To Buy or not Buy with foundation issues?

[Connor Castillo]

Hi all,

I hope someone can lend their wisdom for this. We found a great opportunity for a home in an appreciating area, and on paper the numbers work. I sent a low-ball offer, and we went back forth but ended up getting 30K under asking accepted.  The inspection report came back, and it's pretty bad. The worst part is the foundation. We have received two quotes so far, and they are very different. One is about a 11K and the other is about 70K. They have very different types of solutions, but both say all of their work plus the integrity of the foundation is covered under warranty for the life of the home. The guy who quoted 70K said that I should tread lightly because he sees many issues throughout the home potentially. My agent (whom I trust fully heartedly) said that this foundation expert tends to be an alarmist. He said both foundation guys are very reputable and do great work but have different ways of approaching solutions. The seller will not let us extend due diligence and will just put it back on the market and said he could do these repairs for half of the cost of the low bid (~5k). So we are gearing up to ask for the full 11K and to have the expert do the work instead of them. For all of you experienced RE investors out there. Are there enough red flags that I should run for the hills? Also, forgot to mention, this house is a hundred years old! 

Thanks!

[Esteban Diaz]

Hey Connor the way I look at it is depending on what your plan is with the property, if you plan to keep it for the long term and the numbers work (Cash flow, equity, Appreciation etc) then negotiate a price you are comfortable with and go for it. Keep in mind the foundation is not the only issue, when there is foundation issues there is usually other internal issues that go along with it, (wall separation, Possible broken pipes, floors etc) so give yourself plenty of wiggle room for repairs. If you don’t plan to hold the property for a very long it’s not worth the hassle. it will make your resell harder because you will have to disclose that you did foundation repairs to the property on the sellers disclosure. hope this helps best of luck!