Buying a house with subsidence.few questions

katepnlo

Very long story short.
If you found a house that was close to your dream house. But it states quite openly there has been movement and subsindence on the extension (was a garrage,now a dining room with bedroom on top) The owner has had a report done and the reson for it is not known.
The agent believe work could be around 20k to put right.

How would this hinder a purchase? mortgage etc?
If we were to negotiate a good price, could we get a mortgage on it?

When our house sells we look at coming away with about 50k equity to put towards the new house.

Houses in the road sell for about 250k and it is on the market for 190k..

Would really appreciate some advice.

We haven't done anything about this yet, we are just trying to figure out if we could do anything really!

Thank you
Kate

darkblue_2

If it were my dream house, I would have a builder survey the damage and verify the cost of repair. If they have knocked down the price to allow for the repairs, fair play.

Sadly, a lot of people don't tell potential buyers and try and hide it.

Generally speaking, if you can't get home insurance; you will find it hard to get a mortgage. So try and get some quotes for insurance and see what people say. You could also call your mortgage supplier (or future one) and ask them what they think.

If you aim to repair it, it may be that the mortgage company accept this and offer you a mortgage. But it could spell trouble ahead.

katepnlo

well i have called and left a message with the agent, so hopefully i will get a more detailed picture come tomorrow.

Need to speak to their mortgage people to see if we could get a mortgage, and if we could, will they with hold money until work is done etc..
so many questions.

Must be some way round it otherwise, teh only possible buyers would be cash buyers?

Eric1

Search this forum for "subsidence insurance", plenty of threads.
I'd also ask the vendor about their current insurance, its cost, any claims, if none why not.

CloudCuckooLand

Even if the current owner claimed and had it repaired it might take months and years to be sure it had gone away.

Walk away, save yourself the survey fees and heartache.

Yorkie1

Friend of the family has a house which has had repeated subsidence over the last 20 years. I'm not sure if they are on their second or third claim, but they've been out of the house for many months over the decades whilst repairs have been done.

So being fixed once is not necessarily a guarantee of a problem-free future, especially if the cause has not been identified and solved.

If a claim was made by the existing owners for the subsidence, I think their insurers are under an obligation to continue to offer cover - at a price. You will probably find that many high-street insurers' computers will immediately say 'no' when they hear of the history of the house, irrespective of anything else.

Salz

I don't know if you will get a mortgage if it has known subsidence problems. There was one near us, and they had had the work done, but the company that fixed it went bankrupt, so no proof available, and they had to sell it as cash buyers only.

katepnlo

hmm if we had reports done that said for example; it can be fixed by doing 'this' and will cost 20k, could we go to our mortgage provider and say we would like a mortgage for x amount and keep 20k of the equity we get from the sale of our house and have the works done'?

silvercar

Any lender is going to worry about the resale value of a property with recent subsidence, remedied or not. Unless its an absolute bargain and you have over budgetted how much it will cost to put right I would walk away. Ask yourself why the sellers aren't sorting out the problem and getting the work guaranteed before sale? Why isn't their insurance paying out? The risks with subsidence from an unidentified source are greater than where the reason is known.

I would suspect that they may have built the upstairs on top of foundations not designed to support two stories, leaving the insurer unwilling to pay out. You could end up knocking down the whole extension and starting again.

katepnlo

Just spoke to the agent, they are going to speak to their financial man to see what is possible.

The report basicaly said it wasn't 100% sure, (not sure what type of report was done) said possibly drains, but more likely the extension that was just a garrage but now has a bedroom on top was built on single story foundations.

Owners havent had anything fixed as they have just found out for certain there was a problem and they had the report done as they are in a position of having to sell...no choice.

i presume in this case teh extension would have to be knocked down and start again?

i just wait now to see if they think it is possible to get a mortgage on it.

so really its not a 4 bed property with dining room, its a 3 bed with no dining room, with an extension that needs to go.

im guessing it wouldnt be covered by their insurance because of the fact its built on single story foundations?

Cannon_Fodder

Until they claim upon their insurance, no-one will know if the insurer will decline or not. Or the reason.

A full, ongoing paper trail needs to be documented and maintained, otherwise you will never get insurance of your own.

Either that paper trail documents the successful identification, and professional handling, of the problem.

Or it documents uncertainty as to the cause and/or the current insurer declining to deal with it.

The latter, will make it pretty impossible to get insurance ever again. Certainly not while the problem remains unfixed.

The former, is what should happen. However desperate the sellers are to get rid of the place, its only going to be a worse selling price - and probably never selling if viewers are sensible - so they might as well claim properly and get it fixed, to improve their selling position.

Even if under threat of repossession, a lender will realise that rushing them out without the insurer fixing it, only jeopardises the eventually recovery of the monies they are owed.

No lender in their right mind will lend on the basis of uncertainty as it stands.

Maybe a cash buyer would come along, who is prepared to take a gamble. But that could take months. During which months the sellers will have all the time they need to get proper inspections and remedial actions undertaken to at least stabilise, and hopefully solve, the situation.

In my opinion, you are wrong to rely on the in-house financial advice. This is such a precarious situation, you need independent advice - or even better, advice biased in your favour. The EA and their financial man will be wanting to sell you this house under any circumstance. Asking them if they think they can find a mortgage, holds no water whatsoever. You need to do your own research, have your own, trusted advisor. Take it slowly and cautiously.

Take a step back, and have the EA and vendors jump through hoops to provide every scrap of information in respect of the problem. And fully documented explanations of why the current insurer is not dealing with it.

If they put that in writing, walk away. It would be uninsurable until the problem was dealt with. Suppose there was a fire during the works to knock down and rebuild the extension - you would have no house, just an incredibly expensive plot...

If they are not prepared to put it in writing, walk away, even faster.