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Foundation Problem

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xm39hnu

Senior Member
Joined
Jul 10, 2003
Professional Status
General Public
State
Florida
House was built in 1997 by a sleazy contractor whom a lot of people would like to shoot, and who many have sued. Foundation is a single brick thick, with the floor joist band as well as the ends of the floor joists resting on the bricks. There is no termite shield, and none of the wood is treated. House is under a pest control contract.

There's no county zoning; city zoning concerns itself only with land use; there's no local building code. City building permit costs $10; building inspector is a fee collector. If he knows anything about building codes, he keeps it carefully concealed. AFAIK, there's no legal reason that the house cannot be built as it is.

The remainder of the house is of average construction with many above-average features, especially inside.

Local estimates put the cost to cure this type of foundation defect at $7,000 - $10,000. It cannot be affirmatively shown that our market of rednecks pays any attention to such matters; they'd pay the same for this house as they would for one with a proper foundation.

But this foundation is defective, and I know it. Despite the fact that rednecks in the market don't know any better, I must deduct for low-grade construction of the foundation some way or another. Morally and professionally, I can't do otherwise. But this condition isn't deferred maintenance; there's no settlement or cracking. Somehow functional obsolescence is a square peg in a round hole. My mentor/wife won't let me just say it's got a s***ty foundation.

How would you deal with this? Any and all suggestions appreciated. (BTW, this WILL be mentioned pointedly in the comments.)
 

Greg Hyland

Sophomore Member
Joined
Mar 30, 2003
Professional Status
Licensed Appraiser
State
Wisconsin
Put the foundation in place does not appear to be of proper technique. Then recommend a structural engineer or foundation specialist evaluate the subjects foundation.

Good luck!
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
This Appraisal and Report is based on the "Extraordinary Assumption" that the foundation is stable. A foundation inspection by a qualified expert is highly recommended. This "Extraordinary Assumption" is directly related to this specific structure and appraisal assignment, which, if found to be false, could alter the appraiser's opinions or conclusions.

*****************

This covers you without you having to go into details. If you don't mention it, it's your butt.... and your wifes. Bet you win this argument! If you really question this, contact your E&O carrier and ask them.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Say what you said in paragraph one and call for an inspection by a expert.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Definitely disclose it. And remember that the idea behind market value is a "knowledgeable buyer", not an ignorant redneck (trying to be nice here ;) ). If this were disclosed or discovered by the knowledgeable buyer, I'd bet they would call for it to be fixed, or expect one heck of a discount.

And it's a good thing your mentor made you change the language in the addendum. :D Don't think the UW would like it to be worded quite that way.
 

xm39hnu

Senior Member
Joined
Jul 10, 2003
Professional Status
General Public
State
Florida
Originally posted by Pamela Crowley (Florida)@Aug 7 2003, 09:38 AM
This Appraisal and Report is based on the "Extraordinary Assumption" that the foundation is stable. A foundation inspection by a qualified expert is highly recommended. This "Extraordinary Assumption" is directly related to this specific structure and appraisal assignment, which, if found to be false, could alter the appraiser's opinions or conclusions.

*****************

This covers you without you having to go into details. If you don't mention it, it's your butt.... and your wifes. Bet you win this argument! If you really question this, contact your E&O carrier and ask them.
Thankyouthankyouthankyou! I'd forgotten about the Extraordinary Assumption. We're still gonna explain what I observed about this foundation, and that it is not typical of similar homes in this market segment, and state (not recommend) that only an expert can determine whether the foundation is stable.

(I don't recommend. The LO's and UW's are big boys and girls. I let them do their own thinking. If I'm to play my "just a dumb appraiser" role properly, then by disclaimer I'm not smart enough to go making recommendations about construction quality.)

I still want to make some adjustment to the opinion of value, but I can't prove market resistance to this type foundation (it's not typical, but is not unique either). So I can't take a "Quality of Construction" adjustment, 'cause I can't support it. And I don't have enough data to support a reduction in economic life, although I know in my very bones that this d**n house won't last the sixty years or so that we attribute to others in this market segment. Deferred maintenance offers no relief. By definition, there's no condition requiring immediate attention to prevent damage to the rest of the structure.

This house is six years old, and there's no evidence of settlement or foundation instability. I'm wondering whether this just offends my own construction standards (to which FHA happens to conform), or whether I'm just barking at a booger.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Local estimates put the cost to cure this type of foundation defect at $7,000 - $10,000.
If that estimate is from a reliable source, state the source, and that you assume it's reasonable since ya' duno. Curable functional depreciation, the cost to cure equals amount of the adjustments in the cost and market approach.

Hold on for some other ideas.........
 

xm39hnu

Senior Member
Joined
Jul 10, 2003
Professional Status
General Public
State
Florida
Originally posted by M Leggett@Aug 7 2003, 10:16 AM
Definitely disclose it. And remember that the idea behind market value is a "knowledgeable buyer", not an ignorant redneck (trying to be nice here ;) ). If this were disclosed or discovered by the knowledgeable buyer, I'd bet they would call for it to be fixed, or expect one heck of a discount.

And it's a good thing your mentor made you change the language in the addendum. :D Don't think the UW would like it to be worded quite that way.
Thanks for that tip. That lets in my Quality of Construction adjustment (appropriately commented) just fine. I'd forgotten about the knowledgeable buyer part. Neither the buyer nor the seller, in this case, have a clue about foundations.

(And I did put that wording into the comment addendum, just to see if she'd catch it. Delightful screech! Keeps her on her toes :D )
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
:rofl:
Jim:

You (and spouse ~by proxy~) are and are going to continue be a welcome addition to this forum!

thanks for making my morning.

Spouse & I do such things also... so far none have gone out the door witout correction :eek:
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
If you decide you should adjust for repairs (and I think you should) you should also consider the additional market resistance for having to do these repairs. If you used a Title 1 loan, that's a 10% +/- rate with a probable 10 year holding period - do the math. There should be some market resistance even if you don't use the above as a method because an "informed buyer" would want to definitely correct the foundation, which would also require plumbing removal and reconnection as the foundation goes vertical 18" (You'd want to build a sufficient crawl space). Is that in the $7-10K cost? What about interior cracking, etc when the home is moved vertically? Can the contractor move the home enough to fix the foundation without cracking the walls? I don't think so. You would have to consider interior repairs and repainting as well as the base cost.

Just some things to strain the brain with. :D

Roger
 
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