For Agents

 

 

Top Tips For Real Estate Agents

Educate your buyer or seller     Understand new home warranties     Understand foundation repair warranties     Understand the TREC foundation repair recommendation     Recommend an engineer     Be able to recognize a substandard engineering report     Be able to recognize foundation  repair contractor scare tactics  

 

Tip #1: Educate your buyer or seller: The number one way you can educate your buyers and sellers about foundation performance evaluations is to recommend they visit this website.  This site was specifically designed to inform buyers and sellers about these issues; we are convinced that every buyer and seller of a house in the Greater Houston Area should educate themselves by reading this website.

There are two other sites that are also useful.  One is www.foundationrepair.org.  This is a very good trade association website that has a lot of engineering input.  Another is www.dawsonfoundationrepair.com.  This is a foundation contractor website that is very informative.  This website gives a good overview of the repair process.  It also includes a refreshingly candid explanation of how the need for foundation repair should normally be determined:

“The majority of home foundation problems are not jeopardizing the structural integrity of the home.  Rather, the foundation problems present cosmetic deficiencies (cracked brick veneer), inconveniences (fixing jammed doors) and a need for greater home maintenance (fixing broken plumbing pipes).  The final decision concerning the repair of a home’s foundation depends on the individual homeowner’s tolerance of the symptoms.”

 

I want to repeat that last sentence: The final decision concerning the repair of a home’s foundation depends on the individual homeowner’s tolerance of the symptoms.  This simple truth makes this site the most informative of all the foundation contractor web sites and helps keep the issue of foundation performance and repair in perspective.  

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Tip #2: Understand new home warranties: I strongly recommend you read the major 3rd party foundation (major structural defect) warranties that frequently come with new homes.  Buyers frequently misunderstand these warranties.  There are two aspects of these warranties that any real estate agent should understand.

bullet These warranties require that there be damage to a listed structural member: The large majority of houses that experience foundation problems will not show damage to a listed structural member.  The damage is almost always restricted to brittle wall coverings such as drywall (sheetrock), brick veneer and stucco.  These coverings are not listed structural members. Regardless of how severely damaged wall coverings are, such damage is not covered by the 10-year foundation warranty.
bullet The damage to a listed structural member must render the house unlivable or unsafe.  This is even less likely.  In practice, virtually the only way this can happen is for a door that is a primary or secondary fire escape door may stick or bind so that small child may not be able to open the door.  But, even if this happens, it can almost always be corrected without underpinning the foundation.  

The bottom line is this : The typical new home foundation warranty is akin to an insurance policy protecting the owner from the theft of an in-ground concrete swimming pool.  It provides protection only against an extremely unlikely event.

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Tip #3: Understand foundation repair warrantiesA foundation repair warranty is no better than the company that stands behind it.  This industry is littered with repair warranty programs and companies that have gone bankrupt leaving homeowners with little more than pieces of paper that say Lifetime Warranty, disconnected phone numbers and addresses where there is nothing but an empty lot.

The typical foundation repair warranty requires only that the foundation repair contractor make adjustments to the piles or piers during the life of the warranty if certain conditions are met.  The foundation contractor is not liable for any damage that may result from such adjustments.  The cost of the adjustments may be borne by the contractor or may cost the owner an amount stipulated in the foundation repair warranty. 

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Tip #4: Understand the TREC foundation repair recommendation
It is very important for you to understand the different roles played by real estate inspectors and engineers in the foundation inspection and evaluation process.

From a practical perspective the difference between what a real estate inspector and an engineer comes down to what they report if the foundation performance is judged to be inadequate.

 

bullet The Real Estate Inspection Approach: Under the rules licensed real estate inspectors are required to follow, if they judge the performance of the foundation to be inadequate, the inspector is required to report the foundation as in need of repair.
bullet The Engineering Approach: An example of an engineering approach can be found in a publication of Texas Section of the American Society of Civil Engineers.  The guidelines state that if the foundation performance is judged to be inadequate, the engineer should report to his client the options that are available to improve the performance.  Those options may include structural foundation repair but also may include non-structural options such as landscaping changes, more or less aggressive watering of the foundation making cosmetic repairs and/or changes to the house and, if appropriate, doing nothing.  

 

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Tip #5: Recommend an engineer: According to the US Army Corps of Engineers publication Foundations in Expansive Soils, the fact that a foundation is not performing "adequately" does not mean that foundation repair is either necessary or desirable.  Nor does it mean that foundation repair will actually improve the performance of the foundation.  An engineer has both the training and duty to exercise his engineering and analytical judgment in judging both the adequacy of the performance of the foundation and in reporting what options are applicable for improving inadequate foundation performance.  The real estate inspection approach frequently results in a repair  recommendation that is both unnecessary and counterproductive.  Many real estate inspectors know this.  They usually follow the rules by reporting a house that shows signs of damage due to foundation movement as in need of foundation repair but then also recommend a second opinion from a structural engineer. 

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Tip #6: Know your buyer: This may seem obvious, but it is not.  If you are working with a buyer that shows a lower than normal tolerance for living in a house that shows damage due to foundation movement, then do not show him or her houses that have a known history of foundation repair or a known history of damage due to foundation movement.  One of the authors, R. Michael Gray, P.E., once inspected  a house for a buyer that stated that his highest priority was that he did not want to deal with any foundation problems.  The house was on the Westbury area and had been underpinned 3 separate times in the last 8-years.  There was simply no way the house was going to meet his unrealistic expectations. 

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Tip #7: Be able to recognize a substandard engineering report: A competent engineering foundation evaluation will identify any damage observed by the engineer; if the damage is confined to cosmetic and minor door issues (like sticking doors) foundation repair should be presented as an option and not as a necessity.  Only if foundation movement has damaged the house so that it is unsafe to live in should foundation  repair be presented as a necessity or requirement.

To paraphrase the recommendations of the Texas Section of the ASCE, if the house is found to be unsafe due to foundation performance issues, the engineer is to inform the client and/or civil authorities immediately.

If the performance of the foundation judged to be inadequate, the engineer is to provide alternatives for the client’s consideration.  The alternatives should be commensurate with the nature and cause of the performance inadequacy and the seriousness of the consequences.  In making recommendations, the engineer is to take into consideration the cost effectiveness and practicality of the recommendations, the projected performance improvement that is likely to result, risks of diminished structural performance that may result from the recommended remediation, and the needs of the client.  Some clients may choose to perform periodic cosmetic repairs and door adjustments rather than undertake foundation underpinning.

There are two aspects of engineering reports you should look for:

bullet Foundation repair should normally be presented as an option, not as a necessity: If the foundation performance the engineer should, in our opinion, discuss foundation repair as an option among other options.  Foundation repair only becomes a necessity if there is severe structural damage to the house frame or to the foundation itself that makes the frame incapable of safely carrying normally imposed loads or if there are structural safety issues involved.  Even if one or both of these conditions exist, foundation repair would still not be a necessity unless there were no other way to practically deal with the problem.
bullet If the foundation performance is judged to be inadequate, any recommended option, including foundation repair, should include a recognition of both the benefits and risks of the option: Foundation repair usually does improve the performance of the foundation; but there are attendant risks.  Those risks include severe structural damage to the foundation and to the house structure.  A recommendation to underpin a foundation should reflect a considered judgment on the part of the engineer.

 

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Tip #8: Be able to recognize foundation repair contractor scare tactics: It has been my experience that some (but certainly not all) foundation repair contractors are not above using unethical scare tactics to sell foundation repair work.  The most common and egregious tactics are listed below:

 

bullet The finish floor (or foundation surface) exceeds the allowable slope: The scam here is that there is no “allowable slope”.  Construction tolerances published by the American Concrete Institute (ACI) allow for a new slab to have a slope as high as 1.25 inches over 10-feet.  But neither the ACI or any code authority publishes a maximum allowable slope tolerance for existing slab-on-ground foundations.
bullet The finish floor (or foundation surface) exceeds the allowable levelness criterion: Foundation repair contractors will sometimes tell a homeowner that his foundation is excessively out of level.  This is misleading at best and a scam at worst.  There is no code requirement that stipulates how level a slab-on-ground foundation should be.  The levelness of the foundation surface is an aesthetic issue, not a code issue. 
bullet The roof rafters are being pulled apart: When there are gaps between the roof rafters and the ridge beam, the typical cause is sloppy framing, not foundation movement.  One way to check to see if foundation movement is a possible cause of such gaps is to test plumb of the of wall the rafter frame into.  If the wall is reasonably plumb, foundation movement is not likely to be pulling the roof rafters apart.
bullet Snakes and other vermin can enter the house: I have been told stories of foundation repair contractors telling homeowners that if they do not underpin their foundation snakes and other vermin can enter the house.  This is an obvious scare tactic.  The truth is that vermin can enter any house.  No one likes to hear that, but it is true.  Underpinning the foundation is not going to change that fact.
bullet If you do not underpin the foundation perimeter now, you will have to underpin the interior later: This is almost laughable.  Underpinning the perimeter of a foundation can result in the normally dormant area of the foundation becoming unstable.  The fact is that foundation repair is rarely an emergency situation.  Taking your time to make a well-considered decision is not likely to result in having to do even more repair work in the future.  Do not let a repair contractor hurry your decision.
bullet If you do not underpin the foundation you cannot sell the house: I will admit that if a house shows signs of significant foundation movement, it may be easier to sell the house if it has been underpinned, especially if the repair work comes with a life-time warranty.  But it is also true that underpinning the foundation may also make the house more difficult to sell.  There is no clearer proof that a foundation has performed inadequately in the past than the fact that the owner spent several thousand dollars to try to make it perform better.
bullet You must repair the foundation now or face bigger problems later: In most cases, there is no reason to believe that you will face even more repairs in the future if you do not repair the foundation now.  I cannot stress enough that foundation underpinning is rarely an emergency situation.  It is almost always prudent to take your time and make a decision only after you are satisfied you have enough information.
 

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© 2004 R. Michael Gray, P.E. and Matthew T. Gray.  This material may be reprinted for personal and educational non-commercial use only.  This material is based on generally accepted engineering principles and practices; it is for general information only.  The information contained herein should not be used without first securing competent professional advice with respect to its suitability for a general or specific application.  Anyone using this information assumes all liability for such use.