Can A Home Foundation Problem Impact A Real Estate Transaction?
Everyone knows it’s important to have a solid foundation for your home for various reasons such as earthquake damage prevention. But did you know that a problematic foundation can have an effect on buying or selling your home as well? Many people don’t think to consider that a home foundation can be an issue during real estate transactions.
Property foundation problems will generally reduce the value of a home. How much depends on the severity of the problem. Initial settlement of a foundation following construction of a new home is usually not a cause for concern even if it has caused minor cracks. But foundations that continue to move years later can pose a serious problem to your home’s value. The condition of the foundation is a major consideration. If the location and amenities are desirable enough to a buyer, the foundation problems may not be a deal breaker but could cost the owner a significant amount to repair. The good news is that everything is fixable it’s just a matter of knowing at what cost.
As a buyer, many agents recommend that a buyer hire a structural engineer to analyze the foundation’s condition. While home inspectors can identify a foundation’s general problems, they are generally not qualified to give a full assessment of the causes or extent of repair needed.
Investors and buyers that are willing to renovate are much more focused on the structural integrity of the home compared to most buyers. If a realtor is working with a buyer who is looking for a home in move in condition, they will steer away from properties that have foundation issues. As an agent, they have the duty to point out basic structural and mechanical issues that clients may overlook if they get excited about the superficial aspects of the home.
As a buyer, many agents recommend that a buyer hire a structural engineer to analyze the foundation’s condition. While home inspectors can identify a foundation’s general problems, they are generally not qualified to give a full assessment of the causes or extent of repair needed. Once you have an engineer’s report, it’s good to get estimates from contractors who specialize in foundation repair. A good foundation repair expert will provide you with a detailed list of what needs to be done to restore the foundation. Buyers can use these estimates in negotiations with the seller. As a buyer with estimates readily available, they are in a better position to negotiate a fair price. As a seller you may want to have a different party come in to provide estimates if you suspect this might become an issue in your real estate transaction. “Ideally money should be kept in escrow from the sale to cover the cost of the foundation repair, if one is needed,” according to real estate agent, Gail Robinson of William Raveis Real Estate. “If the seller can’t afford to do this, then the buyer should figure out the worst case scenario and factor that into the sale price,” she adds. Once a contract is drawn up, it’s a good idea to have an engineer certify the repair plan and inspect the job during and after it’s completion.
Homes with structural problems make it hard to appraise them and difficult to finance. By being proactive and making foundation repairs to your home before you decide to sell, you will place yourself in a better position to get what you deserve from the value of your home. Even if you’re not planning to sell it’s a good idea to make sure your foundation is in good shape before planning any upgrades such as new windows, adding a deck, patio or walkway or finishing your basement to make sure these are sound investments. This way you won’t have to worry about rework and paying more to fix it later.