Are foundation issues a deal breaker?

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Are foundation issues a deal breaker?

Esi Okpetu
Member since 2023 · 10 posts · 2 votes

Hi everyone! My name is Esi and I am just getting into the world of real estate. I came across a deal that has foundation issues. It was priced below market value and I would still be doing further negotiations if I were to put in an offer but the major issue is the foundation. The owner's provided a repair estimate they received of $10,000. I have not had a professional look at it or anything but I would like to hear the general feedback or opinion of anyone who has dealt with foundation issues. Is the deal worth pursuing, given I'm still new to the process or is it not a big deal? 

Thanks.

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Costin I.
Rental Property Investor · Round Rock, TX · Member since 2016 · 1k+ posts · 971 votes
2y

@Esi Okpetu - my 2¢:

I would not trust an estimate from the seller - get your structural engineer there to check on things.

Just be aware, ​there is more to foundation repairs than just the foundation. Here is what I collected as "warnings" or lessons (from various sources and some experienced myself) about foundation problems and/or repairs:

1. If you have brick on the exterior, you might have to do tuckpointing. $$$

2. If you have tiles inside, the tiles will crack. And if they have to drill holes for interior piers, you pretty much will have to replace the entire flooring. $$$$

3. You'll have drywall cracks, so you should factor in drywall repairs and repainting. $$$

4. If the doors were adjusted to a crooked foundation, you might need to readjust or even buy new doors. $$$

5. A hydrostatic plumbing test is recommended to be performed by a licensed plumber post Foundation work. Plumbing leaks may void warranty. Old houses have cast iron pipers that will disintegrate (because of age and/or foundation shift). You'll have to replace all plumbing at that point. $$$$

6. Depending on how bad is the foundation state (how many inches you have to correct), is very possible the sewer line will disconnect/break in the horizontal portions. Repairing that requires tunneling, a repair that could be very expensive. $$$$

7. If the driveway- garage differential is big (for example, the driveway slab is sunken and you need to raise the house, you'll end up with an even bigger gap after repair) you might need to replace the driveway. $$$$

8. If you are dealing with an addition built on 12" beams (or if the original foundation is old and not built to current standards), the repair company might not be able to push the piers down to refusal depth or psi due to the beam not taking the load, thus leveling it, but not guaranteeing it will not continue to move in the future, thus not providing warranty.

9. The owner may be required to provide a structural engineer's evaluation prior to warranty work.

10. Read the fine print in the foundation repair contract: "Damages to the property, interior and exterior as a result of the foundation movement are not covered, during and after works completion. This usually includes but is not limited to PLUMBING, flooring, landscape, utility lines and masonry. The foundation repair does not cover any repairs that may be needed to the home during and after works completion." And you'll have new cracks in unexpected places, old cracks that will not close, but instead enlarge. My suggestion is to add at least 25% to the cost of the foundation repair as mitigation to the problems that will come from the foundation repair.

11. The foundation repair company salespeople (and even owners, in some case) of structure companies are not engineers and though they may be right most of the time, there will be gaps in their assumptions. Unless it's a small job with an obvious solution, get an engineer ($250+) to look at it and sketch up a scope of work for a contractor to do.

12. Many foundation problems have water as a root cause - be that infiltration in a crawl space, drainage around the site, cracked sewer line or water line. Before solving the foundation you might want to get to the root cause of the foundation issue and resolve it, otherwise you might repair the foundation for nothing.

13. If you repair the foundation on only select places, don't be surprised if the other sides will suddenly start "working". If the house is stabilized on one side, you might get cracks in the other side soon after. In other words, if you do a foundation repair, it's better to get the whole house stabilized and the warranty for the whole house.

If anyone has more experience with any of these, please correct me if mistaken.

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y

    @Esi Okpetu

    $10,000 for foundation repair seems minor

    I would have an engineer do a second opinion and see if the repair is a permanent fix or temporary fix with issuing come back later

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  • Mike D.
    Investor · Marion, IA · Member since 2010 · 177 posts · 117 votes
    2y

    I'd get a few of your own estimates. Make sure they are reputable companies and bonded that warrant their work. Subtract that price and holding costs from the purchase price. Also don't forget costs that you'll incur like moving utility lines that aren't included in the repair bid. 

    I had a foundation repair estimate about 10 years ago and it was $15k. $10k sounds way way too low!

    Good luck!

    1Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    2y
    Quote from @Esi Okpetu:

    Hi everyone! My name is Esi and I am just getting into the world of real estate. I came across a deal that has foundation issues. It was priced below market value and I would still be doing further negotiations if I were to put in an offer but the major issue is the foundation. The owner's provided a repair estimate they received of $10,000. I have not had a professional look at it or anything but I would like to hear the general feedback or opinion of anyone who has dealt with foundation issues. Is the deal worth pursuing, given I'm still new to the process or is it not a big deal? 

    Thanks.


     No its all about price, just fix it 

    1Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    2y

    I am analyzing one right now and cost is 135k. I am really confused too is it because of the actual problem or company ? do you know anyone that can analyze by looking at the report ? 

    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    2y

    Foundation issues are an investors best friend. They scare everyone away and are actually (generally) no big deal at all......

    I would get a Foundation Contractor to have a look. Usually this is a General Contractor with a specialty in foundations.

    I myself have rebuilt a raised foundation from underneath a house. Not a big deal... Anywhere from $5k - $50k would be normal. But don't use the seller's estimate, get your own.

    2Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    2y
    Quote from @Bruce Woodruff:

    Foundation issues are an investors best friend. They scare everyone away and are actually (generally) no big deal at all......

    I would get a Foundation Contractor to have a look. Usually this is a General Contractor with a specialty in foundations.

    I myself have rebuilt a raised foundation from underneath a house. Not a big deal... Anywhere from $5k - $50k would be normal. But don't use the seller's estimate, get your own.


    Hi Bruce,

    do you have recommendation who can take a look at the report and give  his opinion ?

    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    2y
    Quote from @Carlos Ptriawan:

    do you have recommendation who can take a look at the report and give  his opinion ?

    Send it to me. PM me and I'll give ya my email.
    1Reply
  • Esi Okpetu
    OP
    Member since 2023 · 10 posts · 2 votes
    2y

    Thanks for the responses, I appreciate it.

    @Bruce Woodruff I'll send you a PM as well.

    Thanks

    0Reply
  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    2y

    You welcome foundation issues. I've bought the deepest with these ones, and that's with marking it higher than the contractors quotes. It all depends on how active you're willing to get, but these will likely yield the most. 

    0Reply
  • Alecia LovelessPro Member
    Member since 2019 · 3k+ posts · 2k+ votes
    2y

    @Esi Okpetu Get a couple of estimates. The duplex I bought and live in had its foundation flagged and the buyers got an estimate for a $75,000 foundation repair. They backed out. The price dropped from $245,000 to $195,000. A second couple offered on it and then backed out because of the foundation. The price dropped to $145,000. I came in and looked and saw there were no wall cracks and the doors all closed and got my own expert foundation opinion. I offered $99,000. We closed at $106,000. It’s 5 years later and I have a tenant in the other unit paying all my bills and I live in the other side and live virtually free of cost.

    I paid $139,000 under the original list price. Today it is worth about $345,000 and the town just assessed it for $332,000 on a 100% evaluation. The other side is a 3/1 and if I rented it at market rate would rent for $1800. I rent it under value because I know the tenant and he is quiet, takes impeccable care of the unit and looks after the place and does landscaping. My unit is a 3/3 and could easily rent for $2000.

    If you get an estimate on your foundation issue you may find out it won’t cost what you thought it would. It could be a great negotiating point to save money on the price which can work to your benefit like it did to mine.

    3Reply
  • Julien J.
    Investor · CO · Member since 2016 · 757 posts · 1k+ votes
    2y

    @Esi Okpetu

    That all depends, if the numbers work, I don't mind.

    Trust, but verify anything the owner provides. Get your own quote.

    2Reply
  • Kerry BairdPro Member
    Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
    2y

    I had a house on a slab mudjacked for $3650, because the corner of the house was sinking.

    1Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    2y
    Quote from @Kerry Baird:

    I had a house on a slab mudjacked for $3650, because the corner of the house was sinking.


     I am wondering why the quote i received is 135k

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    2y

    All problems are ultimately solved with dollars. Apply the dollar amount to fix, and adjust price to fit that. 

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  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    2y

    Hey @Esi Okpetu - You've got some good advice and rough numbers above.  Here in Chicago a lot fo buildings have foundation "issues" but the buildings aren't going any way any time soon.

    Where is the property located?  That can also affect how detailed the foundation work might need to be.

    Also when you say foundation issue - are you able to describe the issue in more detail?  

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  • Costin I.
    Rental Property Investor · Round Rock, TX · Member since 2016 · 1k+ posts · 971 votes
    2y

    @Esi Okpetu - my 2¢:

    I would not trust an estimate from the seller - get your structural engineer there to check on things.

    Just be aware, ​there is more to foundation repairs than just the foundation. Here is what I collected as "warnings" or lessons (from various sources and some experienced myself) about foundation problems and/or repairs:

    1. If you have brick on the exterior, you might have to do tuckpointing. $$$

    2. If you have tiles inside, the tiles will crack. And if they have to drill holes for interior piers, you pretty much will have to replace the entire flooring. $$$$

    3. You'll have drywall cracks, so you should factor in drywall repairs and repainting. $$$

    4. If the doors were adjusted to a crooked foundation, you might need to readjust or even buy new doors. $$$

    5. A hydrostatic plumbing test is recommended to be performed by a licensed plumber post Foundation work. Plumbing leaks may void warranty. Old houses have cast iron pipers that will disintegrate (because of age and/or foundation shift). You'll have to replace all plumbing at that point. $$$$

    6. Depending on how bad is the foundation state (how many inches you have to correct), is very possible the sewer line will disconnect/break in the horizontal portions. Repairing that requires tunneling, a repair that could be very expensive. $$$$

    7. If the driveway- garage differential is big (for example, the driveway slab is sunken and you need to raise the house, you'll end up with an even bigger gap after repair) you might need to replace the driveway. $$$$

    8. If you are dealing with an addition built on 12" beams (or if the original foundation is old and not built to current standards), the repair company might not be able to push the piers down to refusal depth or psi due to the beam not taking the load, thus leveling it, but not guaranteeing it will not continue to move in the future, thus not providing warranty.

    9. The owner may be required to provide a structural engineer's evaluation prior to warranty work.

    10. Read the fine print in the foundation repair contract: "Damages to the property, interior and exterior as a result of the foundation movement are not covered, during and after works completion. This usually includes but is not limited to PLUMBING, flooring, landscape, utility lines and masonry. The foundation repair does not cover any repairs that may be needed to the home during and after works completion." And you'll have new cracks in unexpected places, old cracks that will not close, but instead enlarge. My suggestion is to add at least 25% to the cost of the foundation repair as mitigation to the problems that will come from the foundation repair.

    11. The foundation repair company salespeople (and even owners, in some case) of structure companies are not engineers and though they may be right most of the time, there will be gaps in their assumptions. Unless it's a small job with an obvious solution, get an engineer ($250+) to look at it and sketch up a scope of work for a contractor to do.

    12. Many foundation problems have water as a root cause - be that infiltration in a crawl space, drainage around the site, cracked sewer line or water line. Before solving the foundation you might want to get to the root cause of the foundation issue and resolve it, otherwise you might repair the foundation for nothing.

    13. If you repair the foundation on only select places, don't be surprised if the other sides will suddenly start "working". If the house is stabilized on one side, you might get cracks in the other side soon after. In other words, if you do a foundation repair, it's better to get the whole house stabilized and the warranty for the whole house.

    If anyone has more experience with any of these, please correct me if mistaken.

    4Reply
  • Kerry BairdPro Member
    Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
    2y

    @Costin I., with each item on your list, I rejoiced that I dodged a bullet, as any one of those could have happened in our location, particularly cast iron problems. 

    That's a zinger of a post.  

    1Reply
  • Salvatore Lentini
    Rental Property Investor · Doylestown, PA · Member since 2008 · 1k+ posts · 1k+ votes
    2y

    @Esi Okpetu - if you're serious about the property you could get it under contract and then get several estimates.  Use the high one to make a counter to their $10K.  Anything your contractor finds and you put in front of the seller will now be required to be disclosed if they don't continue the deal with you.  Most of the time the seller will just lower the price further or give you a seller credit at closing, or seller credit to be held in escrow to be used for the repair after closing.  Foundation issues can be a big problem but they can also just be scary on the surface to most and easy to remedy.  I can't tell you the number of times I've looked at properties with "foundation issues" that were really just superficial cracks or settling that had occurred many moons ago when the property was first built.

    1Reply
  • Esi Okpetu
    OP
    Member since 2023 · 10 posts · 2 votes
    2y

    I really appreciate all the responses, very helpful. Thank you!!! 

    @Jonathan Klemm, the property is in TX. Below is an excerpt from the quote, it seems to be slab related but from the general advice, it may be best to have a structural engineer take a look in person.

    0Reply
  • Crystal SmithPro Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
    2y
    Quote from @Esi Okpetu:

    Hi everyone! My name is Esi and I am just getting into the world of real estate. I came across a deal that has foundation issues. It was priced below market value and I would still be doing further negotiations if I were to put in an offer but the major issue is the foundation. The owner's provided a repair estimate they received of $10,000. I have not had a professional look at it or anything but I would like to hear the general feedback or opinion of anyone who has dealt with foundation issues. Is the deal worth pursuing, given I'm still new to the process or is it not a big deal? 

    Thanks.



    We have purchased properties with foundation issues.  But we never relied on estimates from the owner unless we could speak directly to the company that provided the estimate. I recommend getting your  own estimate to repair, then you can determine if it's worth pursuing. 
    312-681-7487
    1Reply
  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    2y

    @Esi Okpetu - If it is slab-related it is less likely to be a structural issue, I'd confirm it is a slab issue and nothing with the footings.  However, if there are some cracks or penetrations in the slab groundwater infiltration could be a concern...

    For sure it sounds like you should at least have someone familiar with foundations take a look...

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  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    2y

    @Costin I. That is a great post. Covers pretty much everything! All of my foundation work was in SoCal where there is significant danger of earthquakes and they insist on Seismic Strapping. Although that may not be an Issue in TX, I would add it anyway...it really tightens up and ties together a house on raised foundation...and is not that expensive.

    3Reply
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