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Selling a House With Foundation Issues
Although selling a house with foundation issues causes delays, price discounts, and lengthy negotiations, you can still reach the closing table. That is if you use the right strategy and identify the correct buyer pool for your house early on.
There are two ways to sell a house with foundation issues— sell as-is to a cash buyer or make repairs and sell traditionally. Among these two, the former is preferred because no lenders are involved. Many houses with foundation problems fail to sell in the open market because mortgage lenders don't approve the mortgage loans of potential buyers.
This blog covers everything you need to know about selling a house with foundation problems— from its causes to repair costs, and how you can sell for a fair price.
Causes of Foundation Problems
Before you can address a foundation issue on your house, you must first identify its cause. Generally, soil and house construction are the main culprits for foundation problems.
Poor Construction
Before creating the foundation of a home, it is crucial that the soil be compacted to avoid differential settlement. If not, no matter how skilled the foundation repair contractor is, the construction of the foundation would be very poor.
Erosion
Sogging soil due to inadequate or poor drainage can cause soil erosion. This can destabilize your home's foundation leading to uneven settling and buckling walls.
Aside from downspouts and clogged gutters, erosion can also be caused by slopes leading to the foundation or significantly low areas that create pooling.
Soggy Soil
Plumbing leaks, sewer breaks, and heavy rain cause the soil to swell and expand. When this happens, the foundation would be pushed upward.
Shrinking Soil
Due to hot weather, the soil can dry up and shrink, which is a major cause of foundation shift. It is also possible that trees near the foundation suck the moisture in the soil causing it to shrink.
Signs of Foundation Issues In a House
To accurately identify foundation problems, a professional inspection is necessary. However, if you're short on budget, a simple DIY foundation inspection can also tell you that your house has major foundation or structural problems.
Here are some indicators that you should look out for:
Exterior Signs
- Sinking or settling foundation
- Gaps between the trim and the house
- Hairline cracks and large cracks
- Foundation upheaval
- Gaps between the pavement and the garage door
- Step cracks
- Columns, porch, or deck that pull away or lean on the house
- Rotating wall due to the pulled-up foundation
- Separated or leaning chimneys
- Exterior walls that are bulging or exhibiting severe bowing
Interior Signs
- Gaps or cracks in the foundation, the windows, and doors
- Windows and doors that do not open or close
- Sloping, sagging, or uneven floors
- Cabinet doors that won't close
- Wood floor planks that are sagging
- Pooling water around the house's foundation or wet crawl space
- Cracks extending from door or window corners
- Walls that are pulling away from the ceiling or floor
- Fireplace cracks and leaks
- Bowed walls or walls that do not appear straight or bulging
- Stair step cracks
How Much Does Foundation Repair Cost?
Usually, a foundation repair cost is between $2,153 and $7,736according to Home Advisor. Of course, aside from the type of foundation problems, the inspector would find in your property, factors such as the material used in your home's foundation and location can also impact this cost.
It is not unusual for foundation repairs to incur more than $40,000 if the problems are major and the property is quite large.
Here are the specific costs of the most common house foundation problems:
- Minor Cracks in Poured Concrete: This is caused by soil moisture variation or settling soil. Cracked foundation repairs usually cost $350 to $50,000.
- Polyurethane Foam of Epoxy Injection on Minor Cracks: This is done to vertical cracks to avoid moisture ingress. Expect to pay $300 to $800 for this.
- House Shifting: Repairing this can cost $800 to $30,000. Some of the most common solutions are mudjacking, wall reinforcement, and foam jacking.
- House Sinking or House Settling: This can be fixed by raising the foundation by pumping concrete under it. A foundation repair contractor usually charge $1,000 to $25,000 for this solution.
- Bowing Foundation Walls: Reinforcing walls with steel rods and anchor plates as well as putting fiber strips combined with epoxy can fix this issue. This repair will run you $700 to $15,000.
- Basement Underpinning: Excavation and installation of hydraulic piers cost around $1,000 to $3,000/pier.
- Crumbling Foundation: Crumbling foundations can either be fixed by polyurethane fillers or epoxy. But in major crumbling, pier installation may be necessary. Expect to pay $500 to $20,000 for this repair.
Aside from the issues mentioned above, you also have to pay for a structural engineer, soil testing, a building permit, and repair of the hidden issues uncovered during the foundation repair of the foundations.
Does Insurance Cover Foundation Repair?
Yes. Most homeowners insurance covers foundation repairs. However, their dwelling coverage may not apply to your home if the foundation damage is caused by floods and earthquakes. It would be better to purchase flood and earthquake insurance that covers your home's foundation repair.
Moreover, if the foundation damage is caused by normal wear and tear, most insurance companies do not cover it as well. Many policies only cover damages caused by accidents or any unfortunate events. They consider normal wear and tear to be caused by the homeowner's negligence.
Can You Sell a House With Foundation Issues?
Yes. You can legally sell your house with foundation problems. However, the sale won't be as fast and easy as typical home sales. You'll go through a lot of hoops, especially when selling as-is in the local real estate market.
To illustrate, most lenders do not approve mortgage loans for houses with foundation problems. Lenders believe that houses with this type of foundation damage are more at risk of being foreclosed.
And since many potential buyers depend on mortgage loans to purchase a home, they get dissuaded from buying a property when they find out that it has foundation problems.
If you really want to sell your property in the open market, it would be better to repair the foundation problem. However, if you do not have the budget, a better option is selling your house to a cash buyer. We'll discuss these options in a later section so keep on reading.
Should You Fix Foundation Issues Before Selling?
Whether or not you should make foundation repairs before selling your home depends on where you plan to sell and your circumstances.
If the market is in favor of sellers, it doesn't really matter if you make repairs or not— your home is surely going to sell.
Meanwhile, if it's a buyer's market, expect that it can take ages for you to sell your house with foundation problems. The potential buyer also has a lot of negotiating power so it would be better to make repairs before selling.
On another note, you aren't required to make a foundation repair when you sell to a cash buyer.
They'll make the repairs for you, although, they'll probably discount its cost on their offer. This is still the best option since you won't have to deal with repairs at all. Aside from money, it will save you time and energy.
Who Buys Houses With Foundation Issues?
The typical buyers of houses with foundation problems are real estate investors, developers, house flippers, and landlords. These potential buyers are interested in turning the house into an investment.
For instance, real estate investors may make necessary repairs and wait for the market value of the property to appreciate before selling. Meanwhile, house flippers would fix all the foundation problems and sell the house immediately after for a much higher price.
Developers, on the other hand, don't really care about the house but the land where it sits. If they bought a house as-is and the foundation problems are extreme, they would rather demolish it and build a new one.
Although retail buyers can also take interest in houses with foundation problems, mortgage lenders make it impossible for them to buy such homes. Thus, your buyer pool is really limited to investors and cash buyers.
How to Sell a House With Foundation Problems
To sell a house as-is when it has a foundation problem, there are two routes you can take— make necessary repairs or sell the home as-is with the help of an agent or sell to a cash buyer or real estate investor.
Sell the Home As-Is to a Cash Buyer
Dealing with foundation damages isn't easy or cheap. It would require careful planning as well as a few thousand dollars to repair depending on the severity. To avoid the stress brought about by this structural damage, sell your house as-is to a cash buyer or cash investor.
Cash buyers are exactly that— they purchase homes for cash including properties with foundation problems.
Here are some of the reasons why you should prioritize selling your house with bad foundation to a cash investor:
No Repairs
The first, and perhaps, the main reason why you should sell to a cash buyer is that they don't require foundation repairs.
Even if the foundation damage and its other structural issues are extreme, they would still give you an offer. They'll do the work for you so you can get to the closing table without lifting any finger to fix the structural damage.
No Appraisal
Home appraisal can be very expensive, but you can still get a cash offer even without this. Cash buyers typically assess your home and then base their offer on it.
Less Risky
Cash sales aren't at risk of falling through because there is no mortgage approval involved. The buyer has enough funds to buy your house with damaged foundation and is only waiting for the sale to close before transferring it to your bank.
Faster Home Sale
Cash buyers guarantee a fast real estate transaction for houses with foundation issues. They remove lenders from the picture so there's no more mortgage approval that can delay the sale.
No Commission Fees
You don't need real estate agents when selling to a cash buyer. Hence, you won't have to pay a 5% to 6% commission fee during closing.
Flexible Sales Timeline
You have full control of the sales timeline if you sell to a cash buyer. You can communicate when you want to close or move out of the property.
Selling your house with a foundation problem to a cash buyer will be one of your best life decisions.
If you think this is the right path for you, you can start by asking for cash offers. Many cash buyers give no-obligation cash offers so you can compare them before deciding to choose a company.
The process of selling to a cash buyer is fairly straightforward. After giving them a call or filling out a form, you should expect them to visit your home so they can formulate an accurate offer. If you accept their offer, you then have to sign a contract and set a closing date.
During closing, you'll get your money in your bank and the deed will be legally transferred to the cash buyer's name.
Sell With a Real Estate Agent
Although difficult, some home sellers still take the traditional route in selling their houses with foundation issues. They hire the best real estate agent to help them plan a marketing strategy, stage the house, list in the LMS, schedule showings, and more.
However, it should be noted that no matter how skilled the real estate agent is, if the foundation issues are severe, selling the home as-is in the open market would still be very challenging. It's nearly impossible to find a buyer that is ready to pay market value price in exchange for a problematic home.
Thus, if you really want to sell with a real estate agent, you must make foundation repairs first with the help of a structural engineer. This will help you find more potential buyers and set a higher price point. As stated earlier, most home insurance covers foundation repairs as long as they aren't caused by earthquakes, flooding, and wear and tear.
This is ideal if you have the time and energy to make major repairs. If you need to sell fast because you are divorcing or moving to another city, then selling traditionally isn't for you.
Frequently Asked Questions
How Long Do Foundation Repairs Take?
Minor foundation repairs like fixing a slab only take one to three days to finish. Meanwhile, major home repairs related to the foundation may span from three to four weeks realistically.
Some factors that affect the length of time needed to fix foundation damage are the repair method, the depth of excavation needed, the location of the property, and the number of piers needed.
What Are the Biggest Mistakes Homeowners Make Related to Foundation Problems?
There are actually five common mistakes that homeowners make when their house has foundation issues.
These are ignoring the warning signs of foundation problems, delaying major repairs, renovating the property before fixing the foundation, planting large foliage and trees near the foundation, and not installing a good gutter system that can destabilize the soil under the foundation.
If the house is being sold in the market, not disclosing foundation issues is also a huge mistake that can lead to the seller being litigated.
Do I Need to Disclose Known Foundation Issues to the Buyer?
Yes. Disclosing foundation issues to the buyer, even if you have fixed them, is extremely necessary and it is also legally required in many states.
If a home seller intentionally withheld information so the market value of the property won't take a dip and the seller finds out, the former can face a lawsuit. This is especially true if an accident occurred due to known foundation damages.
No matter how minor the signs are (ex. damp crawl spaces, hairline cracks, etc.), they should be disclosed.
Do Lenders Approve Mortgage Loans for Houses With Foundation Issues?
Mortgage lenders rarely approve loans for houses with foundation issues because it greatly affects the market value of a property.
However, there are some mortgage programs that finance houses with foundation issues and even lend funds for needed repairs. These include the 203K FHA Rehab Loan (also referred to as FHA construction loans), Freddie Mac CHOICERenovation Mortgage, and Fannie Mae HomeStyle Renovation Mortgage.
Note, though, that these loans would only be approved if the buyer has a good credit standing.
What Happens If a Buyer’s Home Inspection Uncovers Foundation Issues?
If the buyer's home inspection report uncovers foundational problems, they would probably ask for its severity and the cost of fixing it.
They would then use the information they have gathered from the inspection and the foundation repair company to renegotiate the terms of the sale. After all, they are not buying a move in ready home, but instead a home with a major problem.
It is also possible for the sale to fall through if the seller withheld the foundation issues from the buyer. This often happens, not only because most buyers develop a distrust of the seller but because of the difficulty of getting a mortgage loan.
Can the Buyer Pull Out of the Deal Due to Foundation Issues?
Yes. Potential buyers from the open market can pull out of a home sale due to foundation issues, especially when it wasn't disclosed by the seller even though it is caught early on.
Meanwhile, if you are dealing with a cash buyer, there's very little chance that they'll pull out of the sale. Most probably, they're just going to make another offer considering the repairs they have to make on your house with foundation problems.
Final Thoughts: Selling a House With Foundation Issues
The discovery of foundation problems is a deal breaker for many. If repairs aren't made or you didn't sell at a lower price, you wouldn't see a successful home sale in the traditional market.
All hope is not lost, though, as you can still sell your house as-is to a cash buyer. This is very much suggested if you want to avoid making repairs yourself!
Ready to sell your house with foundation issues? Reach out to us at House Buyer Network! We'll make a cash offer for your property and do all the work for you!
Call us at (855) 835-2544 or fill out our form below to start selling your house with foundation issues.
