So I came across a property that I'm interested in. The house was actually put under contract the day I reached out to the listing agent, but she called me to let me know the deal was going to fall through. She told me the inspection showed the house had foundation issues so the buyers backed out. she sent me the quotes from the Foundation Repair companies, but there's a big difference in price between the two quotes she sent. one is at 13k and one is at 25k.
So i have two questions.
1. I haven't actually gone to look at the house yet, so I'm not sure how noticeable the foundation issues are, but if they're not noticeable would I be required to repair the foundation? If I'm not required would it be ok to just leave it alone? I'm not flipping the house, it would be a buy and hold play.
2. Since the quotes have such a big difference in price, is there someone you guys can recommend to have another look and provide another quote?
I'm planning on looking at the house as soon as the buyers send in their termination, but would like to have an idea of what all my options are.
I don't have an inspection report, but one of the quotes has what looks like a diagram that provides a summary of the deficiencies. I've never dealt with foundation issues before so I'm not really sure how to read it. I'm going to be googling some of the terms on the quote to try to understand it. I'm also attaching it here, if anyone can read it and wouldn't mind explaining it i would really appreciate it.
Thanks in advance guys/gals and any input would be really appreciated!
@Alex Juarez Beyond the obvious of just doing the right thing by providing safe housing for your tenants, if you buy it and don't fix it you are just going to be on the other end of the table when it's time to sell next and likely be on the hook to fix it or required reduction in price. Better to be the one asking for the reduction in price as the buyer, getting cash back at closing and fixing it and moving on to getting the property rented and stabilized for the long haul.
If the sellers do not want to fix or discount, then I would re-analyze the property now incorporating the highest bid (anything lower will end up being gravy) and continue on if you are willing to take on the work and delayed stabilization. I'm sure it's not the only house available so trust your gut and move on if you have to, but those properties that need the most help often can provide the best returns in the end if you get a good deal.
Best of luck!
@Alex Juarez The difference in price can from the difference in repair method, quality and warranty. Pay for an engineer to inspect and tell you exact what the foundation repair company needs to do - his expertise is what counts as a contractor might do unnecessary or wrong things.
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. $$$
5. A hydro-static plumbing test is recommended to be performed by a licensed plumber post Foundation work. Plumbing leaks may void warranty. Old houses have cast iron pipers that will disintegrate (because of age and/or foundation shift). You'll have to replace all plumbing at that point. $$$$
6. Depending on how bad is the foundation state (how many inches you have to correct), is very possible the sewer line will disconnect/break in the horizontal portions. Repairing that requires tunneling, a repair that could be very expensive. $$$$
7. If the driveway- garage differential is big (for example, the driveway slab is sunken and you need to raise the house, you'll end up with an even bigger gap after repair) you might need to replace the driveway. $$$$
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 engineers evaluation prior to warranty work.
10. 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.
If anyone has more experience with any of these, please correct me if mistaken.
A rule of thumb for a "quick and dirty" pier and beam foundation estimate without engaging a foundation contractor...yet:
- Take the floor area and divide by 49. Generally piers need to be set 7' apart, so 7x7= 49sf.
- Let's say the house is one story @ 1,400sf. 1400/49 = 28.6 or total of 29 Piers.
- Now multiply the number of piers by $250. 29x250 = $7,250.
- Now add $200 for permit & $400 for Engineer's letter (yes, both of these are required by the City). 200+400 = $600
- Total foundation price = $7,850.
In the above scenario, this assumes all piers need to be replaced (this is usually not the case). It does not account for new beams. I do not have a rule of thumb for beam replacement cost, but it's usually another line item on the foundation bid. It should also be noted price per pier cost can vary different from contractor to contractor, from around $200/pier on the low end, to $600/pier on the Retail end.
Thanks guys for the input! Also thanks @Costin I. for that detailed breakdown. I think I'll go the engineer route to see what he recommends for the repair and get a few quotes based of that before moving forward. I wasn't too worried about the flooring, I was planning on replacing it anyways, but wasn't aware of the other items you listed.
If anyone can recommend a structural engineer they've used before I'd appreciate it.
Are you using cash, conventional or hard money loan? Cash you can fix after the purchase, but you probably want to do before the tenant moves in....so in case you have to fix fresh water or sewer you can do that while they are not there.
If you use hard money they might also require you fix.
Conventional lender may not lend on a house with structural issues, so that might not work.