Commonly Asked Question: We finally found our dream home. Unfortunately, the inspection revealed that the foundation has shifted. Should we walk away?
This is a question that comes up a lot around Austin, particularly on the East Side. Whether you’re a first-time homebuyer or whether you’re a seasoned investor, it is natural that foundation issues are going to give you pause—as well they should. (As an aside: I myself just knowingly bought a house with a lemon of a foundation in December, so this question is one that I myself came up against very recently.)
As with many questions of this nature, in real estate the answers are not always black and white. Before you decide, here are some things to consider:
How far has it sunk? What will the repairs cost? Obviously, you will need to talk to some (not just one, but a few) reputable structural engineers to determine whether the problem needs immediate attention; whether it is worth the cost; AND whether fixing it is something you are willing to do.
Basically, there are foundation issues and then there are major PROBLEMS. On older homes, some shifting can be expected. If the shifting is so great that it’s going to prevent you (or a future buyer) from being able to take out a mortgage, then you really want to explore this issue from every possible angle before you pull the trigger. Keep in mind that sometimes minor shifting need not actually be repaired immediately and need only be monitored (watering the foundation during droughts helps to maintain it, mind you). BUT ASK A STRUCTURAL ENGINEER how badly the foundation is damaged; AND SHOP AROUND before you commit to anything.
If you do move ahead with the sale and decide to repair the foundation, it is definitely worth paying a bit more for a lifetime warranty with a reputable company. Upon re-sale, you will have to disclose that the house had previous foundation issues. A lifetime warranty transforms a past problem into a major asset, thus adding value to your house—particularly if you’re buying into an area where foundation issues are common.
Also, and this must be a factor in your decision: whenever you repair a foundation, you are going to have secondary “injuries” to the house. There WILL be cracks in the walls and ceilings (read: You will need to do some re-spackling/re-mudding and re-painting); it is possible that a lot of the doors will need to be re-cut/replaced; some of the windows may need to be re-sealed. If it’s an extreme repair, the windows could conceivably break–though, honestly, I’ve never actually heard of that happening to anyone I know personally. I’ve done two foundations on my own investments without incident in the windows department, but I have been told by window installers that it can happen.
You may want to brace yourself for this next one: if it’s a slab, there is likely (inevitably) plumbing in that foundation, and it may or may not take the move well. So, if you do move ahead with such a deal and opt to do the repairs, it is imperative that you communicate the engineer’s report to a reputable plumber, so that he/she can also assess 1) what the risk of the plumbing breaking with the foundation repair is and 2) what it will cost to repair the plumbing should it fail. A lot of people don’t do this, and they find themselves with a huge plumbing bill on account of what was a fairly minor foundation repair. Extend the option period if you need to, as the plumber’s assessment is one that you will certainly want to have in hand.
Finally, if it’s a slab and you need piers in the interior of the house, then they will have to drill sizable holes in the floor. What this means is that you also have to factor in the costs of making additional repairs (i.e. replacing the flooring). With a lot of homes, the piers need only be put around the exterior of the house. More severe shifting, however, may require interior piers.
This is why you must look carefully at the engineer’s drawing. Where are the piers? If they are inside, is it in a room with flooring you could pull it up and put right back down without damaging it (carpeting; floating hardwoods, for example)? Are the piers in a room that you wanted to re-do anyway, or are they going to be in the middle of pristine and expensive glue-down/nail-down hardwood flooring or tiles?
Pier and beam is, mind you, a completely different story when it comes to flooring and plumbing.
Long story short: Whether you should walk away from a house with a shifting foundation or not is really dependent on: first, the price of the house vs. the market value of the house. Second, how much ALL of the primary and secondary repairs are going to likely run. And, third, whether you have the stomach for such a project. If you’re looking for move-in ready, and the shifting is severe, you may want to walk away from this. This is emphatically true if the price is high for the house and/or the foundation repair is major. However, if the problem is not major; you can deal with some repairs; you’re getting this for a good price, AND you really love the house, then perhaps this need not be a deal breaker.
Whatever you do, you must absolutely move forward with your eyes open, your structural engineers’ reports in hand, and the cost of all your repairs factored in. Do your due diligence; get ALL of the estimates and professional insight you will need; and work with an agent who understands that the engineer’s bid on the foundation is really only part of the story here. Sadly, far too many buyers (and agents) don’t take these other possibilities into account and just negotiate for the price of the foundation repair.