Investor · Chicago, IL · Member since 2012 · 34 posts · 7 votes
I'm under contract for a SFH in Indiana and the inspection uncovered some fairly serious foundation problems. Basically a previous owner dug out the basement below the foundation footer and this has caused one of the foundation walls to settle. It's obviously a pretty major issue and would require significant expense to repair. I'd be curious as to how others have dealt with situations like this. My agent is talking to the listing agent to see what we can work out, but here's how I am thinking about my options:
1. Seller pays to have foundation fixed (unlikely given price point of home - $75k)
2. Seller agrees to lower price (I would need a fairly significant discount to make it worth the out of pocket expense and risk that repair is more expensive than planned)
3. Walk away from the deal (really don't want to do this but may have to....)
Flipper/Rehabber · Wilmington, DE · Member since 2016 · 80 posts · 75 votes
9y
@Account Closed Did you get a structural engineer in there to take a look? If you do that and then get a couple quotes to fix then at least you'll be confident in what it will cost and try to renegotiate with the seller. Also, how did you find out that the owner before the owner dug out part of the foundation? Was there anything in the seller disclosure? Anyway, looks like 2 and 3 are your only options. Now that the seller knows the issue they will always be legally obligated to disclose to future buyers, which means that unless they want to put a bunch more cash into the property they are going to have to offer you a much better deal.
Investor · Chicago, IL · Member since 2012 · 34 posts · 7 votes
9y
@Jack Clough - Not yet, I'm going to try and get one in this weekend to take a look. Foundation problems were noted in the disclosure, but either way I was going to have to get an inspector in to assess how bad it was. This deal was a bit unique in that I relied on my agent and offered on it sight unseen... I actually didn't see the disclosure until after I had offered. Not a big deal, I don't mind paying for the inspection and I can still walk away. If nothing else it's a learning experience...
Investor · Chicago, IL · Member since 2012 · 34 posts · 7 votes
9y
@Taylor Chiu - Inspector said minimum of $5k and I think that's a pretty conservative estimate. They would need to jack up the entire East side of the foundation wall to fix it.
Investor · Chicago, IL · Member since 2012 · 34 posts · 7 votes
9y
@Taylor Chiu That assumes $10k for all repairs including foundation. HVAC is also old and likely needs replaced so $10k is probably on the low end. Won't know until I get a contractor in there
Investor · West Los Angeles, CA · Member since 2014 · 230 posts · 239 votes
9y
@Account Closed
I'm not sure how you intend to finance this purchase. Given the foundation issues the property will now need to be an all cash purchase as conventional financing will no longer work. Therefore you should submit a new (deeply discounted) offer based on this information.
Investor · Chicago, IL · Member since 2012 · 34 posts · 7 votes
9y
@Account Closed We will see, the appraisal happens this week. The current owner has a conventional loan but the foundation could have settled after they closed.
In order for a bank to issue a loan against collateral (a house) the collateral must be habitable. Serious foundation issues, mold, asbestos etc makes the property unlivable.
Investor · Chicago, IL · Member since 2012 · 34 posts · 7 votes
9y
@Account Closed For what it's worth, the appraisal came back today at purchase price ($75k), so either the appraiser didn't notice the foundation issues or didn't think it was serious. I'm going to see the home with a contractor tomorrow so we'll see what he says.
Residential Real Estate Broker · Indianapolis, IN · Member since 2009 · 477 posts · 304 votes
8y
@Account Closed This doesn't look that bad to me from the pictures.. How long ago was it "Dug out"... I bet the problem is the gutters are dumping water near there and it's going down and causing this..
Is the house in Indy? I have a great foundation guy, always done right by me.. He could fix the sill issues as well..
Investor · Chicago, IL · Member since 2012 · 34 posts · 7 votes
8y
@Lee Smith Thanks - I had a contractor look at it a few weeks back and he also didn't think it was bad. I'm a few hours north of Indy, I assume that's outside of your guy's range? I'll be closing on the home on Friday.