Is It Possible To Have A ‘Minor’ Foundation Issue?
Minor foundation issues do exist, and some aren’t too expensive to repair. In fact, the foundation issues don’t directly endanger you or your family, but they’ll allow other, more concerning problems – like mold or vermin – to seep into your new home.
Cracks
If the home inspection or personal observation reveals cracks in the walls, ceilings or the home’s exterior, you should consider hiring a structural engineer to carry out a closer inspection of the foundation. The engineer will determine whether the problems are minor and not a small symptom of a much bigger problem.
Small Cracks
Very small cracks, or those a quarter-inch thick or less, are common in old homes that have settled over the years, although it’s quite possible that these small cracks are indicative of a larger problem. Ceiling cracks are another early warning sign of potential foundation problems.
These cracks can simply be repaired and should be since the value of a home is a crucial factor to consider for borrowers going through the approval process. Assuming the foundation is still sound, those small cracks can be patched by a professional, who will likely also recommend that you grade the soil around the foundation to divert water from the house. According to HomeAdvisor, these minimal repairs could cost as little as $500.
Large Cracks
Large cracks indicate the foundation is undergoing a considerable shift, possibly revealing bigger structural problems with the home. Pay particular attention to horizontal cracks in the foundation, or cracks that look like stairs in exterior bricks.
Large cracks will allow water and worse to enter the home freely and cause even more damage once inside. According to HomeAdvisor, you can expect to pay $2,000 – $7,000 to repair a foundation leak.
Moisture
As mentioned earlier, foundation issues don’t necessarily render a home unsafe for its occupants. But they do make the home highly vulnerable to problems, like mold or pests, that moisture causes or worsens.
Look for signs of water or water damage in crawl spaces and basem*nts. Not all moisture or water damage means that there’s a structural problem, but if you find one, make sure you take a hard look at the foundation.
Gaps
If a foundation is shifting, the home’s doors and windows are a likely place to spot problems. If they are hard to open, or if gaps appear between walls and the windows/doors, a problem may well exist.
Likewise, if gaps appear between walls and ceilings, uneven floors or cracked flooring, pay particular attention to the foundation during the home inspection process.
Bowing, Sinking Or Sloping
If the home you’re considering is showing any signs of bowing, sinking or sloping, significant – and costly – problems are likely to arise.
You’ll need to talk with a structural engineer to find out exactly what needs to be done, but significant foundation repairs can easily cost in excess of $10,000.
What Should I Do If The Home Inspection Reveals Foundation Issues?
Foundation issues don’t have to doom the deal, though they’re serious and should never be ignored, even if they look minor. You should understand, however, that a foundation issue will likely cause at least a delay with closing and could endanger your mortgage application and approval status, because lenders are cautious about homes with foundation issues.
Your first call after learning of a foundation problem should be to your real estate agent, seeking their advice on how to proceed. Your next call should alert your lender to the problem.
Your next task is to hire a structural engineer to fully assess the problem. Be sure to ask if there’s evidence of prior foundation repairs, because if a reputable contractor did them, a warranty may cover the cost of the new repairs.
Negotiate A Discount
Armed with the home inspection and the structural engineer’s report, you are in a good position to negotiate with the seller. Remember, if your inspection revealed problems, the seller must disclose those problems going forward.
If the seller can’t or won’t make the repairs for you, they’re going to have to offer the house as-is, which will attract house flippers and other investors looking for a deep discount.
Your goal is to have the seller pay for repairs out of their pocket, or, if they can’t afford the repairs, agree to a steep reduction in the purchase price that will cover the costs of the repairs and compensate you for having to oversee them.
Pay Cash, Or See If Your Lender Will Reconsider With A Bigger Down Payment
In real estate, having access to cash can solve some problems. If it’s at all possible (and the upside of the property is such that, over the long term, it makes sense to undertake costly repairs now and recoup your loss at resale), you may decide to forgo financing and proceed to close with an all-cash deal.
If you can’t swing that, and the foundation problems are minor to moderate, your lender may be persuaded to proceed if you increase your down payment to cover the cost of repairs and the risk they’d otherwise be absorbing.
Consider A Rehabilitation Loan
Although all three government-backed loans require that homes are structurally sound before mortgage approval is final, the government also offers rehabilitation loans to facilitate repairs.
The FHA offers 203(k) rehabilitation loans, which provide funds for major repairs needed to make homes habitable.
The USDA offers rehabilitation loans as well as purchase funds if you’re buying a home in one of its approved districts and earn 80% or less of the area’s median income.
The VA offers additional funds for renovation to qualifying service members and their families.
Fannie Mae and Freddie Mac also offer rehabilitation loans with their HomeStyle Renovation loans and CHOICERenovation mortgages.
