Should I buy a house with structural problems?
Wednesday, October 17, 2018
You can determine whether a house with structural problems is a good buy by getting answers to the following three questions:
- What is the cause of the problem?
Your home inspector can talk to you about the extent of the problem and point out where there is visual evidence. In the picture above, for example, there is a stair-stepping crack with “differential,” meaning that one face of the crack has moved forward of the other. Unfortunately, evidence of structural problems in the early stages are not always recognizable to the average homebuyer. Occasionally we inspect a home where the buyer tells us that “the house seems alright to me but I thought it was a good idea to have a home inspection anyway,” only to have to advise them that they have significant structural issues that require repair.
We know of three primary causes for structural problems due a defect in the ground under a home: soil subsidence (the washing away or movement of the soil, typically from a higher to lower elevation), clay soil (which expands during wet weather and contracts during dry spells, causing up-and-down heaving), and sink holes (the partial or complete collapse of the limestone karst layer under a home, causing moderate to severe settlement)
To an extent, the cause of the problem determines what type of repair is required. The next step is to have an evaluation by a structural engineer, who will also provide a plan for repair like the one shown below for the location of steel piles, often to referred to as “pins,” around the perimeter of a home. You can also start with a foundation repair contractor.
2) What is the cost of the repair?
The seller or seller’s realtor will sometimes provide an estimate from a local foundation repair company to the buyer as part of the disclosures. Read the estimate carefully. Does it include only stabilizing the home? Are cosmetic repairs to the exterior included? How about repairs to the interior cracks, and door and window repairs?
What is the guarantee? Typically, a foundation repair company only guarantees the area in which they make repairs. So if settlement at the back left corner of the home has been repaired, a new set of cracks in the front left corner of the home in the future represents additional work that you have to pay for.
We occasionally inspect a home with clear evidence of structural distress, where the sellers present us with documentation that the problem was repaired by a licensed foundation contractor, based on specifications prepared by a structural engineer—only to have to advise them that the problems we saw are in the opposite corner of the home from the repaired area shown in their documentation drawings.
3) Is it a “rented suit”?
There’s a joke that Warren Buffet, the billionaire investor, likes to tell about evaluating long-term risk: “A fellow traveling abroad got a call from his sister to tell him that his dad has died. The brother replied that it was impossible for him to get home for the funeral; he volunteered, however, to shoulder its cost. Upon returning, the brother received a bill from the mortuary for $4,500, which he promptly paid. A month later, and a month after that also, he paid $10 pursuant to an add-on invoice. When a third $10 invoice came, he called his sister for an explanation. ‘Oh,’ she replied, ‘I forgot to tell you. We buried dad in a rented suit.’”
Some houses with structural problems are like Warren’s rented suit. If the cost of repair only fixes the damage done by the geological defect under the home, but not the underlying cause, then the settlement or heaving will continue and may keep you paying new repair bills every few years.
Talk to the structural engineer that prepared the repair plan about the likelihood of further settlement or heaving in years to come. There are no guarantees, only a judgement of possibilities. So it’s a good idea to add in some additional future cost when you calculate whether the price of the house plus the cost of immediate repairs equals a good deal.
For tips on recognizing structural issues, see our blog post How do I recognize serious structural problems in a house?
If you are concerned about the possibility of sinkhole activity on your property, find out more at these blog posts:
- What causes sinkholes?
- What are the warning signs of a sinkhole?
- How can homebuyers protect themselves against buying a house over a sinkhole?
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To learn more about exterior walls and structures, see these other blog posts:
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