer.

BTW, a roof replacement only takes a couple days. Don't know why you should have to wait months because of the chance of rain.

Also want to add this: assessed value is NOT the same thing as appraised value.

One, assessed value, has to do with how your property taxes will be computed in order to be in line with other properties in the same taxing district. It is often a completely different figure from market value. That it is different is immaterial if all the properties in the same taxing unit are similarly at variance with their respective market values according to the local laws regarding assessments.

The other, appraised value, (which is what I think you probabaly meant) has to do with a number determined by comparing recently sold, more or less similar, nearby properties to yours and making specific adjustments based on any differences in time, details and proximity to you, to come up with a predictive number for the likely range of price your house might sell for today. It is the number that your lender will use to determine how much they are willing to lend to you with this property as collateral.

Since you mentioned being a first time buyer, I thought you wouldn't mind me pointing out this info. If you really did mean assessed value (taxable value) be aware that your lender may completely ignore that number in favor of the appraisal amount.

Loans that pay out more than the contract price (i.e. money to make repairs in addition to the purchase price) are not normal loans and may have some added costs due to higher interest rates or conditions. Be sure to ask about this.

Typically lenders will lend up to a certain amount of the appraised value and buyers must come up with the rest.

Don't take on more house than you can comfortably swing just because you can "qualify" for more. If you are a two-income household, what would happen if one of those income streams was interrupted?

Be sure you understand what it would cost to make those repairs. Would the roof see you through another winter?

Good luck!

L.

PS: Everybody stretches a little financially when purchasing a first house, I think. A little stretch is a good thing (teaches financial discipline), but it should be a little stretch in the context of also having some reserves, just in case the little stretch is a mite too far. If it's a little stretch with no reserves, then you're asking for trouble. We live on a farm that when we purchased it was twice what we had been looking at. We had to really scrape by for awhile. But our definition of scraping by didn't dent our emergency fund, or retirement savings, it just meant we had no money for anything else except necessities, including none for fixing up the house. We just opted to live in it for that time until we had built up a cash reserve to make repairs.

Thank you for all the replies. I will take everything that was said into consideration.

If it is a Fannie Mae property, can you look into getting a Homepath Renovation mortgage?

Here is a link that might be useful: Homepath Renovation

We decided to walk on that home. It needed too much work done, and we really wanted something move-in ready. Thank you to everyone who gave advice. Your advice did have an influence on our decision, and we are now very happy we did not buy that house. We found a different house we are really happy with that is cheaper and in much better condition. Our offer was accepted, the home passed inspection with no major issues, and we expect to close on our new house next month!