Should I buy a house with foundation issues?

You’re in the final stages of buying your home, and you hit a bump in the road: Your dream house has foundation issues. A moment ago, you imagined your life in your new home, and now you’re asking yourself if you should go through with the sale or walk away.

Buying a house with foundation problems can be daunting, but not all foundation issues need to be deal-breakers. Here’s how to tell if you should buy a house that needs foundation repairs.

What are foundation issues?

A home’s foundation is a vital part of the structure. It provides a level and stable ground for the house to rest on and serves as the load-bearing center of the home. It also provides insulation from fluctuating temperatures and groundwater.

Foundation issues are just that: problems with this essential component of a home, (quite literally) the bedrock on which it is built. Common foundation issues include:

• Cracks
• Leaks
• House settling and sinking
• Bowing basement walls

Related: Home winterization checklist

Signs of foundation problems and how to spot them

As such an important part of the home, you’ll want to keep an eye out for potential foundation issues. Here are some common signs to look out for:

• Large, zig-zag cracks on exterior walls
• Zig-zag cracks on interior walls
• Damp crawl space
• Uneven floors
• Sagging or rotted floors
• Mold or pests, which indicate moisture
• Unsquare doors
• Door or window frame separation from walls
• Exterior walls pulling away from interior walls

Identifying foundation problems early is key to ensuring that they don’t become bigger problems down the road. Take the time to regularly scan your home’s interior and exterior for cracks, dampness, and other signs that your foundation may need repairs.

When you’re buying a house, a professional home inspection can reveal any issues with the property, including a bad foundation.

Related: What to know about condemned houses

When to walk away from foundation issues

A house with severe foundation problems isn’t just costly to repair: It’s also a safety risk. If left unaddressed, a badly damaged foundation puts the house at risk of collapsing. You may be tempted to walk away with so much on the line.

And if you can’t come to an agreement with the sellers to cover the costs, and the damage is too expensive to fix on your budget, walking away may be your only choice.

If your contract included a home inspection or home appraisal contingency, then you may be able to walk away without losing your earnest money deposit. But if you made a non-contingent offer, you could lose your deposit unless you can prove that the seller was aware of the problems and did not disclose them to you.

What to do if the inspection reveals foundation issues

Foundation issues may delay officially closing on your new home, but it doesn’t have to end the deal entirely. Follow these simple steps to cover your bases:

1. Contact your real estate agent: Your real estate agent about your options going forward — they can be a valuable resource in navigating potential outcomes and also connecting you with reputable contractors to help. 
2. Notify your lender: It’s important that your lender is looped in early so they are aware of the situation — remember, you may have been pre-approved for your mortgage but its final issuance is contingent on the house meeting your lender’s criteria. Your loan officer will also be able to give you more insight on how this might impact your financing or ability to close.
3. Hire a structural engineer: These experts will be able to assess the damage much more closely to give you an idea of the damage's extent and the needed repairs.
4. Negotiate: Now that you have all of the information, you’re in a good position to negotiate with the seller. Strategize with your real estate agent about whether to ask the seller to cover repairs as a part of a seller’s concession or if they will agree to complete the repairs before closing.

When you buy a house with Orchard, you’ll have a local agent with years of experience on your side. Browse listings here.

How much do foundation repairs cost?

Foundation repair costs will depend on the type of damage. The average foundation repair comes in at around $5,000, but smaller fixes, like repairing small cracks, costs just $250 to $800. Once you’ve diagnosed the damage, a local contractor should be able to give you an accurate quote.

Buying a house with foundation issues

You've decided to buy a house with foundation issues, and now you have to address them. Here are some tips to help you:

• Hire a professional: Foundation repairs require the expertise of highly trained professionals and structural engineers. As much as you may want to DIY these repairs, you’ll need to outsource this to the professionals. Bonus: As you shop for contractors, seek out those who guarantee their work. That way, if you have future issues, they may be covered by their warranty.
• Be budget conscious: Foundation repairs can add up fast, with major repairs like stabilizing costing as much as $12,000. Factor these costs into your homebuying budget so it doesn’t feel like a hidden cost.
• Realize this may mean your house isn’t quite move-in ready: An overwhelming majority of homeowners prefer a house that is move-in ready vs a fixer-upper. A house that needs foundation repairs will need ample attention that could delay your plans to get fully settled, but luckily, not by much. The average time to complete a basic foundation repair is 1 to 3 days, with more intensive repairs taking longer.

→ Related: Signs a house will collapse

Will foundation issues affect my financing?

A house with significant foundation issues might be a deal-breaker if you're applying for a government-backed loan, like a Federal Housing Administration (FHA) or Veterans Affairs (VA) loan. These loans have strict structural requirements for homes and specify that a house must have an undamaged exterior, roof, and foundation.

If your home appraisal reveals foundation damage, it will need to be fixed before the loan can be approved. If you’re unable to work out a deal with your lender and the sellers, you might have to walk away.