what would you do: house on a hill, bad retaining wall. - LotusTalk - The Lotus Cars Community
 
LotusTalk.com is the premier Lotus Forum on the internet. Registered Users do not see the above ads.
Reply
 
LinkBack Thread Tools Display Modes
Old 04-07-2005, 10:28 AM   #1 (permalink)
Registered User
 
BrianK's Avatar
 
Join Date: Mar 2003
Location: Los Angeles (Highland Park)
Posts: 2,550
what would you do: house on a hill, bad retaining wall.

going into broken record mode.... (sorry guys)

So, I'm in escrow on this house (which will be my first house). I beat out 4 other bids to get it. My bid was almost 10% over asking price. I've been in the house market for a while, and this is, by far, the most unique house I've come across. Absolute privacy, nearly 270 degree views and it's not very far out of LA - only a 20 minute drive to my office. Houses like this don't come on the market very often - this one has been in its previous owner's family since the 60's.

I've had a structural engineer come out to survey the house & surrounding retaining wall... Turns out the retaining wall is a gravity-type wall, i.e. it's only held in place by its weight. It also happens to be cracked pretty good around the tree that's growing in the patio. Because the wall is not anchored into bedrock, it has settled a bit & the dirt it's holding up has settled as well. The unfortunate part here is that the dirt it is holding up holds up a large portion of the patio and the dining room. The engineer said that on one hand, the wall has withstood two good earthquakes and the second largest rainy season in recorded history, however, that doesn't mean that it will hold forever. He said that in a big earthquake, there is a good chance it will give & the patio, dining room, and laundry room will go with it & there's a possibility the rest of the house will be dragged down as well.

He said it could be re-enforced, but it could cost $50K+/- to do so.

The property is unique enough that if I had the money, I would buy it and fix it right, but I don't. There's a chance that the market will continue to rise & I'll have the equity for a fix in a year or two, but there are lots of people who think the market may stabalize or start coming down.

I need to back out by tomorrow to get my earnest money back.

To sum it up: on the positive side, there is a very good chance I will never find another place like this one - i's amazing & I absolutely love it.. On the negative side, there is a chance that if I don't get the wall fixed & there's an earthquake, the house may slide down the hill (possibly with me in it) and be destroyed.

What would you do - continue on the purchase or bail?
__________________
Time flies like an arrow. Fruit flies like a banana.
BrianK is offline   Reply With Quote
Sponsored Links
Advertisement
 
Old 04-07-2005, 10:41 AM   #2 (permalink)
Registered User
 
mikester's Avatar
 
Join Date: Mar 2003
Location: So Cal
Posts: 4,634
Brian, is the property near any known, active faults ?
__________________
Covered in Brandy and Lard
mikester is offline   Reply With Quote
Old 04-07-2005, 10:44 AM   #3 (permalink)
Registered User
 
The Stig's Avatar
 
Join Date: Nov 2003
Location: who's asking?
Posts: 4,253
What would I do? ... I would go buy an Elise.

Good luck with your new home.

Neil
__________________
WTF people?
The Stig is offline   Reply With Quote
Old 04-07-2005, 10:48 AM   #4 (permalink)
Registered User
 
mact3333's Avatar
 
Join Date: Jun 2004
Location: Portland
Posts: 970
imho, its too risky...not only will the SoCal real estate take a hit(my opinion only) within the next yr or so, but the earthquake risk is too large imo...30-50% of mortgages in SoCal sold this past yr was either a ARM or interest only's...this implies that given the inflated prices down there and everywhere, people are barely able to afford these houses...while we dont like to think about an investment ever going down and hence do not, history tells us otherwise...if I were a betting person, I think SoCal takes a 15-30% whack within 2-3 yrs...we cannot stay at 40 yr lows for mortgage rates forever and eventually, the 7 increases in a row by Greenspan with fed fund rates have to catch up with mortgage rates...whats even more alarming is the "bias" Greenspan talked about at last meeting(signs of inflation could mean 50 basis point hikes in the future...there are definitely signs of inflation in many places now)Im fully expecting 30 yr rates to go to 7-9% within 1-3 yrs and have planned accordingly...if rates go to 9%, house payments will rise significantly and this WILL cool off the mkt when people are forced to sell...smart money should be waiting when things do cool off...while some have a cap on their ARM rates, the cap is still quite abit higher than what they are paying now.

But should you go off and buy the Elise instead???...no!...keep saving and wait for your time is what I would do...Im sacrficing my Elise right now also cause I need to make some real estate investments and lock in the favorable rates now but I am in a completely different situation than you are.
__________________
ardent/blk...lss...touring...HT..starshield...perhaps QS.
mact3333 is offline   Reply With Quote
Old 04-07-2005, 10:51 AM   #5 (permalink)
Registered User
 
khamai's Avatar
 
Join Date: Aug 2003
Location: Nor Cal
Posts: 4,448
Why wasn't this disclosed by the sellers? By law the sellers are required to give full disclosure of anything in their knowledge. It's hard to believe they weren't aware of the condition of the wall. Is the contract "As Is"?

Assuming that they weren't knowledgable & the contract is not "As Is", you can have your agent go back to them and asked for the price to be reduced to cover the repair ($50K+). If they are not interested in negotiating you can bail based upon non-disclosure. At that point they will be required to disclose the status of the wall to all potential buyers. Smart buyers will flee or negotiate some compensation for the cost of repairing the wall.

You've got a bargaining chip...
__________________
Lotus events in Northern California - www.gglotus.org
khamai is offline   Reply With Quote
Old 04-07-2005, 11:09 AM   #6 (permalink)
Registered User
 
BrianK's Avatar
 
Join Date: Mar 2003
Location: Los Angeles (Highland Park)
Posts: 2,550
mikester: it's somewhat near the Verdugo fault. That said, all of Los Angeles is somewhere near some fault.

mact: I'm leaning that way too. I usually err on the side of safety, though I've been trying to ween myself of that as I've passed up some pretty good opportunities by doing so. I'll likely still not get the Elise (wishing now I hadn't sold my last nice car), though banking on house prices coming down is as risky as banking on them going up.

khamai: Some of the settling was in the disclosures. There was no mention of the type of wall, though I don't know if that's necessary. I still have an easy out based on the engineer's report. I don't believe I have much bargaining leverage as there are more than one back-up offers on the house (it's a very nice house for the money).

I'm meeting with the realtor this afternoon to either sign bail-out papers or schedule a geologist to survey the soil (expensive) - need to make the decision before then. ::napoleon dynamite sigh::
__________________
Time flies like an arrow. Fruit flies like a banana.

Last edited by BrianK; 04-07-2005 at 11:12 AM.
BrianK is offline   Reply With Quote
Old 04-07-2005, 11:13 AM   #7 (permalink)
Registered User
 
offroadr35's Avatar
 
Join Date: Aug 2003
Location: Beverly Hills
Posts: 1,256
i would not live in that house. therefore, if you do not have the money to fix the wall and cannot get the sellers to pay for it, you have no choice but to walk. It can turn into a total nightmare REALLY quickly.
offroadr35 is offline   Reply With Quote
Old 04-07-2005, 11:20 AM   #8 (permalink)
Registered User
 
khamai's Avatar
 
Join Date: Aug 2003
Location: Nor Cal
Posts: 4,448
Brian,

Good luck.

Talk it over w/ your agent. I'm ol' sales guy, so it's my nature to see this an opportunity to negotiate.

Even if there are other potential buyers in-line, remember they are not aware of the wall issue (safety) and will likely be reluctant as you are to purchase the property with such a problem.

Also the buyers are motivated having gotten this far in the process, and will be disappointed to learn of this situation and will realize that they will have to disclose and thus compensate on the price or get it fixed on their nickel (LOT of nickels).

Kiyoshi
__________________
Lotus events in Northern California - www.gglotus.org
khamai is offline   Reply With Quote
Old 04-07-2005, 11:28 AM   #9 (permalink)
Registered User
 
NtflBlueLiz's Avatar
 
Join Date: May 2004
Posts: 1,198
Brian, its easy to not get emotional froma a distance but here it goes:
IMO, 2 things: Don't fall in love with anything before you own it! You are already past that point since you offered over asking price? I never heard of that before, the world is going crazy..... but I digress, back on topic....

Did you make the offer with an allowance for repairs or did you offer to buy the place "as is"?
If your offer was "as is", make up your mind if you can live with the risk and finalize your decision one way or the other.
If your offer was with an allowance for repairs than I would ask for a $ 50k allowance for repairs ( if the percentage can cover that ) to be deducted from the proceeds destined to the seller and to be held by the escrow company to be paid out to a contractor to repair the damaged retaining wall (sorry about the run-on sentence); what this does IMO is that it shows the seller that you are not trying to get a back door reduction in price by getting the money yourself but rather addressing and correcting a real structural concern on the property. Also since you found the problem with the retaining wall the seller is now obligated to disclose the findings to all other buyers and to provide them with a copy of your engineer's report thus affecting the potential value of the home to all future buyers; I think that you will find that most sellers become more "flexible" once that happens unless the market is really that hot and he sold too cheap??. If they are not willing to pickup the whole tab for the repairs than negotiate to at least a split in cost in between seller and buyer and you see if you use that money to buy 50% of a new Elise or if you try to find a couple of cowboys to shore up that wall and you live with it with the knowledge that you have insurance and if the place goes to hell you get a new house??

Good luck!.
__________________
2005 Nightfall Blue
NtflBlueLiz is offline   Reply With Quote
Old 04-07-2005, 11:29 AM   #10 (permalink)
Registered User
 
NtflBlueLiz's Avatar
 
Join Date: May 2004
Posts: 1,198
Khamai, Great minds think alike! and you type faster than I!
__________________
2005 Nightfall Blue
NtflBlueLiz is offline   Reply With Quote
Old 04-07-2005, 12:44 PM   #11 (permalink)
insert clever title here
 
MattG's Avatar
 
Join Date: Mar 2003
Location: Living above the clouds in Colorado
Posts: 7,699
Images: 11
You live in earthquakeland, no house is worth the risk. I wouldn't recommend buying it unless it can be fixed before you move in.
__________________
'05 Elise, Magnetic Blue / Biscuit / Hardtop
MattG is offline   Reply With Quote
Old 04-07-2005, 12:46 PM   #12 (permalink)
insert clever title here
 
MattG's Avatar
 
Join Date: Mar 2003
Location: Living above the clouds in Colorado
Posts: 7,699
Images: 11
Quote:
Originally Posted by NtflBlueLiz
or if you try to find a couple of cowboys to shore up that wall and you live with it with the knowledge that you have insurance and if the place goes to hell you get a new house??
Not if he doesn't have earthquake insurance (very expensive to begin with, gotta be a fortune for a house on a hill), and what if he is inside the house at that time? What if there are other people in the house as well?
__________________
'05 Elise, Magnetic Blue / Biscuit / Hardtop
MattG is offline   Reply With Quote
Old 04-07-2005, 02:12 PM   #13 (permalink)
Registered User
 
Terminus's Avatar
 
Join Date: Feb 2004
Location: Seattle, wa
Posts: 647
Speaking as someone with a view property that had some structural (though not slope) issues when I bought it...

If this house with a conventional 20-30yr mortgage is easily within your means, then it may very well be worth it to you.

The view will not go away and you cannot add the view to an existing house somewhere else.

On the flip side, you have to accept that you either need to find a way to increase the stability of the wall (would $5k-$10k buy you some time till you could do it right?) or face the risk that you may have a significant rebuild were a quake to occur before you fix it.
Is there room in front of the house on the property to relocate the house to were you to lose some of the back slope? Or would you have an unbuildable property at that time?

If dealing with this type of thing scares you, or if you are stretching yourself in the first place just to get this house, then maybe you need to say no.
__________________
Scott
SY / LSS / Touring / Hardtop

Last edited by Terminus; 04-07-2005 at 02:17 PM.
Terminus is offline   Reply With Quote
Old 04-07-2005, 02:21 PM   #14 (permalink)
Registered User
 
NtflBlueLiz's Avatar
 
Join Date: May 2004
Posts: 1,198
Quote:
Originally Posted by MattG
Not if he doesn't have earthquake insurance (very expensive to begin with, gotta be a fortune for a house on a hill), and what if he is inside the house at that time? What if there are other people in the house as well?
Thanks for the clarification on that Matt, Where I live we need lots of different insurance: Homeowners, flood, windstorm (read hurricane) but never Earthquake insurance
__________________
2005 Nightfall Blue
NtflBlueLiz is offline   Reply With Quote
Old 04-07-2005, 02:54 PM   #15 (permalink)
Registered User
 
Chris D.'s Avatar
 
Join Date: Jan 2005
Location: Berryville, Virginia
Posts: 2,018
That's what property insurance is all about. It sounds like an unlikely event; will insurance cover it if it ever does occur. If it will, buy the house and go drive your elise.
__________________
2013 Evora S, Yellow with Black Package
Chris D. is offline   Reply With Quote
Old 04-07-2005, 03:51 PM   #16 (permalink)
Registered User
 
BrianK's Avatar
 
Join Date: Mar 2003
Location: Los Angeles (Highland Park)
Posts: 2,550
I passed on it. We asked if the seller was interested in fixing or helping with the fix. They said no. The backup offer is from a contractor who is more than capable to fix the problem himself & his offer was the same as mine.

I got a quote from my insurer for earthquake - it wasn't too bad really. A little less than 50% of the normal insurance. The engineer brought up a good point that even if I got earthquake insurance, when the ins company sent out their adjuster to inspect the property, there's a good chance they would have canceled the earthquake insurance due to the lack of stability of the wall.

Terminus: Wow, awesome view. I agree with you on the buy & fix if you have the means. That was one of my big arguments both for and against. If I had a spare $50K, I would have snapped up this property in a second & fixed it myself. Unfortunately, I was stretching it to begin with - I wouldn't have had much in the way of cash flow after mortgage payment unless it came from equity; which is questionable right now in SoCal - at least for the next few years.

Man, that was rough. In two weeks, I've passed on my Elise (which was sitting at the dealership at the time) to get an awesome house... which I then had to pass on.
__________________
Time flies like an arrow. Fruit flies like a banana.
BrianK is offline   Reply With Quote
Old 04-07-2005, 03:59 PM   #17 (permalink)
Registered User
 
khamai's Avatar
 
Join Date: Aug 2003
Location: Nor Cal
Posts: 4,448
Brian,

The smart thing to do given the seller's response.

There was one option that wasn't mentioned... get the home and use it as a foster home for wayward kids. That would get Ty & the entire ABC Extreme Home Makeover crew to rebuild in a week and then boot the kids out! (come on... it's a joke! I'd never do that to orphan kids... )
__________________
Lotus events in Northern California - www.gglotus.org
khamai is offline   Reply With Quote
Old 04-07-2005, 04:18 PM   #18 (permalink)
Registered User
 
dana's Avatar
 
Join Date: Jan 2004
Location: san francisco
Posts: 263
I was going to suggest doing it yourself. Three years ago the house I owned in the Santa Cruz mountains had a retaining wall begin to give way during a particularly nasty SNOW storm that knocked down a bunch of trees on our property. The contractor estimate to fix it was $40k -- we got three estimates around that price.

Instead we spent $10k renting heavy equipment, and buying building materials, and did it ourselves (and bought our friends a *really* nice dinner). It isn't rocket science, it's a wall. Sounds like the contractor, though, has the upper hand.

Good luck with your house hunt! Hopefully you'll find one soon
dana is offline   Reply With Quote
Old 04-07-2005, 05:21 PM   #19 (permalink)
Registered User
 
BrianK's Avatar
 
Join Date: Mar 2003
Location: Los Angeles (Highland Park)
Posts: 2,550
Quote:
Originally Posted by dana
I was going to suggest doing it yourself....
You know, I thought about that. However, the road leading up to this house was too steep and narrow to get heavy equipment up there... I could have taken the low road & parked in the neighbor's driveway, but that still would have been about 20 ft below the retaining wall with about a 50 degree grade up to the wall.

such is life. I'm not feeling so bad about the decision any more.

thanks for the opinions.
__________________
Time flies like an arrow. Fruit flies like a banana.
BrianK is offline   Reply With Quote
Old 04-08-2005, 01:01 AM   #20 (permalink)
Registered User
 
clrodrick's Avatar
 
Join Date: Jul 2004
Location: Los Angeles
Posts: 649
Hey Brian,

I'm very sorry you had to back out of the escrot. That sucks when you think it's all yours and start to get excited. About a year ago I placed bids on two different condo's in Redondo Beach, both above asking price. Both times both me and my agent thought I had a great chance of getting it, but both times got sniped by the sellers stalling a day or two and then getting a better offer. Eh, I'm over it...sorta. Anyways, that did sound like a nice place, but I think you DID make the smart move in backing out. Without the means to fix that wall properly, it's just too big of a risk.
clrodrick is offline   Reply With Quote
Sponsored Links
Advertisement
 
Reply

  LotusTalk - The Lotus Cars Community > Community > Other



Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On



All times are GMT -8. The time now is 01:27 PM.


Powered by vBulletin® Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.
Search Engine Friendly URLs by vBSEO 3.3.2
Garage Plus vBulletin Plugins by Drive Thru Online, Inc.