Rehab Property in North Carolina with Foundation Issues...Will a Bank Finance it?

6 Replies

Hello BP Members,

I have a property under contract with a sinking/settled foundation. To buy or not to buy is my questions.

The numbers: ARV 175K; Repairs 30k (about 20k just for the foundation); Purchase 89K. There is a pending comp a few doors down under contract for 195K. My exit strategy is to sell the property at about 90% of market value to move the house fast and worst case scenario, I'll drop the price 72% of market value to sell the property at breakeven (or a slight loss).

I’m worried that, even if I fix the foundation and get a letter from the foundation repair company certifying their work, a bank will not want to finance my end buyer because of the pre-existing foundation issues.

I’m looking for some advice from BP members who’ve dealt with foundation issues.


I am not expert and I would suspect that every bank may be different however, I would think that if they repairs are done properly and certified then they shouldn't have any issue with loaning on the property.

I would probably check with my bank (mortgage dept) to see what their thoughts were.

@Drew Oquendo  I actually just dealt with a somewhat similar problem but it was for a house I planned to purchase as a primary residence.

The house was built in the 1980's before the building code for the city of Durham was implemented so the requirements for new construction were very lax. The house was a three story Cape Cod style around 3,000 square feet with a basement and two car garage. During inspection it was discovered that the concrete slab in the garage had shifted almost 6" due to no perimeter drain being installed around the house. Although it was priced significantly below FMV the lender informed us that it was highly unlikely to appraise due to the foundation issue, let alone the other problems resulting from the slab shifting.

Needless to say, we backed out of purchasing it based on that info. Most end buyers run for the hills when they hear foundation issues regardless of repair. I hope sharing my experience helps you somewhat in making your decision. Let us know when you get it all figured out. Best wishes to you!

@Alan Russell Thats what I would love to believe; I just hear so many investors say they would never touch anything with foundation issues.

@Michael Jobe So, it seems like your lender was only concerned about what the property would apraise for? ....And, not the foundation issue in itself?

Hello Drew,

If you get the foundation fixed and completed properly before the appraiser comes out then you shouldn't have an issue.  The lender is going to base part of their decision on the appraisal and if it doesn't mention anything about foundation then you should be good.  It might say something like the foundation was just completely re done in a craftmans like manner.  If anything this should help because they know the foundation is new and completed well.  You might want to get a structual engineer to also give a report when this is done to have an even stronger case.  If an engineer is used you for sure will be ok. 


Earlier this year we bought a property from an estate that had foundation issues. Since we were using conventional financing, the foundation issues needed to be fixed prior to the our purchase, which the seller agreed to do. Per my lender, it was all about the appraisal, either a) it would come back clean, or b) there would be a recommendation for a structural engineer to make a report. If a) and the appraisal amount was high enough, then they were good. The other condition was that the foundation repair company issue a life time transferable warrantee and this be transferred to us at closing, so if you go ahead make sure that the foundation company you use will do this. Most do, but apparently not all.

Hope this helps!

Thanks guys! That makes me feel more comfortable about moving forward with the deal.

@Shaun Weeks I’m going to google some structural engineers in my area; I hope they’re not too expensive.

@Harry M Thanks for sharing your experience and advice. I will definitely ask about a transferable warranty.

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