Past water intrusion in crawlspace and undermining of foundation

[Tom Shi]

I am the buyer under contract of this house (built in 1991), during inspection we find that in the crawlspace there was evidence of past water flooding up to 1/2 foot deep. There is already a trench and sump-pump installed in the past.  Inspector (whom I hired based on past good experience with him) also noted that the grounds around the house is sloped towards the house and suggest regrading maybe needed.  "Moderate" undermining of the foundation was also found, perhaps due to water and/or trench construction.  

This is a estate sell so the seller states that they don't know anything about past water issues so nothing on the disclosures.

On FloodFactor.com this house has 1/10 "minimal" flood risk.  I have asked the neighbors who have lived there for >30 years and they never had issues with flooding so it's doesn't sound like a general problem for the neighborhood but more specific to that house .

Since the past owner had installed sump pump and dug trench in the crawlspace, I feel that water entry must had been a recurrent problem to to have required such a set up.  This is in Portland Oregon so we do get a lot of rain but a sump pump is still somewhat rare thing around here I feel.  

The inspector seems to feel that these are not necessarily a huge deal; he says foundations "can handle" some unsupported areas and maybe pour some concrete at the area of undermining, regrade the slopes, monitor water entry, and potentially add French drain.  When I asked whether this need the attention of structural engineer, he provided some contacts but says he personally feel it doesn't warrant having an engineer to come out to see it. 

A family member of mine who have multiple houses and who I consult for real estate advice is in the other extreme and feels I should just exit the deal. Maybe this is due to her never having to deal with sump pump situation before. 

So I don't know what to think.  But I would like to get other people's perspectives on this.  

[Ronald Allen Barney]

With a crawl space there is some fudge factor with individual foundation posts, making the repairs non-emergency, but there should still be repairs made for the sake of long term stresses on other structural members.  I would get a general contractor to look at the posts and give an estimate for what it would take to do that foundation remediation, and also to give an estimate for digging a trench or swale between the house and the hill to divert rain water away from the house (a trench IN the crawl space was obviously not effective!)  That might have been what the inspector meant by "regrading", and a trench shouldn't cost too much.  If you're ambitious you can rent a ditch witch and DIY.  Depending on the visibility and traffic of the drainage area you might need french drains and gravel in the ditch to prevent kids, pets, or visitors from falling in.

With that being said, if your gut tells you this will cost more than what your cash flow will make up for, go with your gut and exit the deal.