Foundation Issues- Opportunity or run the other way??

Question

I have a great deal on a house that has foundation issues. The wall is bowing on two basement walls. You can barely tell by looking at it but you can definitely see the cracks. The way we remedied this problem in the house we live in now was with carbon fiber strips that offer a lifetime transferable warranty that no further bowing would take place. Foundation issues don't scare me but this house would be one that would attract a lot of first time home buyers and I'm worried that it will sit on the market because of these issues scaring people off. Anyone have any experience with flipping houses that have foundation issues??

Josh Caldwell · Answer

I have flipped houses with foundation issues, and it comes down to the math.  What sort of discount can I get when I buy this house, and how much will it cost me t fix the problem?

It the discont is bigger than the price to fix, then I am interested.  It is that simple.

you are right that a lot of other buyers will be scared off by a foundation problem.  Traditional financing is not an option for these houses, so you are down to investors with vision and there are not a lot of us out there.

Mark Elliott · Answer

hi liz. yes, i have dealt with foundation issues on houses. i use them as a means to get a discount on the price when buying. i bought a house a couple of years ago with the exact issues you are talking about. i got a good deal, used the post method to stop the further damage to the foundation and sold the house. i do not recall even one potential buyer mentioning the foundation issues. if there was one, my realtor never mentioned it. personally, if i saw a house with foundation issues that have been fixed to stop the issue, then there really is no issue. if the deal suits you, lowball your offer based on the foundation issue, buy the house, fix the issue and sell the house. i doubt you will have any problems

Cindy Meyer · Answer

Account Closed

I would be OK with buying the home as long as the repairs were done by a certified professional.   I would also want to read through the warranty.  Many times:

1) the reimbursement will only cover the cost of the materials and not the labor to install them.

2) the company will have many requirements to be met (i.e., method of installation, you must purchase the material before 3 p.m. on a Tuesday, etc.)

Randall Shields · Answer

Due diligence is important here. Fixing the foundation correctly is a gray area. Do the research on requirements and costs for fixing the issue with regards toward your target market. First time home buyers, i.e. FHA, Veterans, ect. financing will require certain protocol. If you can still make your desired profit then it's a good deal.

Katie Neason · Answer

I am a long way from you, but we have flipped houses with foundation issues successfully. They have not stayed on the market longer. We always disclose before a contract is signed so if the buyer has an issue we know before the house is taken off the market.

Jeff Rabinowitz · Answer

You can do very well if you fix problems that most people will not. Your profit is on the buy side. You are offering on a house that will receive very few offers. The seller has a problem that they are not willing to address--you are helping them, not the other way around. If you cannot purchase it at a price that will more than compensate for attempting the repairs it is not worth the risk. Make sure you add enough of a cushion into the repair estimate so that you will be covered if something unplanned occurs and you can give the end buyer a financial incentive to purchase from you.

Josh Caldwell · Answer

it might sit a bit longer but after you fix the problem and offer a warranty that should sooth the fears of potential buyers,   When I am rehabbing a house, my buyer assumes correctly that I have fixed a lot of problems.  Now they get a house that is pretty close to new condition and buyers like that

Dell Schlabach · Answer

Account Closed we have rehabbed and sold quite a few foundation issue houses. When we did our first one, I was very concerned about the saleability, my agent assured me that at the price range ( 120k)  we would not have any problem selling it if we had a transferrable warrenty.

The first one we did sold in a couple weeks, we have rehabbed a dozen or so with foundation issues in the past four years, we recently did a 280k house in Hudson, 14k in foundation work, including straps, house sold within a week. We have sold the houses for full price without taking any discounts because of foundation issues, I would not be worried about it if you have a reputable contractor that can issue a transferrable warranty.

Matthew Paul · Answer

No,  you fix the problem , and finish the basement  .  The repair is done correctly , but it still looks like a repair , finish the basement walls and it becomes a non issue .  I have 2 houses I bought with finished basements ,  the only way to find out if there were cracks or bows in the walls would have been to rip out the drywall .  Sellers generally dont rip out walls for buyers to see.   Repair it correctly , finish it , its then not an issue.

Foundation Issues- Opportunity or run the other way??

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