Fiancée and I have been searching for homes for ~1.5yrs, we finally got an offer accepted on one. We offered $267K ($12K under) on a gorgeous house built in 1882. Real Estate Agent is a family friend and has been absolutely phenomenal through the whole thing. We had our DD window, and the inspector found a few minor things but nothing worth cancelling the deal over. Seller agreed to cover a small portion of closing costs because a lot of the outlets were ungrounded. I'm somewhat handy, and have some very handy family members, so I figured we could do it ourselves. They also hired an HVAC company to inspect and certify the furnace and AC, as they were pretty old.
We had our final walkthrough on Monday (and pushed closing to Friday because some trash was not taken out of the garage as agreed to). It has now been taken care of, I'm told. Here's the problem: during our final walkthrough, we noticed some active knob and tube wiring that the inspector missed somehow, despite it being out in the open in the basement. This is making me rethink everything, those open grounds are very possibly because the entire house is wired with knob & tube. The insurance we are going through will not accept houses with any knob and tube wiring. We do not have the money to hire out for the whole house to be rewired (easily going to be >$12K for a 1750sqft house from what I can see) and I cannot find any insurance companies that will do K&T wiring. The broker specifically mentioned it when I was setting it up, and I said we don't have any because I didn't think we did. I don't really have the time or knowhow to do the rewiring myself, especially with plaster walls throughout.
I have not been able to sleep for the past few nights because of this. The roof is also pretty old (>15yrs) so I have been worried about that as well. We are both 24 and have done pretty well for ourselves financially so far through a lot of hard work and frugalness. I worry that if we were to go through with the closing our savings would be pretty much entirely wiped out, we would likely even have to take additional loans with our wedding being next May (We already have a ton of deposits down). This is a house we envisioned ourselves in for 5-7 years before moving to a more kid friendly one, these large costs just don't make sense with that.
What are my options here? I really like this house otherwise, and I don't want to lose it after not having our offer accepted on over a dozen others, but I just cannot spend the type of money it would take to rewire an entire 140 y/o house. If we were to back out, I'm ok with losing the Earnest money ($3K) if necessary. Would there be any other damages that I would be required to pay, like commissions for the agents or for the contingencies they had to hire out for? If it's relevant, this is an estate sale.
Here is what I believe to be the relevant part of the agreement:
DEFAULT: If Buyer defaults in any of the agreements here, Seller may cancel this Purchase Agreement, and any payments made here, including earnest money, shall be retained by Seller as liquidated damages and Buyer and Seller shall affirm the same in a written cancellation agreement
If Buyer defaults in any of the agreements here, Seller may terminate this Purchase Agreement under the provisions of either MN Statute 559.21 or MN Statute 559.217, whichever is applicable. If either Buyer or Seller defaults in any of the agreements here or there exists an unfulfilled condition after the date specified for fulfillment, either party may cancel this purchase agreement under MN statute 559.217, subd. 3. Wherever it is provided here that this purchase agreement is cancelled, said language shall be deemed a provision authorizing a declaratory cancellation under MN Statute 559.217, subd. 4.
If this purchase agreement is not cancelled or terminated as provided here, buyer or seller may seek actual damages for breach of this purchase agreement or specific performance of this purchase agreement; and, as to specific performance, such action must be commenced withing six (6) months after such right of action arises
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source https://www.reddit.com/r/RealEstate/comments/1nwslt2/freaking_out_night_before_closing/
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