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How to Stop Chasing Water Downhill

By Datta Khalsa, Broker

I recently represented both the buyer and the seller in a commercial transaction. Escrow had closed and everyone was excited and busily moving forward with their long-awaited plans.

Then the buyer got a notification from the water company that the property had a leak of 12-13 GPH. They also informed him of a history of leaks at the property which pointed to a potential issue between the parties, but before jumping to conclusions it’s always good to get additional information. The local plumbing company that the buyer called to assess the issue recommended repairs for 150 Feet of pipe replacement, including asphalt demo/replacement and installing a new pressure regulating valve and thermal expansion tank to address high water pressure conditions. And their estimate came in at a staggering $38,891—talk about inflation!

In case the customer couldn’t afford this cost out-of-pocket, the proposal also graciously offered financing options through a third-party vendor called GreenSky. The customer could choose between a “Reduced Rate” plan at 9.99% interest with a 96-month term for payoff, or a plan for “No interest No payments Due” that offered 12 months with no payments due before charging 17.99%-26.99% interest with 84 months to payoff. A quick calculation shows this last option could result in as much as an additional $73,476.76 in interest payments, which would bring the possible total paid to $112,367.76. I can’t think of anything good to say about these options other than to recommend credit counseling to anyone who would consider them. And to get a second opinion before signing anything that authorizes a repair cost of such magnitude.

To get the all-important second opinion, I met with Bill Stark of Stark Leak Detection Service at the property. He charges a $400 minimum to come out and evaluate suspected leaks, plus $150 per hour thereafter if he doesn’t find the problem within the first hour, which he estimates he is able to do 70-80% of the time using basic field evaluation techniques and an audio probe. If the initial audio survey doesn’t find the leak, he uses air pressure to create more noise. And if that doesn’t work, he has a helium detector that takes air samples. Hiring a leak detection service makes sense, because they focus on identifying the leak and don’t offer repair service, which does away with the built-in conflict of interest that can call to question the reliability of a bid from a plumbing company such as the one that the buyer had been presented in this instance.

After having the buyer show us the lay of the land, Bill got out his leak detection equipment and within 10 minutes located the leak about 40 feet from the water meter in an unpaved area under an embedded planter box adjoining the neighboring property. He dug up the affected area and identified a single break in the PVC line there that he felt confident can be corrected by splicing the pipe and inserting a coupling at the point of the break. The relieved buyer said he would be happy to do the repair himself and will report back once the leak has been tested to confirm if that has resolved the issue.

I’m betting the cost of a $400 visit and a $2.99 PVC fitting that it does.

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