Selling a House with Foundation Issues? How to Keep the Deal Together Even When Your Home’s Falling Apart

“You could see inside the house from outside,” recalls Cape Coral, Florida, real estate agent Mike Lombardo of a home he sold with a worst-case-scenario foundation fiasco.

The house was under contract when the sellers left for the weekend. Little did they know, the toilet line broke while they were gone.

Three days later, they returned to find that rush of water from the toilet line had washed away most of the home’s foundation thanks to the particular type of soil in his Florida market.

The sellers also found a new crack in the foundation about 6 inches wide and several feet long. “We ended up having to get a structural engineer involved and that repair ran almost $50,000,” says Lombardo.

The mere utterance of “foundation problems” scares the living daylights out of homeowners—and it’s true that these issues pose big risks to your home’s safety, value, and appearance. But foundation flaws don’t have to be the kiss of death for your home sale.

We asked real estate experts, structural engineers, and appraisers to share their firsthand experiences on selling a house with foundation issues and what you should do to still get the best price for your home. Here are their insights to 6 of home sellers’ foundation problem FAQs.

Crack in house that will show foundation issues.
Source: (zimmytws/ Shutterstock)

1. How can you tell if your home has foundation or structural issues?

Generally, you won’t be able to officially diagnose foundation or structural issues on your own, but you can check for visible signs that warrant further investigation.

Take a walk around the home and look for cracks or crumbling, or anything else out of the ordinary—like bowed walls, separated siding, or long cracks in the paint throughout the house.

You should also look for cracked tiles or flooring, wetness or a mildew smell, or an uneven floor.

If you find any of those, call a professional from a foundation repair company to come take a look and give you some answers.

According to the Foundation Repair Network, a foundation repair educational resource center for property owners founded by the past president of the Foundation Repair Association of Texas, a foundation inspection takes about two hours.

The Network recommends you collect assessments of your home’s foundation from at least three contractors since foundation work is not a DIY job.

Post a message on your Nextdoor news feed asking your neighbors for foundation repair contractors in the area. Alternatively, you can get matched with a foundation repair company through Thumbtack after providing some information about the suspected problem and your property’s characteristics.

2. How much does foundation repair cost?

This truly depends on the type and severity of foundation issue going on. Lombardo’s worst-case scenario of $50,000 was on the extreme high end of the spectrum.

The national average cost for foundation repair is $4,033, according to HomeAdvisor.

For a general crack in the foundation from a home settling over the years, repair cost could run up to $10,000—though many inspectors will tell you that if the crack is less than a half-inch, it’s likely not much of an issue.

In top-selling agent Brett Young’s market of Indianapolis, foundations can suffer from a crack in the block, termites in the wood, water eroding the foundation, or bowed walls.

The cracked block can often be fixed easily with mortar or caulk that you apply yourself. Bowed walls, though, can run around $5,000 to $7,000 to fix because a system needs to be installed to hold the walls up.

For water concerns, the cost to fix it depends on the issue. If it’s just a problematic downspout, it could be as low as $100.

But to put in an entire drainage system because water is coming up from the basement, you could be looking at $10,000 depending on the size of the basement. Waterproofing the basement afterwards could cost just as much.

Source: (Radovan1/ Shutterstock)

3. Should you repair foundation issues before you sell?

It depends on who you ask.

Edmond (Buddy) Eslava, a nationally renowned appraiser with the Appraisal Consultant Group in the Mobile, Alabama, area says it’s “significantly wiser” to have them fixed before you sell so you can command a higher price point.

But according to Jerin Harper, from Harper Certified Appraisals in Oregon with 10 years of experience:

“It is wise for a seller to educate themselves on any foundation issues, and to get at least three bids from licensed contractors,” Harper said. “In my opinion, it is not necessary to fix those problems prior to listing unless it comes at a reasonable cost.”

Harper advises that the buyer do their own inspection, and the seller negotiate accordingly based on what they know about the issue.

The buyer can always ask for a reduction in sale price, but in a best-case-scenario, the seller will have multiple offers and the buyer will worry about the foundation after they get the property.

There are pros and cons to fixing the foundation first, though. On the plus side, you won’t scare anybody away and your pool of potential buyers becomes wider, Young said.

Lombardo agrees, noting that eventually the issue could be something a seller may get sued over if they didn’t disclose the problem upfront. Insurance may also cover the repairs, making it a more affordable option.

However, biting the bullet on foundation repairs before you sell could cost you thousands of dollars that you would never have had to spend if you’d taken the chance to see what the market would offer.

A house with foundation issues being held up with a brick.
Source: (Georgiy Myakishev/ Shutterstock)

4. Should you sell your home “as is” to a cash investor if you have foundation problems?

When you sell your home to a cash investor, it’s a quick, no-fuss transaction. You still have to disclose any foundation problems, but you skip the repair negotiations because the investor purchases your home “as is.” That can be an attractive option if you’re dealing with tens of thousands of dollars in repairs.

What’s the catch? Well, the cash offer you receive will likely be far less than what your house could fetch on the open market. Fix and flippers, the type of investor that would be most likely to purchase a home in rough condition, pay pennies on the dollar. The reality is that investors are willing to buy your home for cash so that they can fix it up and do all the legwork to turn around and sell it for market value.

However, today’s direct-buy market is more competitive than past generations’. The demand for a simple transaction has made way for a batch of new high-tech players like Opendoor, Offerpad and even Zillow to enter this space.

That means if you want to sell to an investor, you now have more potential buyers to choose from and the competition should theoretically increase the amount of money you can get if you shop around for different offers.

That said, some of these investors won’t make offers on homes that aren’t in fairly good condition. So depending on how bad your foundation issues are, your options may be more limited.

Before you make a decision, work with a real estate agent to find out what they think your house could command in a traditional sale.

A couple who would buy a house with foundation issues.
Source: (Brooke Cagle/ Unsplash)

5. Are there any buyers out there who would consider a house with foundation issues?

The answer here is a resounding yes. Luckily, plenty of buyers will buy homes with foundation problems—though you may end up selling at a lower price.

Young has run into every situation under the sun when selling homes with foundation problems. In one case, the buyer fixed the foundation problem before making the purchase. Another time, the buyer of a home was able to make the purchase only because the price had been lowered to reflect the foundation issues.

Lombardo has had similar situations. Once, a buyer had a structural engineer in to evaluate the issue, the engineer said it wouldn’t get worse over time, and so they went ahead and purchased the home.

In other cases, the buyer will purchase the home with a stipulation that the seller first fixes the foundation problems on their own dime.

Negotiation power shifts depending on whether you’re in a buyer’s market or a seller’s market.

6. How do I sell a house with foundation issues on the open market?

If you’re looking to sell your home on the open market and you know it has foundation problems, there’s a standard procedure to follow.

Get your foundation inspected.

This is three-fold. It’s possible that you might not have as big a problem as you think, so you could just have a real estate agent check it out and get their opinion.

“A qualified Realtor though should be able to walk through a basement of the home or look at it from the outside if there isn’t a basement and be able to pick up on any warning signs,” Young said. “You’re not going to call a professional every time.”

If the agent says yes, you need to call someone, then have a home inspector or a foundation company come out to see what the issue is. And then, you’ll potentially need the help of a structural engineer.

“If the inspector tells you, ‘Hey, I think this is more than regular settling,’ then you bring in a structural engineer,” Lombardo said.

“It’s not something you’ll be able to eyeball yourself, because even a half-inch crack can become a very large problem quickly.”

Keep in mind, though, that anything beyond your agent’s educated walkthrough will come with a cost attached to it.

Disclose any known foundation issues to buyers in writing.

This step is incredibly important. Most states require that you disclose known foundation issues in writing upfront to potential buyers. Need to review the mandatory real estate disclosures in your state? We’ve got a list of all 50 states disclosure forms.

If you aren’t upfront and honest with the buyer, they could come back at you later for selling a home with major concerns that you knew about but didn’t disclose.

Let everyone know as soon as possible and get it in writing that the buyers have acknowledged the problem, Lombardo said, so everyone is aware of the issue.

Share the inspection report with the buyers.

Be as transparent as possible. You want the buyers to know what they’re getting into. Lombardo suggests not just sharing the inspection report, but also the invoice or estimate to fix the issue, whether you can afford it or not.

“That way you have an expert on the line that says, ‘Hey, for $7,500 you can fix this yourself,’” he said. “You take away the unknown from the buyer. That way you’re being transparent with everybody.”

Negotiate accordingly.

Remember that more than likely, foundation problems will affect the sale price. A buyer will want to purchase the home for less money if they have to repair something right away, and you may want to sell it for more if you’ve had to fix the problem on your own dime.

Or, the repairs could be worked into the sale in some aspect. In any case, the foundation issue will need to be addressed.