Episode #011 - Is your house standing straight? This episode is the first in the “Insider Tips” series, where Jason shares his experience in various aspects of real estate transactions. Join us as Jason discusses different foundation issues and how they affect the sale or purchase of real property. (https://youtu.be/ykLEOrVwmFc)

Transcription

Episode #011 REN Podcast Transcription (Jason Reynolds)

Hello, good afternoon everybody. This is Jason Reynolds with ‘The Real Estate Now’ podcast. So I made a mistake and thought I was recording when I was doing my Facebook live, but I wasn’t. So, you, famous podcast audience and YouTube audience get a one and only second video on foundation issues and repair, super exciting.

Before I start today’s episode, we are actually starting a new series, it’s going to be insider tips. So we are going to focus on specific aspects of real estate that I think is good to talk about for clients, whether it is buyers or sellers. Anybody that is out there this is just good knowledge that I have learnt over time that I want to share.

That being said, I do want to provide a disclaimer to everybody. What I am sharing today is based in personal experience and research, it’s not meant as a guarantee, I am not an engineer, I am not a foundation expert. So, if you guys are making any decisions or have any specific questions, I recommend A, that you talk to an engineer. B, that you talk with a foundation company and C, if you are looking for advice that you speak with a real estate agent that you have hired to help you either buy or sell a house. That could be me, but I always recommend that you talk to that person that you have specifically hired to give you advice. Everything that I am saying here is just personal advice from my time in real estate.

That being said, I wanted to quickly give an overview on the types of slabs that you typically see in Texas. There are two main types that you see; one is going to be slab and the other is going to be pier and beam. Slab is actually just a slab of concrete and the, pier and beam is going to be different points of support throughout the house. Pier and beam house, those are the types that have crawl spaces underneath the floors that you can access as maybe a foot or two and then it’s dirt and you have different support areas. So, your plumbing runs underneath there and things like that. Mostly what you are going to see here in Texas in the DFW area are slab foundations, so those are your main foundations types. Now, foundation issues, the way you typically find out about them is going to be a few items. (2:47)

Cracking on the walls. You may see settling in houses and that is totally normal and settling can just be separation areas in the drywall. Houses are so large and the slabs do just naturally settle but when you start to see diagonal cracks at the corner of door frames or windows, that could indicate a greater problem.
Sloping floors. I have actually walked through houses before where you could tell you were walking downhill. So that can be a clear indication as well that there is a foundation issue.
Cracked bricks on the exterior. You can actually see through the mortar crack all the way up or you can also see crack through the bricks themselves. So if you ever see that, it’s good to have it checked out. It may not mean it’s a large problem, sometimes I have seen cracked bricks and there is no problem at all. That usually can be a sign that you have foundation problems.
Another is doors not closing or opening, getting stuck easily, it maybe during different seasons. I know I have looked at a house before where the doors were opened and closed easily during a certain part of the year and then the other part, you couldn’t even close it and if you did, it was extremely hard to open the door. That can be a sign as well. The reason that you typically see for foundation problems is going to be the consistency of the soil rapidly changing. In Texas, it tends to get very hot in the summers and we can have wet periods. But what happens is that soil when it is wet would compound but, when it’s dry can expand. If it is doing it in different areas by or underneath your foundation, then that can create a lot of stress and eventually create foundation problems.
Another reason is pooling of water so, if you have an area that when it rains really hard, it just pools in a certain area by your house, that can create problems as well. Erosion of soil, if you don’t have gutters, then it could be coming right off the roof and eroding the soil right next to your foundation and therefore, removing the support that is there.
Next is obstruction from trees and roots, so if you have trees or bushes close to your house, long term that can cause problems. So, it’s always best to try and keep those away from your house so that way, it doesn’t interfere with your foundation at all. Another can be plumbing leaks, so if you ever see water pooling around your house but you haven’t watered the house and it hasn’t rained in a long period of time, that can be a sign that you have a plumbing leak somewhere maybe in the foundation, it could be in the house. Again, you would have to hire a plumber to look at that but that can be something to check out because, that can cause foundation issues as well.
Lastly, it can just be poor construction; it could be that the ground wasn’t compacted properly when it was built and it could be that the slab was not poured correctly when it was poured.

All these are issues that a foundation engineer would be able to really evaluate and give you advice on but those are a few of the things to look out for. Ways that you can prevent foundation issues: (6:02)

Timed sprinklers: a lot of homes that are newer have water systems that water the yard but that also waters the area next to the foundation. So that is considered to be a sprinkler around the foundation. There are other systems that are specifically to water foundations so, it is a water system for the foundation but it only waters that foundation itself and not your yard. A lot of folks would dig maybe a small trench and put a soaker hose in the ground and then, put it on a timer to water every once in a while. That also works but you are going to have to replace that fairly often because that hose would deteriorate being in the ground.
Another way to prevent foundation issues is to drain water away from house. So if you see water pooling after it rains and staying there, you want to make sure that that soil slopes away from the house and any water that is hidden is actually leaving the house everywhere around the perimeter.
Avoid having trees and shrubs close to the foundation, we talked about that being a reason for foundation problems.
Keeping the area moist: that is done through the sprinkler system or the foundation watering systems.
Cleaning out gutter and downspouts. If you end up having a backed up gutter or downspout, then it’s just going to pull over and create the same issues. You want to make sure that is all clear so that way, you will drain the water and make sure that the spouts are directing that water away from the house and not just directing it to your foundation and creating a pool.

So, those are the main issues. Foundation issues typically come up when you are selling your house. So, if you already know about foundation problems, you need to disclose these items in your seller’s disclosure. Otherwise, it can create issues for you in the future. Again, it is always important to disclose this on your seller disclosures and disclose any inspections you might have, any reports, any estimates, you want to be completely transparent.

Another issue is you may not know until you have a potential buyer and they get an inspection and then they find out that there may be foundation problems. Rely upon your real estate agent to walk you through that to get additional opinions but again, it’s always best to address the issues and figure out the best way to resolve it. Whether that is moving forward with that particular buyer or not. Again, visit with your real estate agent about how to do that.

Another aspect of that is if that buyer is getting financing whether it is conventional, FHA or VA. Lenders to the best of my knowledge, would not close on a property that has an active foundation problem. They have to have proof that that work has been completed and the foundation is now within it’s limits and has a passing structural engineers report.

If it’s cash transactions, then that is all negotiated and it could be purchased by the buyer as long as they are aware of the issue but, when it comes to financing, that is something that you are going to have to talk to your agent about as you are walking through that. Your options when you find out that you have foundation issues is going to be: (9:19)

Contact your foundation company. There are plenty of them in the DFW Metroplex and they typically offer inspections at no charge. They will come out to your house and they have devices that measure the levels of the areas of the foundation and they give a recommendation for the work that needs to be completed. They often provide an estimate as well, that is one option.
Another option is to get a foundation engineer’s report. That is going to be a formal report that is a third party report. They do not do foundation work themselves, they are simply giving an in-depth opinion of how the foundation is operating, where piers might need to be placed and what issues are causing the foundation problems and what can be done to help prevent them in the future. Those do cost and I did have an example here of one that was about a year and a half ago that a client of mine purchased. That was $650 for a 4-bedroom, 2-bathroom house, it was roughly 2,700 sq. ft. those do cost, but again, an important thing to think about is that it is a third party opinion and the person that is giving the opinion isn’t doing the work. There is no conflict of interest there based on my experience. But it does cost, $650 versus nothing is a big difference depending on your budget. Again, visit with your agent in terms of how to walk through that and what might work best for your personal situation.

When you do hire a foundation company, I put together some questions that are great to ask them as you are doing your research: (10:50)

Is the company insured? Obviously, you want them to be insured.
How long have they been in business? You want a company that has been in business for while.
What type of piers are you recommending? There are different types, there are; steel piers, concrete piers. So you want to ask them what type they are recommending, what is the reason for that type that can be relied upon.
The type of soil there around your house. Make sure they are knowledgeable about what they are talking about and they are not afraid to inform about that.
Ask them if they are a member of the ‘Better Business Bureau’ and check their ratings with today’s technology. It’s always great to go online and look at Google reviews, look at Facebook reviews, look at Angie’s list. There are many ways that you can check the reputation of a company and actually look at real reviews from clients that have used them in the past.
Do they pull permits for work? It’s a great question. To my knowledge, all cities require a permit to be pulled when work is being completed. You want to make sure that is actually happening, you need to verify that because that can cause problems for you in the future. You want to make sure the permit would work through the city and that the work is being done properly.
Does the estimate include a post engineer’s report and post plumbing report? Not all companies include that in their estimate, so you want to makes sure that that is included and you are going to need that documentation. Especially, if you have a buyer that is getting financing on the property. For the ability to verify that the work was completed and the reason there is a post plumbing test as well is because sometimes, when you are moving a foundation all the plumbing is typically going through your slab, both your sewer lines and your water lines. So, when you are moving that, sometimes pipes can crack and it can be damaged and have to be repaired. It is always best to be potentially prepared for that to happen. In terms of cost, it can vary greatly, you can go all the way from a few thousand dollars and I have an estimate from client spending roughly $20,000 re-doing most of the plumbing underneath the house. It was very intensive work, they had to actually tunnel underneath the house, replace piping and then re-compact all that dirt. So, it is a very intensive process and can be very expensive as well.
Do they offer post-job clean up? Very important. Foundation work is a very dirty job so you want to makes sure that they are planning to clean up the area and make sure it’s nice following them completing the work.
Is there warranty included? You want to make sure there is a warranty, you want to make sure it’s a transferable warranty, you want to be able to transfer that when you sell the house in the future. Sometimes, there is a cost associated with transfer so, it is very important to makes sure that you know all the details about the warranties, whether you are buying the house that had had foundational work or you are a seller. You want to make sure that you get a warranty that is transferable because, most buyers are looking for that. Always read the fine print in those contracts as well. In terms of cost, I was able to pull from Home Advisor, they said the average fee associated with it is $4,008. Based on all the estimates, just a few that I have pulled from the work that has been done on the houses that we have helped sell or buy, it ranges anywhere from $2,000-$8,000. That is the most that I have seen for foundation work itself. I would say that that estimate is pretty accurate and it seems that would maybe be your range.

Again, it always depends in how extreme the foundation issue is, how soon you have caught it and the amount of work that has to go into it. It just all depends so you have to rely upon the other foundation engineer to really guide you through that along with your real estate agent. In terms of payment, lots of folks can pay in full but maybe a lot folks don’t have that cash sitting around. So, I have seen a lot of foundation companies offer financing. I believe they use third party companies that finance that amount so you end up paying a monthly balance when the work is completed. Another option is if you are selling the house, I have had foundation companies bill the title companies so that way when the property closes, the seller is actually paying out of their proceeds at closing for the work that was competed. Sometimes, that makes it easier if the sellers don’t have any liquid funds to pay for that at the moment but, they know they are going to have it when they sell the house. Usually a foundation company will allow that, it just always depends on which company you are using.

Overall, foundation issues are fairly frequent in the state of Texas and especially in the DFW area so I wouldn’t be very scared of it, it is all about being educated. So, it is very important that you look at your options and just what I recommend you to do, if you see anything, consult with a foundation engineer if you will like to get that third party report or call a foundation company or work with your real estate agent for the specific situation you are in. Because, most real estate agents have helped many clients through these types of transactions, I know we have and so, we have a wide range of knowledge of different scenarios and different levels of work that need to be done and different ways it can be completed, paid for and things like that. With the education, it’s not as scary of a topic, just go and makes an educated decision when you are running into any problems. If you guys have any questions at all that maybe we didn’t focus on, please be sure to comment below on this video with your questions. We will be focusing on anybody that posts questions, we will address it and we will be glad to answer it.

If you are on the podcast listening to this, please just grab the email address, I am glad to answer those questions via email. You can reach me at jason@visionsrealty.com thank you guys for joining us today and we look forward to catching you on the next podcast. Thanks!