Horrific Homebuyer's Report - HELP.

Elizabeth12345

Hi,
We have secured a property through Modern Auction which has meant that we had to pay a £6,000 non-refundable reservation fee. We clarified before paying this that it would be refundable if the seller dropped out and if the property was not valued to the amount that we had offered (£134k).
We received the homebuyer's report today and almost everything is listed as category three. It was valued at £134k and if improved, it would be valued at £150k. This is obviously worrying. I feel sick reading the extensive list of issues and whilst we were aware that the roof would need patching and the gutters replacing, the list of jobs seem endless. This is a mid-terrace built approx 1910. I love older properties and I'm fully aware of the issues that this brings regarding damp etc. If it wasn't for the £6k reservation fee, I would currently be looking withdraw from the sale. I'm looking for some second opinions as losing the £6k would be devastating for us but equally, we don't want to invest into a horror show.
I understand that this is a massive ask but if anyone could read through the report and offer any advice, it would be greatly appreciated. 
These following issues have been rated grade 3: 

Chimney stacks, Roof coverings, Rainwater pipes and gutters, Main walls, Windows

Roof structure, Ceilings, Walls and partitions, Floors, Fireplaces, chimney breasts and flues

Electricity, Water, Heating, Water heating, Drainage

Chimney Stacks:

The property has two brick chimney stacks. The stacks are shared with the adjoining property. These are surmounted by six chimney pots. The junction between the stacks and the roof coverings is sealed with cement mortar fillets. Several bricks and to the rear stack are spalling. The mortar pointing is also badly weathered and has fallen away in places. The mortar fillet around the stacks has cracked and is missing in places. The chimney pot on the rear stack is cracked. Condition Rating 3 These defects could lead to damp internally. This is a risk to the building, and we refer you to our comments in section J. You should ask an appropriate person to investigate and report on the remedial work needed before exchange of contracts as the repairs/replacements may be costly. You should follow the advice given in the page in this report entitled 'What to do now'. When the remedial work is done it would be prudent to check the condition of all hidden parts to ensure no other disrepair has taken place. As the work will mean some disturbance to the building, further disrepair may well be discovered which could increase costs. Until the work is carried out, regular checks should be made internally for any possible water leakage. The open chimney pots can lead to rainwater entering the property. You should consider fitting some form of ventilating cap or cowl. As the rear stack is redundant, you should consider removing it to below the roof covering. Any remaining flues should be properly ventilated to reduce the risk of condensation and damp internally.

Roof Coverings: 

The roof is pitched and covered with slates. There are angled clay ridge tiles and lead lined valleys. The rear bay roof is flat covered with lead. The roof coverings are leaking. Many slates are damaged and missing. The bedding mortar under the ridge is missing in places. The mortar (torching) under the roof is in poor condition. The bay flat roof covering is leaking as there is penetrating dampness into the rear reception room. These defects have led to damp internally.

Rainwater Pipes and Gutters:

The property is served by plastic gutters and downpipes. The guttering is leaking, cracked and damaged. The guttering is partly blocked with leaves and vegetation. Several downpipes are leaking. A rear downpipe discharges onto the ground and water is pooling next to the rear wall.

Main Walls:

The walls are of cavity construction with a brick outer leaf. There are stone lintels and cills to parts of the property. We cannot confirm whether a damp-proof course is present because of the mortar pointing obscuring the construction. However, bearing in mind the age of the property, the walls are likely to have a bituminous felt dampproof course. High damp meter readings were recorded throughout the ground floor. There is some historic cracking which we believe is the result of settlement. A few window sills have cracked. A large number of bricks around the property are badly stained, are weathered and are crumbling and spalling. The mortar pointing in several places has also failed and fallen away. These defects have led to damp internally.

Such cracking is not unusual in older properties. The cavity walls of this property are formed in two leaves which are usually held together with metal wall ties. The metal ties used in properties built before the early 1980s were prone to corrosion which, if significant, could lead to structural movement. However, no signs of wall tie failure were found and when considering the property's construction and the local environment, we consider the risk of such failure to be small. No further action is necessary at this stage although it is advisable to have the walls periodically checked, every 5 - 10 years by a registered cavity wall tie replacement company, or a chartered building surveyor. Bitumen based damp-proof courses crack and break down over time as they cannot cope with the normal expansion and contraction of masonry walls.

Windows:

The property has single glazed timber and sash windows. There are double glazed Velux windows in the roof space and single glazed roof lights. Most windows are old, badly rotten in places and in disrepair. The windows could not be opened. There are large gaps around several of the window frames. The glazing has no British Standard safety rating. The lack of an openable windows in the first floor will prevent easy exit should a fire occur and other escape routes are blocked. These defects could lead to damp internally. These defects could lead to accidents.

Roof Structure:

The main roof space has been floored and boarded out. This conceals the main structure although there is a small void to the rear. There is also a hatch in the rear bedroom for the void above the offshoot. The roof is formed with conventional rafters and purlins. Some of the roof timbers are damp, rotted and badly stained. The boarding in the main void is saturated due to the leaking roof and buckets have been placed here to collect leaking water. The roof space is not insulated to modern standards. There are redundant cold and hot water tanks which should be removed. Condition Rating 3 This has led to damp, timber decay and damage to the property internally.

Ceilings:

The property has older type lath and plaster ceilings. These have a range of painted and textured finishes. High damp meter readings were recorded under the ceilings in both reception rooms and the rear bedroom. The ceiling plaster throughtout the property is uneven and badly cracked. Some of the coving is cracked and stained. The repairs and improvements should be undertaken soon. The textured ceiling finishes may contain asbestos but only a detailed laboratory test can confirm this. In the meantime the material should not be disturbed, sanded or drilled, without taking suitable safety precautions. You can obtain further information from a Local Authority Environmental Health Officer or from the Government's Health and Safety Executive.

Walls and Partitions:

The property has a mixture of solid masonry and lath and plaster internal walls. These have been mostly paper lined and timber clad with some wall tiling present. There is an artex finish in a bedroom. An internal wall has been removed in the kitchen. However, we cannot confirm if loads have been properly redistributed as the work is now concealed. Several door openings are out of square. High damp meter readings were recorded throughout the ground floor and to a number of areas to the first floor. The wall plaster in several rooms is uneven, badly cracked and missing. These defects could lead to timber decay.

Floors:

The ground floor is mainly of suspended timber construction with solid flooring to the rear of the kitchen. Ventilation to the air space beneath the timber floor is inadequate. High damp meter readings were recorded throughout the ground floor. The concrete kitchen floor has lifted and is uneven. These defects could lead to timber decay internally. This is a risk to the building, and we refer you to our comments in section J. You should ask an appropriate person to investigate and report on the remedial work needed before exchange of contracts as the repairs/replacements are urgent. You should follow the advice given in the page in this report entitled 'What to do now'. As the sub-floor ventilation is inadequate, the quality of support to the floor is suspect. The floor and other hidden areas in near proximity should be opened up and examined in more detail. Having regard to the age of the property, the solid floors in the kitchen are unlikely to contain a damp-proof membrane to stop rising damp. Whilst no signs of wood-boring beetle attack were found, older properties such as this one are very susceptible to such infestation which may well be discovered when the property is completely emptied. Should an outbreak be discovered, localised treatment may be necessary.

Fireplaces, chimney breasts and flues:

The property has four fireplaces / chimney breasts. There are fire surrounds and gas fires to the reception rooms. The chimney breast to the kitchen and rear bedroom has been removed. It is present in the roof space and a metal joist has been inserted. We refer you to Section G4: Heating for the gas fires. The fireplaces have no air vents to provide through ventilation to hidden flues. High damp meter readings were recorded in the chimney plaster in the reception rooms. In addition, the rear bedroom wall is stained / damp where the chimney breast has been removed. This is a risk to the building, and we refer you to our comments in section J. You should ask an appropriate person to investigate and report on the remedial work needed before exchange of contracts as the repairs/replacements are urgent. You should follow the advice given in the page in this report entitled 'What to do now'. The removal of the chimney breasts may well have needed building regulation approval and your legal adviser should check whether such approval has been obtained. We refer you to section I. Although there were no signs of distress or disrepair where this work has been done, it would be prudent to check the adequacy of support soon after occupation.

Electricity:

The meter, fusebox and additional RCD are in the hall. Where visible, the installation has been wired in older type rubber covered cable. The electrical installation is dated and in disrepair. The consumer unit contains no modern cut-off devices. There is some older type wiring and sockets throughout the property. This could lead to accidents. This is a risk to persons, and we refer you to our comments in section J. You should ask an approved electrical engineer registered with either the National Inspection Council for Electrical Installation Contracting, (NICEIC), (www. niceic. com/) or with the Electrical Contractors Association, (ECA), (www. eca. co. uk/) to inspect and test the electrical installation and report to you before exchange of contracts as no modern safety cut-off devices are present and as some faults were found. We refer you to the page in this report entitled 'What to do now'. The number of socket outlets are inadequate for modern requirements and there is a risk of overloading the few sockets that are present.

Water:

The property is connected to the mains supply. The internal stopcock is under the kitchen sink. The cold water pipework internally, where visible, is in copper. The water pipes are leaking in places, including the rear bedroom where the wall is stained and timber casing is damaged.

Heating:

Central heating and hot water is provided by condensing boiler which is located in the kitchen. There is no radiator to the small front bedroom. There appears to be no service agreement for the boiler. The boiler's location is unsatisfactory. It is exposed on a kitchen wall.

Drainage:

The property is assumed to be connected to the public sewer. The above ground drainage pipes are a mixture of plastic and cast iron. There is an inspection chamber to the rear. Where access could be obtained, the underground drainage system was blocked by debris. The soil and vent pipe (the main vertical drainage pipe) is corroded and ventilates close to an opening in the property.

davidmcn

Elizabeth12345 said:

We received the homebuyer's report today and almost everything is listed as category three. It was valued at £134k and said that if all the work was completed (£335k estimated cost) it would be valued at £150k. 

Are you sure you've got your numbers right here? There can't possibly be £335k of repairs to a £134k house. You could demolish and rebuild it for less than that.

Elizabeth12345

Unfortunately, yes. It's not a typo either as the report states £335,000 in both numerical and written form as the current reinstatement cost. It's completely nonsensical, considering his valuation of the property being worth £150k once fully 'reinstated'. I wondered if this could be grounds to have my £6,000 refunded as although the property has been valued at the asking price, surely the bank could not confidently lend given the homebuyer's report. 

davidmcn

Elizabeth12345 said:

Unfortunately, yes. It's not a typo either as the report states £335,000 in both numerical and written form as the current reinstatement cost. It's completely nonsensical, considering his valuation of the property being worth £150k once fully 'reinstated'. I wondered if this could be grounds to have my £6,000 refunded as although the property has been valued at the asking price, surely the bank could not confidently lend given the homebuyer's report. 

Ok, you've misunderstood. The current reinstatement cost is what you should insure it for (i.e. that is the cost of demolishing and rebuilding the house), not the cost of carrying out the repairs they've recommended. I wouldn't normally expect the surveyor to estimate those costs, you'd need to seek estimates elsewhere.
I don't know whether the repairs necessarily make the property unmortgageable. What exactly did you agree with the EA? This was written down as part of your contract I hope, not just a verbal assurance?

BJV

Normally for a house to go through auction the seller either wants a mega quick sale or there is something wrong. ( normally there is something wrong ) We buy houses from auction and estate agents and you always have to ask yourself. If the house is being sold for 134 and it only needs minimal work and then it would be worth 250 why hasn't the vendor done it. Who would want to talk themselves out of 100k. There are still some bargains out there but not many. 

Have you checked the T&C's of the auction house?

Hate to say it but normally when the auction stops if you win its yours wort's and all. Please tell me that you saw the property before you bought it? 

Also the estimate for the work sounds hellishly high. We are just about to finish a project that has cost £70k and we had to almost demolish the inside and roof and rebuild.  Before you panic speak to a builder and get a quote. It many not be anything like the amount you think. The bank will always quote high? 

lincroft1710

It would be unusual for an inner terrace property built in 1910 to have a cavity wall.

Bossypants

It's not £335k (see David's reply above), but looking at that list, it still ain't gonna be cheap. To be completely honest, if losing £6k is 'devastating' for you, buying at auction was never a good idea. Have a builder round and get some quotes, or consider how much you can DIY yourself, but looking at that list, the place sounds like it needs a good few £ks spending on it, £10k at the very barest minimum just to make it safe. If that's not affordable, I think your best bet is probably to pull out and consider it an expensive lesson learned.

AnotherJoe

Did you mean £33.5k? EDIT; OK I see the new posts correcting that. Even so seems very high that  house worth 135 woudl cost 335 to demolish and rebuild.

Hindsight and only useful to those contemplating this rip-off method of selling but a bargepole is well-advised,and spending for a report BEFORE bidding was the thing to do, was it not?

You'll have to get a builder or trades in to come up with some estimates but probably would cost a lot more than the value you'd add to this.

And you've discovered why it was for sale on this type of auction.

I would walk away you'll still save money compared to spending maybe 5x-10x that and still lose out since you wont get back in value what you spent.

Elizabeth12345

Sorry - I've edited to avoid further confusion. Yes we have all correspondence in writing with the auctioneer. The £6k is a reservation fee for the property. If, for whatever reason, the seller pulls out of the sale then we are refunded the full amount. If the bank will not lend us the money (due to it not being valued at the asking price) we will also receive a refund. The T&Cs repeat this information. I don't think that the property is unmortgagable although my mortgage advisor seems concerned about the building insurance due to all of the issues listed a needing urgent attention. 
We visited the property twice before buying it and knew the roof and gutters needed work. I'm mostly concerned about the roof/loft (timber rot?), ventilation issues in the kitchen floor, burst pipe in the bedroom wall causing damp, rotten windows, and a full rewire. We understood that the property required a lot of work and were prepared for this to be a very long project. However, all of the category threes are making us worry that there are several costly issues which need resolving urgently - we don't have the funds to cover even half of these category three issues immediately. I'm wondering if anyone has any experience with similar issues and how serious they are or if the surveyor has been over-zealous in his wording.  

AnotherJoe

Elizabeth12345 said:

we don't have the funds to cover even half of these category three issues immediately. I'm wondering if anyone has any experience with similar issues and how serious they are or if the surveyor has been over-zealous in his wording.  

Surveyors often are overcautious ... but .. you've no way of knowing in your particular case if "this wall is going to fall down if not underpinned" means it might or it will or it wont but they were covering themselves? I woudl be erring on the verge of caution though because what do you do if you do run out of money and all these issues are real? There's a lot of issues. In fact, what ISN'T an issue with this money pit ?There IS a reason this house was put up for sale by auction. You knew that right?

I think the thing to do might be to have a word with your bank and see if you can get them to decline to lend after they send a surveyor round. ... but, do the conditions mean you get your £6k back if YOUR bank wont lend, or all mortgage cos wont lend ( and how do you prove that?)

sal_III

If you don't have the funds to resolve the issues and the loss of £6k is going to be devastating, why on earth did you go for an auctioned project house? What was the estimates you had for the repairs you noted BEFORE putting the £6k deposit? You did get some right? Or did you just blindly put a £6k deposit with no clue how much it will cost to fix the house?

My God the likes of "Homes under the hammer" have a lot to answer for, deluding people how good/easy it is to flip houses.