Santa Cruz, CA · Member since 2018 · 3 posts · 3 votes
Investigating a property in the mountains for a househack deal, and in the disclosures we found a vertical crack in the foundation. I remember on the BP podcast hearing someone advise just stay away from any cracks in the foundation (automatic pass). However, reading on the internet, it seems like vertical cracks are very common and most homes have 1-3 after a few years post-construction (T/F?). WHAT DO YOU THINK, and what follow up questions and inquiries need to be investigated?
Investor · Cleveland, OH · Member since 2017 · 319 posts · 330 votes
6y
It depends on the crack, and the type / amount of movement that caused it. It also depends on the age of the building and of the crack. You can usually tell from the location and direction of a crack, what caused it.
For example, a crack of 1/8 inch in a 50 year old basement wall, near where the house meets an attached garage, would almost certainly not be bad - especially if you can see that the last couple coats of paint got inside it. On the other hand, a 1/2-inch crack in a brand new building would indicate a major problem...
Real Estate Coach · San Diego, CA · Member since 2019 · 164 posts · 121 votes
6y
I've been tagging along with a successful investor here in San Diego and he hasn't been scared off by cracks in the foundation. They seem to be more common in California since the ground is harder and a little 3.5 earthquake can cause a crack.
Plus, he tells me that it can be good because it scares off a lot of other investors.
In fact, I had to repair a crack in my house's foundation over the summer and it cost around $12K. Would I let that scare me from buying a house that could be worth $1.1M if I could drive the price down because there are no other offers?
I mean, if I ignore the 70% rule and paid 80% of ARV and the foundation cost $50K to repair, I might still walk away with $100K profit.
BUT...
He told me that as a newbie, while the foundation experts are pretty good at estimations, we should pad any foundation estimate by at least 10-20% since we may not be able to take a huge hit if they're wrong.
And any preliminary offer you make should be contingent upon what the inspector says.
All in all, I'm not going to let cracks scare me off but you need to do what makes you comfortable. If you're not comfortable... don't buy it.
Investor · Cleveland, OH · Member since 2017 · 319 posts · 330 votes
6y
It depends on the crack, and the type / amount of movement that caused it. It also depends on the age of the building and of the crack. You can usually tell from the location and direction of a crack, what caused it.
For example, a crack of 1/8 inch in a 50 year old basement wall, near where the house meets an attached garage, would almost certainly not be bad - especially if you can see that the last couple coats of paint got inside it. On the other hand, a 1/2-inch crack in a brand new building would indicate a major problem...
Rental Property Investor · Pocatello, ID · Member since 2021 · 15 posts · 10 votes
5y
Getting it inspected should be done just to know what is exactly going on. Structural engineer or foundation contractors should be able to check it out and tell you if it is good or not for free. They could even bid it out for you as well so you know the cost and what it is going to take to fix it, then go to the seller of the property and say "I want this fixed or the price dropped this much."
If the bid comes back and no one wants to pay for it move on. Not worth continuing that lead.
Thanks Dallin! It just went pending after only a few days!! One question though, generally speaking, how would you get a contractor or structural engineer in to see the place before making an offer? It was my understanding that you had to make the offer first before doing that. Or would you have the engineer come in with you during the showing when your realtor is showing it to you?