Buying Repo - house flooded due to burst pipe

mlz1413

besonders1 wrote: »

hi thanks for the replies, the asking price is £65,000 for a 3 bed ex council house (average price in the north of england which in not a too affluent area). I have not made an offer yet, just curious in case I make an offer and find out it will cost thousands to fix the damp problem. I am annoyed that I was not told the truth though about how long the water was leaking as I think the damage to the structure of the house would be severe but it could still be a bargain if it would not cost a lot to fix. All the carpets, curtains and furniture have been removed from the house so that would not be included in the costs. I was I think i'll just play it safe and make a silly low offer and see how I get on. hoping that there would be someone on here that has had a flood over Christmas or on holiday and know what the costs would be.[/quote]

IMO play it safe and don't offer at all
There is no set cost, ie 1hr doesn't = £100 and 1 day = 10,000. It depends on many things. If you do go for this house make sure you add that any offer is made dependant on a full structual survey. Also PAY for a full structual survey, approx £1500, as that way you will know excately what is damaged.

mlz1413

Jorgan wrote: »

We have to inspect them every 7 days for insurance purposes, so the mortgage company or their insurance should be looking at sorting the problem.

Can I ask who 'we' is? do you mean Estate Agents?
Also does this mean that the EA must be reporting the damage to repo co, but has no liability to viewers?

besonders1

I have just spoken to another neighbour and have found out that this house was owned by a BTL landlord and the tenant was evicted for non -payment and when the house was empty the landlord tried to sell it not the mortgage company. Unfortunately the landlord couldn't afford the mortgage himself, hence the reason why he did not fix the water leak and I assume he wouldn't care as it is no longer his house anymore. The water has been turned off now though but it smells and the wallpaper is a complete mess.

GDB2222

besonders1 wrote: »

I have just spoken to another neighbour and have found out that this house was owned by a BTL landlord and the tenant was evicted for non -payment and when the house was empty the landlord tried to sell it not the mortgage company. Unfortunately the landlord couldn't afford the mortgage himself, hence the reason why he did not fix the water leak and I assume he wouldn't care as it is no longer his house anymore. The water has been turned off now though but it smells and the wallpaper is a complete mess.

Major flood damage like that is enormously expensive to repair. You could need to renew all the woodwork, replaster everything, etc. (Think of the cost of a new staircase!) Friends who had a similar problem had to move out of their house for nearly a year, and it cost £100k to repair. Although it's not as dramatic as a fire, it can be as expensive to repair.

It is entirely possible that this house has no value at all, once the repair costs are taken into account.

Jorgan_2

mlz1413 wrote: »

Can I ask who 'we' is? do you mean Estate Agents?
Also does this mean that the EA must be reporting the damage to repo co, but has no liability to viewers?

Sorry, the 'we' I was referring to was EA's in general. I've worked for a few around the UK and each repo I have dealt with is has had to be inspected every seven days.

The EA should report the damage to the repo company, as for liability to viewers, they have to act in accordance with the Estate Agency Act and Property Misdescriptions Act. Many companys stipulate that we do not tell viewers that a property has been taken into possession.

Going from what the op has just posted, it seems the EA wasn't being evasive or secretative in answering questions about the flood damage, the damage happened before the EA was involved in selling the property.

poppysarah

Would a mortgage company give a mortgage on the property? It's all so variable on how much damage has been done.

If you offered 25k and it cost 20k to sort out - would you feel it was worth the stress of having to rebuild a house? And what if it cost 40k and took two years?

hethmar

Whose insurance should have been covering the house in that period?

Jorgan_2

poppysarah wrote: »

Would a mortgage company give a mortgage on the property? It's all so variable on how much damage has been done.

If it is mortgageable, I think there will be a large retention on the property.

hethmar wrote: »

Whose insurance should have been covering the house in that period?

The OP said that leak happened before possession was taken so the previous owners insurance should have covered the damage.

besonders1

poppysarah wrote: »

Would a mortgage company give a mortgage on the property? It's all so variable on how much damage has been done.

If you offered 25k and it cost 20k to sort out - would you feel it was worth the stress of having to rebuild a house? And what if it cost 40k and took two years?

Thats what I am thinking, A lot of friends that I have asked, seem to believe that it could end up costing more than the "market rate" of purchasing a property without the damp/flood problem especially with the house prices decreasing plus the time and inconvenience of not being able to move in. I am so glad that I asked the neighbours though rather than trusting an estate agent.

thanks to all that replied

silvercar

You buy it as it is. You pay the price for what its worth in the state its in, factoring in the cost of putting the leak right.

If the mortgage lender, in repossession wanted to claim on their insurance and then sell, they would have done so. Alternatively they could have had a pay out from the insurer for the drop in value caused by the leak. Either way their insurance, or lack of, is not an issue for you. The only person who might have a claim is the poor repossessed person, for the lack of insurance causing a drop in value for which either they will be chased or get less equity returned for them. Whether the mortgage lender in repossession has an obligation to insure, I haven't a clue.