Real Estate Investor's Guide to Dealing with Foundation Issues

By Home Bay

Posted on April 8th, 2016

Hearing the words “foundation issues” can frighten even the most experienced real estate investor. But before you walk away from an otherwise promising deal, it’s important to understand the scope of what you’re dealing with. Use this guide to help determine whether the next foundation issue you encounter should be a deal breaker.


Rely on a Professional Opinion to Assess the Problem

If an inspection reveals any sort of foundation issue, such as minor or major settlement or cracking, it’s time to call in the pros. Have the foundation examined by a reputable structural engineer, who can determine the cause of the issue. A structural expert can also pinpoint the severity of the damage and can advise you on what will need to be done to repair it.

Get Estimates From Reputable Foundation Repair Experts

Once you have the opinion of the structural engineer, you can request quotes from foundation repair companies on the cost and scope of the repairs needed to fix the problem. This information is critical in helping you determine whether to continue perusing a property because you will have a better understanding of how much bargaining power you have. If the damage is extensive, the cost is prohibitive and the risk is too high, it may be time to walk away and look for a more stable investment (quite literally).

Use the Foundation Issue to Successfully Negotiate a Better Price

Homes are often sold with foundation issues that have not been addressed or even examined by an expert because sellers feel the cost will be prohibitive. These sellers understand that the presence of a foundation issue will negatively affect the number and amount of any purchase offers they receive.

Since many private buyers may also feel a home with a foundation issue is not a good fit for them, investors are in an excellent position to purchase these properties at attractive prices. The information you received from the structural engineer and the expected cost of the repairs are powerful bargaining chips that will add weight to any offer you make on the property.

Hire a Reputable Company to Manage Repairs

If you do decide to move forward and complete the purchase the property in its present state, make sure that the foundation company you ultimately hire is reputable and experienced in the type of repair that is needed and that they offer a full warranty on the repair. If you have never worked with them before, make sure that you obtain and verify several references from their past customers and clients before hiring them.

Use our contractor hiring guide to simplify the process: Download it here.

Disclose, Disclose, Disclose

A home with a past foundation problem is not uncommon, especially in regions of the country where soil problems, frequent drought conditions, fault lines and other environmental issues can affect the health of the foundation. However, it is vitally important that any future buyers you market the property to are fully informed of past foundation issues, as well as the repairs that were made to address them. Fully disclosing the problem and the steps you took to have it repaired is the best way to protect yourself from future liability, should a buyer become dissatisfied after purchasing the repaired property from you.

Now that you know how to effectively investigate, evaluate and address foundation issues, you can execute your next investment property purchase with more confidence than ever!

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Posted in Real Estate Investing