In escrow with foundation conundrum

[David Siegel]

We are in escrow and our inspection contingency ends on Sunday, Feb 6. We had our home inspection on Thursday, Feb 3 and the inspector included in his immediate recommended improvements:

"Substantial foundation cracking, deterioration and/or movement was observed in the foundation walls at the basement. This implies that structural movement of the building may have occurred."

We had one foundation repair company out at the property on Friday, Feb. 5 and his tone was very alarming, almost unprofessionally so. He noted that one room (12' x 20') was sloping 2 inches. The basement cement walls are bowing fairly drastically and there is evidence of a lot of cracks being patched recently. He told us to run. Then, he gave us back the $450 we paid his company to provide a report and said he didn't want to be involved in this. 

Result: no report, no quote

Another foundation repair consultant from a different company came out later that same Friday and had a different tone but essentially agreed that the home's foundation was questionable and that since it was built in 1950 it has clearly experienced some sinking since then and there's no way of telling if it's done sinking or how to anticipate what will happen next. Because it was recently flipped all evidence of movement would have been covered up while they were renovating. I asked him to provide a report or a quote. He said he couldn't really do so because there was no clear evidence of an issue to address besides the heavily sloping room and the bowing/cracking walls in the basement. 

Result: no report, no quote

We discussed with the second foundation guy the concept of asking for a $30K seller credit because there is evidence of issues with the foundation. 

We spoke to an REA friend and ran that by him and he said no way, not a good look to request a seller credit without a quote for repairs. Basically, don't ask for money back just because you're in an uneasy place. You need to show them a quote. I don't know if I fully agree given our experience. 

We are working on our Request for Repairs and really don't have any idea how to address the foundation issue. 2 foundation companies would not provide a quote or a report. Its highly unlikely that we will have someone able to see it before Sunday. 

Very eager to see how this would be handled by whoever took the time to read this whole thing. TIA for sharing your insights!

[Jon Schwartz]

Originally posted by @David Siegel:

We are in escrow and our inspection contingency ends on Sunday, Feb 6. We had our home inspection on Thursday, Feb 3 and the inspector included in his immediate recommended improvements:

"Substantial foundation cracking, deterioration and/or movement was observed in the foundation walls at the basement. This implies that structural movement of the building may have occurred."

We had one foundation repair company out at the property on Friday, Feb. 5 and his tone was very alarming, almost unprofessionally so. He noted that one room (12' x 20') was sloping 2 inches. The basement cement walls are bowing fairly drastically and there is evidence of a lot of cracks being patched recently. He told us to run. Then, he gave us back the $450 we paid his company to provide a report and said he didn't want to be involved in this. 

Result: no report, no quote

Another foundation repair consultant from a different company came out later that same Friday and had a different tone but essentially agreed that the home's foundation was questionable and that since it was built in 1950 it has clearly experienced some sinking since then and there's no way of telling if it's done sinking or how to anticipate what will happen next. Because it was recently flipped all evidence of movement would have been covered up while they were renovating. I asked him to provide a report or a quote. He said he couldn't really do so because there was no clear evidence of an issue to address besides the heavily sloping room and the bowing/cracking walls in the basement. 

Result: no report, no quote

We discussed with the second foundation guy the concept of asking for a $30K seller credit because there is evidence of issues with the foundation. 

We spoke to an REA friend and ran that by him and he said no way, not a good look to request a seller credit without a quote for repairs. Basically, don't ask for money back just because you're in an uneasy place. You need to show them a quote. I don't know if I fully agree given our experience. 

We are working on our Request for Repairs and really don't have any idea how to address the foundation issue. 2 foundation companies would not provide a quote or a report. Its highly unlikely that we will have someone able to see it before Sunday. 

Very eager to see how this would be handled by whoever took the time to read this whole thing. TIA for sharing your insights!

 This is a conundrm!

I'm in LA. Buildings settle here, so it's totally common to have a few small cracks in the walls and a crack or two in the foundation. Simple cracks can be repaired for under $1000, so a few cracks aren't a big deal.

Also, the age of the building is a positive. Builders made good foundations by 1950. It's buildings from the 1920s and earlier that you really have to be careful with!

I wouldn't be alarmed by the language in the inspection report or the comments of the second foundation inspector. Both are what you often get for unremarkable circumstance. General inspectors need to cover their behinds, so they're quick to recommend further inspection by a specialist. And foundation/structural engineer guys often say things like, "Welp, it's moved two inches, so maybe it'll continue sliding off the hill or maybe it's done sliding for good, there's no way to tell." I once had a structural engineer tell me that a retaining wall had technically failed (it was still standing, but angled), but there was no way of telling how long until it toppled or if it would ever topple at all.

The first inspector is what really worries me. I've *never* heard of an inspection refunding the inspection and running for the hills. I also don't have much experience with basements, so I'm a bit in the dark there.

Here's my advice: don't worry about missing the inspection contingency deadline. You're earnest money is still protected. If you blow past the deadline, the seller has to give you a Notice to Perform, as which point you have two more days to cancel escrow without your earnest money being in jeopardy.

I would ask your realtor to calling the listing agent and say something like, "We had a foundation inspection that was very alarming. The inspector was taken aback, said there was evidence of cracks being recently repaired, and refunded the inspection because he doesn't want anything to do with this structure. Can you speak with your sellers and get all the information they have about work done to the foundation during their ownership?"

Sellers are required BY LAW to disclose all material facts, known or expected to be known, about the property. A "material fact" is one which would affect the value of the property. So, if the sellers covered up some foundation damage, or even did some straight-forward foundation repair, the onus is on them to disclose it.

Have your realtor also tell the listing agent that you need to conduct another foundation repair to get a quote, and as a result, the inspection contingency is going to be extended.

Then hire the most expensive/most legit structural engineering firm you can find in SD. Get them to come out and give a quote for work -- even if they only thing they can find to quote is a full replacement of the foundation.

This course of action assumes you don't want to buy the house without getting to the bottom of the foundation issue -- or, at least, getting a significant discount. If you're willing to purchase the house at its current price knowing that you might have to replace the foundation in a few years, proceed!

Good luck!

Best,

Jon