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What You Need to Know About Buying a Home with Foundation Issues

May 26 2018
by Sterling Place

A home’s foundation is as essential as it sounds. The job of the foundation is to transfer the structure’s load to the rock or soil underneath, without excessive movement or settlement. Without a proper foundation, a house will not stand the test of time.Therefore, before buying a house, make sure to perform a proper inspection. While performing the inspection make sure to watch out for foundation problems such as:

  • Exterior cracks and bulging
  • Cracked chimneys
  • Leaning posts and beams
  • Misaligned windows and doors
  • Sloping floors
  • Cracked walls

If you discover that the home you’re considering purchasing does have foundation problems, you’ll be faced with a difficult decision. We’ve created this article to make sure you’re well informed when faced with the decision of buying a house with foundation issues.

Here’s what you need to know about buying a home with foundation issues.

Have the foundation inspected.

A foundation repair expert will explain how the problem occurred. They will also provide different solutions for the problem. With a full analysis, you’ll be able to assess whether it’ll be cost-effective to fix the issues or not.

The seller won’t object to you getting the foundation inspected. But if they do, consider it a red flag. Walk away.

Understand the costs involved.

Once you get the foundation problem analyzed, the next step is to understand the costs involved. There are varying degrees of foundation damage, which come with varying costs. Minor foundation repairs include replacing and fixing gutters, injecting foundations with epoxy, and bolting on steel braces. Minor repairs can be relatively affordable (less than $1000.)

Major foundation repairs can be a big project. These problems generally arise from serious foundation problems beneath the home. The cost for these types of repairs can range from $5,000 to $30,000.

Never ask the seller to fix problems.

You’re better off not asking sellers for help unless they have a very good reason to fix the house’s foundation. The risk here is that they may end up choosing the low-priced option as foundation repair companies usually offer different estimates.

For instance, one company may say that it requires twelve piers to fix the problem at a cost of $10,000. Another company may come in and say they can fix the problem using six piers at a cost of $5,000.

If the seller is offered these options, it’s highly likely that they’ll choose the $5,000 option. Eventually, the final work may end up being substandard.

What you can perhaps ask the seller to help you with are the previous repair reports. The report should clearly state the kind of problems that were present, how they were fixed, and how well they worked.

You can ask the seller to give you the name of the company that handled the previous repairs.

Find out the different financing options available.

A good number of mortgage lenders won’t settle for anything less than a foundation that’s solid. However, you can get financing for homes needing structural repair from federally-backed rehabilitation mortgages.

  • Fannie HomeStyle Mortgages.

These mortgages have various adjustable rate lengths as well as 15- and 30-year fixed-rate versions. These loans also permit Community Seconds mortgages.

Community Seconds mortgages are second mortgages with either deferred or forgivable payment terms. They are available through state and local housing agencies as well as nonprofit organizations.

  • FHA 203(k) Mortgages.

You can use this type of mortgage to fund all the structural repairs the house needs. The mortgage loan’s amount is based on the projected value of the home once it’s rehabilitated.

The loan covers everything from acquisition to improvement of the home you are buying.

You can apply for an FHA mortgage if you have a credit score of at least 580. They, however, prefer those with a score of at least 640.

  • Structural Repair Mortgages.

FHA-insured 203(k) rehabilitation mortgage funds homes in need of structural repairs.

Check other issues related to the foundation

Foundation issues are no minor problem. The issues could go deeper than the foundation. You may be shocked to discover that the problems stem from soil shifting. It’s caused by shifting soil or a buildup of pressure in the soil around the foundation.

The shifting causes damage to the chimney, floors and doors. When building takes place on a non-level ground, most builders perform a soil test. However, some contractors may fail to do the test, or the test may fail.

If soil shifting is the case, you run the risk of replacing the whole foundation. It’s best to consult with a foundation repair specialist.

Include the appropriate contingency clauses.

Prior to putting an offer on a house with foundation problems, make sure you have appropriate contingency clauses in place.

Know when to walk away.

As much as you may love the house, there may come a time when you may have to let it pass. Foundation issues often cost a lot to fix. You can try to negotiate the selling price based on the costs to fix the foundation but if the seller is unwilling to budge, it may be in your best interest to walk away.

So, is it advisable to buy a house with foundation problems? Yes and no! Yes, if the problems are minor and can be fixed within your budget. And no, if the problems run deep and the seller is unwilling to reduce the price of the home.

Just remember, the most important thing to do is have the foundation inspected by professional foundation repair experts. Ignoring signs of foundation problems only to find out months later that you’ll require major foundation repairs can definitely cause financial stress.

This article was contributed by Granite Foundation Repair. Granite Foundation Repair has been providing foundation repair services in Dallas-Fort Worth and surrounding areas for nearly 20 years.