Inspection finding... how bad is it?

[newgirl]

OK, situation in a nutshell:

About a month ago, ideal house came on the market. Partner and I decided to make an offer, they went with another offer. Today I get an email saying the house is back on the market. I sent our realtor out sniffing and he came back with this:

Our buyer's inspector pointed out a bow in the back wall at the property and it prompted the buyer to cancel before we could get a specialist out to look at it.

We had XXX company out to do an analysis.  The determination was the all foundation walls are structurally sound.  To ensure no further movement occurs and to straighten the back wall he suggested a wall anchor system which carries a 25-year warranty with unlimited transferability to subsequent owners.   The sellers are going to move ahead with the project. 

Since the ground needs to be thawed before the system can be put in place, the owners will pre-pay XXX company and get on the calendar for spring.

This is all the information I have at the moment. Obviously we'd conduct our own inspection if we decided to move forward, but I'm curious what you all think about the seller agent info...

[trollwithamustache]

It doesn't have to be a big deal but it may be a cost.  People freak out about foundation stuff, but it can all be worked through to turn unknowns in to dollars and man-hours of work.

You want to have your inspector look at this, and you want to get a quote or two from your foundation contractor to compare.  Other appropriate specialists may propose something different and you want to understand why. 

If cashflow isn't an issue, the preference might be to have the cost of the property reduced by the cost to do the work. Your seller prepaying the contractor means 1.) he is paid regardless of when the work gets done, and 2.) your contractor does not work for you.

[newgirl]

If cashflow isn't an issue, the preference might be to have the cost of the property reduced by the cost to do the work. Your seller prepaying the contractor means 1.) he is paid regardless of when the work gets done, and 2.) your contractor does not work for you.

Thank you so much for pointing this out - I can't believe that didn't even cross my mind but it's an excellent point. It makes way more sense to reduce the purchase price and fund the repairs ourselves.

[Bicycle_B]

Maybe verify with the contractor that their work is guaranteed to fix the problem?

I mean, what if even this contract is a BandAid relative to the scope of the true problem?

Just thinking out loud here.  I sold a family home that had water problems, and was in an area where I no longer live.  When I visited later, the new buyer had made cosmetic changes and put the house on the market for a higher price than I ever imagined.  Drainage issues had supposedly been resolved, but the claimed resolution did not appear at all adequate to me based on experience.  The family member who bought the home originally hadn't recognized the problem until too late, and I think the next buyer won't either.  I hope your case goes better than that!  :)

[newgirl]

Maybe verify with the contractor that their work is guaranteed to fix the problem?

I mean, what if even this contract is a BandAid relative to the scope of the true problem?

Just thinking out loud here.  I sold a family home that had water problems, and was in an area where I no longer live.  When I visited later, the new buyer had made cosmetic changes and put the house on the market for a higher price than I ever imagined.  Drainage issues had supposedly been resolved, but the claimed resolution did not appear at all adequate to me based on experience.  The family member who bought the home originally hadn't recognized the problem until too late, and I think the next buyer won't either.  I hope your case goes better than that!  :)

That was definitely my immediate thought - "OK, WHY did this happen in the first place, and is this proposed solution actually the correct one for the problem, or just the cheapest one?" Unfortunately I am not very construction savvy, so I'm really grateful to the MMM readers chiming in here. If we decide to move forward we'll definitely get a specialist contractor to come out there and give us their opinion and estimate to compare against the report from this other inspection.

We have a lot of due diligence to do here, for sure. I'm checking out the company they're proposing to contract the repairs out to and so far they appear to be above board, but the most I'm thinking about it the more I don't want to deal with this prepay the contractor scenario at all.

[Bicycle_B]

Keep researching.  I'm no expert.  It seems equally possible to me that the seller made the contract in good faith, and would be happy to accept a price difference instead, assuming the repair contract does not have a withdrawal/revocation penalty.

Totally deferring to remarks by more experienced real estate people as they filter in, though... this board is full of people with more real estate experience than I have. 

[TrMama]

My biggest concern would be how this issue (and its possible resolution) will affect your ability to sell the property in the future. There's no way I'd be comfortable buying a place I wouldn't be able to sell later.

[Jon Bon]

OK I had this happen to me on my first house.

Went into contract to buy the house in 2009. Obviously I had the leverage here due to the market conditions. Basically freaked out because it was my house and I was 25 years old. I worked through it, did research, got estimates, worked with the seller and got a nice check at closing.

Basically in many cases a bowing foundation on a house is caused by poor drainage (as was the case here). So check that first of all. More often then not simply getting the water away from the house through gutters, drains, grading etc will prevent any future problems. Any interior work/bracing etc is for peace of mind and for resale.

About 4 years later I opted to sell the house as the market had gotten A LOT better and the show was on the other foot in terms of leverage. I had an offer quickly but it fell through I did disclose the foundation issue. Part was due to the basement foundation but the other was due to a MASSIVE mistake by the realtors agent. Basically the real estate agent put into the contract that the BUYER would pay her fee, and not the seller, so that was going to cost her the entire commission. Needless to say she killed the deal. Obviously an agent has a lot of sway over a single first time home buyer.

I got a second offer a week or so later, closed no problem.

In terms of selling I would disclose this early and often, that way there is no 11th hour freak outs by the buyer. YMMV.

[HawkeyeNFO]

If you go ahead and make an offer:  Knowing that there is a potential foundation issue, at the time of inspection, I would hire a foundation guy to some in and give you an opinion.  This is in addition to the regular inspection of course. 

I would not accept their deal of having their person fix it at a later date.  What if he finds an additional issue when he begins work?

[newgirl]

Basically in many cases a bowing foundation on a house is caused by poor drainage (as was the case here). So check that first of all. More often then not simply getting the water away from the house through gutters, drains, grading etc will prevent any future problems. Any interior work/bracing etc is for peace of mind and for resale.

Thank you, this is really good to know. The house is near a lake (not sure if that matters at all), but also up on a hill. Now that I think of it, the backyard is sloped so that it does downward towards the house. So if the bowing is on the back wall, that may be the reason right there. That would probably be a tough (expensive) problem to fix.

We'll pay extra attention to the drainage and grading if we move forward. Hopefully once we get the full seller's disclosure there will be more information to help us pinpoint the cause.

[newgirl]

It's not the full report but here's what the contractor who is installing the wall anchor had to say. Sadly, looks like I was right that the cause is the yard:

Inspection of the home revealed a bowed wall on the west side of the home. The other walls in the basement appear to be in
good condition. The back wall bow is due to hydrostatic water pressure from the slope of the yard and has likely taken place over several years time. The presence of a sump pump and drain tile helps the situation with the wall, however by installing our ground anchor system we will be able to further stabilize the wall.

With this system installed we will be able to stabilize and prevent the wall from coming in further with the slight chance that the wall may be able to be straightened.

I'm bummed but I think at this point we walk away. The slope of the yard is pretty dramatic and not something that can be easily changed. If this is going to be an ongoing issue with water intrusion that screams money pit to me. Based on this letter, they are band-aiding the problem but not addressing the underlying cause.

[trollwithamustache]

It's not the full report but here's what the contractor who is installing the wall anchor had to say. Sadly, looks like I was right that the cause is the yard:

Inspection of the home revealed a bowed wall on the west side of the home. The other walls in the basement appear to be in
good condition. The back wall bow is due to hydrostatic water pressure from the slope of the yard and has likely taken place over several years time. The presence of a sump pump and drain tile helps the situation with the wall, however by installing our ground anchor system we will be able to further stabilize the wall.

With this system installed we will be able to stabilize and prevent the wall from coming in further with the slight chance that the wall may be able to be straightened.

I'm bummed but I think at this point we walk away. The slope of the yard is pretty dramatic and not something that can be easily changed. If this is going to be an ongoing issue with water intrusion that screams money pit to me. Based on this letter, they are band-aiding the problem but not addressing the underlying cause.

Did you get a 2nd opinion or is this just the sellers guy?  Anchors will indeed stabilize the foundation from movement. But, they do nothing to address the hydrostatic pressure, nor do they strengthen the wall to resist more hydrostatic pressure from uphill.  Others have mentioned drainage, but with the hill something more involved like a fairly large French drain may be appropriate as part of a multi part fix.   

This situation is sounding a bit more complex, so that means either finding the right contractor, consulting a geotechnical/soils engineer or yes, walking away.

[newgirl]

It's not the full report but here's what the contractor who is installing the wall anchor had to say. Sadly, looks like I was right that the cause is the yard:

Inspection of the home revealed a bowed wall on the west side of the home. The other walls in the basement appear to be in
good condition. The back wall bow is due to hydrostatic water pressure from the slope of the yard and has likely taken place over several years time. The presence of a sump pump and drain tile helps the situation with the wall, however by installing our ground anchor system we will be able to further stabilize the wall.

With this system installed we will be able to stabilize and prevent the wall from coming in further with the slight chance that the wall may be able to be straightened.

I'm bummed but I think at this point we walk away. The slope of the yard is pretty dramatic and not something that can be easily changed. If this is going to be an ongoing issue with water intrusion that screams money pit to me. Based on this letter, they are band-aiding the problem but not addressing the underlying cause.

Did you get a 2nd opinion or is this just the sellers guy?  Anchors will indeed stabilize the foundation from movement. But, they do nothing to address the hydrostatic pressure, nor do they strengthen the wall to resist more hydrostatic pressure from uphill.  Others have mentioned drainage, but with the hill something more involved like a fairly large French drain may be appropriate as part of a multi part fix.   

This situation is sounding a bit more complex, so that means either finding the right contractor, consulting a geotechnical/soils engineer or yes, walking away.

This is the letter from the seller's contractor. We discussed a little further and walking away is the right decision for us for exactly the reasons you state - the underlying cause of the pressure is not being addressed in these repairs, and we decided that we don't want to take that on ourselves.

There's always another house, right? :) And the longer we wait, the bigger downpayment and/or repair fund we will have. We'll just keep growing our little house 'stache.

Thank you Mustachians for all your help and education on this issue

[tralfamadorian]

Glad to hear that you all made a decision that was right for you.

For anyone reading for the future, IMO there was an important missing specialist in the route that the sellers took. They went straight from inspector to contractor. In my experience with foundations, you want to go from the inspector who raises a red flag on a potential foundation issue to a structural engineer who will be able to make professional recommendations for foundation repair, drainage modifications, etc then to the contractor(s) for a quote. 

[Dicey]

Glad to hear that you all made a decision that was right for you.

For anyone reading for the future, IMO there was an important missing specialist in the route that the sellers took. They went straight from inspector to contractor. In my experience with foundations, you want to go from the inspector who raises a red flag on a potential foundation issue to a structural engineer who will be able to make professional recommendations for foundation repair, drainage modifications, etc then to the contractor(s) for a quote.

This is excellent advice. Our neighbors did this, thinking it would solve their (and consequently our) drainage problems. They hired a general contractor instead of a specialist and told us everything would be "taken care of". When the job started, DH went over to meet the contractor. He realized the contractor did not understand the full extent of the problem and his "solution" was deeply inadequate. DH walked him onto our property, showed him the effect on our side and politely mentioned that if his work didn't solve the problem, we would be forced to sue, as has already been recommended by the City Inspector. DH also politely mentioned his qualifications. The contractor realized he had to change his plan and did so. It may have helped that two of his subs work with my husband. We have no idea how much more it cost our neighbors, but we just had a major storm and everything seems to be draining nicely now.

Water is a powerful force of nature and is never to be dealt with lightly. Newgirl, you are wise to walk away.

[coopdog]

Glad to hear that you all made a decision that was right for you.

For anyone reading for the future, IMO there was an important missing specialist in the route that the sellers took. They went straight from inspector to contractor. In my experience with foundations, you want to go from the inspector who raises a red flag on a potential foundation issue to a structural engineer who will be able to make professional recommendations for foundation repair, drainage modifications, etc then to the contractor(s) for a quote.

Exactly. I've even had a client hire the structural engineer to come back and certify the contractor's work. That gives everyone a nice neat paper trail.