Risk Tolerance for Foundation Settlement: Villa Park-Denver, CO

[Kevin Grasse]

Hi all,

I'm under contract to purchase my first house hack and going through due diligence. The property is in the Villa Park neighborhood of Denver's West side, built in the 1960s. The home inspector pointed out a few potential foundation issues my real estate agent and I thought warranted contacting a structural engineer: 45 degree angle drywall crack on a corner of just one doorframe, trouble with opening a few different windows, "minor" cracking in the foundation, cracked tile in a bathroom, and a more major issue: one of the cast iron sewer pipes has a positive sloping portion in the crawl space.

The structural engineer completed his inspection today and I was able to discuss his findings over the phone with him. The structural engineer noted a maximum elevation difference of 1.75 inches over a distance where a maximum of 0.5 inches would be within tolerance. He explained that this is pretty extensive differential settlement and expected to find significant issues when he went to the crawl space to inspect the foundation. He was pretty surprised that the foundation was in good condition (he was able to inspect about 95% of the inside of the foundation from the crawl space) and only confirmed minor cracking inside and out. Potentially, the settlement was more uniform than the elevation differences suggests. He did note an above average seepage amount within the crawl space for the neighborhood and said that normal differential settlement where he starts to be concerned in the neighborhood is around ~1". The engineer said that no immediate repair is needed, but it is riskier than normal. 

I know foundation issues can be extremely costly (he mentioned putting in piers around the inside of the crawl space would run ~$50K if the situation significantly worsened). That would pretty much ruin the deal.

Does anyone have experience with soils/foundations in West Denver?

More broadly though, what are your tolerances for risk with foundation work? I'm concerned that if I go to sell in the future, this could be a major issue for buyers and cause issues selling. We will be trying to negotiate with this information, but I don't foresee a huge reduction in price if the foundation is passable now.

Thanks for reading and I can't thank this community enough, I wouldn't be under contract for a house hack without it!

[Matt M.]

I'd terminate if it was me. I have zero tolerance for foundation issues that require that kind of repair. The repair costs are egregious for what they actually do AND you'll have to disclose to your next buyer about the issues. 

Most of my clients walk on structural issues. A $50k hit in villa park is a big deal at the price point in that neighborhood. 

Move on. I know the inventory sucks right now, but 2020 is almost here.