Buying a Property with Foundation Issues

By most experts in the industry, the 2014 real estate landscape was far better than that of years priors. Home prices headed north in almost all counties across the U.S., and mortgage rates remained in the affordable range.

As the REO inventory has winded down or as some would agree, has silently been put on hold until prices climb even higher, the “good deal” is now harder and harder to find. If a diamond in the rough is placed on the market, the price is pushed higher by the same tactics used during that last boom.

Multiple offers soon drive the price into the realm of “non-affordability” or minimal return for the potential buyer. Prime “fixer-uppers” are now seldom put on the market since the listing agent can offer it as a pocket listing to the select few in order to maximize their commissions.

Where does this put the small time investor or first-time buyer who can’t compete for the “off-market” properties? Scrambling for the left-over’s at prices that usually don’t make sense, or dropping out of the market completely.

“Don’t give up!” says Jerry Bronstrup of Foundation Technology. “There’s still plenty of money to be made IF you know how to look at properties in a completely different light, especially if you enlist the help of a professional.”

With more than 15,000 properties rehabbed in the past eight years for banks and asset managers, Jerry knows a thing or two about what to look for when securing a “good deal” in today’s market. His other company Bristol Restoration works directly for Fannie Mae and Freddie Mac rehabbing as many as 150 REO properties for sale every month.

Properties with foundation issues are generally sold “as-is” by both Freddie and Fannie, even if the only rehab or repair required is foundation work. Minor work aside. Banks tend to follow the same path. Most buyers and investors of any type today, as they have in the past, avoid almost any property that had been branded with the dreaded “foundation issue”. That ‘branding’ is considered the death knell for a property’s value. Often the property is torn down completely.

But, that’s exactly the property any savvy investor or home-buyer today should be looking for, if you desire a property well under market pricing. You can generally find a property 25-50% under current market, and sometimes even lower. The key, says Jerry, is to have a foundation professional by your side instead of just a home inspector. He knows quickly what to look for and can sum up an approximate price for the repairs while onsite. The other stuff; you know, kitchen and baths, cosmetic, roofs, you’ve been looking. You know what it costs to repair, and these always someone who will do that portion cheaply. Foundation work is best left up to a professional, and it seems everyone is afraid of it. Now, you don’t need to be!

Throughout the U.S., there are foundation repair specialists that offer alternative repair methods that can be completed in just a few days for thousands of dollars less than traditional remove and replace methods most are familiar with. The average repair is usually around $18,000-$20,000, but the discounted selling price is generally 3-5 times that amount. Changes the way you look at properties, doesn’t it? The best part; warrantied up to twenty five years, transferable too! For the first-time-buyer repairs can be included in a $203,000 mortgage. And remember, in most cases, the prices is far below the market, which means qualifying is easier as well.

Don’t know where to begin looking? Start by talking to your Realtor. They may want to point you in another direction, or want to know what you know. Also look at the all the left-over properties from the online auctions. You will begin to see the “foundation Issue” pattern. It’s not rocket science, it’s simply enlisting the help of a professional you may have never thought to enlist, to assist you in your search. Keep this under wraps though, when the story gets out, prices for these kind of properties will no longer be where you want them.

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At Foundation Technology, our foundation specialists can help you save a lot of money when negotiating a discounted price on a property with foundation issues.