: Are galvanized pipes the new "Titanic" of the real estate industry?

The ticking time bomb of old rusty galvanized pipes is wrecking havoc on home-buyers and their agents. The fault may lay with neglected foreclosure and short-sale properties but the ramifications are far reaching for the new owners and the agents who specialize in these types of properties. With foreclosures and short-sales making up over 40% of the total market the problem may be widespread.

     Bob and Susan had seen all the foreclosures and short-sale properties available and decided they could stretch their purchasing dollar further if they could "land" a good deal. After researching properties on line, Bob and Susan settled on a reliable Realtor they had found and began looking at properties that fit their needs. Four bedroom two bath Rancher, with room to add on in the future. A pool would be icing on the cake.   Their Realtor had told them that multiple offers were being submitted on almost every good property left, so; "be prepared to act quickly or you could lose out on the home of your dreams.  What you see on the market today may be gone tomorrow!"                                                                              

     They began looking at properties their Realtor had selected to fit within their "needs and wants list" after deciding on a price range they could afford. They had pre-qualified for an FHA loan with just enough money down and in reserve to cover closing costs and spruce up the place. Bob wanted as big as they could afford. Susan only wanted a clean kitchen and bathrooms with just enough room to raise two kids and a dog. With the "act quickly or lose out" fresh on their mind Bob and Susan quickly settled on a four bedroom, two bath with two stories and an RV parking space. The pool would have to wait, besides, per their Realtor, "this was a very good deal".                            

     Escrow was the standard thirty days plus an additional "two" to allow the seller from the short-sale they had settled on, to move out on a weekend. During the approval process, it was noted by the appraiser that there were a few items that did not comply with FHA lending guidelines. The home inspector recommended by their Realtor found some additional items that needed to be repaired. With no money to pay for the repairs by the seller, Bob and Susan opted to pay for the minimal repairs to ensure their new house would pass and FHA approval.  It did! They'd make the other repairs when they had some spare cash. One thing immediately repaired was the water heater. It had been leaking and showed signs of age. Hot showers were absolutely necessary, and the FHA loan required it to be working.

     Bob took a week off his night shift to complete the move into their new home. He also spent a few days painting and cleaning while Susan unpacked boxes and shopped for all the necessities the house was missing.

     Two months passed before bob noticed the "discoloration" under the bathroom sink getting worse.  What was even more annoying was the new stain in the closet behind his uniforms. Everything was beginning to smell slightly musty and stink. Susan kindly reminded Bob to not hang up his pressed shirts for a second wearing, especially in the summer. She was kidding; she had seen the stain in the closet too.

 BURIED IN THE WALL                  DIDN'T LOOK THAT BAD                   WHAT WE FOUND ON THE INSIDE

 The previous owner had disclosed that he had just repaired the kitchen drain to "fix" the leak before he listed the property. Everything seemed fine and with a bit of stain hiding paint, everything looked fine to the home inspector as well as both Realtors.  Nothing out of the "norm" was disclosed. Besides this was a short-sale and the previous owner was cash strapped and could not afford any repairs. The inspector "did" mention in his report that there was galvanized plumbing, but the system held pressure and there were no visible leaks.                           

     When Bob and Susan finally discovered the stain in the closet, water had been leaking under the carpet and through the second floor master bedroom closet onto the ceiling in the family room, had leaked into the new ceiling fan Bob had paid top dollar for, and was even seeping into the wood of the bathroom cabinet and dissolving the glue in the particle board and wood veneer of the vanity. This was only the areas they actually discovered after Bob lifted the carpet to inspect the "discoloration" in the closet.   The real damage would not be discovered until a few weeks later when the contractor they hired , (me), opened up a few walls and the ceiling to determine the cause of the leaks. 

The Final Outcome:

Bob and Susan ended up forking out over $23,000 to completely copper re-pipe and repair the damage caused by water leaks. The re-pipe cost just over $5,000. The additional cost was for the mold and water damaged caused by a complete failure of the galvanized fresh water piping originally installed in the house.  Their good deal turned out to be not so good. The two agents involved in the transaction; although not responsible in any way for the failure aren't getting favorable recommendations by a now very vocal and quite dissatisfied "former" client.  

Conclusion:

Regardless of whose fault, if anyone at all, is not in question here. The reputation and potential loss of future business by two experienced Realtors have been compromised. In today's increasingly competitive real estate market to attract new clients, going above and beyond standard disclosure rules should be considered, especially when it comes to REO's and Short-sales. Buyers today won't be trading up or refinancing like the days of old.   So, the house they buy today will most likely be the home they live in for quite a few years to come. That "good deal" as good as it seems sometimes can prove to be not in the best interest of your clients. The right deal on the other hand is a deal that has been scrutinized to ensure it is really a good deal. Anything you can provide to ensure your client is making the right decision should be considered. Your name is all over it! Scrutinize it as if you were buying the property for yourself.  If you don't know about repairs or problems, get a professional to walk the property with you- ALONE, so you'll know the potential problems. From there, you decide how to present the outcome to your buyers. It's the least you can do for your clients. Providing simple "maintenance and repair schedules" and what to look for in the future, provided by your trusted "construction professional" is also a valuable asset to your success.  At very least, pay for the first year home warranty for your clients, especially if there is some question to life expectancy of items needing expensive repairs, and when it's time to renew the warranty, you have a reason to call them and ask for some referrals. Fianlly, if you don't have a licensed and qualified construction professional on your team- get one.

...Or you could be like Bob and Susan's Realtor who spends his days doing damage control just to stay afloat.