Is buying a house with a cracked foundation a good idea?

Buying a home is probably the largest real estate investment any of us is likely to make in our lifetime. So what do you do when you’ve found a home that seems like it could be your dream home at last, but you discover the home has foundation cracks? Do you walk away from your ideal home? Or is buying a home with foundation issues a good idea? This short read ought to give you a fair idea of what your options are.

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To begin with, it is unlikely that most of us would pay attention to signs of foundation damage while looking at buying a house. Even if you did notice small cracks in the wall or in the foundation, you’d probably think you could fix the issue later.

The truth is, most signs of foundation damage only come to light during home inspections. And while home inspectors may bring the fact that the property is a house with foundation issues to light, you will need to hire a structural engineer to find out the true extent of the damage.

While hiring a structural engineer may mean spending more money out of pocket, it also means you have a clear understanding of how structurally sound the home is, as well as how much foundation repairs are likely to cost. You could take these findings to the seller, and use the reports to either ask the seller to fix the damage before you close on the sale or settle for a lower price than what was initially quoted.

On average, the costs to repair minor cracks in the foundation fall around the $3,500 mark, but more serious damage could cost as much as $40,000 to rectify.

Signs of foundation damage

1. Uneven or sagging floors
2. Doors and windows that do not close properly
3. Cracks in the walls above doors and windows
4. Large cracks in concrete floors, most noticeable in basements and garages
5. Horizontal cracks on basement walls and drainage issues
6. Bowed basement walls
7. Excess moisture and mold in the basement

Should you walk away from your dream home?

Homes with foundation problems are not always bad buys. You could always ask the seller to get the foundation repaired before you close on the deal. Even if the seller does not, it opens up the table to negotiations about the final selling price of the home, and this is likely to work in your favor as a buyer.

On the downside, this may make certain loans unavailable to you, such as government-backed loans, unless these damages are satisfactorily addressed in advance. 

Keep in mind that even if the seller has agreed to repair the foundation, you will still need to inform your mortgage lender about these issues.

Even if you need to pay for the repairs yourself, consider taking a rehabilitation loan to help cover the costs. The way it works is that the lender loans you the appraised value of the house after the repairs have been made, and you can use the difference between the home’s price and the loan amount to pay for the repairs.

This works if you have great negotiation skills and bring down the sale price of the home considering the cost of the repairs that you will need to undertake.

While dealing with foundation issues, it is also important to remember that your homeowners’ insurance will not pay for these repairs after you buy the house. Most homeowners insurance policies cover foundation repairs when the damage occurs due to a covered risk, such as a fire or sudden plumbing leak. 

Read more: Buy a haunted house in this market

Written by Narayan Shrouthy. September 14, 2021

Narayan is a content writer for Kukun. With experience in both content writing and editing, Narayan mixes his writing and love for reading with his passion for music. As an active musician, He aims to be a key player in Kukun's content experience.