Foundation Issues or Oportunity?

Great tip! Thank you! I'm seeing a lot of distressed houses with foundation issues lately. I was wondering why buyers seem to be putting off these properties. They seem to sit rejected on the MLS for many months.

I've since viewed 2 properties like this with 1 of my agents. With evident and obvious cracks in the foundation and brickwork (from the outside), it's easy to spot even for an amateur investor and I can see why they sit on the market. What I'm seeing is, though, that the foundation issue is really all that's wrong, aside from minor paint/carpet cosmetics.

So my questions are: Would it be a good call or feasible to meet a foundation professional at a viewing of a given property like this? Could/would they be able to assess the damage on a free estimate basis with a quick look-see?
And, is this permissible to do prior to making an offer?
Incidentally, there are both slab and pier & beam foundations here.
Which is most preferred, or easier to repair?
Any foundation pros amongst us? How expensive could this be?

I've heard some lending institutions will not do loans for such properties. I've learned too that sometimes it's only a matter of a few piers and jacks to level the house upright. Can the damage really been corrected?
I need to know at which point this could be a red flag; whether to pursue or not? ~TIA!

Kathleen,

Houses with structural issues can be great wholesale deals or fix/flips. As always it just depends on the numbers. We need to find the properties that owner/occupants don't want.
We would rather deal with a house that has repairable structural issues than one on a busy street or next to a commercial building, liquor store or railroad tracks. You can fix the structure, you can't fix the location!
We always have our Structural Engineer take a look at these places before we make our offer. We want to know exactly what we are up against concerning structural repairs.
Another school of thought (not ours!)is to make an offer (a guess) and then have the property inspected only if the offer is accepted. If the repairs are more than you estimated you then go back to the seller and ask for a price reduction. Problem here is a lot of times they wont take a price reduction.
I have no preference to the foundation type, They all have their issues. Structural repairs I have seen have run from $7,000 to $120,000. So structural repair and fixing what CAUSED the failure CAN be quiet expensive.
As far as financing, no conventional lender I know of will finance a property with structural. They all will do so after repairs have been signed off on by a structural engineer. Some times the houses are in better shape than when they were new. The problem that caused the failure in the first place has been fixed too!
There CAN be a stigma attached to a property that has had structural repairs when it hits the retail market. Account for this possibility when you make your offer.
As far as a fed flag, your engineer will usually advise you what to do and if the repairs will be cost effective or the place just needs to be scraped. Each property and it's "numbers" will vary.

We will take a house with minor structural repairs all day long! Like mold, meth houses, grow houses, asbestos, lead paint. smelly, dog and cat poop covered houses! We see and smell gold! It is all a matter of the numbers!

Hope this helps,

Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC

Yes foundation probles can be and issue. I would suggest bringing in a property inspector before making your offer. They will be able to tell you if the structure issue is a major or minor problem. They can also give you and idea about how much that issue may cost. I hope this helps.

Zig Ziglar said, "Perception is the strongest form of reality," and that is especially true of home values including homes that are perceived to have foundation problems. If a prospective buyer perceives that a home has a diminished or no value because of a foundation issue, that negative perception (what's typically called an "objection" in the sales process has to be overcome, and often times it just cannot be.

I have a house for sale right now that's priced $10,000 less than every other house in the neighborhood, and buyers' objections are strong, even though the foundation has been repaired and guaranteed. The guarantee may or may not allay the negative perceptions, but the price may overcome them. So, price accordingly!

Make double damn sure that the foundation issues are fully disclosed, including what caused the foundation problems (sewer leaks, flood, settling or whatever). That too may overcome objections and negative perceptions and objections.

Finally, if the foundation has been repaired, it's important to repair the resulting cracks in floors and walls as well as dragging doors, etc. If the foundation repair is less obvious (visually), even though disclosed, that also allays the negative perceptions.

Thank you, Michael! I knew I could count on you to lay it out for me.
(PS. I had discovered a meth house in a town west of me on a drive by, if you're interested...LOL...was wondering who to approach on this one...looks like a fire occurred, but more like an explosion, or implosion---puzzled at first, but figured it out! If the owner was incarcerated, the buying process may be a bit complicated with red tape....I need to find out the story...it's a duplex).

Thank you, Niven3! Appreciate your reply.

Thank you, Rick! ...and Zig! Texas is a non-disclosure state. However, like said, damage is quite apparent, even for me to recognize. Some listings do divulge the foundation issues upfront, either repaired/warrantee'd or in needing such. The ones with warranties are transferrable.

I did some more research...There are foundation issues with north Texas properties because of the extreme heat and dryness. There are no basements here in north TX because of the clay. The clay really shrinks when dry and expands when wet. It's not uncommon to see cracks one can stick their whole hand in. This expanding, contracting, and shifting of the soil would exert tremendous pressure on buried structures (a basement). This condition can cause shifting in the floor, foundation, and overall structure, as well. Many homeowners do not use soaker hoses to keep their foundations wet. (And we have been on water restriction this year). Basements do, however, exist in other parts of Texas further west of here, I'm told. I'm from the east coast and I do miss my basement! It surprised me when I relocated here, but now I know why we don't/can't have them.

Who qualifies as a "structural engineer?"
Would a certified inspector or foundation pro be enough?
Or does this involve a city official?

In Most cases a certified inspector should be enough for minor problems. The inspector will let you know if you need an engineer or not. This is someing i learned in a Certification class for inspectors. Infact i am certified in the state of Minnesota. The introduction to property inspecting can give you alot of insite when looking at properties. You will immediatly be able to spot major problems at a glance even if you dont take the more advanced class.

usually inspectors will look at foundation issues, and their recommendations will be to 'have an engineer do an inspection to make an assessment of the damage and repairs needed'; experienced inspectors may point out the problems, but they will not (cannot) make recommendations for fixing foundation issues.

If you have foundation repairs done, make sure the company who does the work is a reputable one, and will issue a TRANSFERABLE, LIFETIME warranty on the work that they do.

as Rick points out, the perception of the buyers is a big issue when selling a property with foundation issues, even if it has been repaired, so be prepared to make a deduction on your selling price....

Thank you, Christa and Valerie! ~I appreciate your help very much.

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