Updated August 29th, 2019
Contrary to what you would think, buying a house with foundation issues isn't always a bad idea.
Many buyers are not keen on having to deal with major repairs before they can move into their new home. Plus, dealing with structural problems is nerve-wracking. What if you can't get it properly repaired? On top of that, many lenders won't give out a loan for a home with foundation issues.
However, if you play your cards right, buying a house with foundation issues can save you a lot of money. An expert real estate agent can help you navigate this tricky situation and make sure you come out on top.
Keep reading to learn what you need to know.
Should you buy a house with foundation issues?
Maybe. The answer to this question depends on many factors. How bad is the damage? How much will it cost to repair it? Are you getting a good enough deal on the home to make it worth it?
Is the house your dream home? Buyers have to be willing to compromise when searching for a home. There is always something that isn't quite perfect. If you find yourself compromising on many factors, maybe overlooking the foundation issues isn't the best choice.
In short, there is a lot to consider. Let's break it down.
How much does it cost to fix the foundation of a house?
The average cost to repair a foundation is about $4,000. Of course, it depends on the extent of the damage. Major repairs can easily cost upwards of $10,000, whereas repairing a few cracks may cost only $500. If the damage is extensive and the entire foundation needs to be replaced, it could cost close to $100,000.
Ask the home inspector for a rough estimate. If you want to get more specific, you can get an estimate from a contractor.
Does foundation repair affect home value?
Foundation issues will bring down the value of your home. How much depends on the extent of the damage. As a very rough estimate, significant issues can bring down the value as much as 10%-15%.
On the plus side, 10%-15% of a $250,000 home is $25,000-$37,500. As we've seen, the average cost of repair is significantly lower than that. Make the right deal and you can save a nice chunk of change.
Another thing to consider is that some buyers will get nervous just knowing the house had issues in the past. You might be comfortable buying the home and doing the work, but you may have trouble getting full value from it when it's time to sell.
How do you uncover foundation issues?
Carefully inspect the home, paying particular attention to the foundation. Though not required, buyers are highly encouraged to hire a home inspector to root out any problems.
Even if the damage to a foundation is difficult to overtly see, there will be symptoms. The entire house rests on the foundation. If it is faulty, problems will show up somewhere.
What are the signs of a bad foundation?
An obvious sign of a bad foundation is large cracks in the foundation itself. Small ones less than a ¼ of an inch thick are probably not anything to worry about.
Doors and windows are stuck, jammed, or don't close and latch properly. This may be due to the house shifting on top of a bad foundation.
Watch for cracks in the walls and floor. Pay particular attention to over windows or doorways and where the walls meet the ceiling.
Sight down the foundation walls on the outside of the home to see if they're straight. Proper foundation walls should be more or less straight lengthwise as well as up and down.
Go down into the crawlspace or basement and check out the posts or concrete supports. They should be straight and standing firm under whatever they are supporting. You also shouldn't see any water pooling on the ground or wet components.
Weak concrete is a horrible sign. Try poking the foundation walls with a screwdriver. Concrete should be hard enough that you can't damage it. If you can chip off pieces, that's a sign that the original mix was bad and the concrete is now deteriorating. The only solution is a new foundation.
Are foundation problems covered by homeowner's insurance?
Unfortunately, most policies don't cover foundation problems. In some instances, homeowner's insurance may cover damage if it was caused by something else that is covered. For example, if a pipe breaks or leaks and soaks the soil near your foundation, causing it to sink or crack.
Other less common instances include when a foundation is damaged by an earthquake or flood. However, the homeowner must choose to add these on to their policy and very few homeowners do so unless required.
Can you get a mortgage on a home with foundation issues?
Be prepared for more limited financing options if you want to buy a home with foundation issues. While lenders understand that most homes will have something wrong, foundation problems are a major issue they tend to shy away from.
You do have options, however. There are government-backed rehabilitation loan programs that will accept structural issues.
Two prominent ones are the Fannie Mae HomeStyle Mortgage and the FHA 203(k) mortgage.
Will the FHA finance a home with foundation issues?
The FHA has rather stringent requirements for the condition of the home, especially when it comes to health and safety. Foundation issues fall into this category, making it difficult to qualify for a regular loan.
However, you may be able to qualify for the FHA 203(k) renovation loan. This loan allows you to take out a larger loan than the purchase price. You can use the excess to fund repairs on the house. The permissible loan amount is based on the home's projected value once all repairs have been completed.
How should you negotiate with the seller about foundation issues?
Either the sale price should reflect the need for repairs or you should ask for a repair credit.
This is one area where you shouldn't ask the seller to make repairs. Not all foundation repair companies are the same. Some will quote a lower price and do low-quality work. The seller isn't concerned with quality work as it doesn't benefit them. You can bet they'll take the lower price and you'll be left to deal with shoddy work later on.
Are there certain contingencies to include when dealing with foundation problems?
You should almost always include an inspection contingency in your offer. You can always choose to take a home as-is anyway, but if something major comes up that the seller didn't warn you about you need a way out of the contract without losing your earnest money.
If you suspect foundation issues, or the seller tells you there are problems, you should definitely include an inspection contingency. A certified inspector will be able to tell you more about the extent of the damage and you can make an informed decision about purchasing the property.
What's the best way to navigate buying a home with foundation issues?
Have a solid, knowledgeable real estate agent on your side.
They will make sure that you take the steps necessary to protect yourself like including the correct contingency clauses in your purchase agreement. They'll also help you negotiate the price or a seller repair credit to account for the lack of a sound foundation.
Without an agent, you'll be going up against an expert negotiator (the seller's agent) to negotiate a significant issue. You stand to lose thousands of dollars if the negotiations aren't handled well. Take the pressure off with an experienced real estate agent handling these important negotiations for you.
Finding a good buyer's agent is easy. Simply contact us here at Clever. Clever is a discount referral brokerage, saving our customers when they buy or sell homes. We connect our customers with the top 5% of agents in their markets, with a discounted listing commission of $3,000 or 1% of the selling price. When buying, you'll get access to on-demand listing and a home buyer rebate where legal.
Top FAQs About Buying a House with Foundation Issues
How long does foundation repair last?
Ideally, foundation repair should last indefinitely. Most companies offer lifetime warranties on the repair and you should look for this as well as a company that has been around a while. A lifetime warranty isn't any good if the company disappears after a few years.
However, to prevent future problems, you need to address what caused the foundation problems in the first place. For example, poor drainage may leave the soil around your home wet for extended periods of time. This allows the foundation to shift and sink, causing cracks and other problems.
If you don't fix the drainage problem, your repaired foundation will eventually shift and sink as well and you'll see the damage reappear. Your contractor can help determine what caused the damage and advise you on what preventative measures to take.
What happens if you don't fix foundation problems?
The entire weight of your home rests on the foundation. A few small cracks here and there isn't something to worry about. But if there are large cracks, they will continue getting larger. The floors may become uneven or the porch may sag. You may start having a hard time opening and closing doors and windows.
Water may be seeping into your crawlspace or basement through the cracks in your foundation. This will lead to mold and mildew building up and contaminating the air in your home. You and your family may begin to experience more frequents colds or respiratory problems. A person with asthma will suffer even more.
Eventually, the foundation could collapse. It'll take a bit to get to that point, but ignoring foundation problems is not a good idea.
How hard is it to fix foundation problems?
Simple cracks are relatively easy to repair. The fix simply involves filling the cracks with a sturdy resin, epoxy, or polyurethane foam. If water is getting in, you may need some waterproofing as well.
More severe leaks will require digging out around the foundation. This allows workers to fill cracks with cement and fully seal the foundation.
If there is already some sinking and shifting going on, it gets a little more complicated. Workers may need to raise up the foundation on hydraulic lifts to reposition the foundation and reinforce weak areas. They can also inject grout underneath the foundation to float it back up into position. However, this doesn't work for every foundation type.