HELP! Selling a flip with foundation repair

14 Replies

HI everyone!

I have a flip on the market in Denver metro that we've done a foundation repair using Carbon Armor. The basement wall has a large crack. There is also a little settlement in one area at the garage entry way and in the mechanical room, purely cosmetic. Otherwise all the floors are level. We've had the house evaluated by an engineer and there are no issues that haven't been addressed with the foundation repair.

We've been on the market 30 days, today. We've had 17 showings and dropped the price twice and are currently sitting about 5K under market value. Most of the feedback we get is that the buyer loves the house but is scared off because of the structural issues. We've been pretty open about the repair and for the first 3 weeks we had a folder in the kitchen with information regarding the basement repair and had it in the MLS for the buyers agent. We have since removed that because it seemed like buyers were immediately scared off so now we have a note in the basement room where the repair can be seen just saying what it is and that there is a warranty for the work.

I was not expecting this much trouble selling the house when the issue has been fixed and comes with a warranty.  Plus structural repairs are pretty common around here.

I'm starting to wonder if my mistake has been leaving the area uncovered and so visible in the mechanical room. You can paint or even drywall over the wall that has been repaired and I'm considering doing so but then I'm worried that it will just fall out of contract with the property disclosure and inspection.

How do you approach selling a house with this type of repair? Is it better to just cover the repaired wall and just disclose it in the listing and in the property disclosure? How do you approach this issue when selling your own filp with these type of repairs?

Thanks so much for any help you can offer! I'm anxious to get this one sold before the holidays.

Thanks,

Jill S.

@Christopher Phillips

The repair company? That wasn't something they included with the straps (carbon armor) and there isn't any water leaking. This is my first repair like this. Do they normally fill it in when repairing with carbon armor?

I will work on mechanical room and disclose it in the report.  The strap is a band aid and need to be behind drywalls painted. Do you want to sell your car with a chain on the trunk stating it is still safe because it has a new lock on the chain? 

I suspect the entire neighborhood has similar issues as homes were not built on rock foundation.  I am quite familiar with your area market craze and home prices.  I also suspect home prices have maxed out and people now hesitate to jump into a home with structure issues fixed or not.

Good luck.

Originally posted by @Sam Shueh :

I will work on mechanical room and disclose it in the report.  The strap is a band aid and need to be behind drywalls painted. Do you want to sell your car with a chain on the trunk stating it is still safe because it has a new lock on the chain? 

I suspect the entire neighborhood has similar issues as homes were not built on rock foundation.  I am quite familiar with your area market craze and home prices.  I also suspect home prices have maxed out and people now hesitate to jump into a home with structure issues fixed or not.

Good luck.

 Thank you, Sam! I appreciate your advice. The Carbon Armor is a permanent fix for the wall but I understand what you're saying. 

I completely agree with your assessment of prices. Buyers here seem picky and much less aggressive than in the recent past.

I agree with hiding it.  Even if you have that same note there disclosing it during the visits.  Knowing there has been a foundation fix and SEEING the foundation fix have different psychological affects, IMO.  I think people are a lot more likely to accept it if it's not visible.  In their mind, it's more likely to be fine since they can't see any problems.  Just my 2 cents.

I would fill in the crack and get some sort of structural engineer to sign a document saying the repair is up to standards and the crack does not affect the structure integrity.  Should only cost another 1k.

That should put a lot of buyers minds at ease.  

@Jill S. Is this an unfinished basement? In a flip a few years ago we did significant structural work.  I think the key was, even though the basement remained unfinished we made sure it was clean, painted, looked like the details had been attended to (and they had).  My advice would be to look at the area critically and make sure you've done the full mitigation that needs to be done, including filling open cracks, leveling floors if possible, so it looks completed to a buyer. Having the engineers report available is vital and always disclose what has been done. Denver is still strong, but buyers want something that is fully done.

I would get a structural letter from an engineer and include it in the listing documents. The buyer's lender will want a copy of this anyway. The letter should ease the buyer's mind, but the cosmetics have to be dealt with.

Make sure the letter from the structural engineer is signed and sealed. Otherwise, it doesn't mean much...

@Jill S.

If the foundation is fixed, the crack is cosmetic, but it’s not going to look good to anyone...

Thanks everyone for your feedback. I had the engineer there last week just waiting on the letter and I'll upload it to the listing.

@John Negomir the basement is finished but we didn't finish off the mechanical room since it only has the furnace, HW heater and some storage space. The laundry is in a different area. The crack and the carbon armor, however, go directly through this room and is the first thing you see when you open the door. I'll have my contractor put up some sheets of drywall in there and level the floor a little better.

 I'm pretty disappointed that I over looked this and jumped right into lowering the price. I'm about $15K under the price the house "should" have sold for.

Thank you all! I hope this does the trick.

I would not cover it up. because it sounds like the only reason you would be doing so is to hide something rather than something that is standard procedures. Usually mechanical rooms are unfinished. I would put all the information in the mechanical room. It was probably a mistake to advertise a negative aspect of the house on the kitchen counter. When marketing a house you should only advertise the positives but disclose the negatives. It's like advertising that a furnace is at the end of it's typical life but that the HVAC contractor says it should run for another 10 years because it's in really good shape. You don't market the age of the HVAC in the listing or on the kitchen counter. I would have focused the marketing on how beautiful the kitchen is versus distracting them from the kitchen with the foundation information. But all that is water under the bridge. I would approach is a new way with your agent in marketing the house but I would not cover it up. That's unethical and why house flippers get a bad reputation. Don't let the risks you take flipping a house compromise your ethics. You were trying to do the right things but you over did it. Don't go the wrong way now.

Originally posted by @Jered Souder :

I would not cover it up. because it sounds like the only reason you would be doing so is to hide something rather than something that is standard procedures. Usually mechanical rooms are unfinished. I would put all the information in the mechanical room. It was probably a mistake to advertise a negative aspect of the house on the kitchen counter. When marketing a house you should only advertise the positives but disclose the negatives. It's like advertising that a furnace is at the end of it's typical life but that the HVAC contractor says it should run for another 10 years because it's in really good shape. You don't market the age of the HVAC in the listing or on the kitchen counter. I would have focused the marketing on how beautiful the kitchen is versus distracting them from the kitchen with the foundation information. But all that is water under the bridge. I would approach is a new way with your agent in marketing the house but I would not cover it up. That's unethical and why house flippers get a bad reputation. Don't let the risks you take flipping a house compromise your ethics. You were trying to do the right things but you over did it. Don't go the wrong way now.

 Thank you, Jered! I agree with you on the marketing bit those are really good points. However I disagree on what you said about covering the wall. I would not be covering the repair  to hide it from the buyer and fully plan to disclose the repairs have been made just as I have been. I just think maybe it looks scary and that's where the problem is stemming from.

I did follow some other advise from here last night and filled in the crack in the wall. It made such a huge difference! Hopefully I won't end up needed to cover the wall but if I do I fully plan to disclose the repair.

If you have a report from a qualified licensed structural engineer stating all necessary repairs have been done successfully, then patching is good marketing. I have a long term house w/ major foundation issues. I have an engineering firm do a survey every year to make sure there hasn't been any further movement. If I sell at some point, will have a multi year record of any movements. Also a 50k quote for a first class top of the line repair which I may do at some point. Beautiful house on a golf course for the price of a mobile home.

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