Thinking about buying a house with foundation issues? Know the signs. Know the costs of foundation repairs. Make an educated decision.
Foundation issues can be scary to find when buying a house. If you find them during the process of buying a home, should you run or stick it out?
Is it smart to take on a home with potential foundation problems? How do you know if your home has them? Can you fix it? Is this going to be a disastrous move or a savvy investment?
Homes with Foundation Problems in VA
Foundations literally hold your house up. So, problems here are not something to take lightly.
Few people choose to buy a home in this type of condition. Sometimes it is pretty obvious that a property has issues, even from pictures online. The roof is slanted, the steps have become detached from the home, or there are visible exterior cracks.
This is only when it has gotten pretty bad and the property hasn’t been maintained of fixed for a long time. Often you won’t know if there are problems with the basement, crawl space or foundation until you completed a thorough walk through, or had a professional home inspection or appraisal.
At this point, you may have already signed a binding real estate purchase contract, given notice to your old landlord, got the family excited, and put down a sizable deposit.
Your first instinct may be to panic and run the other way. That may be warranted in some cases. Though foundation repairs can be quite common. Especially in areas like Texas, California and Virginia. It doesn’t have to be the end of the deal. Though you do absolutely need to know the extent of the required repairs, how long it will take to fix, and how it changes your finances.
Foundation Related Issues: Don’t Ignore Them
Left uncured foundation problems can lead to a variety of other pains.
Cracks are the most obvious. Cracks can cause leaks. Water and moisture can create poisonous mold, stains, warped flooring and doors and windows that no longer close properly. This can all create bad odors that just keep coming back, as well as electrical and fire hazards. Eventually, of course, the place is going to crumble.
The other unexpected issue this presents to home buyers is financing. Most mortgage lenders are not going to finance a house with structural defects like this. It is too much of a risk for them. This also means that until repairs and improvements have been made, you won’t be able to refinance the property. It is going to be very hard to resell, unless you offer it at a fabulous discount to a cash buyer.
How to Spot Problems
Sellers and Realtors can be very creative in masking common indicators of foundation issues. There is a very high chance you won’t notice them in the five minutes of walking through a home during your preview.
Always get a professional home inspection before buying a home. Make sure your offer and contract gives you the legal right to inspect and if need be, to cancel the contract and get your deposit back.
If you suspect there may be more to investigate and your inspection or appraisal didn’t cover it, ask a local foundation specialist for a free inspection and quote.
You Found A Problem, Now What?
Depending on the wording in your real estate purchase contract you will have several options.
● Cancel the purchase and get your deposit back
● Have the seller make the repairs before the closing
● Have the seller give you a credit for a percentage of the repair costs at closing
● Renegotiate a lower sales price
Note that if you are using a mortgage loan to finance the property you may have to talk to your loan officer about finding a program that will allow this type of property.
The Pros of Buying Houses with Foundation Problems
While it may seem scary, there may actually be advantages of buying one of these homes. In fact, many real estate investors specifically look for distressed properties.
These homes should be sold at sizable discounts. If you are already in contract on one, renegotiate. Don’t just ask for the amount of repairs. Make sure you cover all your time and a little extra cushion too. Distressed properties can sell for as little as 40 to 70 cents on the dollar.
Fewer people buy these properties because they aren’t aware of what they really cost to fix. That means less competition from other buyers, and better deals. If you want to find them look for the obvious signs when driving the neighborhood, ask Realtors and local real estate wholesalers, or check out the HUD home store for foreclosure properties.