Q: My friend wants to buy a house in a very upscale area of Washington, D.C. The asking price is $1.5 million. I advised her against buying the home because of significant repairs that need to be made.

For example, the house needs a new roof, an upgrade to the electrical system and repairs to the foundation of the home (where water leaks into the lower level), among other repairs.

These are bad enough, but there is a larger problem that threatens the very foundation of home. The home is built on a hill that has a very steep slope in the rear of the home. During the last month or so the slope has suffered tremendous and significant erosion due, I think, to a lot of recent rain and water runoff. The area affected is about 20′ x 40′ and is approximately 30′ to 40′ feet from the rear foundation of the home. Some might describe this erosion as a “sink hole” if it were on a street.

Because of this erosion, I advised my friend against purchasing the property. The area is very hilly and difficult to get to with the type equipment needed to shore-up with some kind supporting system. Because of the inaccessibility of the area, it will likely cost a lot more to fix the issue.

The seller has reduced the price by a $100,000 to mitigate the situation. However, I wonder if the sale price was artificially set at the current price in order to give the seller the option to discount or negotiate with a prospective buyer.

What do you think my friend should do? Thank you for any advice that you may want to share.

A: The easy way to find out if the seller had arbitrarily raised the price is to have the buyers’ agent prepare a comprehensive survey of homes that are similar that have sold in the past few months in the neighborhood. That will tell you if the house is fairly priced at $1.5 million, or should actually be priced a lot lower.

But I agree with you that your friend should explore more fully the ramifications of the erosion and what, if anything, can be done to protect the property against further erosion. To that end, she may need to find a landscape contractor with extensive experience in shoring up eroding land, or perhaps a structural engineer, who can tell her how the property can be shored up.

Whether the fix will cost $100,000 or $1 million, I don’t know. But until your friend does know the answer to these and other questions, she would be foolish to make an offer on the property.

July 2, 2008.