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House “Flippers”

29 Dec

Over the years, I have inspected the foundation of homes that had been purchased by investors. The investors remodeled the interior / exteriors and brought them up to a “new car smell” standard and sold them. Obviously, I am somewhat jaded by some of the things I have seen “flippers” do. However, on the other hand, I have seen some investors who not only do a wonderful job on the “new car smell” upgrades but  also do a good job on repairing the foundation (if needed).

Since I get involved in only foundation problems (in North Texas), my comments will center around the Good, Bad and the Ugly aspects of buying a home that has foundation problems from an investor. (I should also say that I have also seen some long time homeowners / occupants of a home act the same way as the “flippers” do – see the last example of “The Ugly”.)

The Good

One home I inspected was owned by an investor who recognized that foundation repair was needed on a home she was going to “flip”. She contacted an engineer to design the foundation repairs. She hired a reputable foundation repair company to do the work. Once the foundation work was completed, she had the engineer return and review the work and write a compliance letter to pass on to a prospective buyer.

Included in her sales package to any prospective purchaser was a copy of the engineer’s reports, the foundation repair company’s warranty documents and a copy of the sub slab plumbing leak test (done after the foundation work was completed).

She then installed new floors and remodeled the kitchen and baths.

The home rapidly sold at the asking price.

The Bad

Several months ago, I inspected the foundation of a 1500 sq ft home with a slab foundation. The buyer (my client) loved the home because the investor had installed new wood floors, new kitchen granite counter tops and removed some walls to make an open interior living room/dining room and kitchen. He had also recently had foundation work performed. The investor had retained an engineer to design the foundation repair. The engineer had recommended the installation of numerous piers around the exterior and throughout the interior.

He also specified that the foundation be raised to within a specific range.

The investor hired a foundation repair company to install the piers supposedly in accordance with the engineer’s specifications. (It was later determined by my client that the foundation repair contractor did not obtain a building permit as required by the city.) Once the foundation was “repaired” the owner completely remodeled the two bathrooms and installed new wood floors.

My inspection found that the foundation in several of the rooms was still significantly out of level, with some doors so much out of level that they could not be closed. Also, there was no evidence that the foundation repair engineer had ever reviewed the foundation repairs as they was being done or afterward.

I advised my client to have the owner (investor) get his engineer to issue a letter certifying that the foundation work was done to his specifications or if not, describe what needed to be done to make it so. I also advised my client that to attempt to raise the foundation up to an acceptable level would probably damage the remodeled bathrooms (including the shower tile walls); so some cosmetic repairs would need to be done after the foundation was lifted up.

The owner was not willing to do these things so my client wisely backed out of the deal.

The Ugly

I once inspected a small home for a young couple who had just purchased their first home and within a few weeks after they moved in, large cracks began appearing in the sheetrock. In my inspection I found that the doors were generally level but that the slab was over 6″ out of level. It was obvious that the foundation was (and had been) unstable.

I asked them if they had a copy of the report from their General Home Inspector, made prior to purchasing the home. They said that their realtor told them that an inspection was not necessary so they did not have the home inspected. (The realtor had them sign a document that said they did not want an inspection.)

They found out by talking to a neighbor that the previous owner was a professional painter and that he would completely paint the interior of the home two times a year and had done so prior to putting the home on the market. (He also had rehung the interior doors.)

To repair the foundation would require about $25k of piers which they could not afford.

My Advice To a Buyer of a Home in North Texas

Get all documents from the seller that concern foundation problems. If the owner says that there has not been any foundation work done or an engineering inspection done on the foundation, then I would also ask if he has ever had the foundation inspected by a foundation repair company (who probably would not be an engineer). If so, who was it and what did they recommend? I would also ask if the seller if he has ever had any problems with the operation of any doors (sticking) or made cosmetic repairs to the sheetrock or brick cracks. Call the city Building Inspection Department and ask if there have been any building permits issued for foundation repairs. If so, get the documents.

Retain an engineer to inspect the foundation prior during the option period. The engineer should also take elevations as a part of his inspection.

Many times, if a foundation has been repaired, the foundation repair contractor will have retained an engineer to review and sign off on the repairs. This engineer is the engineer-of-record for the foundation repairs. It may be possible to get this engineer involved in the inspection of the current condition of the foundation. If so, he should issue a written report of his findings.

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Posted by on December 29, 2014 in foundation repair

 

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